I think a further parallel post may be to explore Trump's continuous dislike for a strong dollar and your assessment as to what a weakening dollar may do to bonds and Treasury notes.
The part where I am still very confused is that I keep hearing these tariffs are meant to weaken the dollar (which as you pointed out, is generally not what happen to a currency of the country that imposes tariffs), so that in the near-future, the US could "refinance" its debt...which in theory sounds great, but I'm having a hard time understanding how that can realistically happen.
The idea of weakening the dollar to refinance its debt really only makes sense to me if you think only of first order consequences. Weak dollar means when you refinance debt that was taken on when the dollar was stronger, the debt is now worth less in real terms. Turn your brain off here, and it sounds great. Ignore the pesky higher order effects that occur when you try to actually intentionally devalue the world's reserve currency.
It's like saying you want to pay off your mortgage, so you decide to burn your house down for the insurance money. If you don't think about anything other than being able to pay off your mortgage, it makes perfect sense.
And I think this is where we stumble into what I think is one of the most divisive economic questions that I've seen in the past 15-20 years. What do we do with the debt? I've seen arguments that it is our most critical, existential problem and I've seen the complete opposite take that it doesn't matter at all because the US will never default. Both ends of the spectrum don't seem credible to me, so I am trying to get smarter about understanding our debt, and how to meaningfully tackle it without governing by guillotine and by impulse; which seems to be this administration's M.O.
Thanks for this, Kyla. I recently discovered your work and have really been enjoying following your writing and analysis.
So I understand the justification for these tariff policies as being a sort of response to what has happened to well-paying unionized manufacturing jobs in this country over the last 30 years via NAFTA etc.... and I get that the kind of chaotic way that Trump is instituting these policies is unlikely to bring manufacturing jobs back to the US and that without a more coherent policy, his use of tariffs is extremely destablizing.
One thing that I think gets left out of this discussion, in part bc economic concerns are so top of mind for people, is how tariffs can be a policy tool to encourage things like more fair labor practices or more environmentally sustainable ways of manufacturing or simply to help diversify manufacturing, which is important if/when we ever go through another pandemic (not that the Trump administration is necessarily interested in any of that).
From my perspective, it seems like one of the dangers of what is happening with these tariffs and the trade wars etc. is that tariffs themselves get the blemish of Trump and thus this important policy tool becomes just widely viewed as toxic and something democrats or any left leaning politicians don't want to touch.
I'm wondering what your thoughts are... like are you concerned that Trump's use of tariffs is ruining tariffs for everyone? Do you think there is a place for tariffs? And do you think that, despite the chaos of what is happening now, there could be any good, unintentional consequences?
Like when Bernie was running for president he actually talked a lot about how he would use tariffs to do the same kinds of things Trump is purporting to be trying to do -- bring back manufacturing jobs etc. And who knows, but I imagine Bernie would have been using tariffs in a more strategic way, accompanied by other economic policies to prevent price gouging etc. I guess I wonder if another danger of all of this tariff chaos is that everyone will be afraid of tariffs for good....
Another thing is... I read an interview with Lori Wallach just the other day that according to some analysis (not sure what study she was citing) that consumer prices actually didn't go up after the 2018 tariffs (here... https://nwlaborpress.org/2025/04/unpacking-trumps-trade-war/) ... and that the profits of retailers absorbed the vast majority of the costs... the price gouging didn't really start until the pandemic.
So another question is, do you think with these tariffs that price increases for consumers are inevitable (I mean, I saw you wrote that Target already said they'd be increasing prices)? Is there a world where companies absorb these costs (as some purportedly did in 2018) instead of passing them on to consumers? And if so, what would it take to make that happen?
Love the citation of Tribe and something I’ve thought about. To quote the Art of War, "The supreme art of war is to subdue the enemy without fighting”. Foreign countries have been using bots to control the narrative on people’s social media feeds (as you mentioned in one of your recent articles). And with that the amount of misinformation and conspiracy has effectively corrupted people’s way of thinking so much we are destroying ourselves within.
The (probably not) Chinese curse comes to mind: may you live in interesting times. I truly wish for some boring weeks nowadays. Awesome post tho, was a pleasure to read!
