This is an inherently political subject, but I would appreciate a dispassionate argument explaining how this could be even remotely good for the U.S.'s economy in a way that is light on MAGA ideology and doesn't simply claim the overwhelming majority of economists are dumb. I'm simply not seeing even a glimmer of a possible upside right now. I see even less possibility of an upside for those of us North of the border or pretty much anywhere else on the globe.
My best understanding of the administration's psyche is that they're determined to have more manufacturing happen in the US - regardless of the economic impact.
It still doesn't make sense though - there's a reason sneaker makers like to have kids in places like Vietnam make shoes for a few cents per hour. It's because no one in the US would work gruelling hours for such little pay!
POTUS wants to 'level the field' but I'm not convinced it's dawned on him that as leader of one of the wealthiest nations on Earth, 'levelling' will mean the US getting poorer.
More manufacturing will move to the US, but they're about to get a real-time lesson in Econ 101 in the form of the destruction of their country as they abandon comparative advantage and achieve autarky, joining the illustrious club of North Korea.
Also would require near-certainty that these conditions will last far, far longer than 4 years (or 4 days, per earlier tariff tantrums). Especially for the most important industries like semiconductors, steel, oil, which require massive capex.
You said the most important part. Trump and Co believes that a car or semi factories grow overnight like mushrooms in the forest. If a CEO of a semiconductor company would decide to start building a billion dollar plant in the USA, which would take 6-8 years to built, knowing that new President from the other much different party might take over in less than 4 years, that CEO would probably endup being sued by shareholders for jeopardizing the company's bottom line.
Noone in their right mind will start building factories in USA because of temporary tariffs that all might go away with an executive order and a stroke of a pen comes January 2029.
They used to work that way in the US! Then came the labor protections.
Labor conditions are a prisoners dilemma. Individuals in a location can’t really choose to opt out of poor labor conditions if that is what exists there. That is why it took a lot of activism in America to change the labor conditions.
So right now we are exploiting people in places that don’t have the same protections. The comparative advantage of those places is in allowing suffering, not in the people actually being more okay with the conditions.
> It's because no one in the US would work gruelling hours for such little pay!
There are entire towns in the US where nearly everyone is unemployed since the manufacturing dried up.
I would happily pay a few more dollars more per sneaker if it meant those people could have a job, and it meant my purchase went toward making someone's life here better.
> levelling' will mean the US getting poorer
It was never about being rich (maybe in a silicon valley bubble it is) but these people need jobs not only to live but for personal fulfillment. The fact that you are contributing positively to society.
Not everyone wants to collect welfare or unemployment and do nothing for the rest of their life. It causes serious mental health issues and why the 'opioid epidemic' has ravaged these small former-manufacturing towns.
People are hungry for work because they want to be part of society.
I find it hard to sympathize, given how much work there is in this country.
People cross the southern border illegally without knowing the local language and with close to no skills and still get jobs, build families and give a chance to prosper to their offspring.
I'm not saying there's no hardship anywhere in the US, but rather that the US has so much richness as a whole that these towns you talk about should be going out of their way to find job elsewhere in the US.
Its how urbanization works and has been the trend for a long time. There's no reason why every geographic location has to have a booming economy.
Though every human should have the ability and right to move where the economic boom is happening.
> People cross the southern border illegally without knowing the local language and with close to no skills and still get jobs, build families and give a chance to prosper to their offspring.
Those people work jobs with illegally bad working conditions and illegally low salaries.
The problem is more that the companies want to keep their insane profit margin. They could produce in the US, pay workers more and sell for the same price.
But thats less revenue for the company. Less shareholder value. Less bonus for CEOs.
The problem is the hyper capitalism which we have for the past 50 years that every company needs more and more profits.
The boundaries of what is politics and what isn't is difficult to suss (for me) these days. I personally do not believe this is good. But I have a theory on why those that do think so.
I'm 54. It follows that I see a number of people my age. I'm churchgoing, as well as involved in a number of clubs (pilots, rowing, legos, etc). So I get to rub shoulders with a decent amount of people. And especially a bunch of older people. Our parents are aging.
I'm just beginning to see how hard these years from here on out have a number of difficult challenges. I've begun writing myself notes that I hope will help me navigate the years ahead. One of the key issues is feeling relevant still. As well as losing your competitive edge. Your formative wisdom is being invalidated and eroded constantly.
Couple that with a period of euphoria that was experienced as post WWII prosperity followed by the cessation of the "cold war" and a surge in population, and you have a group of people that are more in their own generational bubble than historically. There's enough peers to make you feel like you're in the majority. I think many of these people feel like this is good, because it feeds the need for relevancy. It's not uncommon for older people to lash out, somewhat foolishly, as they transit these years. And as cognition decreases, it becomes easier to game people in this age bracket (unless someone has a better explanation for why older people are the best target of scams).
As I visit with many of the older genrations (not all of course), their justifications, when pared back often come down to "this makes me feel relevant again". And attempts to restore "the narrative I have in my head about how life was in the good years".
