Tariffs are starting to bite-what next?

Photo by Aleksandr Neplokhov on Pexels.com

Despite everything you read, America still counts. So when it makes a move on something as big as tariff reform, as President Trump did almost a year ago, the rest of the world is affected, Big time: and responds accordingly. Veteran readers will recall our coverage of this trope (LSS 19 5 20) and subsequent riffs on the same theme. Our misgivings were pretty clear. But, how is the world really coping with all these tariffs, counter-tariffs and all the other red tape which has appeared in the last year or so?

At first sight: it’s coping: just. In an excellent article for the Conversation Umair Choksy cites reports from both the IMF and the WTO that world trade actually increased last year. But let’s not get carried away, he warns. In the short term companies can adapt, briefly, by dipping into reserve stock or changing supplier(always to a more expensive one) But both for companies and nations, this can only last so long:

But if costs and availability remain in doubt, these temporary fixes stop working. Stock runs out. Emergency suppliers cost more. And when margins are squeezed for long enough, businesses respond by raising prices, freezing hiring, cutting hours, delaying pay rises or shedding jobs altogether.

The long term consequences are admirably summarised by this report from the Word 360 {2] In a nutshell, they are reduced trade volumes, higher inflation and reduced business confidence, which really does chime with the message of our earlier blogs. It’s quite simple really: if tariffs are such a good idea would Scotland do better by imposing them upon England? Or Kansas upon Arkansas? It was David Ricardo who summarised the benefits of free trade when he wrote:

Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole.” [3]

We have written before on the possible advantages of a World Government. One would be the immediate abolition of all trade tariffs for they would be no longer necessary. The world would function as a single unit, with all the same internal tariff-free advantages currently enjoyed by the nations mentioned above. Time for serious consideration?

[1]https://theconversation.com/tariffs-might-seem-manageable-now-but-theyll-quietly-squeeze-households-later-274594?utm_medium=email&utm_campaign=Latest%20from

[2]https://theword360.com/2025/09/13/the-long-term-effects-of-global-trade-wars/

[3] David Ricardo, On the Principles of Political Economy and Taxation (1817), Chapter 7

#tariffs #wto #IMF #trade #economics #manufacturing #inflation

Everyone hates Keir. Here’s why

As we write. the current troubles of UK Prime Minister Sir Keir Starmer are profound. One of the reasons they are so bad is that, almost before he took office, almost no one has warmed to him: many evince active dislike. Meaning this serious, intelligent man can draw on no reserves of public goodwill in the way that a more raffish character like say Boris Johnson could. Why?

We think part of the answer lies in this article by Larry Elliott. For it charts Britain’s fall from manufacturing powerhouse to fragile services-led house of cards in a few punchy paragraphs, while noting China’s almost inverse trajectory to high tech manufacturing superpower. How so? Elliott compares the policies of two politicians who took power at around the same time in their respective nations: Deng Xiaoping and Margaret Thatcher. While the former did everything he could to foster manufacturing, the latter, a true disciple of unfettered free markets, believed:

…… market forces should determine which businesses thrived. If Britain excelled in financial and business services……… That’s what the country should concentrate its efforts on, while other nations made the ships and the machine tools

Underwritten by the short term unearned bonanza of North Sea Oil, this catechism was applied unchecked. With the results we see today. No British Government will ever again have the resources to satisfy the clamours of its citizens-for hospitals, for thriving high streets and clean water, nor create the booming economy they crave. But, used to abundant wealth and easy answers, these citizens still think like spoiled heirs burning through the last remains of the family patrimony. So any sensible family lawyer like Starmer, who tries to utter the self-earned nature of their plight, will pass unheeded, or worse, actively scorned. Such people will always prefer a story teller to a truth teller. And for a way forward? Restore manufacturing, to which end Elliott has some policy recommendations of course . But his real answer is psychological, not economic.

The bottom line is that to rebuild manufacturing Britain has to see the world through the prism of a developing country not a developed one.

In other words -forget its pride.

[1] How can Britain regain its manufacturing power? Start thinking like a developing country | Larry Elliott | The Guardian

#economics #UK #China #Deng Xiaoping #Margaret Thatcher #manufacturing #politics

Gold is King #3: How one of our old blogs really has come true!

