It is interesting that tech (Nasdaq) is the hardest hit here. The real engine of US exports for recent decades and likely to be a casualty as other countries plan their trade-war retaliation.
And that's not even taking into consideration what might happen in the domestic market should there be a real recession - consumers will cut down their consumption and that'll filter back to lower corporate earnings.
In previous economic stumbles, US exports abroad were able to buffer domestic weakness. Probably not anymore...
Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus. A lot of that is very high margin tech SASS/advertising.
If this continues it seems like this could be a "digg->reddit" type moment for US tech. In some ways it is easier for a lot of people to leave facebook than it is for a single person. If you look at gross margins there is a lot of room for competition, though network effects make that competition very difficult. Maybe this is the catalyst for competitors to break in.
>Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus.
Then why don’t other countries tax US services? I don’t even hear this from anyone in the media too
Countries can and have under the name of "digital services tax". Generally the rates are low and often only cover a subset of things. The US and tech giants have historically pushed back hard on them. This is a reasonably up to date link to the situation in Europe https://taxfoundation.org/data/all/eu/digital-tax-europe-202... Keep in mind many of those are proposed and not implemented.
The real threat to the US IMO is losing marketshare. The stock market has gotten beat up but most of the real pain for the average person is still off in the horizon. Anti-US sentiment is growing quickly, if we enter a full blown global recession/depression I think it could be a real catalyst for large sudden shifts away from US tech companies.
Yes, and that’s always mysteriously forgotten in these conversations.
Historically, China stole US IP and software, like Windows, en masse. Now they refuse to import our main export product — software — while we import their physical products and software like TikTok.
If we were allowed to export our services to China in exchange, this would be a very different geopolitical moment.
Thank you for providing me a front-row example of it. There's always one bullshit excuse or another.
In reality, the US suppresses Canada's national defense, because for some weird reason, it doesn't want a heavily-armed neighbor.
As for energy, for every dollar of it that it buys, it derives far more than a dollar of economic utility from it, which is why it's screaming bloody murder at the mere mention of Canada turning off, or adding surcharges at the tap.
All this is why in 2025, one would have to be an utter fool to expect America to keep faith.
In reality, Canadians have bravely fought and died for American interests in the Middle East. Don’t take any of this as my personal view, or as a repudiation of the interpersonal camaraderie that Americans, by and large, still feel with Canadians (although I understand it’s no longer universally reciprocated).
However, as a matter of industrial economic reality, NAFTA likely benefited Canada more than it did the US, and the US does subsidize NATO and Canadian defense by extension. What barriers are there to an independent Canadian defense industry?
(Although I would argue that NAFTA benefited both countries, and we should continue our free trade agreements!)
>What barriers are there to an independent Canadian defense industry?
A defense industry is intertwined with a industry for civilians, for example in aeronautics. Certain nearby trading partners have historically stymied attempts to maintain such an industry.
I agree, even though I don’t agree with how these tarrifs were implemented I don’t have any sympathy for China. President Trump is absolutely right when he says China took full advantage of the US policies.
What caused people to stop using the free service that is MySpace? What caused people stop using the free service that is Digg? Being free isn't particularly novel. Facebook isn't providing this service out of some sense of altruism. It is incredibly profitable.
What about the tariffs would cause people to stop using it? Because they - along with many other of the administrations postulations and policies - are incredibly unpopular and a complete 180 of US foreign trade policy. Because tech is a money printing machine for the US and tech oligarchs who have largely bent the knee to Trump.
The other side of it is the lost trust in American tech. That’s most prominent in the military debates around whether other countries can rely on their expensive hardware working if they run afoul of American policy, or if the president is looking for leverage to extort a mineral deal, but it’s also highly relevant for the civilian side. For pretty much as long as we’ve had computers, most other countries have trusted hardware made by American companies running operating systems and applications made by American companies. Now everyone has to wonder what kind of espionage or sabotage would be possible if those companies were pressured – or whether the guys standing on stage would even need to be pressured. Suddenly, giving Google the ability to push code onto most of the devices in the world looks less like a security win and more like a risk - and it’s famously hard to establish trust without the rule of law as the foundation. Snowden started it but most allied governments were confident that there were limits in a way which is a lot harder to believe now.
