No need to think about anything embarrassing here. Honestly, I was left wondering how that data should be interpreted. X’s tweets are 99% clickbait, and conclusions always have to be drawn independently. Clearly(?) before the tariffs came into effect, goods were bought into storage so that places are bursting with goods? Has the change in the trade balance since then been truly structural, or just inventory reduction?
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Yes, thank you! 
And that’s why I also told you what I think, so a smarter person can correct me more easily. I don’t doubt that I might be wrong, especially when I explain things awkwardly (+incorrectly). 
Thanks to @Johnnyboy too + to you!
This is one of the biggest contributions of the forum, when one is corrected and learns. I’m not often ‘on the map’, but perhaps more so than my expression implies, though still quite clueless anyway. 
Indeed, I also overemphasized those timeframes unnecessarily, because it didn’t even answer your good questions. 
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Both can very well be true at the same time. Let’s assume that tariffs have reduced imports, thus decreasing the trade balance deficit. Imported materials used in production are slightly more expensive, and so are the final products, leading to weaker demand for them, thus slowing down economic growth. This, however, happens with a delay, but as a result, exports also weaken in addition to domestic demand decreasing. Thus, incomes also decrease, but only slightly later.
Well, I am not an economist, and the above is a drastic simplification of the impact of tariffs. There is much more to the matter. Paul Krugman discusses the impact of tariffs already in the spring in the article below. I can recommend his Substack to anyone interested in economics. He has made a career in international trade economics, so he certainly knows what he is talking about.
In addition, about domestic demand. Consumers are not very confident right now. When people are scared, they keep their purse strings tight. The entire article is behind a paywall, but you can still read below that outside of the AI boom, things don’t look bright.
Yet according to the long-running University of Michigan survey of consumer sentiment, shown as Chart 1 at the top of this post, Americans have a worse view of the economy now than:
· in mid-2022, when inflation hit around 9 percent
· in the immediate aftermath of the financial crisis, when unemployment was in double digits
· in 1980, when the economy was in recession and had double-digit inflation.
Well, whatever you think about the matter, we will certainly see in the coming years whether Trump’s tariffs were a good solution for the United States’ government deficit.
P.S. In connection with this, it is probably worth mentioning that Trump would like to give a $2000 refund to citizens from the collected tariff money. So, that money would not go to balancing the national economy, e.g., in the form of debt repayment. Not everyone is convinced of the brilliance of the idea, however.
“A dividend of at least $2000 a person (not including high income people!) will be paid to everyone,” Mr. Trump wrote in a Truth Social post last week. He didn’t provide additional details on how such rebates would be disbursed to Americans.
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Picked from the China thread, an excellent article that gives food for thought. Is it now the case that China is “conquering” Africa as its own market / partner while the West watches the development from the sidelines? China is spreading its tentacles all over the world, and it won’t be long before we realize that Africa is “lost” to China.
It’s somewhat absurd for the West to start blocking even within the “Western bloc” (US tariffs, etc.), when in the big picture, the West should, on the contrary, pull itself together and intensify its cooperation, before the situation becomes China’s world domination, to put it a bit bluntly.
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The West certainly tried for decades, but it always came to nothing. Let’s calmly see whether China runs out of money or patience first.
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Last Wednesday, EU Commissioner Henna Virkkunen presented how the continent’s digital and AI regulations would be streamlined. For example, AI and data protection regulations.
Today, US Secretary of Commerce Howard Lutnick announced that it’s completely insufficient and threatens to wield the stick. As a carrot, a proper streamlining would again offer more data centers to Europe.
→ State socialism is progressing very far in the Americas when a minister dictates the guidelines for private company investments. Secondly, at least some of the data centers must be located in the market area itself.
Be that as it may, a mess is coming 
However, it will still take 15 years before tariffs on machinery and equipment drop from 20% → 0%.
The 25-year negotiations for a free trade agreement between the EU and four South American countries—Brazil, Argentina, Paraguay, and Uruguay—were finally concluded on Friday, as a majority of EU countries supported the approval of the agreement. It is the largest trade deal in EU history, creating a free trade area of over 700 million consumers.
The agreement eliminates tariffs on 91 percent of goods, which will lower costs for companies. Companies in EU countries are estimated to save billions of euros annually in customs duties.
From Finland, a lot of machinery and equipment are exported to Mercosur countries, which currently face 20 percent import duties. With the agreement, these tariffs will drop to zero over 15 years.