Long standing readers (surely “long suffering”?-ed) will recall our two blogs Gold is King….(LSS 26 10 24) and ….Did we actually get something right?(LSS 23 4 25).Which severally predicted that a deteriorating security situation in general, and the policies of the Trump Administration in particular, would have two consequences. First that the dollar would start to lose reserve status. And that in the absence of any credible alternative, Gold would become the only reliable safe haven, and that its price had la way to rise. Now help has arrived from someone who really knows what they are talking about, the astute Richard Partington of the Guardian. Have a look at this killer quote from his succinct article The Dollar is losing Credibility: why Central Banks are scrambling for Gold: [1]

Investors – private and sovereign – believe their strategic reserves are no longer safe in dollar terms, as they can be confiscated overnight. The dollar is losing the credibility as the nominal anchor of the global monetary system because the Fed is losing credibility, and US Congress is losing its credibility.

And he explains how and why all the most astute and powerful people in the world can see nothing but gold as the only safe place in which to park their assets in the foreseeable future.

At the risk of blowing our own trumpet,(oh, come on!-ed) and in the sure and secure knowledge that we never offer financial advice, only economic commentary, and that wistful, we wish to adduce the following points:

1 Is LSS possessed of an eeerie mystic prescience? No. Even a stopped clock is right twice a day. But when real professionals like Partington confirm our thoughts, it means the facts are pretty grim indeed.

2 Isn’t this a lot of log rolling by the Guardian, which has a bit of a reputation for being a Lefty at times? No-all commentators are starting to agree, including a pretty astute lot at the Financial Times. And if you believe they are Lefties, then you might as well believe in a Flat Moon and the Abominable Yeti.

3 Is the dollar finished as the world’s reserve currency? Not yet. But its fall from 66% of global reserves to 57% in a single decade suggests all is not as healthy as it once was and that alone gives cause for concern.

4 So why has another currency not replaced the dollar? The experts we consulted think that Europe is too weak for the Euro to be a runner. While China’s yuan is just not convertible, and its political system is so different, that they rule it out altogether

5 What about all these ‘ere funny digital currencies, wotsit? We don’t even go there, we know nothing about them.

6 Is this more Trump-bashing? No. We think Mr Trump has a right to act in what he believes is America’s interests. We merely report the consequences of what happens when everybody acts like that.

7 Does LSS like what’s happening? No. we hate it. A world in which the principle economic activity becomes digging a metal out of the ground and then burying underground again somewhere else is operating far, far below its optimal economic potential. It would do much better with a single reserve currency, peaceful trade and stable international relations based on Law. But some of you will have found our thoughts on that matter elsewhere in our sequence of blogs.

[1]https://www.theguardian.com/business/2026/jan/16/the-dollar-is-losing-credibility-why-central-banks-are-scrambling-for-gold?CMP=Share_iOSApp_Other

#dollar #gold #economics #trade #currencies #international relations

Is Globalisation over? Steve Schifferes worries what comes next

Recently the residents of the Canadian State of Ontario irritated US President Donald Trump by running a series of TV ads showing former President Ronald Reagan disparaging trade tariffs,. Why would such hero of the global Right have taken such a heterodox view? The answer is that Reagan thought that free trade was the best way to distribute prosperity as widely as possible. Under the hegemonic power of the United States of America of course. And he had good evidence for this belief, as Steve Schifferes makes clear in this article for the Conversation.

Schifferes is such a good writer. His sentences are always short and to the point, He keeps away from jargon. Which clarity allows him to range over the last 400 years or so of history tracking the rise and fall of the various powers-China, France, The Netherlands, Britain the USA all of whom aspired to the hegemonic position in world affairs. In the first of two such called The Rise and Fall of Globalisation: the battle to be top dog he comes to one overarching conclusion. Things go better, and the world grows when there is one such dog. The period of British dominance , roughly 1815-1914 was marked by ever closer union of world markets and ever greater flows of capital and people. The American hegemon, roughly lasting from 1944 to 2016 was a second such example. The great problem for the world was that, as Britain stepped down in 1918, the USA did not step up to the plate. Leading to two decades of deep economic and international stability that culminated in the most destructive war in History. This one we shall urge you to read, gentle readers. It not only describes, it explains.

