The Art of War responds again to The Art of the Deal/DXY breaks below 100

The Art of War continues to stand up to The Art of the Deal and the battle between the two makes us all worse off. Elsewhere, the dollar continues to tank. With today's retaliation, and expressed as the last, China said "Given that American goods are no longer marketable in China under the current tariff rates, if the US further raises tariffs on Chinese exports, China will disregard such measures." The Commerce Ministry also said "It's become a joke" referencing the situation. As we import about $450b worth of goods from China, including Iphones as we know, that we can't easily replace and quickly, this has become a ridiculous situation.

If this fight with China doesn't end soon, Polymarket should start adding a prediction of an over/under on how many months before US shelves start emptying out. Because of all these risks, I think a deal happens soon and even Trump yesterday said he was hopeful.

Why isn't anything said about the trade surplus in US services of about $300b? Are we ripping everyone off? No, but we are now pissing them off. From a Bloomberg News article yesterday, "The number of Canadian resident return trips by automobile from the US plunged 31.9% in March from a year ago, Statistics Canada said Thursday. That's the third straight monthly decline and followed a 23% drop a month earlier."

Also, "The number of Canadian-resident return trips by air from the US also fell, decreasing 13.5% in March from the same month a year ago. On the other hand, return trips by Canadians from foreign countries other than the US rose 9.1%."

And, "Canadians make up the biggest group of tourists in the US. Last year, Canadian visitors generated $20.5 billion in spending in the US, according to the US Travel Association." Well, the US is about to start shrinking its trade surplus in services. https://www.bloomberg.com/news/articles/2025-04-10/canadian-car-trips-to-us-plunge-32-as-trump-threats-strain-ties

Back to the US dollar, I mentioned in the 30 yr auction note yesterday that it was on track for its worst percentage day decline since November 2022, falling by 2% in the DXY and is down another 1.2% today. Now below 100, it stands at its weakest level in three years. Specifically against the Canadian$, the US dollar has now lost all of its post election gains. What this means, other than being likely inflationary, is that US importers/consumers will continue to eat more of the tax impact of tariffs. I'm glad I locked in on Monday, before the US dollar selloff this week, the purchase of Toronto Blue Jay tickets from Ticketmaster Canada for a game in Toronto next month I'm going to with my buddy David Rosenberg.