US Administration announces 34% tariffs on China, 20% on EU

If the tariffs remained in effect for three decades, or more, there may have been incentive to move manufacturing back to the US; however, with the changing of the guard on the regular, most companies are just going to ignore it for 3.5 more years and hope that someone stops this from continuing.

Because, if you think about it, it took decades to get us to where we are today and it'll take decades to reverse, even logistically. This is a bunch of stupidity and meaningless saber rattling that will do nothing but hurt everyone except the extremely wealthy who can afford the additional taxation on the consumer side because the Republicans will further reduce the taxation on the income side.

> How much all the imports are realistically going to be made in the US?

For some of the hardest hit locations, very little. The US would have to invade and claim other countries to start producing, for instance, vanilla or coffee (the US essentially doesn't produce vanilla, and for coffee we grow less than a percent of what we consume). But Madagascar got hit with 47% tariffs.

Somewhat yes. But more precisely it is a reallocation from things we have the best comparative advantage to things where we have less comparative advantage. The main effect is to make almost everyone poorer.

Look, this is basic economic theory. The kinds of taxes you levy alter primary behavior. You tax the things you don’t want and don’t tax the things you want. So looking at incidence of taxation (who pays the tax) isn’t enough. You need to look at how taxes alter economic incentives.

Offhand, I'm unaware of where to even look to get an easy to digest version of 'where tax dollars go'. Would the GAO make such a report? Something for Congress otherwise? Would there be a classified and an public version?

Even better would be a tool that, E.G. with your IRS filing number, shows how much 'you' paid in, breaks down where that went, and shows how 'you' compare to other areas.

Such tools and reports would cost money, but making them is practically an audit anyway which is a good use of resources in a bureaucracy (part of the self-calibration system).

Letting billionaires hoard all the money has gotten us to where we are today. It seems worse than government mismanaging the budget. Was that concern also there in the 50s and 60s when the wealthy was taxed at a substantial higher rate? I don't believe so. It all seems to point at the failure of trickled down economics of Reagan.

Everything at Walmart is about to be 34% more expensive but you think the rich are hurt more than the poor?

I read this and I was quite disappointed that he didn’t talk about labor costs and other comparative advantages for labor-heavy manufacturing to be in a different situation trade market-wise than it was in the 1930s.

I just downloaded this and listened to it for the past 2 hours, this is a fantastic book. Thanks for the rec guys!

I purchased this book after seeing all of these glowing reviews for it.

That is only Norway. Maybe a little bit of Denmark, but Denmark is not considered an oil economy.

And I don't know what you mean with "captive tax base" but Norway just piles up the wealth they are too afraid to use it since it will increase the inflation.

That's just Norway.

Didn't know that. I'm just a stupid EU sheep.

Incidentally, even Amazon US uses that facility. They charge me my local VAT plus some change ("exchange rate whatever" commission, something under 1%) and the package arrives in my hands via courier without any further interaction.

Even Mouser has set up a warehouse inside the EU in the past years. They went from a pain to order from to a pleasure.

Just to emphasise, this system has been set up for ages because you did need to pay VAT on imports anyway. Even without any special tariffs. And that means a visit to the post office in person.

For reference: https://vat-one-stop-shop.ec.europa.eu/one-stop-shop_en

Yeah EU doesn't have a special tariff per se, but they wanted a responsible legal entity in EU to deal with taxes and customer rights so they created this structure.

US just doesn't want anything imported. Doesn't help to set up US entity. You will have to pay this amount. Though, it helps with $1 orders if they import them and process them in bulk.

Well, the point of the action in the US is to stop imports, not just tax them, so manufacturing moves into the US. The minimum fee per item is clearly punitive.

Not that that matters, most manufacturing will simply never be in the US ever again, and having punitive taxes like this will simply drive up costs massively.

From which Apple store? If it's your local store of course they have VAT built in.

Interesting about amazon japan, never tried it. Have you tried amazon us?

Edit: interesting, amazon.co.jp seems to be its own thing. My login works on amazon US and all european country sites, but it doesn't work on the JP site.

To add some color: when I've placed orders like this in the past the small items didn't come packed like consumer goods in a nice box but in something like a zip lock bag or an envelope.

Also people buying stationary stuff from China, how will their pricing be?

Alibaba is Aliexpress. They have multiple warehouses around europe.

The exemption for low value imports was removed a few years ago, see other comments near this one in the discussion.

Purchases from Temu pay EU VAT according to the location of the purchaser, and an electronic system means the money sent to Temu gets to the EU and the package can sail through customs.

That's the thing, there is an almost impenetrable media wall that no amount of "this is bad" news articles can get through

IMO the only thing that can get through is actual personal consequences for the voter themself

> It was clearly bad, but few people saw impacts in their own lives.

It did though, they just didn't know how to measure it, and it wasn't felt immediately. It was like the flash of light that dazzles before the pressure wave of the nuclear bomb blasts everything (which in the analogy is this moment, now).

What happened on Jan 6, and in the leadup and response to it, was the erosion of democratic norms. Before Nov 2020 they were stronger, and after Jan 6 they were significantly weakened. Our institutions are essentially built on trust, and Trump in his campaign to overturn the 2020 election spent every waking moment for months attacking those foundations. He purposefully eroded people's trust in Democracy for no reason, because there ultimately the fraud he alleged in that election was not found.

That impacts everyone. They just don't feel it in the supermarket; they just have no "democracy meter" that they can use to gauge how healthy their representation is in government. But the reason he's able to do what he's doing now is he because he laid the foundation in 2020.

I see no evidence of your claim. A total of 4 senators of the President’s party voted symbolically on a non-binding resolution against his Canada tariffs. The Speaker of the House, who also belongs to the President’s party, won’t even bring it up for a vote. There has been no motion from the legislative branch to undo the President’s direct subversion of the power of the purse by effectively eliminating the staff required to disburse Congressionally-approved funds.