Just some rambling thoughts, about why some people think this is good. It's less about the money to them, and more about a hope of something gained. Not unlike a terminally ill person blowing a wad of cash on something that they would never otherwise have justified.
It is sad, that it comes at the expense of the younger generations. It breaks my heart actually.
That may be, but if you run the numbers, the older generations overwhelmingly put this administration in power. If for some reason you weren’t able to vote after 65, it would have been close. And if you weren’t able to vote over 55, it would have gone largely the other way.
Hey thank you for posting this comment. It’s a very interesting perspective!
I wonder if a factor is that many of these older folks don’t have grandchildren to the extent older folks of previous generations did.
I don’t know what effect that could have but I know it’s a feeling that troubles many baby boomers. They thought their children would have children by now and in many cases that’s not happening. It can lead to a great deal of sadness.
In the long run it could lead to more fair trade deals.
Today’s episode of Newshour at the BBC World Service had a conversation between a BBC journalist and a German CDU politician where they talked about how the tariffs on cars from Germany entering America has historically been lower than the tariffs on cars from America entering Germany. The CDU politician was telling the BBC that he hoped maybe a resolution for all of this would be both America and Europe lowering their tariffs to zero.
That was the hope of that politician in the long run though. In the short run the politician was in a sad mood because he felt things economically are going to be bad for everybody.
I think that is unlikely. Trade deals require precitability and trust. Nobody wants to sign a trade deal if it might not be worth the paper its written on next week.
I would expect that it would make future trade agreements more "unfair" to usa because other countries will price in a risk premium to cover america's unpredictability.
e.g. The U.S. has now violated CUSMA/USMCA/NAFTA 2.0 to an egregious degree, and this treaty is due to be renegotiated next year. As an unreliable partner, the U.S. is going to have to give up some serious concessions to Mexico and Canada to make the treaty happen. It's no different than applying for a loan with a low credit score. If you're a higher risk, the rates will be unfavourable.
Trump himself has said the tariffs are to raise revenue in order to get rid of income and corporate taxes. But now they’re also a negotiating tool to eventually remove all tariffs with our trade partners? That makes no sense
I think in theory it forces the middle class to buy American due to tariffs, which builds a more sustainable lower class at the expense of the middle and lower upper classes.
I think it’s still an overall net negative (dramatically) that sees us become overall poorer and less influential, but I would guess there will be more factory sorts of jobs.
The deadweight losses from this trade are staggering, several percents of gdp that'll mostly hit people who consume imports (mostly low-end goods so probably poor people)
If American made prices did not increase too match tariff adjusted foreign made prices that logic would hold. But we know from recent and not so recent history - American made prices some increase, even if they are not impacted at all.
It is strategically beneficial, for trade agreements, diplomatic leverage and in international conflicts, for a nation to have a strong industrial base, in other words an economy that creates and exports actual physical goods. Tariffs level the playing field in our own consumer economy for American made goods, because without them American manufacturing is competing with countries where labor is absurdly cheap.
Donald J. Trump lost an auction in 1988 for a 58-key piano used in the classic film “Casablanca” to a Japanese trading company representing a collector. While he brushed off being outbid, it was a firsthand reminder of Japan’s growing wealth, and the following year, Mr. Trump went on television to call for a 15 percent to 20 percent tax on imports from Japan.
“I believe very strongly in tariffs,” Mr. Trump, at the time a Manhattan real estate developer with fledgling political instincts, told the journalist Diane Sawyer, before criticizing Japan, West Germany, Saudi Arabia and South Korea for their trade practices. “America is being ripped off,” he said. “We’re a debtor nation, and we have to tax, we have to tariff, we have to protect this country.” [1]
We're in an Emperor With No Clothes situation and all of his aids have no clothes either.
My thought today was that aside from the stocks crashing, and aside from any realistic possibility of magically minting new manufacturing facilities, you'd force the price of imported products up in the short term, and prices don't really go back down, so after they go away you'll hypothetically be selling the same products at higher prices that people are now used to, and nothing else needs to happen functionally to increase efficiency or build them domestically. 1) Increase cost of selling imports 2) Crash stock market 3) Buy stocks 4) Remove tariffs 5) Profit
> This is an inherently political subject, but I would appreciate a dispassionate argument explaining how this could be even remotely good for the U.S.'s economy in a way that is light on MAGA ideology and doesn't simply claim the overwhelming majority of economists are dumb.
The slim hope to a voting bloc in the Upper Midwest that maybe, somehow, this will bring back manufacturing.
They've tried everything else; why not this?
We can't simply legally punish the people who shipped the factories off and drove the region into despair, so why not tax the stuff the factories made overseas as a part of the trade-off?
I'm not saying it's a good idea, I'm saying this is their logic.
I’m from Southern Ohio which was not hit as hard, but I know the attitude well. I call it “rust belt rage.”
I remember during the first Trump election hearing quotes like “I hope he does as much damage as possible” and “I can’t throw a bomb into the White House but I can throw a Trump.” Lots more like that.
