> the 10 year bond price started going up as stocks were trading down,

Correct me if I'm wrong, but the abnormal thing happening was that treasury yields were going up, which meant that prices were going down (due to lack of buyers, as you said), right?

> a big part of the tariff strategy

You mean, a big part of one of the inconsistent explanations people are desperately theorizing, because they're too afraid of the simple answer... that there isn't any strategy at all?

[Edit: Or, to be more precise, no strategy which is both (A) sane and (B) designed for America rather than for specific individuals.]

> chaos in an effort to drive down the price of the 10-year bond

I assume this means "the US government will benefit by being able to borrow money more cheaply than before because so many people can't trust stocks". That explanation rests on a big fat false assumption that trust in the particular debtor issuing the bonds remains unchanged as more people want to lend them money.

Instead, economic trust in the US--built up over decades--is being actively firebombed into the dirt by the new Republican regime. This means the US government can easily end up in a far worse position than before, because creditors will demand higher interest-payments to offset the "holy shit your country might implode first" risk they're taking on.

Or, y'know, they'll take their money out of US stocks and then buy the bonds of some other government entirely...

This doesnt make sense. When money moves out of stocks, it has to go somewhere. Typically, it moves to less-risky assets, like bonds. That makes their prices go up, and yields down.

Likewise, why would the tariff strategy be to drive down bond prices? Lower prices means receiving less for their issuance/paying more interest...

Youve got it all backwards friend

Pretty sure you're confusing the price of bonds with their yields, which are inversely correlated. Yields have gone up (to put it mildly).

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Funds selling bonds to cover their losses on equity side.

Trump explained his tariff idea to Oprah in previous century. But sure, it's a dynamic plan in response to a 2025 bond sale.

And this does happen (most prominently involving the Atlantic slave trade): https://en.wikipedia.org/wiki/Triangular_trade

Not to be a hater, but this is Ben Thomspon's style. Dial up the word count until people think your analysis is comprehensive, to disguise the fact that you're not saying anything substantive.

It reminds me a lot of Brexit. Politicians in the south of the country were warning that the financial sector (predominantly in London) would loose 100,000 jobs and people in the north were saying "oh, that sounds pretty good".

A few years later when that didn't happen to that extent I remember an interview with someone from a fishing port which lost a lot of business that previously went to Europe. They were complaining that Brexit wasn't hurting the right people and why are prices increasing all the time.

It seems no amount of logic is going to convince some people.

The primary architect of trumps tariff strategy in his first and second term is Peter Navarro. If you want to understand the tariffs today, just go read one of his many books. His goals are pretty simple:

reindustriaize America

No more free trade

China is evil and the worlds enemy

It should be no surprise to anyone observing trump since he took office that the end goal was always to decouple from China.

> It is like the administration adopted a policy of jailing all Capricorns and only Capricorns and people started writing think pieces about how the criminal justice system would be more efficient if they focused on programs to reduce recidivism.

I was born on January 19. Should I be concerned?

Worse than projecting one's values onto a rationalization of the new tariffs is to simply take the administration's rhetoric at face value. That other countries are "taking advantage of us" is just a talking point. We have to look at how the tariffs fit historical conservative programs. Republicans have long wished to replace our progressive income taxation with a flat tax system, but that's simply not achievable, even for Trump. Further decreasing tax rates from high earners and replacing revenue with tariffs to avoid the ballooning of the government debt, for which Trump was heavily criticized during the first term, may be the closest he can get to approximating flat taxation.

It is considered socially unacceptable to armchair psychoanalyze other people, but I think we can waive that when it comes to the most powerful politician on the planet.

https://www.nytimes.com/2025/04/09/opinion/trump-tariffs-rat...

In some cases, Occam's Razor says, "this person is not acting rationally" and you have to weigh that possibility even if it is uncomfortable. Desire for dominance is common, and is not rational. Why should it surprise us to see it in Trump?

The confusing part is that the actions don't seem logically consistent with any of the possible goals.

>The tariffs are targeted based on trade imbalance

Ok, I buy that based on the stupid formula they showed. Is "not ruin everything else" not also part of his goals? Can you explain what I'm missing?

I think people just keep underestimating exactly how stupid and ignorant Trump is. That's why nothing makes sense. He does not understand the law of comparative advantage and thus doesn't understand that trade is the engine of growth. He only sees fixed size pies and win-lose deals, so he's not capable of finding real solutions.

Thank you. I see these coping strategies everywhere, from sources I would never imagine would try to find reason within the damage these will do. People want to feel like these are rational well thought out choices with experts behind the reasoning and that they must be missing something. Because how could the POTUS willingly cause so much harm to the country? So there is cope instead of coming to terms that this man is single handedly destroying the economy and their future.

Indeed, Paul Krugman has been doing the rounds on podcasts recently and he seems to think that Trump is doing tariffs and trying to eliminate trade imbalances because he has always had that idea of doing tariffs and thought that trade deficits were being taken advantage of, and the talk about a greater strategy are post-hoc rationalizations. Sometimes a simple person has a simple reason divorced from complicated reality.