The root cause is the IEEPA (1977) which was vaguely worded to supposedly shrink executive authority under TWEA (1917) which allowed essentially unlimited executive authority "emergencies" to be declared for an unspecified amount of time. IEEPA was used to block TikTok, which still may get blocked, and used to set these arbitrary tariffs. IEEPA needs to be fully abolished. (And we also need to bring back the Tillman Act (1907) and get an amendment to overturn CU.)

I'm sure they are working on a very strongly worded letter about this right this very moment.

Are they going to actually do anything about it? If not, their displeasure isn't worth a fart in the wind.

Yep, that's the talking point. Howard Lutnick has been out there saying this.

For better or worse, though, voters don't judge politicians based on the impact their policies have in 10-20 years. They're going to judge these tariffs in 18 months when they vote in the midterms and again in 2028, long before a widespread shift in manufacturing can occur.

> we shouldn't react to short term impact

Yes, but it's deeper than that.

We want our territory back, and we don't care about the health of the economy.

In fact, if the economy tanks, that's even better, because it will destroy the incentive for all of these other people to be come here and set up shop.

If there is no opportunity here, there will be no reason for them to be here. Also, if people are less comfortable, people will fight over resources more, which will lead to an antagonistic environment, which will cause even more people to leave.

Furthermore, the imports industry, and international corporations generally, are the power-base of our domestic enemies, and local industry is the power-base of our domestic allies.

I couldn't be more excited about all of this.

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Everything done is done by "by part of the "people""

This is not true. Next time you grab an olive oil bottle read the fine print: unless it’s very expensive it will be a blend of oils from 4-8 countries, ie production doesn’t have to be in the same country where olives grow on olive trees, as you eloquently put.

There are a few olive trees in my neighborhood. I should plant some too. It would be fun to watch them grow.

Hawaii is the only U.S. state where you can grow coffee and their coffee costs a fortune. You need tropical weather and high altitude. Florida won't cut it. Besides, we already have fruit rotting in the fields in Florida because there's no one to pick it.

Want to put tariffs on Chinese electric cars or batteries? Ok, fine. But tariffs on all imports? It's the most brain dead policy in my lifetime. I can't think of any products that are produced 100% domestically without any foreign inputs. These tariffs will drive up the price of just about everything.

There are olive farms as far north as Oregon. I visited one a few years ago and bought some olive oil; it was very good.

Oh that's 100% what Potus thinks.

There's no other rationale for this other than thinking this.

Or (more likely) they would not have access to many crops at all.

Personally I don't mind not having strawberries in the middle of winter, but for some they care about that.

Let's ignore whether we'll actually get there, that's a very deep question and entirely theoretical for now.

If we could snap our fingers and domestically produce most or all of our own products, would you not prefer that?

I mean if you could make olive oil cheaper in America wouldn't someone have done that by now?

The US never lacked for smart entrepreneurs looking for a business opportunity. See wine.

There is this group-think on HN today that services are intentionally left out as part of the US trade balance. That confusion likely comes from tax and corporate structures. Ie all those profits are locked into sub-corps, so Apple-Cayman Islands or Google-Ireland (corporate tax havens) which is why they don't show up on the balance sheet as "trade" into the US (typically those sub-corps buy financial assets with those profits). Read the first chapters of Trade Wars are Class Wars for more depth.

It's not a weird take if you reasonably assumed that OP meant: "they don't have the ability to afford the same value of products from the US." Which makes total sense because their income per capita is only a fraction of that of the US.

Oh, I agree. I was just pointing out we have some, and it's going to get a lot more expensive now.

Tunisia is so productive it exports 123.4% of olive oil.

Or perhaps I don't understand what they're trying to say in that sentence

This is interesting to me, because Spain and Italy are also exporters of olive oil. And there have been famous discoveries of fraud in the EVOO market as it has boomed. I wonder what percentage of Spanish and Italian EVOO exports are actually blended with (or wholly!) Tunisian imports?

Those numbers don't add up.

http://tradingeconomics.com/united-states/exports/tunisia

and imports:

https://tradingeconomics.com/united-states/imports/tunisia

Or just wait for Tunisia to gradually replace tariffed goods with EU and Chinese equivalents. Problem also solved?

From what I've understood from that chart, the "percentage" is just a difference between imports/exports with the USA. It's not actual tariffs in place by Tunisia ON USA goods. Am I right/wrong ?

Or is Tunisia tariffing the hell out of US Olive Oil in order to protect their local production base

Are you trolling?

You jest, but I wonder if this is to stop shenanigans like claiming your business operates from there just to dodge tariffs.

Once again they proceed far beyond the reach of satirists

If ChatGPT was available back then, sure.

It explains why they singled out Reunion from France, it has a separate ccTLD. That type of mistake is the kind a LLM would do, not a human...

I'm convinced. this is fucking crazy.

Its worse than that. Its like saying you must have used chat gpt because you answered that 2+2= 4 and gasp so do the LLMs! Nevermind that its just the obvious answer to the question.

Lets see the prompt. The prompt further down in the thread that reproduces it was asking how to use tariffs to balance trade deficits with a 10% minimum. Is there any other answer then set the rate such that the deficit goes away or 10%, whichever is greater? No. That's just the answer to the question and is why ALL LLMs give the same answer.

Are you implying there is a very small chance that if someone posted in 2018 reddit "We should tariff Algeria at 35% because X", the LLM that the administration may have used would have agreed with random redditor?

It's good at compressing information from the internet, usually not losslessly.

> Me thinks this just means that this tariff idea exists on the internet

Probably from some random genius on reddit.

>It is really silly to say that because an LLM gave a similar approach a single time and someone took a screencap of it without full context, that Elon and Trump are sitting in the whitehouse asking Grok what to.

A similar approach to a close-ended question.