The attitude in that region of the country is absolute seething rage. A lot of people from Northern Ohio, Western Pennsylvania, Michigan, etc. would be gleeful if they saw people hanged. It’s that kind of rage.
Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries. All those software and engineering jobs just vaporize in a span of 20 years. Places that were once the wealthiest in the country look like failed states and war zones. Everyone who can leave leaves.
Then the media makes you the butt of jokes. Calls you “flyover country.”
> Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries. All those software and engineering jobs just vaporize in a span of 20 years.
> Then the media makes you the butt of jokes. Calls you “flyover country.”
The people in your analogy are not the same types suffering from rust belt rage. One group is willing and very wanting to learn and grow and build, and the other is openly antagonistic to any sort of growth.
That's why they became flyover country. I don't think that would happen on the west coast if your scenario were to occur because of the different culture.
What can I say except: I don’t buy that at all. I lived in Los Angeles for 8 years and Boston for 5. There are some cultural differences but the people there are still just human.
When a region and a culture declines, it gets more nostalgic and reactionary. The arrow of cause and effect goes that way. Places like Detroit were innovation centers and much more culturally open before their entire economy was rug pulled.
If California were rug pulled you’d end up with a culture that lives permanently in the shadow of its boom times and rages at the world.
Damn. Because California has been rug pulled. The underground weed economy was responsible for hundreds of millions of dollars in black market revenue. That money's now gone to Oklahoma because the legal cannabis laws are more favorable there, leaving a absolutely gaping hole in California's economy that can't be replaced by growing alternative crops like saffron, or, in keeping with the illegal theme, poppies/heroin or coca/cocaine. Because it was illegal before legalization, there are scant few stats on just how large it was, but where'd growers used to get $4,000/lb, they're now getting $400/lb. (I have this conspiracy theory level theory, in that San Francisco used to be home to illegal grow ops which forced pg&e to upgrade transformers and substations to support pre-led grow lights, which were massively power hungry. since that power is now no longer needed because those grow ops are no longer viable thanks to legalization, but the upgraded substations remain, the rise of electric cars isn't quite the emergency it should be.)
So much of the arts and Burning Man and entire communities in the Emerald Triangle were propped up by that money, and it's gone.
Time will tell how things go for California. I remain hopeful, but there's just no real data about the black market thanks to its very nature, so it's hard to know just how large that gaping hole is.
That’s fascinating. I always figured that real estate hyperinflation just drove all the arts and cool counterculture stuff away.
The upper Midwest had a lot of culture too. Disco (Chicago was a big place for that), Motown (named after Detroit), techno (also Detroit), industrial (Cleveland / Akron), and house music (Chicago and Detroit) all either came from or had large contributions from what is now called the rust belt.
That whole region used to be solidly Democratic. It drifted a bit R in the 90s and 2000s until Trump flipped it with one word: tariffs. Another quote I remember from a guy in Michigan in 2016: "when Trump started talking about trade... I'd die for this man. I don't care what else he does."
Different people have different reasons for supporting a politician, but for these people it's... I'm not even sure it's hope at this point. For some of them it's revenge. They feel lied to and betrayed.
I guess that's part pretty different from the old Cali weed industry. Nobody promised them anything. For these people the Democrats told them NAFTA would bring jobs.
I lived in Southern California for 8 years and I'd say that Orange County and parts of LA are at least as religious as Southwest Ohio where I now live, maybe more.
It's a different kind of religion, a different vibe, but there's not less of it. There's also a ton of new agey stuff in California that is no more rational or secular than old school religion, just different.
Boston may legitimately be less religious and less superstitious, but I'd be surprised if it was by a lot. Again, the religion is just different. There's a lot of Judaism, mainline Protestantism, and Catholicism up there vs. evangelical Christian and new agey stuff elsewhere.
So it's an issue of fundamentalism, maybe. Those areas like LA and Boston might be as religious in many ways as rust/bible belt places, depending on the metric, but they fundamentally are not confusing a day old zygote with a developed fetus, insisting the earth is literally 6000 years old and dismissing the idea we came from 'monkeys', they don't have issues with homosexualty to the same extent and maybe even belong to a church that is fine with it, etc etc.
> Imagine what the vibes would be on the West Coast if there was a huge set of policy changes that decimated and liquidated the high tech industries
We had large inflation caused by Joe Biden's industrial revival acts (spurring a massive increase in factory construction (see https://home.treasury.gov/news/featured-stories/unpacking-th...) that led to interest rate rises and a TON of tech layoffs! People on this forum should be aware that the chain of causality runs in that direction.
And are you saying that the US media doesn't pillory Californa as a liberal hellhole? I actually don't even know what distribution of media you consume that doesn't handwring over the morality of liberals.
Originally the Intel Ohio One fab was being lobbied for by some housewife in Lorain. It went to New Albany because that part of Northern Ohio couldn't get its act together in contiguous land acquisition.
Interest rates didn't rise because of industrial revival acts; they rose because they had been artificially low for a decade and someone had to throw water on the economy to cool it lest hyperinflation hit.
> and a TON of tech layoffs!