> The administration characterizes trade imbalances as countries taking advantage of us.

it seems likely to me that they know their voting base is too dumb to understand, so they make up stuff that sounds good to get the support.

Broadly that is true of the administration's motives, but as concerns trade with China, they are obviously aware of both the national security and competitiveness angle. Not only did Biden take the lead on that already with the exact above rationale, China is currently more steeply targeted.

Agree, and I find this totally bizarre.

The Trump administration's power is based in the Russian propaganda machine and xenophobia. Blanket tariffs (except towards Russia and Belarus, not mentioned in Ben Thompson's article of course) are in service of those two power bases.

Bingo -- analysts of Trump are way too overeager to attribute "4D Chess" super analytics driven goals to Trump.

In reality, he's doing exactly what is on the tin: reducing tariffs, and doing what he wants to do, because he feels like it.

> If there's a structural ratchet mechanism, where outsourcing a particular kind of manufacturing work means the US can never do it effectively again, doesn't every tick of the ratchet pose significant risks?

Yes, and in an earlier post Ben made that argument and said that the broader conversation on tariffs has been straw manning and wasn't trying to understand where they were coming from. He did more or less agree that the post-ww2 and post-nixon economic setup created this and articulated why it's problematic.

His thesis is just that this approach is wrong, and that it's hard to unpack the reasons because you don't know what to trust: is what the admin says a PR problem, a bad argument, directional or literal, etc.

Here's the older post (the one I shared in this thread was a continuation): https://stratechery.com/2025/trade-tariffs-and-tech/

In which metaphor the thesis would implicitly be that we can't for some reason disassemble the "ratchet" and carefully retract or remove the "pawl," but have to chuck a "lit stick of dynamite" into the "workshop."

No, there is still a lot of work to do before we get close to making this make any sense.

> the company spent its early years building its core technology and delivering a high-end experience with significantly higher prices than incumbent taxi companies. Eventually, though, the exact same technology was deployed to deliver a lower-priced experience to a significantly broader customer base; said customer base was brought on board at zero marginal cost

Ironically, this was the plan laid out for Tesla early on. Very expensive Roadster, pretty expensive Model S. Make some cash and build a reputation for how good a luxury electric car can be. Then use that cash to go down market.

Of course zero marginal cost does not apply with the Model 3, but they did dramatically lower their own cost-of-materials by the time they released the Model 3, making it profitable at scale.

> The takeaway from that Article isn’t that Uber is a model for the rebirth of American manufacturing; rather it’s that you can leverage demand to fundamentally reshape supply

Anecdotally, I know that Tesla became an aspirational brand, a dream car for many. A status brand. So the demand was there, and if you could get a "dream car" for $35K USD then why wouldn't you?

I think this is the typical modern American bias of idolizing 'tech' companies - it makes a lot of money so it must be because it's very technologically sophisticated.

In reality I'd guess building an Uber scale tech company is not particularly difficult - after a quick ChatGPT query, it seems a city like New York, has about 90kish drivers at any moment - if we assume they make a query to the API every 5 seconds (and add once as many for users) - the scale doesn't look particularly daunting, something manageable with optimized tech on a small server cluster.

Sharding is trivial since New Yorkers are not really interested in taxies from Brussels etc.

And the proof of the pudding is there are tons of competitors, and most of them work just as well as Uber does (on the technology level, driver availability or market penetration might be a different issue).

Uber is a brand like McDonalds - you could say people go to McDonalds because they have the best burgers enabled by their superior logistics and equipment - and that's certainly probably a factor, you can't really ignore that they are where they are due to brand strength, availability, and early mover advantage - while also recognizing they are far from the only players in the business.

American tech companies have immensely benefited from being the 'default' providers of services - Google, Gmail, AWS, etc. People didn't give much thought on what they chose - and assumed everyone chooses them because they are the best, not because people lacked sufficient incentive to give proper consideration to what service they use.

Thanks to Trump, that has certainly changed in Europe at least, literally overnight.

> it's quite possible that they're intentionally irrational as a bargaining or maneuvering tactic

This is the rationalization being projected onto the situation, but it doesn’t make logical sense.

The administration launched a trade war with 100+ fronts and left no time to negotiate with all of them, let alone the biggest players.

The biggest players are already calling the administration’s bluff with counter-tariffs. If there was an expectation to use the threat of irrational tariffs as a bargaining chip, they didn’t leave enough time to do it.

Behaving irrationally, intentionally or not, is scaring investors away rather than attracting them.

Seen from abroad, trust in the rule of law and property rights has been eroded. Today Trump sends randos to El Salvador, maybe tomorrow he will nationalize enterprises or other assets, with no meaningful opposition from the Congress and the judiciary? Germany is already pulling gold from the US, that had been stored there for decades. Better safe than sorry.

I think you actually _should_ assume that he's acting rationally, just that his motivations aren't aligned with what you think they should be. Trump has a mafia mentality, and the purpose of the tariffs has absolutely nothing to do with policy and everything to do with control. He wants to have a guillotine hanging over the head of every country and corporation that he can use at will, so that every CEO has to come to him and bend the knee, so he can grant them an exemption on a case by case basis in return for personal loyalty to _him_.