The original screenshot doesnt show the prompt. The one reproducing it asks for a tariff policy to eliminate trade deficits with a 10% minimum. Umm... hello? There is only one answer to that. The greater value between 10% and a rate based on the deficit. Of course the Trump policy and all 4 LLM answers agree. The answer is determined by the question.

Its like accusing little Timmy of cheating on his math homework because he said 2+2=4 and -- GASP -- so do all the LLMs!

People are saying they literally used the trade deficit and the formula they published that they claim doesn’t do this multiplies that value by 4 and then 0.25. Yeah… that is what we are dealing with.

> Elon and Trump are sitting in the whitehouse asking Grok what to

Not perhaps Elon or Trump themselves (doubt Trump can actually use a computer), but it could very well be one of the teens like the so-called "Big Balls" that apparently have their hands in everything.

> This level of hyperbole is why reading about anything to do with the two of them is really exhausting

Almost as exhausting as their daily actions / tweets / rants.

> It's now going to be almost impossible to have people realise the truth, especially those people who support Trump

NOW? It's been this way for close to 10 years.

This is where the calculation is extremely unfair to a country like Vietnam. They export low value physical goods and import high value services like ChatGPT, engineering consultations, etc. They're getting screwed by this tariff plan.

Any tariff based on trade deficit needs to account for services.

I'm glad I read your comment because I've been wondering the whole time whether services are factored in. It's absolutely insane that the administration is ignoring the exported value of some of the biggest companies in America that all these countries are buying services from.

That makes no difference to who should get tariffs by the administration's own logic. They're cozying up to Russia. No other explanation is feasible.

Ukraine has around $1.2 billion and still got 10% tariffs.

So? Let’s not give it too hard to poor Russia?

Considering Russia has been disobeying orders and Australia and Japan have done almost nothing to the USA, then why not give it to them a bit harder?

Total trade with Russia in 2024: $3.5bn

Total trade with Ukraine in 2024: $2.9bn

https://ustr.gov/countries-regions/europe-middle-east/russia...

So, Ukraine will get an exemption, too, right? Because their trade is even a mooter point, right? Right?!

The administration placed tariffs on uninhabited islands. I don't think they gave a rat's patootie about the volume of trade.

They tariffed uninhabited land, countries that export nothing to the US, and countries for which the US has a trade surplus.

All those circumstances also would have made the point moot... yet they all still made the list.

There is still more trade with Russia than many countries in the list. Even Syria and Iran got tariffs.

Didn't seem to be an issue for the penguin islands.

Stealing the assets of countries like Venezuela and Russia caused this to happen by making the rest of the world move off of the dollar to secure their asses. Doing more of them is the dumbest idea that can be proposed.

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> Prices rising due to tariffs isn't "inflation" in any traditional sense.

Yes, consumer prices rising is inflation in the traditional sense (since, unqualified, “inflation” refers to increases in consumer prices.)

> It's not driven by consumer demand,

Inflation is not restricted to demand-pull inflation, which is why the term “demand-pull inflation” has a reason to exist.

Tariff-driven price increases are a form of cost-push inflation.

> and therefore the logic for raising rates (i.e. slowing economic growth by reducing money in the market) doesn't apply.

The existence of cost-push inflation doesn't change the short-term marginal effects of monetary policy on prices, so of you care just about near-term price levels, the same monetary interventions make sense as for demand-pull inflation.

OTOH, beyond short-term price effects things are very different: demand-pull inflation frequently is a symptom of strong economic growth and cooling the economy can still be consistent with acceptable growth.

Cost-push inflation tends to be an effect of forces outside of monetary policy which tend to slow the economy, so throwing tight money policy on top of it accelerates the slowdown. This is particularly bad if you are already in a recession with cost-push inflation (stagflation).

The good thing, such as it is, about cost-push inflation where the cost driver is a clear policy like tariffs, is that while monetary policy has no good option to fix it, there is a very clear policy solution—stop the policy that is driving the problem.

The problem is when there is irrational attachment to that policy in the current government.

If a pair of shoes today costs $30, and a pair of shoes tomorrow costs $60 (not saying this will happen, just positing a scenario), from a consumer perspective, there has been 100% inflation in the price of shoes. It doesn't matter that the price increase is due to tarrifs on imports from Vietnam.

If the consumer price index, which is a metric the Fed uses, goes up, then inflation has gone up. Every dollar buys you less (less purchasing power), and the nominal price has increased. To me this indicates inflation. Of course, you need to calculate how this balances out in terms of jobs/wages and the flow of investment, but that's really hard to figure out at this point in time.

I'd expect the CPI to go up in the event of global tariffs at a baseline of 10% assuming all things go ahead as described.

Inflation is inflation.

The fact that we decided allow a massive tax increase by executive fiat is irrelevant. The fact that we’re risking a death spiral from decreased consumer demand via government imposed inflation is irrelevant.

You’re right in that the usual formula of turning the knobs on interest rates to ease economic challenges is unlikely to work. We may have to turn the knobs to prevent a total death spiral, however. Get ready for 16% mortgages.

It doesn't matter what the root cause of increasing prices is. Fed doesn't have any other levers but to adjust rates up to reduce demand. It will work either way because even if demand is not the source, it will reduce whatever demand that was there.

Actually, price increases caused by tariffs are a type of inflation—specifically, cost-push inflation. This is consistent with standard definitions found in macroeconomics and international economics textbooks.

That's a distinction without a difference.

Oil price shocks in the 70s caused stagflation, a very real threat now.

The solution then was massive pain (Volker) that seemed to slay the beast.

Didn't stop the Fed last time, when inflation was due to market control letting companies pick their own price (also not "real" inflation).

The Fed has two mandates: maximum employment & stable prices. If prices go up, the Fed is mandated to raise interest rate.

So you don't think employers will raise wages as the cost of food increases?

According to monetarist theory these two things are one and the same.

The main source of "money printing" is banks making loans. And this is what the Fed targets when it raises interest rates.

I'm not quite sure whether tariffs really do lead to inflation. It depends on how consumers and companies respond to higher prices of imported goods and to the general sense of uncertainty.