The nature of tech layoffs and what has happened in the Midwest over the last 50 years are completely different. When a guy is let go from Meta, he's let go from a job that earned him well over the median salary for Americans. Provided he hasn't blown it out his ass on courses at microdosing at Esalen, he should have something in savings. He has resources. He has connections. He has opportunities. When you work in an area with that much money in it - remember, Larry Ellison, Elon Musk, and Mark Zuckerberg each have a net worth that puts them on par with the yearly gross economic product of small American metropolitan areas - you can recover.
When a guy was let go from an automotive parts supplier in Michigan in 1988, he's making near that median salary. He has far less cushion. The nature of his work does not allow him to simply open his laptop and toy around with new business ideas, or open a startup; his former employer was the employer in town. When it went under, the town went under, and he had no way to get out.
And that's before accounting for what the rusting hulks of machinery did to the town. Chemicals dumped before regulation poison the water and soil. Major swathes of real estate needing millions of dollars in cleanup before any real redevelopment can occur. Maybe the Feds will get around to it with the Superfund in a generation or two; the developer from back east sure as hell isn't going to pay for it. By the way, can the town - which is already short on funds - give them tax increment financing for that redevelopment? They'll never come out ahead otherwise. You can't just convert a former brake pad manufacturing plant to lofts like you can with a former tech headquarters in San Francisco.
> And are you saying that the US media doesn't pillory Californa as a liberal hellhole? I actually don't even know what distribution of media you consume that doesn't handwring over the morality of liberals.
> Interest rates didn't rise because of industrial revival acts; they rose because they had been artificially low for a decade and someone had to throw water on the economy to cool it lest hyperinflation hit.
I hate "artificially low" why artificial? What makes something artificial and what makes it real? In economics, there's an idea of a natural interest rate: the interest rate which is the lowest under which inflation will not occur. That has been trending lower, see https://www.newyorkfed.org/research/policy/rstar. It absolutely is not artificially set anywhere: the fed doesn't set the natural rate of interest, it accommodates it with a policy rate and has to deal with a 12-18 month lag for their policy to be effective (a fun quirk - there's a cool badeconomics thread on this) which is why it was hard to deal with inflation caused by the russian invasion: you can't predict that 12-18 months out!
> The nature of tech layoffs and what has happened in the Midwest over the last 50 years are completely different.
No data backing this up.
> where are you getting that from OC's comment?
OC talking about media calling them 'flyover country' as if it matters / is somehow out of bounds conduct at all.
> I hate "artificially low" why artificial? What makes something artificial and what makes it real?
When people have cheap access to money, they spend it. When they spend it in such a manner that it outpaces the ability of the supply side to, well, supply, the result is inflation. And that's what we saw in '21 and '22. You had someone handing out PPP loans like candy and forgiving them outright, you had stimmy checks (that weren't backed by anything real, but that's another story), you had people sitting around looking for stuff to pass lockdown with, etc.
So at that point, by definition, we're lower than the "natural" interest rate. This showed that a lot of businesses in the tech industry couldn't survive without dirt-cheap money to give them ever-increasing amounts of runway. You can't just hyper scale like Uber when borrowers expect the rate of return dictated by the now-higher "natural" interest rate.
> No data backing this up.
Besides decades of economic, social, environmental, and political events and trends, you're right. Wanna have a bottle of water from Flint, MI? I can pull one out of the cellar. 2015, a fine year.
> OC talking about media calling them 'flyover country' as if it matters / is somehow out of bounds conduct at all.
1) that's not indicative of the stuff you were charging
2) yeah, it is out-of-bounds conduct. It's an a-hole move to belittle poorer regions in your country, whether explicitly or in more tacit ways. If you do it long enough, you get where we are now. Anyone happy about that?
> And that's what we saw in '21 and '22. You had someone handing out PPP loans like candy and forgiving them outright, you had stimmy checks (that weren't backed by anything real, but that's another story), you had people sitting around looking for stuff to pass lockdown with, etc.
Yes, this is my whole point. The American Rescue Act and subsequent policies that were very much propping up salient jobs (certainly not wfh tech jobs that are, definitionally, resistant to lockdowns) fueled inflation that led to the end of zero interest rate period which led to large layoffs in tech.
> Wanna have a bottle of water from Flint, MI?
Flint falsifies your point, it is a democratic bastion. If you'd expect that to radicalize people, it should be deep deep read.
> yeah, it is out-of-bounds conduct
Out of bounds is a social norm over time. Donald Trump, their far and away champion, gives such egregious conduct I can't read this with a straight face.
But we can go further back. Was 'just say no' not egregious enough for you? AIDS shaming? The vicious anger against gay people? I can take any snapshot of the past - conservatives will always be the cry bully at any of the years in time you want to pick.
> Yes, this is my whole point. The American Rescue Act and subsequent policies that were very much propping up salient jobs (certainly not wfh tech jobs that are, definitionally, resistant to lockdowns) fueled inflation that led to the end of zero interest rate period which led to large layoffs in tech.
Those are of little consequence compared to FRS interest rate policy. Also, those people need a place to work. Sorry.