I am expecting that 2024 will be seen as the peak for American tech companies: the longer this goes on, the more competition they’ll have with advantages they can’t match in foreign markets – especially if many of the immigrants who worked at those companies decide to start companies after leaving.
I think since the Snowden revelations it’s pretty clear there is no holds barred in terms of intelligence overreach from practically every angle and state.
What’s happening now, with the tariffs, is really wild (but ultra dumb imho) territory…
Snowden showed that they were willing to compromise allies, but there was still some idea that it was at least plausibly legitimate targets.
Now people are worried that economic espionage or even sabotage are possible. For example, if you are the government of Canada, Snowden annoyed you but you weren’t asking whether Microsoft Update would brick every computer in your government right before a military assault. You probably aren’t thinking that’s highly likely now, either, but you have some intelligence officers analyzing it seriously in a way which would have seemed paranoid a decade ago.
Tech was easiest to export cross border. You can export tech through culture, and the USA has been a powerhouse of every major technical cultural channel for the last 50 years.
My comment may be naive but digital services do not have tariffs. Given the unpredictable manner of Trumps tariffs wouldn't this encourage more startups and companies to focus on exporting digital services instead of focusing on physical goods? If so there could be minimal increase in goods produced in US and instead US consumers just absorb the price rise of goods with the consequences that arise from that.
This all tariff imbecility created solely by Trump it’s atrocious, still, if EU response is to hit the main players in Nasdaq - where there are a lot of chip producers necessary for the ongoing AI revolution - we are just shooting ourselves majorly in the foot.
Surely there are much better companies for the EU to apply directed tariffs. EU absolutely has their weaknesses, but giving blunt responses (like China just did and put tariffs on everything) is not really our way. Expect EU answer to be well crafted and directed at very specific areas.
Nitpick: No, the entire Republican party is at fault here.
They willfully ignored every warning, and attacked the people giving the warnings. They promoted him, protected him in two impeachments, eventually re-elected him, and actively confirmed his cabinet of sycophants instead of requiring some adults in the Oval Office. Then they took specific steps to block anyone from challenging his "national emergency" against our neighbors, by declaring that the rest of the year simply "doesn't count" for the 15 day timer in the original legislation. [0]
Some Republican legislators may have had hard-choices for securing their own re-elections, but they still chose this route.
I would argue that China is just playing the game and EU should do too while it lasts. No time for sophistication in a street fight, this is not chess.
China has latitude in inflicting pain on its own people that the EU does not, and simply mirroring the US’s tariffs would impose significant pain and will not be the EU’s first choice. It may happen anyway, but it’s a harder decision for the EU than for China.
To me, really, the interesting thing is that _the US_ thinks it can do it. Given how annoyed the American public got about expensive eggs, I really question whether that is true; I don’t think people will sit back and go “cool, I can’t afford consumer goods now, and I’ve just lost my job, but it is all part of Dear Leader’s plan.” The idea, which Trump has actually vocalised, that the American public will tolerate pain seems totally at odds with, well, history.
> giving blunt responses (like China just did and put tariffs on everything)
It's incorrect to describe their response as "blunt". As someone who follows mainland Chinese media I can assure you that their policymakers have thoroughly prepared themselves for years. They even foresaw in 2021, after Biden took office, that Trump would become President again, unless he was assassinated. (Yes, they foresaw the assassination attempts as well; and no, they did not orchestrate these attempts -- if they did, Trump would be dead already.)
The Chinese have much more foresight than you seemingly give them credit for, unless I'm misinterpreting your words (in which case I apologise). On the other hand, European leaders have been extremely geopolitically infantile.
And that's not even taking into consideration what might happen in the domestic market should there be a real recession - consumers will cut down their consumption and that'll filter back to lower corporate earnings.
In previous economic stumbles, US exports abroad were able to buffer domestic weakness. Probably not anymore...