There is a reason that the power to tax resides in congress, and it's specifically to prevent that. They've just abdicated their role and here we are with a king instead of a president.

> Sure, but aren't we past rational debate on this point?

No.

> Not only are the new trade policies irrational, it's quite possible that they're intentionally irrational as a bargaining or maneuvering tactic.

Not really, at least not a well-considered bargaining or maneuvering tactic. There is no incentive to comply if there isn't a clear compliance goal and a clear willingness to reward progress toward it as well as punish noncompliance. Irrationality is poor bargaining.

More to the point, though, the space for rational debate is NOT with the architects of the policy, who, yes, seem beyond reason. The space for debate is among everyone else, including the people who have the Constitutional power to arrest the executive policy in this area (whether that debate centers on the merits of policy in the broad sense or their own narrow future political fortunes or some combination of those.)

> As I commented yesterday, there's a playbook for reshoring that's being totally ignored

Broad reshoring of industries or broad sectors that have left the US because its comparative advantage in the present world trade regime has shifted elsewhere is an objectively economically harmful idea, and expending resources on it consumes resources that could be productively employed in pursuit of relative economic inefficiency. There may be select industries that can be identified where there is a rational argument that that would be only a short-term hit and that there would be long-term benefits, or where security or stability issues given real expected international threats make that a cost worth bearing (though in the latter case it is still generally probably better to work to maintain existing alliances and work jointly to "reshore" critical industries broadly within our international political alignment rather than making it an isolated national policy, both because there are often going to be other places in the alliance where it is less out of line with present comparative advantage and because it is a broadly shared benefit where it makes sense to share the costs.)

We don't need a better playbook to achieve autarky, we need to reject it as a goal.

That's what smart experienced people would do. But if you run the power game as an ego polishing reality show with whole world stuck in it, all logic is off the table. Sad to be part of it and absolutely powerless

> Sure, but aren't we past rational debate on this point?

There is no point debating the administration or supporters. Peter Navarro hatched this idea, and he is nearly alone in his logic.

However, a broader debate is useful. A professor in Europe recently pointed out that Nixon did the same thing in the 1971. The intent was to destabilize and reset the dollar value compared to other currencies. He basically set off a grenade in the office. He proposed "New Federalism", and "Nixon's decision to end the gold standard in the United States led to the collapse of the Bretton Woods system. According to Thomas Oatley, "the Bretton Woods system collapsed so that Nixon might win the 1972 presidential election.""

https://en.wikipedia.org/wiki/Richard_Nixon#Economy

By the way. Bretton Woods and Treasury monetary policy after WW2 was crafted by Lauchlan Currie. Currie was a renowned economist and worked at US Treasury from 1934. In WW2, Currie was Franklin Roosevelt's chief economic adviser. Currie was also a Russian agent. His US passport and US citizenship was revoked in ~1954 and he lived the remainder of his life in Colombia.

https://en.wikipedia.org/wiki/Lauchlin_Currie

Preferences are independent of rationality, surely?

If a guy with a finite lifespan has a preference for autarky, expansionist military invasions, racial hierarchies and a secret police regardless of the consequences and then rationally pursues those preferences in ways that are likely to bring them about before his death of old age, the guy doesn't qualify for the category "delusional" and instead fits into one of the moral categories.

> it's quite possible that they're intentionally irrational as a bargaining or maneuvering tactic.

You're giving them too much credit. This is more of a "some men just want to watch the world burn" situation than a "4-D chess" situation.

Hopefully we're never past rational debate.

I mean, the people making decisions might be well past rational, but hopefully there's always a contingent of people putting deep, rational thought into what might be the best plan to utilize going forward. And hopefully good ideas keep spreading and somehow find their way back to the top. Before it's too late.

If the goal was to really reshore there are a lot of ways to encourage companies to move in that direction. The CHIPS act is one but Trump wants to cancel it. And I'm sure there are others than can work, but broad based tariffs are not a solution.

I don’t think this playbook works for complex products. Before every component needed for an iPhone is locally manufactured, the overseas competitor manufacturers of those components would be many generations further. You’d be competing with the whole world.

> First you invite industry to reshore via subsidies and preferential access to government contracts. If necessary, the government must directly invest in new firms.

Summarized: the government gives money to companies, or more charitable "invests".

I would totally agree with you on this path forward BUT FOR the fact that thos nation is dead broke. Completely dead broke. There's no responsible money to do this with. None.

> And surely "everybody else" is working on alternatives.

Well, it really depends on the competence of "everybody else"...

> I find amusing that people still want to rationally discuss this thing.

You certainly seem to practice what you preach, lol

> Brexit 2.0

Apples to oranges

> isolate ourselves from the disaster

The one that will never come? Go ahead, more for us "rational" folks.

> is just Brexit 2.0

They are (were? will be?) exiting the world, not just the EU...

Has anyone done deconstruction of his thesis / arguments and found his predictions to be lackluster?

Thanks ChatGPT.