> Flint falsifies your point, it is a democratic bastion. If you'd expect that to radicalize people, it should be deep deep read.
Democratic or Republican doesn't matter. When you have no more money because of major regional economic changes, you can't do the basic functions of government. There's also demographic differences.
> Out of bounds is a social norm over time. Donald Trump, their far and away champion, gives such egregious conduct I can't read this with a straight face.
That's what rage does.
> But we can go further back. Was 'just say no' not egregious enough for you? AIDS shaming? The vicious anger against gay people? I can take any snapshot of the past - conservatives will always be the cry bully at any of the years in time you want to pick.
You're confusing "conservative" with people in the part of the country that we're talking about.
I’m pretty sure the only ones it will be good for are the rich. Make the rich richer. They will be able to buy stocks cheaply. They will be able to buy homes cheaply as people lose their jobs and foreclose. They will make the USA into a nation of renters. They will increase inflation and prices of everything so most people will be on the cusp of insolvency so they have to work multiple jobs for lower wages and can never retire. They will decrease education so people won’t be able to recognize the propaganda for what it is. They will disappear dissidents. They will make abortion illegal so people churn out the next generation of wage slaves. They will create false enemies (Canadians, gays, liberals, atheists, Jews, Muslims, anyone not white, etc.) to distract people from the real villains.
The rich are about to get a massive tax cut. They cannot possibly spend all those savings on things like food or consumer goods. So where does it go? Assets: Housing, more stocks, antiquities. Any truly rich person will have a diversified portfolio of assets. So what if some of their stocks go down temporarily? They will go back up eventually and the rich can afford to wait out much longer than any normal peon. Its not even a nefarious thing either. If anyone were in their position it would be the prudent thing to do. The most important thing is they have to put this money into something now before it erodes. Buy up all the stocks, buy up all the land, buy up all the vintage collector items, hell even buy up all the retro video games, just do it now.
It's more concentrated than you give it credit: the wealthy overwhelmingly hold their money in business capital (read: stocks) not housing. Housing is predominantly owned by the middle class. Having stocks go up and down is what mostly changes the ultra-rich wealth, and in this case they're going down.
wouldn't a drop in equities be the worst thing for them then? That'd trigger a margin call and liquidation; at the very least, they can do that without the shares falling.
You're implicitly saying that they have an enormous if not cash position then leverage capacity that they're holding out on with the opportunity to buy more shares. In which case I challenge you: tell me where! I see tons of evidence of rich people completely shifted to risky risky equities (accredited investments have many attractions, one of them is not risk / 'volatility' (depending on your definition, see matt levine for details)!).
The only positive outcome I can think of is that T and co are trying to scare trading partners into lowering their tariffs in response. Assuming that happens to some degree, T will revert his and then take credit. Then the market will return as well, and we all head off into the sunset.
Likely why it is happening so early in the admin, so we can all forget about it by the end.
But I do think that a logical assessment undervalues the notion that this is an emotional/intuitive. I don’t think Oren Cass’ very interesting intellectualization of the problem will actually help you predict what Trump will do.
But in the emotional piece - He’s talked endlessly about how America is getting screwed, and his tariff calculation was based pretty directly on trade deficit calculations.
Trump has kooky beliefs about tariffs, and his economic guys are yes men.
Economics and science mean nothing to the President. He probably heard some blowhard in a bar 50 years ago yabber about tariffs. He’s an instinctual person, and when he senses danger to himself, he’ll pivot.
I’d guess there will be air strikes on Iran or threats of an incursion into the Mexican side of the border by June.
Or it's just his newest promise to give voters something for free. Like the wall that was partially built and paid for with DoD funds. He advertises tariffs as free money from other countries. For some reason people buy it.
It's clearly not good for the US economy, but I think that is a red herring. This has been so far, and continues to be, a highly successful endeavor from the perspective that matters: that of the US president himself, who wants to benefit personally.
I think it's helpful to ask "What if this president actually doesn't care one way or the other what happens to the US economy, the world economy, or even geopolitical stability (beyond the US not getting nuked, causing him to die), and everything is just a grifter's instinct for how to benefit personally?"
In that light, literally everything this administration does makes perfect sense.
This is a man whose main accomplishment before the presidency was "being famous" — starring in a reality TV show and professional wrestling (the fake/scripted kind), and he clearly wants to be the center of attention in the media.
Although his tariffs are widely mocked by knowledgeable people as "insane", "stupid", or as the Financial Times put it, "one of the greatest acts of self-harm in American economic history", imposing them gives the man himself the opportunity for corruption on a scale unprecedented in modern US history.
He can easily (very easily) benefit financially and otherwise because heads of state, captains of industry, and the ultra-wealthy have to come to him to beg, flatter, or do something — buy his memecoin, rent out his hotels, buy his otherwise-failed social network for billions, the list is near-infinite — to get out from under his tariffs.
So I don't think there is any upside of the kind you are talking about. But there is substantial upside for the man himself, and it is enough to explain all of his actions.
They only seem nonsensical if you believe he is trying to act in the best interests of the nation.