Thank you. Question: I've heard the following take and wonder your response,
"Don't think of the tariffs in Econ 101 way. Of course that fails. Think of it as short-term move. Let's say a bunch of "early adopter" countries cut productive deals that are most free trade, Trump declares a win; then another group of nations do same. There are certainly long-term holdouts but most of these tariffs disappear. Trump just likes making deals."
I keep seeing talking points in support of the Tariffs that this is all just part of the plan to get people to invest in bonds to drive the yield rate down with the main goal of “refinancing America’s debt.” According to this theory, by making stocks a bad investment, people will turn to bonds. As someone who knows nothing in bonds (I just learned this week that the Bond Market is the main influence when it comes to mortgage rates), is there any credibility to this idea? I am looking for a source on this that isn’t just some schmuck on TikTok that can explain this concept and whether it is something that is actually possible or whether this is just right wing cope.
While these tariffs seem to be across the board for US businesses, my econ professor recently pointed our attention to a study on the first Trump administration's tariffs and the exemptions. They showed that you were more likely to be exempted from tariffs if you were Republican, or donated that side of the aisle. This was accompanied the inverse, if you leaned or donated Democrat, you were more likely to not receive an exemption. (https://news.lehigh.edu/politically-connected-corporations-received-more-exemptions-from-us-tariffs-on-chinese-imports).
While this doesn't have a direct application to the tariffs announced this week, it reaffirms my suspicion that these tariffs are not actually for "America first". Unfortunately, I can't point to who is supposed to benefit this time around.
Love this new format, and thanks for the in-depth analysis as always
thanks jack!
You know it’s bad when we have to quote Rand and Sowell. Great work, Kyla!
And Milton Friedman too! Truly, yikes
I really liked this summary, Kyla.
I think a further parallel post may be to explore Trump's continuous dislike for a strong dollar and your assessment as to what a weakening dollar may do to bonds and Treasury notes.
The part where I am still very confused is that I keep hearing these tariffs are meant to weaken the dollar (which as you pointed out, is generally not what happen to a currency of the country that imposes tariffs), so that in the near-future, the US could "refinance" its debt...which in theory sounds great, but I'm having a hard time understanding how that can realistically happen.
yes, many people are also having a hard time. it's very much rainbows and unicorns type of economic thinking
The idea of weakening the dollar to refinance its debt really only makes sense to me if you think only of first order consequences. Weak dollar means when you refinance debt that was taken on when the dollar was stronger, the debt is now worth less in real terms. Turn your brain off here, and it sounds great. Ignore the pesky higher order effects that occur when you try to actually intentionally devalue the world's reserve currency.
It's like saying you want to pay off your mortgage, so you decide to burn your house down for the insurance money. If you don't think about anything other than being able to pay off your mortgage, it makes perfect sense.
And I think this is where we stumble into what I think is one of the most divisive economic questions that I've seen in the past 15-20 years. What do we do with the debt? I've seen arguments that it is our most critical, existential problem and I've seen the complete opposite take that it doesn't matter at all because the US will never default. Both ends of the spectrum don't seem credible to me, so I am trying to get smarter about understanding our debt, and how to meaningfully tackle it without governing by guillotine and by impulse; which seems to be this administration's M.O.
Thank you, Kyla, once again you always just deliver clarity and knowledge in such an accessible way
thank you Khe!
yes great format!
possibly add a net negative positive or industries most impacted for each point
a lot of people can see some of the dots but need help connecting them - aka me. 😅
That's a good idea! The FT has a good note here on that: https://www.ft.com/content/b94b3995-7d03-4fd3-9c16-c076f7a1d89c
paywall! but yes noted on the winners/losers
something kinda like the NYMag approval matrix - good good / good bad // bad bad / bad good
we did an analysis by NAICS code and by ZIP code for top US cities:
https://genarainsights.substack.com/p/how-will-tariffs-impact-american
https://layoffs.genara.app/reports/tariff-impact-list
This was wonderful and so well broken down
thank you!!
Thank you for your thoughtful, clear answers. I understand these issues much better after reading this.
I am so glad to hear it!
Thanks for this, Kyla. I recently discovered your work and have really been enjoying following your writing and analysis.