> I think they shouldn't unless they're being disingenuous and politically motivated (push just enough to make the entire Trump mandate an unending crisis until Democrats get back in power).

They've been saying since the Biden administration they are going to keep raising rates. If the Trump regime's choices drive us into an unending crisis, bailing him out with rate cuts would be the politically motivated choice. Continuing to raise rates is just sticking to principles.

Translation: When the ox goes to the palace, he does not become a king. But the palace becomes a barn.

> Öküz saraya çıkınca kral olmaz. Ama saray ahır olur.

I like the saying, but why Turkish? It's known in English also.

A crown on a fool's head does not make him a king.

I don't think broader tax increases are off the table either, but we haven't even attempted to simply close up the loopholes used by corporations and the ultra wealthy and raise taxes in kind. Once that happens, I think its fair to reassess what to do with any lingering problems of raising revenue.

The US is unique in levying taxes on its nationals wherever they are in the world.

Although you've just made an argument for capital controls. We could call them "dollar export tariffs".

I don't think its that simple and is overly simplistic. If it was all about getting a better deal why wouldn't they have all left for Switzerland by now? Objectively, its a better deal than what the US offers - even on tax rates.

So where is the wealth of the rich stored?

Where does their income come from? (e.g. investment growth, etc.)

Can't you basically tax their income, and quadruple that tax if they move abroad and want to move their money out of the U.S.?

(I'm guessing it's not easy, but I also guess the reason it's not done is because the ultra rich have so much influence on the politicians and tax code... not for whatever other logistical reasons might exist.)

Good riddance. They can go interfere with someone else's government.

this argument is along the lines of "if theres global warming why is it cold outside today"

The rich prosper precisely because they are in the US.

Plus, if you do that you're a frigging communist. On the other hand, it's so much better to call neighbors, allies and everyone else people pillaging/raping the country. People like drama :)

Sure, they can leave, but if their companies want access to the US market they have to pay taxes. Capital flight is a red herring.

If the billionaires pack up and move to another country, then those who are willing to pay their due taxes and operate with a lesser profit margin would take the place they left in the market. There is no need to oblige sociopathic profiteers because they threaten to leave.

And, where will they go, really? There are considerable taxes in every country that billionaires would consider. And if they choose to cram into some small island tax haven in the Caribbean, the US can easily pressure that tax haven to do anything it wants.

It isn't just "reopen the plant" - it is "reopen the plant and match economic conditions in the time period from the 1950s-1990s".

Just reopening won't bring back the comparably high wages from that time period.

I'm from a very poor Appalachian town. My only option to better my life was to get up and leave.

People from my hometown do talk about the good old days. People worked at union factories and my grandfather worked a well paying railroad job. My no-name town of 1000 people had a train station that made it possible to go to NYC. My grandpa got paid a handsome retirement from the railroad company. When he died, my grandmother was able to receive his benefits.

My hometown votes against building railways. The station has long crumbled. They vote against unions. The factories are long gone. They've voted against any sort of retirement benefits. The elderly are struggling and depending on churches handing out food.

Even if those factories come back, they'll be paid less than my ancestors did. They'll never have an affordable link to cities hours away. They'll never get the retirement benefits my ancestors had. And if you mention giving them these benefits, they yell and say they don't want them. The youth in my hometown who worked hard in school (we somehow had a decent school, all things considered) used their education as a ticket out. Now the people there are pissed and they're coming for education next.

These people don't want "the plant." They want to be young again, without understanding that their youth was great because my ancestors busted their asses to give us great opportunities. They squandered everything that was given to us.

I worked in a factory. I agree with gp. Don't you dare speak for me.

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This. It’s the primary feature of the long term plan.

> Then raise the wages.

The same people proposing bringing back all these factories also want to lower wages.

The dread isn't over production. It's about the conditions they face while producing them. Americans dream about having a small farm and doing their own woodworking and blacksmithing or doing so with a small community. They don't dream about working on a factory line and being fired if they miss a day due to being sick. But at the same time, if someone else says they don't want this, they call them lazy and say the kids don't want to work these days.

It's an odd paradox.

And high skilled manufacturing still exists in America. That work is often paid decently and people are fine with working those jobs. The problem is tariffs being made to bring back low skilled manufacturing, and the desire to make the standards of employment lower in the US so that it's feasible.

The tariffs are high, but not 1,000% or whatever. If the alternative is "build new factories in the US, substantially raise wages and benefits for employees to encourage them to leave service positions for these roles, and then spend time training them" then the furniture from Vietnam with a 50% tariff is still going to be cheaper.

the good production worker's wages came from the unions. the GOP is fervently anti-union (with the exception of the police union maybe). they also oppose minium wages. there is no reason to think they'd support wage raises.

> Then raise the wages.

Then no one will be able to afford the products the plant is going to build.

and (of course) the company will record the data so that the robots will be able to learn via imitation learning ASAP

Why would it have to be that way? Are you imagining a monopoly on all locally produced goods? Why wouldn't there be competition with a healthyish margin? Seems entirely and 100% cynical.

Yep, there will be a lot of promises for factories that should break ground in ~2028.

The White House has already demonstrated repeatedly it can't stick to its guns.

The definition of good pay is relative. Increase wages enough, and people will leave other industries, and new workers will join the workforce straight out of high school rather than going to university. Those jobs will be filled.

No no, it's the skills. My colleague worked for a very high priced fashion brand who were able to pay high rates (and indeed did for this and other parts), but they couldn't get the quality they needed.

At the low end, sure, it's obvious you'll get more for your money abroad. The point here is that the skills are lost and you can't pay any amount anymore, at least not at scale (there will always be artisans who can produce extremely low volumes but these don't affect the market much).

Skilled people are still mortal and after a couple generations, they do pass away. They won't be replaced by new skilled apprentices if the industry hasn't been hiring.