The belief of Trump and his allies is that the last 40 years of free trade has been extremely favorable to college educated "elites" and extremely unfavorable to the working class. They see foreign trade as having hollowed out American manufacturing, and therefore they see the shutting down foreign trade as a way to reverse this decline. While they are aware that doing so will hurt college educated professionals, they don't care because they feel those people have had it too good for too long.
I get it and even sympathize, but I don’t think it will work for three reasons.
First is the uncertainty they are creating. Factories take a long time to build and staff and cost millions to billions depending on size and industry. Who in their right mind is going to invest that to build factories that are only economically viable under a tariff regime that could vaporize after the next election? Or if Trump changes his mind? Which he has a history of doing. Chaos like this is anathema to that kind of long term investment.
I am not opposed to the idea of trying to rebalance trade and repatriate manufacturing. Not at all. But it can be done skillfully, strategically, and without panicking global markets. This economic pivot is less well planned and executed than Biden’s withdrawal from Afghanistan.
The second reason it won’t work is that there’s way more competition today. After WWII during those glory days of US manufacturing everyone talks about Europe was destroyed and much of Asia had not yet industrialized. We were not just selling to a domestic market. We were selling to a world that had no alternatives. That’s just not true anymore.
The third reason it won’t work is that these tariffs are going to be massively inflationary and that will wipe out any gains the working class gets from more or better jobs.
Meanwhile they are doing nothing to address cost disease in housing, health care, or education.
Housing is the big one and I haven’t heard a peep. Instead of using Federal leverage to tilt at windmills like trans people using bathrooms, they could use that power to push states to regularize zoning and allow more home construction. “No more Federal highway funds unless you implement a plan to reduce housing costs.” Now that would help the working class and the young. It would also help things like the birth rate, which I know a bunch of people on the right are freaking out about. Reducing the #1 cost barrier to family formation would help a lot.
In short I think they’re doing a terrible erratic job of implementing a dubious strategy. This is going to fail, and we will all get poorer as a result. China will be the largest beneficiary since even more of global trade will now shift to them. They are now seen as stable, responsible, and reliable while we look like a basket case.
I think that's the belief of his voters in the Upper Midwest, but not necessarily Trump himself. He's the college-educated elite. He's playing them like a fiddle. He knows that they will absorb the damage from this, not the elites, who are far more connected than they are college educated.
Where did you take this from? Trump is not from working class. Working class might've been his 'platform' for the election, but he's already elected now, he basically has no incentive now to fight for the rights/interests of his voters, he has his own wallet that needs to finally get filled. Unless you think he really aims for a 3rd term.
Sure, it's just that though, a belief. The vast majority of the poor have prospered from free trade; indeed, the costs they complain the most about (health, education, housing) are the biggest categories of things that _can't_ be traded.
But these beliefs have been core to the American left for decades. Even left wing intellectuals like Noam Chomsky have attacked the neoliberal trade agreements I think.
Trump’s populist right wing fans have adopted traditionally left wing views. What’s surprising is so many left wing people are supportive of free trade when they were against free trade during the Reagan era.
I don't think the left has been automatically in favor of tariffs--or at least I'd appreciate evidence for that claim. The complaints about free trade deals that I've seen have tended to be about provisions that treated various labor and environmental regulations as restraints on trade. It's fair to say that left-liberal people are paying more attention to the downsides of tariffs than they were, but I don't think it's a simple reversal of positions.
I’m not sure what your sources are but if Bernie Sanders is the left, then he’s been saying the same thing for a long time and continues to. Maybe there’s some nuance to it?
I wouldn't say its good for anyone, but it is probably worse for many of our trading partners so they would, in theory, make moves to negotiate with the US to skirt the tariffs. I don't think it will ultimately have been worth it in the end but time will tell.
I saw Peter Navarro saying US car plants were only running at 65% capacity and by tariffing foreign cars, the US plants could crank up and produce more. Not sure how true that is but that's the kind of thing that could be positive.
- I voted for Trump but do not consider myself a strong supporter (I saw it much more of a vote for who you dislike less sort of situation)
- I don't understand and am not supportive of the approach on Tariffs
- I am an active participate in what most here would consider right wing politics although I don't find myself aligning on every topic (e.g. I am supportive of the abortion laws in California) so I tend to hear a lot of the chatter "from the other side"
Some arguments that I have heard (which I mostly do not agree with) are
- When manufacturing moved out of the US to low cost of living countries, this hurt towns which relied on manufacturing (e.g. the rust belt). Cost is the primary reason why manufacturing moved. Raising the cost on overseas manufacturing may make domestic manufacturing cost competitive. Although economics tells us this will still be a net loss there may be externalities which are not priced into the trade (e.g. the towns falling apart and people becoming despondent / drug addicted might not be factored into corporate profit models)
- Being overly dependent on China or more broadly "foreign powers" for manufacturing represents a national security risk.
- In theory this could be posturing to provide an opening for the US to negotiate more favorable trade agreements. For example Israel, Vietnam, and Argentina have made some statements about reducing trade barriers on US companies.
