Tit for Tat Tariffs - The US versus the World

[rjs330]

Yes we all know that the left believes rhe tariffs are the end of the world and will destroy America.

Maybe they are right. Maybe they will. I really really want Trump to succeed. The majority of his agenda is really good and will be good.

I certainly hope tariffs don't wreck his agenda. I honestly have no idea if they will. They aren't even in effect yet and all the left is convinced dearruction is at hand. I hope they are wrong.

 

[camille70]

https://www.aei.org/economics/president-trumps-tariff-formula-makes-no-economic-sense-its-also-based-on-an-error/

Correcting the Trump Administration’s error would reduce the tariffs assumed to be applied by each country to the United States to about a fourth of their stated level, and as a result, cut the tariffs announced by President Trump on Wednesday by the same fraction, subject to the 10 percent tariff floor. As shown in Table 1, the tariff rate would not exceed 12 percent for any country. For all except five countries, the tariff would be exactly 10 percent, the floor imposed by the Trump Administration.

 

[Say it aint so]

Yes we all know that the left believes rhe tariffs are the end of the world and will destroy America.

Maybe they are right. Maybe they will. I really really want Trump to succeed. The majority of his agenda is really good and will be good.

I certainly hope tariffs don't wreck his agenda. I honestly have no idea if they will. They aren't even in effect yet and all the left is convinced dearruction is at hand. I hope they are wrong.

Don't listen to the left.
Don't listen the right, specially the Trump admin itself.
Listen to those people who create studies, provide analysis, and predictions of economic measures.
What are they saying?
It's far more than just the left.
In fact this yesterday: Senators introduce bipartisan bill to give Congress more power over tariffs

"The bill, co-sponsored by Sens. Maria Cantwell (D-Wash.) and Chuck Grassley (R-Iowa) — both members of the Senate Finance Committee — would “reaffirm” the role of Congress in setting and approving trade policy, according to a release from Cantwell’s office. ​

A bipartisan desire to reign in any damage a president can do through tariffs. It's introduced because even the GOP doesn't have confidence.

 

[loveofourlord]

Don't listen to the left.
Don't listen the right, specially the Trump admin itself.
Listen to those people who create studies, provide analysis, and predictions of economic measures.
What are they saying?
It's far more than just the left.
In fact this yesterday: Senators introduce bipartisan bill to give Congress more power over tariffs

"The bill, co-sponsored by Sens. Maria Cantwell (D-Wash.) and Chuck Grassley (R-Iowa) — both members of the Senate Finance Committee — would “reaffirm” the role of Congress in setting and approving trade policy, according to a release from Cantwell’s office. ​

A bipartisan desire to reign in any damage a president can do through tariffs. It's introduced because even the GOP don't have confidence.

even many trump sycophants like ben sheppiro are turning on him over this.

 

[Merrill]

Personally, I'm thinking "is the thread going so badly for Donald's trade policy that there's a need to continue to drag it off topic by unrelated attacks on the previous administration".

I don't agree with Trump's current trade policy

I think he is doing too much, too soon, and some of this has not be attempted in the past.

But I also disagree with people here who don't understand what he is trying to do, and are simply using the forum to launch attacks on him, make dumb jokes and memes, and drag down the quality of the conversation.

 

[essentialsaltes]

 

[RocksInMyHead]

But I also disagree with people here who don't understand what he is trying to do

The evidence would suggest that Trump doesn't understand what he's trying to do.

 

[Merrill]

The evidence would suggest that Trump doesn't understand what he's trying to do.

Well Trump has a team of economic advisors who have told us what he is trying to do. From what they are saying, and what I have gathered on my own, the strategy is this

1. Implement broad-based tariffs with punitive tariffs on some countries, to generate external revenue and
2. Promote domestic manufacturing and production and clean up the supply chain, and
3. temporarily decrease GDP and growth as a way to entice the Federal Reserve to lower interest rates, and
4. push investors into treasuries, thus bringing down bond yields (they have already come down dramatically), which will
5. make government debt servicing far easier (it is at crisis levels right now)

No one has ever attempted anything like this so quickly, and on this scale, and no one knows if it will work.

but why is he doing this at such a degree?

I think there is absolute panic in Washington over our dependence on Chinese imports, and the fragility of our supply-chain. If Xi got mad and completely cut us off, we wouldn't have sufficient medicine, steel, aluminum, rare-earths, etc. --that is a HUGE problem that somehow needs to be solved. I'd like to ask "free-trade" people if they want China controlling all our medicine? How is that a good idea?

and if China gets crazy and moves on Taiwan, Xi could simply tell the president "any interference, and I will cut off all exports to your country, destroying your economy, and putting 30 million Americans out-of-work"

I don't know if any of this is going to work, but I think I know what he is doing. The US went from 40% of global manufacturing to 15% in 40 years.

