This is a copy/paste, Jeffeosso. I would welcome equally reasoned rebuttal by Trumps advocates.
========

This is one of the best explanations about the impact of tariffs by my economics colleague Tim Salmon.

In light of yesterday’s developments, I felt a bit compelled to post a much too long FB post on tariffs. There is a great deal of misunderstanding about how these work and what they will do flying around. Trump tells us that his tariffs will do 2 things. First, they will raise $6 trillion paid for by other countries. Second, they will revitalize American manufacturing and generate new high paying jobs and wealth for our country. All awesome things if they happened. At a minimum, though, it is mathematically impossible for both to come true. If we raise $6 trillion from the tariffs it is because we continue to buy from foreign countries rather than from US manufacturers. So no manufacturing revolution. If the manufacturing revolution occurs, then we aren’t buying from other countries and no $6 trillion emerges. So at most one of those things happens, but which one?

Could the manufacturing boom happen and would it generate jobs? No and no. There is an important misunderstanding here (ok, several) which is that we don’t manufacture in the US anymore. Domestic manufacturing is at record highs. So why are jobs in manufacturing down? It’s because it is done by robots, not people these days. Manufacturing jobs weren’t stolen by factories in Mexico. They were stolen by robots. This has been known for a long time by everyone except politicians trying to sell you on bad policy and "feel good" sound bites. If we increased manufacturing in the US, it would not create a ton of jobs for humans. We would be making our robots work more. As to whether we will create much more manufacturing, consider what you have to think about if you were a company planning new manufacturing in the US right now. First, you have to build a factory. Problem: all the components to build that factory are now tariffed so building that factory will be much more expensive than it was last year when it was already not worth building. Also, all your production inputs are tariffed. Your products will be super expensive. Second problem: who would work in it? Were you to build a factory dependent on labor, there aren’t workers. We are near full employment and we are kicking all immigrants out and shutting off new ones. This is one of the reasons you would have to rely on robots.

What about your ability to sell? Well, exporting is completely out. Other countries will block that and you will be too expensive anyway. Domestically, everyone will already be paying a lot more for things and so they will be buying less and you will be super expensive. By the time your factory is up and running, odds are good we are in full recession. It might be easier to get employees because of that, but no customers. So any manufacturing boom will only employ robots and it’s unlikely to happen anyway. Plus, we were already booming!

So what about that $6 trillion paid for by others? This is complicated. Everyone knows that it is the importer, i.e. us, who pays the tariff directly. So how could Trump claim other countries would pay it? There actually is a way for that to happen. Take Canadian steel as an example. If it gets tariffed and we have good substitutes like Japanese or Chinese steel, then we don’t have to buy the expensive Canadian steel and can buy elsewhere. Canadian steel companies then have pressure to price reduce so that they are less expensive unless they can find other customers. This means they shoulder the main burden of the tariff. We still pay more for less, but Canada takes some of the burden by setting lower prices. The key to that was the availability of less expensive substitutes. Trump set tariffs on everyone. We have no alternatives. We will take almost all of the surplus loss from these tariffs. We will pay a lot more and get a lot less. You might then think “well, just buy American steel!” There isn’t enough. We don’t produce all the types of steel needed or the quantity and even if we did, American companies would be jacking their prices up due to the demand increase and the fact that their competition is eased. We will still pay a lot more for a lot less and we will not generate new jobs for Americans either in the short or long run.

There is no coherent argument in favor of tariffs implemented this way. If you are thinking, “hey, give the guy a chance, how do you know?” Well, there is all of the clear economic theory leading to the arguments above. There is also a ton of historical evidence showing that all of that theory checks out. This is not a new policy design. It is one that people think up all the time. We know how it works. None of this is new. None of this is novel. None of it has been designed in an intelligent or purposive way. It’s just as dumb as taking ivermectin as a cancer treatment. Well, actually dumber still than that as there’s a chance ivermectin doesn’t harm you (not a great one, please don’t take that junk unless you are a horse with worms!). And I’m not going into the dumbness of how they actually arrived at these tariff numbers as their “process” simply boggles the mind at its stupidity (you should check it out so that you understand why he is tariffing stuff produced by penguins).