Skilled people don’t just appear out of thin air. Skilled people need years of practice, and advice from a network of adjacent skilled people to become skilled in a particular craft.

You can be skilled at Excel and be 10 years away from knowing how to make even mass produced low quality clothing.

This isn't uniformly true in all industries or throughout all manufacturing. Not to mention that you need qualified people to operate and maintain these machines and the machines themselves.

This is the part that confuses me too. The US is in an enviable position where a lot of the "shit" jobs are outsourced and in return we get cheap stuff. Why is this a bad thing?

Or standard of living can fall. Which is quite likely

This essentially amounts to subsidizing industries that aren't competitive. It's like choosing to bake bread at home for $5 when you could buy it for just $2.

This was actually the real cause of the collapse of Zimbabwe. The tax base disappeared. People think it's just because they printed into oblivion but that's not the full picture.

Sure, but the industries of the future arguably are. At least for now.

It's not like money isn't being made in the US today.

No, but we have new ones.

in 1800, 95% of American were farmers in 1900, some 65% of Americans were farmers in 2020, it's down to like 5%.

My point is some industries just die. And its okay. The solution is not to go backwards, but tax the winners of the change to subsidize and retrain the people who lost.

But in America, the extreme winners have convinced the rest of us that we shouldn't tax them, and Trump is now asking us to instead tax everyone more

The vast majority of industries from the past are now highly automated and would be made even more so if the alternative were paying US-scale living wages to the employees.

So you bring the factories back to the US, but 95% of the created jobs are for robots.

Problem solved...?

The system wasn't named “capitalism” because it systematically favors the working class, I mean, what do you expect?

The working class have property and stocks too and don't want them taxed stupidly.

He's one economist from a very conservative line of thinking.

As a counter example, Thomas Piketty argues at length that taxation and wealth redistribution remain an effective way to bolster a societies resilience and lessen wealth inequality - which is still a very real issue in the world, and arguably one that the US shows can have very real negative consequences for letting it go unaddressed.

As for demand and inflating prices, yeah, domestic products may be more attractive, but the economy is huge, and much of it does not have a domestic allegory. The other issue here is the tax is on all imports, not only manufactured goods, which means raw materials - which often have to be sourced elsewhere - make manufacturing more expensive even domestically

>It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.

Have you ever tried to purchase electronics in Brazil? I don't know if that increased demand for domestic goods is necessarily a good thing...

> And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer

How are those things related? Are poor people bribing politicians to increase taxes?

> It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.

But domestic producers will surely increase their prices to match their foreign competitors’ tariffed prices.

It’s hard to see tariffs on steel (say) not raising wider domestic prices. Any domestic industry using steel (car making, house building etc) presumably now has to pay more for its steel which feeds through to consumer prices. You might increase the number of steel worker jobs but at a hidden wider cost to the wider US economy.

> Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer.

That is the most harebrained argument I've ever heard. If politicians are "bad at taxing rich people", maybe the solution could be electing people that actually share the average citizens perspective and attempt to do this more effectively (like Sanders or Tim Walz), instead of billionaire nepo babies that spend half their career on a golf course?

I mean if I was a billionaire, making policy for billionairs, got paid by other billionairs and had working class people still elect me, I most certainly would not try to tax rich people harder, either...

> I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.

Increased demand for domestic goods means increased price for those. And actually increasing domestic supply affects other sectors, too, driving up costs all over the board (=> see baumol effect)-- there is no large unemployed workforce to throw at manufacturing without driving up costs in the places that worked in, before.

And? Ask Sowell if he prefers progressive taxation and welfare or rapid spikes in tariffs sparking a global trade war.

(He actually was interviewed yesterday and he was very much not a fan of the tariffs.)

Sowell would be against tariffs, he’s a free market fundamentalist.

As usual, libertarianism is used as a justification for corporate fascism, mercantilism, taxes on the poor… basically the Republican agenda. Funny how that works.

The tax increase wouldnt be used to create better jobs, they would be used bolster social welfare and reduce the national debt, at the expense of wealth generation in the upper class.

The primary benefit of the approach is that the pre-tarrif economy is strong, health care, high prices, and very high SFH prices are the primary ways people are hurting. Modest taxes as noted above address 2/3 without upending the economy in the process.

Prices wont come down, but unlike the tarrif plan they also wont go up so... seems like a better option at least to my relatively uninformed brain.

What better jobs do you anticipate will be created?

> not be there in a few years

Years? Lol, how much would you bet they are all exactly the same in a month? A week?

There is still a functioning system of laws in this county. Devolving into a monarchy is not a necessary condition for stable trade policy (and the particular guy trying to install himself has not proven a force for stability in trade policies, even his own viz. USMCA).

Their point has nothing to do with term limits.

> Hell, even the current [president] could [eliminate these tariffs].

The point is that the goal of building onshore production isn't as likely to be reached with these tariffs due in part to the uncertainty surrounding the method of enacting the tariffs.

I fail to understand what is "malicious" about the idea that we, as a single species, can someday achieve an equitable and global state of cooperation despite historical tribal / racial / religious differences.

Just because an idea originated in Europe doesn't make it a bad one out of hand.

> This idea of humanity transcending our genetic (due to geographic proximity) tribal groups is a uniquely European one.

Pan-Arabism, Pan-Africanism, and Simón Bolivar would like a word.

lots of opinions presented as facts.

> This idea of humanity transcending our genetic (due to geographic proximity) tribal groups is a uniquely European one. Pretending we can abandon all tribalism and integrate the entire world into a European model is either immensely incompetent or intentionally malicious (I tend to think the latter).

I did not realize Star Trek is uniquely European, that explains all the accents they have. It's a good thing Gene Roddenberry was European otherwise all this nonsense would make us Americans less isolationist.

> The current billionaire class profits immensely from all the diversity (both generic and ideological) in the west. It's much easier to parasitically rule a divided people than a unified one. Nationalism is a defense against these parasites.