A 25-year wait is ending: EU countries are approving the Mercosur agreement 25 vuoden odotus päättymässä: EU-maat hyväksymässä Mercosur-sopimuksen | Kauppalehti
Finland Chamber of Commerce: EU–Mercosur agreement strengthens Finland’s competitiveness and opens new export opportunities - Finland Chamber of Commerce Keskuskauppakamari: EU–Mercosur-sopimus vahvistaa Suomen kilpailukykyä ja avaa uusia vientimahdollisuuksia - Keskuskauppakamari
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Without being an expert in international trade, the thought inevitably creeps in: would the Mercosur agreement have reached the finish line yet if Trump hadn’t started acting like an international enfant terrible with his tariffs and invasions, rubbing it in every nation’s face that he comes, he dictates, and the rest of you are just happy to get a deal with him? I bet it has had an accelerating effect on getting the act together in both Latin America and Europe, as it has become obvious that the United States is no longer anyone’s ally and stability must be sought elsewhere. The EU is a natural alternative. I suspect many countries skipped the usual last-minute bargaining to avoid being left out, as others realized there was no room right now to push too hard for one’s own interests.
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A very interesting 15-minute YouTube clip from someone who seems to know what they’re talking about. He explains how the trade relations between Europe, the United States, and China are interconnected and how Trump’s behavior makes things happen in Europe. Below are a few predictions mentioned in the video; watch the rest for yourselves:
In my opinion, during the next 6 to 12 months, Europe will quietly implement three mechanisms:
First: They will accelerate a rare earth partnership with China.
Second: I think they will establish alternative security frameworks. If America can threaten allies with military force, NATO’s collective security guarantee is meaningless.
Third: They (Europe & China) will coordinate trade policy, not through explicit anti-American trade deals, but through regulatory harmonization that makes European-Chinese trade easier while making American-European trade more expensive through compliance costs.
Here is my specific timeline prediction:
Q1/2026: European nations will announce joint rare earth processing investments with Asian partners.
For Q2 to Q3 / 2026, if Trump continues his Greenland threats, I’d expect European regulatory agencies to announce enhanced scrutiny of American tech firms operating in Europe. This won’t necessarily be framed as retaliation. It will be positioned as protecting European sovereignty in critical infrastructure.
By year-end Q4/2026, European nations will have signed at least 3 new defense cooperation agreements that explicitly exclude American participation.
By 2027, I think America will find itself dealing with a Europe that cooperates when convenient, but no longer views American leadership as reliable.
Here is my prediction: Within 24 months, American business leaders will be calling for de-escalation with Europe because their quarterly earnings reports are showing the costs of a fractured transatlantic relationship.
Europe is playing a 20-year financial game. Trump is playing a 20-day news cycle game. And when you work in finance, you really learn that time horizons determine outcomes. Ultimately, the economic war is already over. America just doesn’t know that it has lost yet.
I recommend watching the whole clip. It offers an interesting perspective on how Europe and Trump & co. operate. It might even be true. At least I didn’t find any obvious logical flaws.
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Seems like quite an anti-American channel based on the rest of the content(?)
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A tariff decision is expected from the US Supreme Court tomorrow.
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I read your summary of the video, I didn’t watch the video itself.
But, in a trade deal between Europe and China, one thing immediately stands out as a sore point: the fact that both are surplus economic areas. I.e., both Europe, but especially China, produce more than they consume.
This means that both are racing to find new export markets to replace the United States. But there is no other equivalent to the United States in the world consuming others’ production, so this attempt quickly escalates into competition for the same markets.
Europe is incredibly bothered—and politicians are also wagging their tongues about this topic—by China’s export surge. When Chinese goods cannot enter the United States due to tariffs, they flood into Europe and the rest of the world. This eats into the market shares of European companies and, consequently, ultimately jobs. One politically influential sector, the German auto industry, is particularly struggling with Chinese competition.
China is such a large economy that over-subsidizes its industry that trade cannot be safely streamlined with it without practically sacrificing one’s own industrial base. I showed this chart last year in Vartti.
Europe is also bothered by the fact that China practically directly supports Russia, which in turn has made it clear that Europe is its enemy. Unless Brussels starts aiming for Putin-level 4D chess, where you become better friends with your main enemy’s best friend.
If China were to play fairer at the same time, such a deal could be more likely. Hopefully I am wrong!
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At the very moment the White House chief blasted out threats of 25% additional tariffs on Finland and several European countries, representatives of the EU and Mercosur countries signed an agreement for a new free trade area of over 700 million people. “To each their own”
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The trade deal between India and the US is also creaking at the seams as a new dispute has surfaced: legumes. 
Senators are grilling Trump to demand relief from India, at least on tariffs for peas and lentils, which they claim discriminate against their own country’s farmers. India, for its part, reasonably asserts that the 30 percent tariffs apply to everyone equally and are necessary to protect local producers from a collapse in prices.
These trade negotiations are once again in a familiar situation.
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I was almost spooked by Trump’s Greenland tariff threats until I read which countries they actually apply to. The list mentions France, Germany, and the UK, among others. In practice, this means the termination of the EU-US trade agreement. The situation would be worse for Finland if these major countries weren’t on the list. Now we’re likely looking at a repeat of last spring. Except now, Europe is increasingly frustrated and the US has already been practically replaced when it comes to support for Ukraine, so Europe’s willingness to compromise may be lower.
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