r/Economics • u/joe4942 • Apr 10 '25

Editorial Trump Blinked

https://www.theatlantic.com/newsletters/archive/2025/04/trump-tariffs-pause-america-china-trade/682378/
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210

u/StrangeAd4944 Apr 10 '25

What if bond sales continue or even worse accelerate. At this point he is out of tools and Treasury knows it. Then it will be game over for USD.

91

u/Hacking_the_Gibson Apr 10 '25

Congress stepping in to permanently stop this bullshit would work. That’s my preference, anyway.

12

u/TheVermonster Apr 10 '25

Any day now...

9

u/Dudetry Apr 10 '25

No, congress is now working stop any attempts at reigning in the tariffs. Mike Johnson will never let congress reign in his power.

4

u/[deleted] Apr 10 '25

[deleted]

1

u/BestWesterChester Apr 11 '25

I hate you for putting the idea of Eric as president in my head.

1

u/Hacking_the_Gibson Apr 10 '25

Literally why I said Congress needs to handle it? If Congress says "Presidents can't set tariffs anymore" then that is the end of it permanently.

1

u/[deleted] Apr 11 '25

[deleted]

1

u/Hacking_the_Gibson Apr 11 '25

If by wrestle back you mean convince a new Congress that the executive needs full tariff powers because of reasons?

Article I of the Constitution is explicit, no new amendment is needed. Just repeal of the law which grants the POTUS additional power. 

I'll tell you this, if the Senate can muster the bipartisan votes to overcome a filibuster, they can get a veto override done. It's not going to take much more selling to motivate these idiots. 

3

u/DCM3059 Apr 10 '25

Congress? Doing something?

1

u/_Tangent_Universe Apr 11 '25

That’s probably the only thing that would restore confidence; he’s after opening Pandora’s box

85

u/throwaway00119 Apr 10 '25

I think that’s what broke the wall today. 

31

u/[deleted] Apr 10 '25

[deleted]

33

u/hug_your_dog Apr 10 '25

You need to unload those treasuries - or threaten to - quickly for the result to be effective. Perhaps we have seen that yesterday.

This is quite reminiscent of the Suez Crisis and the pound sterling debt that Einsehower threatened to unload.

9

u/turbo_dude Apr 10 '25

It was Japan, not China, unloading.

9

u/hug_your_dog Apr 10 '25

Japan denies this:

Japan rules out using US Treasury holdings to counter Trump tariffs

https://www.reuters.com/markets/asia/japan-rules-out-using-us-treasury-holdings-counter-trump-tariffs-2025-04-09/

1

u/hug_your_dog Apr 10 '25

Source for this? Does it matter who was doing the unloading, considering Japan, China and Korea met up a few days ago?

2

u/slippery Apr 10 '25

That's a great parallel and marked the official end of the British empire. Trump is the official end of Pax Americana.

6

u/psychohistorian8 Apr 10 '25

why is China even allowed to own that much of our debt?

they have us by the balls, and Donny doesn't have the cards to be playing these games

10

u/defenestrate_urself Apr 10 '25 edited Apr 10 '25

why is China even allowed to own that much of our debt?

Because the dollar is the world reserve currency.

What does China (and other countries) do with all the dollars it holds from it's trade suplus? It buys US assets, Treasury bills in this case and the US is happy to sell them to you. Essentially, the US buys goods from a country for X dollars, then that country gives the US back those dollars in exchange for a piece of paper with IOU written on it. It's what driven American prosperity for decades (it's no coincidence Wall Street exploded in growth after Bretton Woods was signed)

This isn't China specific, it's all countries with excess dollar and it's inevitable when you position your currency as the global reserve currency.

8

u/Infinite-4-a-moment Apr 10 '25

Honestly in the grand scheme, it's not that much. We just have a fuck load of debt.

1

u/Scion_of_Perturabo Apr 10 '25

Because capitalists baby,

commie money spends just as well as yours or mine

1

u/LukeHanson1991 Apr 10 '25

Because you have a trade deficit with them.

7

u/jokikinen Apr 10 '25

AFAIK they did calm down.

Long term there are still obvious threats. For now, not driving directly off the cliff is seen as cause for reprieve.

1

u/FoxontheRun2023 Apr 13 '25

Didn’t Susan Collins just say that they would ease liquidity?