For as much evidence as you present I'll assert that nationalism in fact profits the billionaire class much more than anyone else, thinking of most marketing campaigns, most nationalist leaders are all backed by the billionaires to win over the hearts of the working class. It's almost like you say yourself, "It’s much easier to parasitically rule a divided people than a unified one" and nationalism is just as much about dividing a nation's people from others than about real unity.

There's only one nation's security interest that are advanced by an emboldened Russia.

How do you feel about the trade deficit, in the other direction, in digital goods (Meta platforms, Amazon/AWS, Google, Apple, ...)?

We negotiated those deals, we aren’t the victims. Now we don’t like how a deal turned out so instead of renegotiating we are throwing a temper tantrum like we weren’t the ones who suggested it in the first place. It’s embarrassing to be represented like that, and it won’t work! We will wind up weaker than we started, I hope they prove me wrong.

For the EU and US: https://ec.europa.eu/commission/presscorner/detail/en/qanda_...

> For technical reasons, there is not one “absolute” figure for the average tariffs on EU-US trade, as this calculation can be done in a variety of ways which produce quite varied results. Nevertheless, considering the actual trade in goods between the EU and US, in practice the average tariff rate on both sides is approximately 1%. In 2023, the US collected approximately €7 billion of tariffs on EU exports, and the EU collected approximately €3 billion on US exports.

> https://www.belastingdienst.nl/wps/wcm/connect/nl/internetaa...

Is suspect you can translate yourself. Every country has a site I am sure (looked up uk tarifs yesterday for instance)

It's downvoted because it's a transparent and weak attempt to "both sides" something that's not both-sidesable.

I think the accusation carries more weight than you're implying because while correct answers are all similar having two students give eerily similar wrong answers is often used as evidence for cheating.

The fact that this announcement is, to put it generously, weird, and not how anyone in the real world actually implements tariffs points to this administration going with the formula from some undergrad econ textbook or econ blog they found and applying it to a spreadsheet. Maybe they got it from an LLM, maybe they didn't, but what matters is the college sophomore level of consideration of the individual tariffs.

Thanks! This is an interesting read.

Canada and Mexico were already hit with 25% tariffs (on non-USMCA-compliant goods) last month...

Source for original tariffs: https://www.wsj.com/economy/trade/trump-tariffs-canada-mexic...

Source for continued original, but no new tariffs: https://www.wsj.com/livecoverage/trump-tariffs-trade-war-sto...

That's why the better policy is not to subsidize the purchase price of the car, but the various taxes associated with owning one, as well as offering certain perks like being able to drive in the bus lane. This was a huge success in Norway. Though now the percentage of new car purchases that are electric is so large that the subsidies are being rolled back because they've gotten too expensive(and the bus lane thing no longer makes sense because if the majority of cars can drive in it, it's not really a bus lane anymore). But I think that's fine. You can make an argument that when subsidies were introduced, electric cars were still struggling to compete with combustion cars in numerous ways, like range, capacity, access to chargers and repair services, etc. Subsidies/perks acted as compensation for those downsides for early adopters. The playing field is obviously a lot more even now. Chargers(including home chargers) are generally widely available, range is improved via better battery tech, there's a lot more players in the market, meaning more choice, etc. Not really a car guy, but I assume the repair situation is also improved, though it may not be on par yet.

In principle, that still injects cash into those companies though; it's just that the popular conception is that these subsidies are intended to make the product cheaper for consumers, instead of encouraging companies to produce them because they're more profitable due to the subsidy.

(This should not be taken as a blanket endorsement, god knows that companies follow the incentives, which is rarely perfectly aligned with the intent)

This is basically what everyone said would happen with Yang's proposed UBI in 2020.

It certainly could. Depends a lot on the specifics of how the UBI is implemented, and how UBI affects salary levels. If everything remained the same and everyone just got x more income each year, then yes, inflation is very likely. On the other hand, something more like no questions asked/no demands made social security, where the only requirement is being unemployed, could improve conditions for people who are unable to work while paying for itself in eliminating heaps of red tape, and also freeing up a lots of manpower towards helping people sort out their lives instead of pouring over disability pension applications, without paying out a bunch of money to people who don't need it because they earn plenty from work already.

One could also pay out ubi universally, but have a one time down-adjustment of salaries the first year.

Right and wrong. Right if it increases aggregate demand more than available economic production thus leading to inflation.

But if we overall had capacity to tame in the added UBI, then no. Unlike targeted subsidies like EVs, UBI is do much better. Each industry is still competing with other industries

1. Not all workers are fungible. Your average 30th percentile individual =/= the person progressing your biotech industry. Would they be more beneficial to the economy working in a customer service job, or in a factory?

2. It's very hard to be a powerhouse of innovation if you don't vertically integrate. China has taught us this. You can't split out the gritty part (manufacturing) from the fun part (invention) of technological innovation and win in the long run.

If you frequent an American form as a non-American, you'll have noticed by now that for most Americans it's as if the rest of the world doesn't really exist. You can talk all you want about how the thing they're proposing has been done in other countries with terrible results. Or the thing they're saying it's inviable exists in many other countries and it just works. You'll be ignored either way

Maybe that's how Trump believes tariffs work, but they are actually a tax on imports, that the importer pays. The importer passes that along to the American consumer.

Other countries are angry about this because it discourages importing from them, and their US exports may go down, or they may have to lower their US export prices. Not because they have to pay a fee or a tax to the US.

No, you as an American consumer are paying the tariffs.

As soon as they have the narrative to blame the incoming recession on Democrats, they definitely will

Yeah. Specially because the U.S economy is service-focused (and consumption as well).

Like, imagine now that all your computers will be more expensive/worse. This will affect services from like, a law firm - to a tech company. Will make harder for young buy good computers and start to code, etc.

I say this as a Brazilian, to us Brazilians watching, this is like: Why are the U.S repeating the same mistake?