Why does Trump want to do it? I’m not a psychologist. I can’t say. It does fit in with his general policy agenda which is simply getting revenge on everyone he thinks has wronged him. This includes all the law firms he is shaking down for money because someone he doesn’t like used to work for the firm, the universities he is shaking down, the States he is shaking down and this is him doing it to other countries. This is policy agenda as designed by someone who only understands mafia style protection rackets. If you disagree and can mount a coherent explanation for why this tariff policy could achieve the claimed goals, great! Let me know. The administration has so far mounted no such argument and I don’t see one as possible, but I would be happy to see some argument for why it will work.

That aside, if you have questions along the lines of “well, why is it fair that other countries have tariffs against us and so this is just returning fairness”, that’s a reasonable question as trade policy is complicated but that is another monstrously long post. Happy to discuss it with you if you want the full explanation (short version, total barriers to trade are complicated and not fully captured just by tariff numbers. The US through a ton of US controlled international trade organizations have been pushing all of these to near 0 for decades setting all international trade standards in our favor. It’s part of why other countries somewhat justifiably hate us and among the reasons we used USAID for decades to pay them off in pennies for what we took back in hundreds and thousands of dollars.)

BTW, nothing in what I wrote above has anything to do with politics or any political party. It’s just straight math. In fact, what I wrote above was understood by Republicans for many decades prior to Trump. Democrats only started to embrace this view while Clinton was president but there have been a lot of holdouts in that party. Prior to Trump, Republicans argued this side and Democrats, except for Clinton and Obama, argued for tariffs. It’s a topsy turvy world but none of my points are constructed based on or intended to support the ideology of either party. It’s just math. Math doesn’t care about parties and neither do I.

We really need to start requiring some semblance of competence in the policy domain as this policy, if it remains for long and the trade war escalates, may be as destructive to world economies as the financial collapse of 2007. This time, the economic devastation is completely and easily preventable. Republicans, please rein in this guy. No one else can. The world needs your help.

Interesting piece. My only rebuttal would be, Tariffs seem to have worked for the rest of the world? China seems to have no issues with their financial growth?

Germany? Their cars do just fine all over the world, ours, not so much.

All that said, I realize that tariffs are a very complex issue.

it cannot be coming from trump advocates and for a good reason they are followers of the cult of the supreme leader so no point to try to reason or open discussion: you will be always a leftist for them ...

quote:

Originally posted by Steve Ahrenberg:
Interesting piece. My only rebuttal would be, Tariffs seem to have worked for the rest of the world? China seems to have no issues with their financial growth?

Germany? Their cars do just fine all over the world, ours, not so much.

All that said, I realize that tariffs are a very complex issue.

Tariffs are used as a ‘leveling’ device in trade, to deter dumping that would destabilize an international market, for example. They must be applied judiciously and carefully.

What Trump is doing is the equivalent of spotting a trophy buffalo in the middle of a herd, and trying to take it with an A10 Warthog and his student pilot permit - a hunter who just wants to kill shit, and doesn’t care about the consequences as long as he feels like a big swinging dick.

quote:

Originally posted by Tumbleweed:

quote:

Originally posted by Steve Ahrenberg:
Interesting piece. My only rebuttal would be, Tariffs seem to have worked for the rest of the world? China seems to have no issues with their financial growth?

Germany? Their cars do just fine all over the world, ours, not so much.

All that said, I realize that tariffs are a very complex issue.

Tariffs are used as a ‘leveling’ device in trade, to deter dumping that would destabilize an international market, for example. They must be applied judiciously and carefully.

What Trump is doing is the equivalent of spotting a trophy buffalo in the middle of a herd, and trying to take it with an A10 Warthog and his student pilot permit - a hunter who just wants to kill shit, and doesn’t care about the consequences as long as he feels like a big swinging dick.

Let me apply a real world example of my experience with it.

As I stated, Gates rubber put plants in China. They then sold us, Chinese product at American prices. While doing so, they effectively trained the Chinese how to make the stuff properly, not the junk they used to sell.

Now, The Chinese sell a common hydraulic hose, say 1/2" !00R2 high pressure hose for well under a buck a foot. While Gates sells the same stuff, also made in China for ~2.00'.

They dump product slowly attempting to bleed us dry. We didi it to ourselves.