So I understand the justification for these tariff policies as being a sort of response to what has happened to well-paying unionized manufacturing jobs in this country over the last 30 years via NAFTA etc.... and I get that the kind of chaotic way that Trump is instituting these policies is unlikely to bring manufacturing jobs back to the US and that without a more coherent policy, his use of tariffs is extremely destablizing.
One thing that I think gets left out of this discussion, in part bc economic concerns are so top of mind for people, is how tariffs can be a policy tool to encourage things like more fair labor practices or more environmentally sustainable ways of manufacturing or simply to help diversify manufacturing, which is important if/when we ever go through another pandemic (not that the Trump administration is necessarily interested in any of that).
From my perspective, it seems like one of the dangers of what is happening with these tariffs and the trade wars etc. is that tariffs themselves get the blemish of Trump and thus this important policy tool becomes just widely viewed as toxic and something democrats or any left leaning politicians don't want to touch.
I'm wondering what your thoughts are... like are you concerned that Trump's use of tariffs is ruining tariffs for everyone? Do you think there is a place for tariffs? And do you think that, despite the chaos of what is happening now, there could be any good, unintentional consequences?
Like when Bernie was running for president he actually talked a lot about how he would use tariffs to do the same kinds of things Trump is purporting to be trying to do -- bring back manufacturing jobs etc. And who knows, but I imagine Bernie would have been using tariffs in a more strategic way, accompanied by other economic policies to prevent price gouging etc. I guess I wonder if another danger of all of this tariff chaos is that everyone will be afraid of tariffs for good....
Another thing is... I read an interview with Lori Wallach just the other day that according to some analysis (not sure what study she was citing) that consumer prices actually didn't go up after the 2018 tariffs (here... https://nwlaborpress.org/2025/04/unpacking-trumps-trade-war/) ... and that the profits of retailers absorbed the vast majority of the costs... the price gouging didn't really start until the pandemic.
So another question is, do you think with these tariffs that price increases for consumers are inevitable (I mean, I saw you wrote that Target already said they'd be increasing prices)? Is there a world where companies absorb these costs (as some purportedly did in 2018) instead of passing them on to consumers? And if so, what would it take to make that happen?
Love the citation of Tribe and something I’ve thought about. To quote the Art of War, "The supreme art of war is to subdue the enemy without fighting”. Foreign countries have been using bots to control the narrative on people’s social media feeds (as you mentioned in one of your recent articles). And with that the amount of misinformation and conspiracy has effectively corrupted people’s way of thinking so much we are destroying ourselves within.
The (probably not) Chinese curse comes to mind: may you live in interesting times. I truly wish for some boring weeks nowadays. Awesome post tho, was a pleasure to read!
Thank you for being a voice of sanity.
Thank you. Question: I've heard the following take and wonder your response,
"Don't think of the tariffs in Econ 101 way. Of course that fails. Think of it as short-term move. Let's say a bunch of "early adopter" countries cut productive deals that are most free trade, Trump declares a win; then another group of nations do same. There are certainly long-term holdouts but most of these tariffs disappear. Trump just likes making deals."
I have a trade deficit with my local grocer! Obviously that's why I find it difficult to pay for my vacation...
I keep seeing talking points in support of the Tariffs that this is all just part of the plan to get people to invest in bonds to drive the yield rate down with the main goal of “refinancing America’s debt.” According to this theory, by making stocks a bad investment, people will turn to bonds. As someone who knows nothing in bonds (I just learned this week that the Bond Market is the main influence when it comes to mortgage rates), is there any credibility to this idea? I am looking for a source on this that isn’t just some schmuck on TikTok that can explain this concept and whether it is something that is actually possible or whether this is just right wing cope.
While these tariffs seem to be across the board for US businesses, my econ professor recently pointed our attention to a study on the first Trump administration's tariffs and the exemptions. They showed that you were more likely to be exempted from tariffs if you were Republican, or donated that side of the aisle. This was accompanied the inverse, if you leaned or donated Democrat, you were more likely to not receive an exemption. (https://news.lehigh.edu/politically-connected-corporations-received-more-exemptions-from-us-tariffs-on-chinese-imports).
While this doesn't have a direct application to the tariffs announced this week, it reaffirms my suspicion that these tariffs are not actually for "America first". Unfortunately, I can't point to who is supposed to benefit this time around.
Great info and format, thanks Kyla! Sharing with my network.