The Economic and Fiscal Effects of the Trump Administration's Proposed Tariffs

> Manufacturing and extraction won't come back to the US unless businesses are convinced this is a long term change, not a bargaining point.

I wrote that yesterday. Today, "Trump pauses Mexico tariffs."[1] The Wall Street Journal is covering this heavily. Businesses have no idea what to do yet. WSJ article: "Trump’s Tariffs Usher In New Trade Wars. The Ultimate Goal Remains Unclear."

For now, you can't go to a bank and borrow to expand your US plant that needs some tariff protection to be profitable. Too risky if policy changes. Can you insure against "Trump risk"? Hedge with futures?

[1] https://www.cnn.com/politics/live-news/trump-tariffs-preside...

I also vouched, but it's not [flagged] and it's weird because he's not been banned (check his history, dang is good about telling people he's banning them, especially people who have been on the site and active for years). I suspect he triggered one of the filters or something.

EDIT: @defrost one of those links caused your comment to become [dead], I think it was the tamu one but I'm not certain. I did mail the mod about it though and Animats comment is live again.

EDIT AGAIN: dang responded. It was the tamu.edu link, somehow that domain had ended up as a spam domain. Animats' comment had been restored by vouches.

> Seems bad form to kill a good faith comment made with effort, at least disagree or counter, etc,

If there were multiple fictional social media lobbying teams, which did not have continuous hourly coverage, then downvoting bots could be used during short intervals between time zone work hours.

> This is clearly designed to keep people busy worrying about their survival while Elon and them continue on with their hapless refactor.

Huh? Trump's not engaging in some conspiracy to protect Elon. He's always liked tariffs, and this is him doing what he believes.

Cut it out with the weird conspiracy theories. They're not helpful.

> The thing I can’t figure out is if he really doesn’t know how tariffs work, or if he’s just a liar. Either way it doesn’t make him look good.

The second proposition has already been proven many times over. The first is very likely also true.

> And from any reasonable analysis I’ve seen, I just don’t understand how this is going to bring anything back home. It’s just going to raise prices and cause more suffering for those who can least afford it.

It won't. I think the best thing we can hope for is that it brings economic frustrations to an untenable boiling point and either forces the administration to correct course (ultimately still costing us significantly in terms of global trade positioning) or it spurs the idiots who voted for this administration into action agains the administration.

> The truth is (as I’m sure you all know) these are fees that we pay to the federal government separately when we import goods from these countries. Other countries don’t pay a dime.

The mistake you're making is only considering first order effects (gov collecting tariff taxes), and ignoring second and greater order effects (how people respond to those taxes).

The truth about tariffs is actually more complicated: https://www.nytimes.com/2025/01/20/opinion/trump-tariffs-tra...:

> A good place to start disentangling things is the argument ad nauseam over who pays for tariffs — the consumer or the foreign producer? Contrary to what both sides sometimes assert, the question has no simple answer. “Despite over a century of theoretical debate on the incidence of tariffs, sound empirical evidence on who bears the burden of trade tariffs is sparse,” according to a 2015 article in the University of Chicago’s Chicago Policy Review.

> ...It’s true that up front, a U.S. tariff is levied on Americans, not foreign producers. But what really matters is who bears the ultimate cost. If the foreign producer continues to charge the same amount at the border, then the final price goes up by the amount of the tariff, and the American bears the full cost. But if the foreign producer cuts its price at the border by the amount of the tariff so that the final price paid by the American is unchanged, then the foreign producer bears the full cost of the tariff.

> Typically, the cost will be split. Americans won’t have to bear much of the cost of the tariff if the foreign producer is willing to accept a smaller profit to hang on to its share of the U.S. market. That calculation will vary product by product.

I know someone who works for a construction company that does big jobs, factories, airports, hospitals, etc, and asked him about building a new factory. He said if someone woke up tomorrow and said "I'm going to build a new plant", 2 years would be an aggressive timeline just for the construction. That doesn't take into account the planning, design, permits, machinery installation, etc. It wouldn't be producing anything until after his presidency.

Now, that's all fine and good, but construction materials like steel, wood, and aluminum are about to go up due to the tariffs not to mention supply chain disruption and stockpiling, making prices even worse.

Construction is going to contract. The publicly traded companies all went down as soon as this was announced. Noone is going to want to build this stuff while materials prices are going up.

There are other ways to encourage onshoring. 25% tariffs and a tariff war with our main trading partners ain't it.

>Other countries don’t pay a dime.

We will indirectly pay in reduction of demand, which will reduce the price or production. Maybe not 25%, but probably not 0%?

If we didn't pay for it, I wouldn't see our prime minister be worried about our industry and scared of trump.

I'm pretty sure his thinking is - say to every company that wants a break on the tariff - here, buy some $DJT, we'll take a look.

If Trump was capable of being honest, he wouldn't be a twice-impeached felon.

The complete lack of charity in these neoliberal critiques always crack me up. Haha, those poor blue collar plebs don't know what's even in their best interest!

"any reasonable analysis"-- I will help you out, right now you can ask deepseek how tariffs helped power the asian economic miracle.

Tariffs should be one of the easiest to implement.

The state is already involved with imports, it just adds another item to the import tax bill. Even the price is already set, as import tax is determined by a percentage too.