I am pretty sure my stock portfolio got hit harder than anyone here, so I am not happy about any of this, but it isn't as simple as people think it is

 

[RocksInMyHead]

Well Trump has a team of economic advisors who have told us what he is trying to do. From what they are saying, and what I have gathered on my own, the strategy is this

1. Implement broad-based tariffs with punitive tariffs on some countries, to generate external revenue and
2. Promote domestic manufacturing and production and clean up the supply chain, and
3. temporarily decrease GDP and growth as a way to entice the Federal Reserve to lower interest rates, and
4. push investors into treasuries, thus bringing down bond yields (they have already come down dramatically), which will
5. make government debt servicing far easier (it is at crisis levels right now)

No one has ever attempted anything like this so quickly, and on this scale, and no one knows if it will work.

but why is he doing this at such a degree?

I think there is absolute panic in Washington over our dependence on Chinese imports, and the fragility of our supply-chain. If Xi got mad and completely cut us off, we wouldn't have sufficient medicine, steel, aluminum, rare-earths, etc. --that is a HUGE problem that somehow needs to be solved. I'd like to ask "free-trade" people if they want China controlling all our medicine? How is that a good idea?

and if China gets crazy and moves on Taiwan, Xi could simply tell the president "any interference, and I will cut off all exports to your country, destroying your economy, and putting 30 million Americans out-of-work"

I don't know if any of this is going to work, but I think I know what he is doing. The US went from 40% of global manufacturing to 15% in 40 years.

I am pretty sure my stock portfolio got hit harder than anyone here, so I am not happy about any of this, but it isn't as simple as people think it is

That may be what Trump's economic advisors are trying to do, but I don't get the impression that Trump himself cares about most of this - he's been yelling about trade deficits and tariffs for 40+ years at this point, and his comments point to his (faulty) perception of "unfairness" being the primary driver behind his decisions. His tariff plan is ill-conceived and idiotic, and if he's just trying to counter China, why blow up our trade relationships with the rest of the world? Even if we do manage to onshore some manufacturing, we aren't going to be able to bring everything back to the US, at least not in any sort of cost-effective way (not without massive automation, at least, which does nothing for American workers), so we're still going to need to have trade. This is just going to drive the EU and SE Asia to align more closely with China in the future.

 

[essentialsaltes]

That may be what Trump's economic advisors are trying to do

Rumors are that Treasury Secretary Bessent wants out of the clown car.

 

[Aryeh Jay]

Rumors are that Treasury Secretary Bessent wants out of the clown car.

Everyone eventually gets out of the car, it just depends if you use the door yourself or if someone else is using the jaws of life.

 

[RocksInMyHead]

1. Implement broad-based tariffs with punitive tariffs on some countries, to generate external revenue and
2. Promote domestic manufacturing and production and clean up the supply chain, and
3. temporarily decrease GDP and growth as a way to entice the Federal Reserve to lower interest rates, and
4. push investors into treasuries, thus bringing down bond yields (they have already come down dramatically), which will
5. make government debt servicing far easier (it is at crisis levels right now)

Speaking directly to these points:
1. Tariffs are paid by the importer, not the exporter. A significant portion of the revenue generated by higher tariffs is coming out of the pockets of American business owners. Some larger retailers may have the leverage to get the manufacturer to shoulder some of the tariff burden, but they can't take all of it, and the higher costs for importers are going to reflect in higher prices for consumers, as well as slower growth for those companies (since they're spending profits on taxes rather than expansion, as well as hoarding cash in case tariffs go up again).

2. This isn't happening in the short term. I wouldn't expect to see any significant increase in domestic manufacturing capacity for at least 5-10 years - it takes a while to build facilities, buy equipment, train a workforce, and set up logistics. And companies will be reluctant to invest in American manufacturing if they aren't sure that the tariffs will stick. With the volatility of American politics at the moment, companies have to plan on a 2-4 year cycle. Why invest a couple billion in setting up a US manufacturing facility if the tariffs that make it economically viable might be gone after the next election (or, indeed, tomorrow, if Trump follows through on the idea of dropping tariffs if other countries do the same)?

3. Interest rates right now are completely average. Sub-1% interest rates aren't sustainable, or even desirable long-term. If we were sitting at the 20% rates of the '80s, this would be a reasonable thing to address, but 5-6% only looks bad right now because we had so many years of artificially depressed interest rates following the 2008 crash. This, alongside trade deficits, is Trump's other economic bugaboo.