And now? Populists everywhere not only proclaim that globalisation is dead, they actively seek to undermine it wherever possible. Tariffs, restrictions on free movement of goods and people, hostility to learning and science-all indicate the flow of history is one way. Yet populist nationalists can point to one overarching weakness in the globalists argument. The whole system when it worked, depended on the successful nationalism of one nation,the hegemonic power. Their nationalism was a good thing. From which many concluded “if nationalism is a good thing, we want some of it too.” So as the hegemon declines, as America now does precipitously, they will assert their own nationalisms more and more. World war Three anyone?

[1]https://theconversation.com/the-rise-and-fall-of-globalisation-the-battle-to-be-top-dog-267910

#steve sciffereres #history #economics #trade #USA #war #globalisation

Heroes of Learning: Alexandra David-Neel

Today we celebrate the life, travels and accomplishments of Alexandra David-Neel (1868-1969) who died tragically young, one month short of her 101st birthday. Yet in that time managed to pack in as varied a CV as anyone ever has. Explorer, feminist, writer, mystic, opera singer, anarchist and first westerner to enter the forbidden city of Lhasa. [1]

Her exposure to the world started early when her father took her to visit the memorial to the recently executed Communards in1871. Whether this troubled her we cannot say. But her teenage years were certainly feisty. By the age of 18 she had clocked up travels to England Switzerland and Spain, on the way encountering controversial characters like Madame Blavatsky and getting herself enrolled in the 30th degree of Scottish Freemasonry.By 1899 she had written her first books and converted to Buddhism. But it was only as the curtains lifted on the twentieth century that she really got going. The next 46 years read like a whirlwind of adventure which would leave Indiana Jones green with envy. She got out East by becoming a successful opera singer in what was then called Indo China. After that her perambulations included vast stretches of India, Sikkim(where she lived as an anchorite in a cave) China, Mongolia, Tibet (hence the Lhasa episode), interspersed with marriage and a peaceful interludes in Digne-les-Bains in Provence.

It was here she finally retired for last decades of her life, . as the burden of her exertions caught up with her. It is interesting to recall that this quintessential nineteenth century explorer actually died after Neil Armstrong had placed his famous first step on the Moon. But we guess that she must have approved. We hope our links will tell you more about this energetic, learned and above all courageous woman. A beacon of learning indeed in dark times.

[1]https://en.wikipedia.org/wiki/Alexandra_David-N%C3%A9el

[2]https://avauntmagazine.com/alexandra-david-neel

#tibet #buddhism #lhasa #dalai lama #provence #china #sikkim #neil armstrong

1st September 2025: the day world history changed forever(you did notice, didn’t you?)

Today, or yesterday (it’s all a bit muddled what with time zones, deadlines and so on) world history changed forever. Because the two biggest powers on the planet have started to come together. Making Asia potentially one huge zone of economic co operation. the true centre of economic and political power in the world. Yes, Mr Xi and Mr Modhi have started to talk about the joint efforts of 1.416 billion Chinese and 1.464 billion Indians. all increasingly prosperous and tech hungry. All of which trumps the 347 million Americans who so recently seemed to have the world game so utterly in their hands(anyone remember George W Bush?)

Ah, critics might say- but look at the GDP figures. America at $30.51 trillion is still comfortably ahead of both its enemies combined($23.4 trillion) But a Briton in 1900 could have pointed to similar figures which showed how rich they still were, ignoring the growth potential of rivals like the USA and Germany. And ominously, the current USA is in a bad position here, with 1.9% against China’s 4.0 % and India’s 6.9% The conclusion is obvious; the USA is fast on the way to becoming a regional, local power. It’s days of strutting the world like a colossus are over, or very nearly so.

And how has this come about? There have been long term trends of course. Growing inequality. political polarisation and corruption of its legal system have been in evidence since 2000 at least. The Iraq war of 2003 was an epic blunder and the crash of 2008 fatally undermined the rationale of the American order. But until recently America still represented an open democratic country Rational independent institutions. inalienable Rights , Something worth fighting for, both for its own people and for its allies. But now those allies are humiliated . [2] Others, not allies but still potential partners, alienated by irrational and erratically applied tariffs, rush to form their own blocs and trading systems. It was easy to believe that Mr Trump and his policies made sense at least from the point of view of their own country. Now the damage is not only deep, it is permanent. Welcome to a new world order.

[1]https://www.bbc.co.uk/news/articles/cp37e8kw3lwo

[2]https://www.independent.co.uk/news/world/americas/us-politics/trump-tariff-ass-kissing-nrcc-hannibal-b2729968.html

#china #india #usa #donald trump #narendra modi #Xi Jinping #geopolitics

Is all the money in the world running out?