Now, go to any Construction/Mining show like the big ConExpo in Las Vegas. You simply cannot find any American product on mining/construction equipment, that goes for Ag equipment as well. John Deere included.

Government leveling the playing field for free enterprise is in fact an oxymoron, I get it. But if we continue down this path, we will not make anything here, including the raw materials to defend ourselves with.

I was struck by what Ross Perot said in the debate with Bush and Clinton; "We won't be making airplanes here anymore if we don't change this."

I'll agree completely that everything Trump does is done with a sledgehammer. But doing nothing with the international trade imbalance is a slow road to failure.

quote:

But doing nothing with the international trade imbalance is a slow road to failure.

If it's an issue in the path to Make America Great Again, then let the experts sort it out.

Trump is not an expert. He is just convinced he is and Navarro too.

What they are doing is the opposite of making America Great again.

No one has called Cato Institute contrary to conservative:

https://en.wikipedia.org/wiki/...rvention%20worldwide.

I looked for an article from a source that is most likely to be respected by self-deemed conservatives, in particular Trump supporters.

Here's one:

https://www.cato.org/blog/igno...eaMxmgxoCL7YQAvD_BwE

August 29, 2024 1:10PM
Ignore the Politicians: Trade Deficits Don’t Really Matter

tariffs war never worked but seems the trump supporters of the cult of the supreme leader are still not getting it ...

Ya'll are morons. Tariffs are a bargaining chip.

quote:

Originally posted by lavaca:
Ya'll are morons. Tariffs are a bargaining chip.

who is the moron of who lol ... i will say so far your supreme leader in chief of negocation he is not doing so well except for manipulating the market for his own interest and his buddies but you are not seeing the light yet lol ...

quote:

Originally posted by lavaca:
Ya'll are morons. Tariffs are a bargaining chip.

And it seems to be working as all those being hit are desperate to negotiate new terms.

China still playing hardball but will come to terms.

quote:

Originally posted by fulvio:

quote:

Originally posted by lavaca:
Ya'll are morons. Tariffs are a bargaining chip.

And it seems to be working as all those being hit are desperate to negotiate new terms.

China still playing hardball but will come to terms.

long time ahead of us do not celebrate too early the victory of trump ...

quote:

Originally posted by fulvio:

quote:

Originally posted by lavaca:
Ya'll are morons. Tariffs are a bargaining chip.

And it seems to be working as all those being hit are desperate to negotiate new terms.

China still playing hardball but will come to terms.

Yea, those penguins looked desperate.

By "terms", what do you mean? Are you talking about tariffs or trade deficits/imbalance?

Let me get this straight.

Maybe it wasn't about tariffs or trade imbalance at all, but a different kind of opportunity.

It's basically a tale of follow the money. Who won and who lost? It's a zero-sum game, you know.

https://youtube.com/shorts/7Yn...?si=44WGNBhUqjjMge_D
Trump ERRATIC Behavior Causes MARKET CHAOS

https://youtube.com/shorts/HN3...?si=7sq9-Rjqi14FkBlP
James Carville: What Did You Expect From Trump?

https://www.cnn.com/2025/04/09...cal-tariffs-hnk-intl

US stocks skyrocket higher after Trump signals shift in trade policy
David Goldman Anna Cooban
By John Towfighi, David Goldman and Anna Cooban, CNN
8 minute read
Updated 5:46 PM EDT, Wed April 9, 2025

https://www.cnn.com/2025/04/11...k-market-dow-tariffs

Trump has 90 days to do 150 trade deals. Financial markets aren’t buying it
David Goldman
By David Goldman and John Towfighi, CNN
7 minute read
Updated 4:04 PM EDT, Fri April 11, 2025

https://www.cnn.com/2025/04/11...ffs-oleary-nr-digvid

https://www.cnn.com/2025/04/11...ffs-oleary-nr-digvid

quote:

Originally posted by lavaca:
Ya'll are morons. Tariffs are a bargaining chip.

Trump is telling you the tariffs are to level the playing field. If that is the case why are the numbers he is putting forward not consistent with the reciprocals being charged by the target country or trading block. He’s just picking numbers out of the air.

https://youtube.com/shorts/nR0...?si=sK1Hgs4ia0kOiOjE

Did Trump just SAVE America? - Stephen Colbert