4 & 5. The first three steps seem like a heck of a lot of effort to obtain a rather mediocre outcome. While reducing bond yields will help with debt servicing, it seems to me that this effort would be better put into simply reducing the debt rather than building a Rube Goldberg device that depends on a lot of external factors going our way to maybe make it little easier to make our payments (all the while driving the debt up further).

 

[loveofourlord]

I don't agree with Trump's current trade policy

I think he is doing too much, too soon, and some of this has not be attempted in the past.

But I also disagree with people here who don't understand what he is trying to do, and are simply using the forum to launch attacks on him, make dumb jokes and memes, and drag down the quality of the conversation.

DUDE the experts, and his own party have no idea wht he's doing, stop acting like it's all liberals and anti trump people that are confused. ben SHAPPIRO turned on him,

 

[Hans Blaster]

Rumors are that Treasury Secretary Bessent wants out of the clown car.

He bought his ticket...

 

[Say it aint so]

Well Trump has a team of economic advisors who have told us what he is trying to do. From what they are saying, and what I have gathered on my own, the strategy is this

1. Implement broad-based tariffs with punitive tariffs on some countries, to generate external revenue and
2. Promote domestic manufacturing and production and clean up the supply chain, and
3. temporarily decrease GDP and growth as a way to entice the Federal Reserve to lower interest rates, and
4. push investors into treasuries, thus bringing down bond yields (they have already come down dramatically), which will
5. make government debt servicing far easier (it is at crisis levels right now)

No one has ever attempted anything like this so quickly, and on this scale, and no one knows if it will work.

but why is he doing this at such a degree?

I think there is absolute panic in Washington over our dependence on Chinese imports, and the fragility of our supply-chain. If Xi got mad and completely cut us off, we wouldn't have sufficient medicine, steel, aluminum, rare-earths, etc. --that is a HUGE problem that somehow needs to be solved. I'd like to ask "free-trade" people if they want China controlling all our medicine? How is that a good idea?

and if China gets crazy and moves on Taiwan, Xi could simply tell the president "any interference, and I will cut off all exports to your country, destroying your economy, and putting 30 million Americans out-of-work"

I don't know if any of this is going to work, but I think I know what he is doing. The US went from 40% of global manufacturing to 15% in 40 years.

I am pretty sure my stock portfolio got hit harder than anyone here, so I am not happy about any of this, but it isn't as simple as people think it is

A lot of what you write here (and yes I agree sectors like pharmaceuticals and semiconductors given covid need to be in house and protected) are why trade agreements exist. Want to protect an industry? Then do like we did with Chinese e-cars and slap a 100% non exempt tariffs on that product. To use blanket tariffs as a revenue driver is a horrible idea. Others do retaliate. I hope to Hades no one thinks the path to lower interest rates is to tank the economy, even if they think it temporary. The function of a trade agreement is kind of like bartering. You buy our beans and we buy your corn. We import the vast majority of our steel and aluminum from Canada and Mexico. One may recognize them as our partners in the USMCA trade agreement. It would be horrible not to dual source steel and aluminum. What is driving this is Trump again thinks all trade, no matter with what country, needs to be monetarily reciprocal and without deficit. It’s how they came up with that crazy chart of implementation rates, even on that uninhibited Island that only has penguins.

 

[Say it aint so]

Rumors are that Treasury Secretary Bessent wants out of the clown car.

Heck, I had my money on RFKjr.

 

[Hans Blaster]

Heck, I had my money on RFKjr.

There are definitely some people who have their knives out for Robert Kennedy with his unilateral moves against NIH research and treatment programs, but Bessant is the first I've heard of wanting to get out on their own.

 

[DaisyDay]

Anyway, what's with all the attempts to absolve Republican voters of responsibility for their votes? What happened to it being the party of personal responsibility - in this case, being responsible for the economic disaster that's the thread topic unfolding before our eyes?

Yeah, that went out of the window along with being the party of "law and order".

 

[Perpetual Student]

Another consideration: What looks like incompetence is intentional harm to our country.

Yes, but that doesn't explain why the American electorate favoured Trump.
Or does the electorate want to harm the USA? To "own the libs" I can grasp, but harm their own country? No sailor would sink the ship is has boarded, I would think.

 

[DaisyDay]

So if I understand Lutnick correctly, apparently once the factories come back, the jobs will go to robots to keep pricing low.

Good heavens, no! The jobs will go to robots to keep costs low - the pricing will be whatever the market can bear.