I don't think Americans know this, but here in Brazil, we also have phone, tablet and PC national brands (Positivo¹, Multi², Philco³). National TV brands like Semp, AOC, Mondial. A ton of home appliances brands like Mondial, Philco, Britânia.

But why Americans don't know them? Because they only exists because of the tariffs. So they only exists in Brazil internal market. They are worse than foreign brands, but they exists because it's cheaper to buy a Mondial Kitchen Stand mixer than a Kitchen Aid!

And worse that most of these products are only white-label Chinese products, sold way more expensive than the real chinese ones.

This also create a whole gray market. A lot of people start smuggling products without import tax.

And this only with a 7% average tariff. Not the U.S 29% lol. Brazil with 31%~ prior to the 90's was WAY worse than this. A lot of brands just died when we opened a little the market (Consul, Brastemp, were Brazilian big fridge, Washing machine etc makers, they got bought by Whirlpool in the 90's)

American Brands then will now look for the U.S gov to ask for exceptions too, and this create a lot of corruption. And after you put these tariffs and there's a whole new companies made to internal market, it's almost impossible to remove because of the lobby from these companies (and corruption).

[1] https://loja.meupositivo.com.br/ [2] https://www.multilaser.com.br/ [3] https://www.philco.com.br/

It's called US companies now could increase their prices by 30% and just don't worry much, if sales are pretty good already for them.

Yeah, but the U.S. govt funds a lot of important research so it may not fall behind technologically unlike India…

Wait, what did you just say? The U.S. government has decimated its research funding?

Oh, well, at least the U.S. has a lot of high quality colleges churning out highly educated Americans, so that still may not be as much of a problem…wait, did you say Americans are increasingly turning away from college due to the high costs and the resultant loans that cannot be terminated even in bankruptcy, because the government has been cutting back significantly on funding education for years now?

Oh well, at least the U.S. is welcoming to immigrants who have founded over 50% of unicorns and usually tend to be the most dynamic and brightest slice of their country’s populations, so it may maintain its technological edge…

Wait what? Oh god.

> The Make in India policy of the present government is reminiscent of the pre-1991 inward-looking Indian state.

Have you seen the 70s or the 80s? I was a child during the 1980s when India was a socialist state. There were very few private enterprises, because there was absolutely zero government support. Taxation peaked at 90% during the early 1970s under Indira Gandhi, who also nationalized many of the largest private companies - because private enterprise was seen as a bad thing. It was also impossible to bring in foreign investment, because that would come with profit motives.

Basically, the comparison you're drawing is not really accurate. The current Make in India plan is very similar to the US bringing in strategic manufacturing back into the US; a plan which has had bipartisan support (for example, the CHIPS Act). It incentivizes businesses (including foreign companies) to set up manufacturing units in India. And is quite the opposite of what was happening during India's socialist era.

Isn’t the US the world’s biggest importer?

Quite a coincidence, I was reading this LRB essay [1] this morning by British political philosopher and historian Perry Anderson, analysing the last decade of political and economic (lack of) change in the West. He ended with this paragraph, I had to look up "import substitution" and then in this thread about the tariffs I see it mentioned again, there might be similarities with Trump and Getúlio Vargas. Any people more knowledgable in Brazilian economics want to chime in?

>Does that mean that until a coherent set of economic and political ideas, comparable to Keynesian or Hayekian paradigms of old, has taken shape as an alternative way of running contemporary societies, no serious change in the existing mode of production can be expected? Not necessarily. Outside the core zones of capitalism, at least two alterations of great moment occurred without any systematic doctrine imagining or proposing them in advance. One was the transformation of Brazil with the revolution that brought Getúlio Vargas to power in 1930, when the coffee exports on which its economy relied collapsed in the Slump and recovery was pragmatically stumbled on by import substitution, without the benefit of any advocacy in advance.

[1] https://www.lrb.co.uk/the-paper/v47/n06/perry-anderson/regim...

>It's called Import Substitution. Import Substitution: A Tried and Tested Policy for Failure

Which worked exceptionally well for China, South Korea, Japan and pretty well for Russia and India.

Services are ignored by Trump for precisely the reason you mention. The big question is: What will other countries do, like Germany, who tend to export goods to the U.S. but import services. Right now, those are the countries who would rather prevent this thing from escalating, but if escalation it must be and they run out of ammunition within the scope of tariffs on goods, where will they go next?

There are two kinds of "services". You have jobs that are in finance and software, which make good money, and you have jobs in cosmetology and fast food, which have terrible pay. The services that we export are the former.

Your high school grad (or high school dropout) isn't going to get one of those finance or software jobs. But they could get a factory job, if we can get those back.

So the best spin I could put on this is that the emphasis is on physical goods because that's where the people who are hurting in the current economy could find real work.

(Of course, if that were the case, the reasonable thing to do would be to explain that, instead of just acting like services didn't exist as something that is traded.)

[dead]

Likely will result in worse products as well (which is what happens when you remove competition).

LaTam is perfect example on how bad this "wide" protectionism is. There's a ton of economic papers about it.

If you really want protectionism, you could do something more similar to how South Korea did, by choosing specific sectors of economy you want to "protect", to create a "national industry".

Most protectionist industrial policies also exempt imports of machines and other supplies used in factories.

e.g. It makes no sense to put tariffs on machines used in a factory in the USA. AS that would make it more expensive for a factory to operate if they have to import a more expensive machine from Germany. "Buy a machine from the U.S", that would mean a more expensive machine likely, as it only exists because of tariffs.

That basically means you'll have factories on best case scenario, but your cars, your computers, phones, won't be exported.

Short term consequences are probably different then long term.

In the short term you can't just create a new garlic farm in a day.

In the long term it will still be more expensive (if american garlic was the cheap option they would have used it from the get-go) but there will probably be more adjustments then in the short term

That's part of the reason why these tarrifs are so stupid. There is no warning on the specifics so there isnt time for companies to come up with alternative plans. Given how inconsistent trump is, there is also limited incentive to seek alternative supply chains, because who knows if he will just change his mind again.