- In theory it could be beneficial to shift the revenue model of the US towards raising revenue with tariffs while reducing interest rates and other tax rates (e.g. "no taxes on overtime and tips")
The argument in favour of free trade is that it increases the pie, so that everyone can be better off (a Pareto improvement). However, given that trade does produce winners and losers, this argument is predicated on redistribution, namely (over)compensating the losers.
That second part of the argument in favour of free trade is often conveniently forgotten. So when that redistribution doesn’t happen, then opposing free trade is quite rational for some.
I broadly agree that free trade increases the pie and is beneficial. I would still like to point out that I can think of two examples where the pie might actually decrease even while conceding in the vast majority of cases the pie does increase and that free trade is largely a good thing.
(1) The comparative advantage of a country is that they do not have strict environmental standards and becomes the low cost leader in a "dirty" industry.
(2) An individual in the rich country loses their job to an individual in the poor country who produces exactly the same level of output at lower cost and the individual in the rich country ends up having to subside on government benefits
For both of these examples, shareholders profit financially from the outsourcing (and so I would argue it is likely happen) even as the world in example 1 or the rich country in example 2 loses out.
To improve rust belt manufacturing, you would target competitors of industries in that area, not the whole global economy.
We imposed a 32% tariff on Taiwan. Simultaneously, we are making it more expensive to manufacture here in the states. We have 1/4 China's pop - why would we try to compete on raw output by ourselves, instead of strengthening ties w/ the world?
For many countries, there is nothing to negotiate since we already have free trade agreements with them. We may import a lot of goods, but we export a lot of services, like many developed nations do.
With regard to raising revenue, think of the tradeoffs. If demand is elastic (given our trade deficit, it has to be!), this will be a tax on many, many American businesses and consumers. Its just moving the taxes from income tax to a consumption tax. That's a worse deal for poorer/middle-class Americans.
> To improve rust belt manufacturing, you would target competitors of industries in that area, not the whole global economy.
If you accept as a premise that the goal is to prevent offshoring our manufacturing base THEN you may also want to develop new industry and not just protect industries in that area. Moreover the goal is presumably not restricted to just that area it is an example of a specific region which was hard hit.
> We imposed a 32% tariff on Taiwan. Simultaneously, we are making it more expensive to manufacture here in the states. We have 1/4 China's pop - why would we try to compete on raw output by ourselves, instead of strengthening ties w/ the world?
I don't immediately see how each of these statements relate to each other. I'll just reply to "We have 1/4 China's pop - why would we try to compete on raw output by ourselves" by stating that we may want to compete with China on manufacturing output because of national security implications.
> For many countries, there is nothing to negotiate since we already have free trade agreements with them. We may import a lot of goods, but we export a lot of services, like many developed nations do.
The Tariff calculations have a differential rate for each country so it appears to have taken into account to some degree that we need more negotiation with certain relationships. I won't state that this was necessarily done well...
> With regard to raising revenue, think of the tradeoffs. If demand is elastic (given our trade deficit, it has to be!), this will be a tax on many, many American businesses and consumers. Its just moving the taxes from income tax to a consumption tax. That's a worse deal for poorer/middle-class Americans.
A consumption tax is a worse deal for poorer/middle-class Americans. I agree with you. It may be the case that this functions as a consumption tax on foreign labor which could increase the negotiating power of poorer/middle-class Americans.
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I really do not mean to defend the specific actions of the sudden global Tariffs. I am attempting to explain how I believe some on the right may see things in case people find this interesting. The furthest I will go is to state that I think the fears about a new great depression may be somewhat overblown.
You could broaden beyond the rust belt: America is a rich country that manufactures fancy things. A smart trade policy would focus on these things; it would not make policies to be competitive with poor nations. We tariffed places that export commodities or low-value-add products, places that we import ingredients from to make the fancy things.
Taiwan and China are related specifically on semiconductor trade; its the hottest point in our "battle" w/ China. TSMC is really the only company in the world that can make the best chips. Losing their trust is itself a security risk.
On the last point, I agree it would increase labor competitiveness, but I don't think its smart to compete with the whole world. If we wanted to do this, we should set policies to make skilled Americans competitive in the manufacturing industries that already exist here.
It's hard to say exactly as the possibilities are endless and as I said originally I am not exactly proud of my vote to begin with. Some things that come to mind:
- Clear outperformance (in my judgment) by Canada / Europe as compared to the US (this would indicate policy failure on the part of the US to me)
- Large scale war of some sort beyond the level of carnage we are witnessing in Ukraine
It seems the maximum likelihood model is a political one and not an economic one. Trump likes making deals and he historically has made them by applying his leverage and bullying people to go his way. Now he has the most powerful office in the world and a lot of leverage to bully anyone he wants (universities, law firms, other countries). Lots of lunch money will be taken but no one's going to go near the bully anymore.
At the end of the day, it's about Trump's need for attention and ability to wield power, rather than any economic objective. Tariffs are a way to wield significant power without requiring the approval of Congress.