Is the United States of America about to go bust, the way that previous empires like Spain and Britain did? Critics point to astronomical levels of government debt ( it’s now a whopping 123% of GDP) and ballooning trade deficits. Exactly the opposite to the US position just over one hundred years ago when it elbowed aside Great Britain to make Uncle Sam the dominant world player. “Ah”, counter the critics” if you have the world’s reserve currency you can issue as much debt as you like. And the fact that America has independent institutions makes its bonds the safest bet in the world for foreign investors”. So-no problem then? Perhaps. The trouble with debt is that it’s OK until it isn’t. As interest rates start to rise (as they have been doing for some time) the rising costs crowd out all sorts of fiscal flexibility. Especially on crucial issues like defence, health and education. As for the United States much vaunted institutions- recent events have put their independence in very great doubt indeed. [1]

But before we heap all the opprobrium on poor old America, don’t forget everyone else is doing it too, Japan is running debt at an eye watering 250% of GDP: while in France things are so bad , there are even rumours that they are flirting with an IMF bailout[2] If stalwarts such as they are in such deep trouble, what hope for less prosperous nations? The answer, chillingly, is not much. According to a report by Schroders [3] the levels of sovereign debt around the world are so high that they represent a real risk to future investment, growth and healthy trade. In effect the repayments will come to stifle most normal economic activity. Though the authors are careful not to go quite this far, what worries us is that if this activity slows, then there may be a real risk that many nation states may become structurally unable to ever repay their debt. If sovereign bond markets cease to function there is no real stable credit, In effect. all the money in the world has run out. The political, social and military consequences of that would be interesting indeed.

[1]https://edition.cnn.com/2025/08/29/economy/trump-fed-turkey-argentina

[2]https://www.theguardian.com/world/2025/aug/27/france-on-the-brink-political-crisis-economic-francois-bayrou

[3]https://www.schroders.com/en-gb/uk/institutional/insights/sovereign-debt-dynamics-the-alarming-backdrop-to-rising-geopolitical-risk/

#sovereign debt #USA #japan #france #economics #finance

Is Donald Trump A socialist? It’s really about tariffs

A few months ago we published a little blog(LSS 7 4 25) in which we wryly suggested that the policies of Donald Trump. especially on trade tariffs, more resembled those of socialists like Tony Benn than those of classic right wingers like Ronald Reagan. Our aim was less with ideology and more with practical matters: will the tariffs work? We even pointed out that, with advances in automated techniques like AI, it was pretty unlikely that huge numbers of jobs would be created in manufacturing, even if the tariffs really did change the pattern of trade in the way Mr Trump desires.

It’s view shared by professional economists of some standing, as this article by Steven Greenhouse for the Guardian points out. For example Ann Harrison of UC Berkeley, not only shares our thoughts on the automation thing. She also points out that to be successful, tariffs need steady application over decades. Trump’s wildly erratic “they’re on. they’re off” approach seriously impedes investment planning. And how long has he got anyway? Would a successor-perhaps JD Vance or a younger member of the Trump dynasty-have the same approach? While Michael Strain of the impeccably right wing American Enterprise Institute worries that all these tariffs will simply raise costs for most US manufacturers – a serious own goal if ever there was one. The various experts raise other questions too. Will the so called pledges of investment from other nations really materialise? Will the tariffs create an archaic automobile industry based on petrol, hopelessly unable to sell a single unit to a world which has long since moved on to electric? Frankly, are tariffs high enough to achieve their stated purpose(yes, that surprised us too) But all of these are laid out in Steven’s excellent article.

Tariffs are like many things. Sometimes they’re good and sometimes they’re not. If they were all good, then every nation would set them at 100%. If they were all bad, they would have been abolished long ago. The real mistake is to implement a good idea with insufficient care and attention. Now that really does resemble many socialist regimes of the past.