Most countries do specific tariffs on areas of the economy they want to develop/protect them.

If a country is doing price dumping, there's even legal ways of protecting these sectors, by applying to WTO (but the U.S basically killed the WTO). But even if the U.S don't trust the WTO, they could apply antidumping tariffs to these specific sectors (like the 100% tariffs Biden administration did to EVs).

U.S is not doing this right now, it's protecting "all sectors" of the economy. There's no other reasonable developed country with a 29% tariff.

You can check here: https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS

You'll also notice that most developed or growing economics have low tariffs...

>And yet, most countries are using tarrifs.

On specific industries they want to protect. Not completely across the board.

Yes. That's what I said "Devaluing dollar does not reduce debt measured in dollar"

The US would still have to pay the debt in Dollars. Devaluation affects currency exchange rates. Debt would be less valuable in Yen and Renminbi but just as expensive for the US government.

Doesn't Europe and Japan have dollar swap lines with US? So ultimately it is US buying its own bonds through Japan to create an illusion that there exists enough external demand.

That's a crazy showertought. WH might actually consider it.

After hypothetical successful debt relinquish negotiations, any new US debt would have similar interest rate to Argentinian debt, 30% or so. Wall Street would shrink and London (or Frankfurt) would become new global financial center.

In reality, countries do just as what they do now. They raise counter-tariffs. The US faces coutertariffs from everyone. Other countries only from the US. Trade between countries other increase and they gradually adjust. Europeans start buying less iPhones and buy more Androids made in South Korea. Less Fords more Nissan.

So the argument is that we crashed the economy but at least we screwed foreigners over and not just social security?

So the full faith and credit of the US Treasury is thrown away just like that?

No one collects the debt. It’s just redeeming treasury bonds. If they are no longer good then the sub prime crisis is going to look like a minor economic wrinkle.

> As a headline "I reduced $7t of foreign debt" is pretty good.

Nobody cares about the big numbers when the wallets are empty.

> Domestic debt might not be such a big deal? Who is coming to collect?

Old people with retirement needs. A lot of that debt is borrowed from SS surpluses in the past, and now the system is actually in deficit (so needs what it lent out back and then some). I’m all for screwing over boomers, psychologically I’ve convinced myself they are responsible for Trump and this mess (not entirely true, but the boomers as a generation messed things up for us before Trump was president, anyways).

> Still fits within a populist agenda. Not a lot of sympathy for mutual funds and the wealthy holding treasury notes that get inflated away.

Wouldn’t this include average people’s pensions, IRAs, etc, too?

Yes, this is the puzzle piece many are missing.

They see a way with china by the end of the decade so they are trying to remove dependence on their manufacturing and flip Russia to our side.

Except there isn’t any guarantee of a war with china, it’s just an idea they have. For all we can tell they have no intention of that. Taiwan is tricky though

Whether one umbrella factory moves from China to the US within this election cycle doesn't really make a dent. The moving of industry from the US happened over decades, and was hand-in-hand with the US making fewer umbrellas and more computer programs, satellites, and microchips. Moving basic manufacturing of low value goods to the US would cannibalize the capacity of producing higher value goods. And none of it will be noticeable while Trump is still alive.

So basically a lose lose from company and consumer perspectives. Either company makes less profit or consumers pay more or a mix of both.

Low cost items, of the type the vast majority of the population are quite sensitive to the price of, have almost no margin on them to start with. There isn't 10% to cut.

The Q5 is made in Mexico.

Forgive me my ignorance, but: parts from which cars are assembled (or raw materials from which parts are manufactured), are also subject to tariffs, aren't they? So the only shift that would happen is that of the labour (and US labour is not the cheapest, IIRC).

> They will now build another factory in the us to be able to avoid tariffs and keep selling their goods at competitive prices

They won't be competitive prices though; they'll have to charge more because of the capital costs in setting up a whole new factory and supply chains, increased labour costs, and having to pay tariffs on importing parts.

I imagine that not being able to export cars from this factory due to reciprocal tarrifs will also drive up prices, due to things like lost flexibility, redundancy, and economies of scale.

In the first scenario the investment isn't astronomical, and if there is surplus capacity you can definitely shift around to avoid tariffs. I think Volvo already announced this wrt. to their US plants. They can take some production from the EU or China and use capacity in the US to build cars. The parts are still imported from China and the EU so will be more expensive, but they still seem to think this can help.

But the second scenario is a massive investment. It not only requires the economics of it to work today, it requires knowing what the situation is 1 or 2 decades down the line. You can't build a car factory in two years. Barely in four. And even if you do, it doesn't matter if it's likely to operate at a loss in 8 years!

The most important thing for that type of investment is stability and predictability, not just "the costs will be lower for at least 2 years now! or maybe 2weeks we don't know since the tariffs seem to come and go depending on which side of bed the local czar wakes up on".

If corp two could have factories in the US and still sell them at competitive prices they would've done that already no? The fact that they haven't indicates it didn't make economic sense. So then doing so would mean their costs would go up, which would either mean they have to eat the extra cost and reduce profit or pass the extra cost to consumers.

You just made me think of another scenario, Corp three has mostly idle factories at important locations around the world but designs their factory lines to be packable and shippable around the world to hedge against tariffs. The carrying-cost of buildings is considered insurance.

No corporation is building a factory based on a policy that has a lifetime of four years.

the tariff is calculated based on trade deficit, not how much tariff the other is applying

You can believe in democracy all you want, but disenfranchisement really has a way of undermining it.

GOP outspent Dems in WI and lost. Dems outspent GOP in FL and lost.

Except those islands are Australian territories. And they've given Australia higher tariffs, so in theory they could reduce these tariffs (which will be paid at least in part by US citizens) by exporting through there?

There's nothing strategic about a 4 column excel spreadsheet and one formula.