[1] https://www.theguardian.com/us-news/2025/aug/18/trumps-tariffs-manufacturing-resurgence-jobs

#donald trump #socialism #capita;ism #tariifs #trade #economics #american enterprise institute

The best time to be alive: Candidate #1 Tang Dynasty China

Imagine you lived in the greatest city in the world. Its streets are bustling with merchants who buy and sell goods from every known country, and many more that lie beyond the limits of knowledge. Such was Chang’an, (now Xi’an) capital and chief entrepot of China’s Tang dynasty (618-903 CE)[1][ With nearly a million residents and over 100 ethnic communities, it was more Babel than Beijing. Zoroastrian fire temples stood beside Buddhist pagodas and Nestorian churches; street food fused Middle Eastern spices with Chinese noodles. Foreign diplomats rubbed shoulders with camel-driving traders from Samarkand. The city was so tolerant and worldly that speaking Turkic or Persian on the street raised no eyebrows. Poets such as Li Bai and Du Fu flourished , as did artists such as Han Gan and Zhang Yuan. There were far reaching technological advances such as wood block printing and all presided over by relatively benign Emperors backed by a professional and highly educated Civil Service.

We’ve picked the Tang because it illustrates the essential doctrines of the great Professor RH Davis who knew that it was trade that made cities, and cities which make humans civilised. He was writing about Europe. Yet Chang’an under the Tang was one example of what humans can achieve when they try. No wonder the modern Chinese feel they need take no lessons from westerners in how to run a civilisation. The Silk Road was essentially a Chinese invention. It was, and maybe still is, the greatest trading system in the world.

It all ended in tears of course, as did many of the other examples we shall consider in this series. The Lushan rebellion of 755-763 inflicted economic and human wounds so deep that the dynasty never fully recovered. And obviously there have been many advances in technical knowledge and in things like medicine, since the Tang fell. But if you wanted to give an example of when the ordinary Joe, people like you and me, could step from their house and feel a glad confident good morning, Tang China is a very good place to start.

[1]https://en.wikipedia.org/wiki/Tang_dynasty

[2] RHC Davis: A History of Medieval Europe from Constantine to St Louis 2nd edition Longman 1988

#china #Tang dynasty #trade #silk road #civil service #history

G7 v BRICS: is this how the sides will line up for World War Three?

We know we started out as a science based blog, mainly devoted to the encouragement of more research into antibiotics. If our brief has widened a little, it is because we cannot ignore the wider world around us. If that world decides to spend more on weapons of mass destruction, and less on antibiotic research, it impinges directly on us and our readers. Which is why this pair of articles from the Guardian caught our eye. They strongly suggest that the sides for the next world war are lining up. And the outcome is by no means certain.

On the one hand are the G7 group of countries, led by the USA.[1] Thirty years ago they had the game in their hands. Immensely rich, accounting for an enormous slice of the global pie, their triumph over the Communist bloc had seemed to set them apart . They were the world’s bankers, the world’s policemen, the world’s shop keepers. Since when, hubris seemed to set in and it has been downhill all the way. Iraq, financial crash, tariffs, Brexit…………These words are shorthand, metanymies if you will, for a deep moral rot that is grounded in an almost childlike reverence for the supremacy of financial markets and the sorts of people who work in them. Now as the admirable Joseph Stiglitz and his colleagues observe, the once mighty G7 is in danger of being little more than a front organisation for the interests of large American multinationals. A position sure to alienate many around the world.

Among the alienated are a group which starting out as the BRICS (Brazil, Russia, India, China and South Africa)[2] has expanded to include rising stars such as Indonesia. It may not be morally perfect either(its stance on Ukraine, and the fact that many members are autocracies cannot be overlooked). But its members are united on one thing: they are tired of the whims and policy lurches of the US, particularly under such a nakedly self-serving President as the current one. They are ready to have done with the traditional instruments of US domination such as the Reserve Dollar. And they are developing the economic resources to make these ambitions feasible.

History has two lessons. The decline of one hegemonic power and the rise of another is usually a signal of impending war. Another is the formation of alliance blocks; as one small event triggers a chain reaction of consequences. Think Europe 1914 as the case example for both. And don’t expect the supply of antibiotics to go up any time soon.

[1]https://www.theguardian.com/business/2025/jul/02/the-g7-has-once-again-put-multinationals-profits-over-the-interests-of-people?CMP=Share_iOSApp_Other

[2]https://www.theguardian.com/commentisfree/2025/jul/13/the-guardian-view-on-brics-growing-up-a-new-bloc-seeks-autonomy-and-eyes-a-post-western-order?CMP=Share_iOSAp

#G7 #BRICS #China #USA #IMF #dollar #geopolitics #brasil #russia #indonesia