I think this might be a move to stop a world war (between Russia and NATO/Europe). If U.S. also leaves NATO any time soon - the chances for a world war would decrease greatly.
I don't think that makes sense. Wars happen when one of the sides think they can win (and want something). USA leaving nato and reducing trade makes european states more vulnerable. I would expect this to increase the liklihood of war.
Especially in the near term - eventually europe will adapt to the new world order, but in the mean time their is a limited window of opportunity where everything is in flux, which would be a great time to strike.
But... they can? If Ukraine can fight Russia to a standstill, a fully mobilized Europe clearly at least has a shot. Unless it escalates to nuclear weapons and everyone loses... But you need at least an argument if you want to say that is less likely without any initial US involvement, it's not obvious.
Exactly. Europe thinks it may join Ukraine in a war against Russia to actually win that war.
My point is that this is quite a reason why a nuke war may occur.
And if U.S. turns back away from Europe - Europe might 'sober up' and not seek the prolongation of a conflict. Non-nuke wars end somehow. One side usually loses, without such a loss - there would be no end for the war and more and more people would die. A bitter ending is better than endless bitterness.
There's nothing in my comment to "exactly" in support of your point. If the US backs away from Europe it may be more likely to encourage Ukrainian surrender. Russia may be more likely to attack Poland. Germany may be more likely to develop its own nuclear deterrent. Or none of these things may happen. Extrapolating from tariffs to world peace demands a bit more than loose speculation at the continental level.
I doubt Europe would be that cocky without a full support from their "big bro" from across the ocean.
As for attacking Poland - that sounds quite uncalled for: Poland doesn't have a meaningful share of Russian natives living there historically for the Poland to start oppressing them to the point Russia would start a war against Poland. I can't even think of any reason why Russia would attack Poland.
There is no modern international norm where a nation can use military force to invade or interfere with another nation because of ethnic natives in that nation being mistreated. This is another russian talking point that’s used as a justification for their intentional aggression and it has nothing to do with why they actually invade their neighbors.
Yes, the isolationist era that followed World War One clearly calmed the rest of the world, so that the various "expansionist" regimes felt less threatened and just let their neighbors be.
It's different now, since at that time there were no weapons of total annihilation (and now there are quite some).
That's exactly why 'expansionist' regimes were ready to start some next war, being eager "to get some extra land" as a result of said war.
The current war is different: this is the war that started not out of appetite towards foreign lands, but, basically, out of primal fear, the fear concerning safety. The West was failing at self-reflection and was completely oblivious about their own actions being treated as crossing a real red line for Russia's safety.
You may scare a wandering bear away, but driving it into a corner is both stupid and fatal.
Interesting, but I don’t see it this way at all. The west talked Ukraine into giving up their nukes and said we’ll keep you safe. All that without NATO. But as time has ebbed, and Russia meddling in eastern Ukraine went largely ignored by the west, Russia grew emboldened and decided it could just invest in a history rewrite, an airing of past grievances, and an invasion.
If Ukraine had said “fuck no” from day one, “we’re keeping our stuff, we don’t trust any of you long term at that level”, it would be in interesting world we live in.
This narrative that NATO provoked Russia into this is non sequitur. A gaslight of grandeur.
I am sorry, but it looks like you are just uneducated about the facts and events that happened prior to Russia taking Crimea back. You should not just read some, but actually dig a bit, if you are really interested. I'm not here for a political debate really, I'm not buying into your baity (and wrong) arguments. I shared my idea about how tariffs might be a step that might actually prevent a nuke war and I just expand on said thought.
These are old and tired russian talking points. How exactly is russia, a nuclear power, threatened by Ukraine? They didn’t respond at all to Sweden and Finland joining NATO, despite Finland’s much larger land border with russia.
russia also annexed and occupied Crimea, and at the same time destroyed or stole the entirely of Ukraine’s Black Sea fleet. They moved their own nuclear weapons to CSTO partner state (and vassal) Belarus, pushing them closer to NATO borders.
no matter what justifications russia claims, their actions are what matter, they have no desire for any form of modern diplomacy. Do you remember how long they pretended Wagner mercenaries weren’t directly funded and supplied by the state?
Care to explain your rationale? Seems like Russia is in no position to invade any NATO country unless the US leaves the alliance. They've proven themselves wholly outclassed in Ukraine, against a much smaller country with refurb gear.
Furthermore, Russia has no plans to invade any NATO country. It just won't let NATO invade^W expand to Ukraine. And no, this war is not how you describe it: said 'much smaller country' was 2nd biggest (in terms of military strength) in Europe after Russia itself.
And it's not a 1x1 war of big Russia vs small Ukraine: Ukraine got help from all over Europe, G.B., U.S. and Canada. Help in arms, in intel, in training, in money and other resources. Russia got sanctioned badly, by such a big bunch of countries that you'd rather be smirking not about Russia not being able to win already, but at Europe (and now U.S.) economy getting some hits... while Russian economy still stands yet. While all the sanctions are still in effect. For years.
> Furthermore, Russia has no plans to invade any NATO country.
Not only are you attempting to prove a negative with "trust me bro" but it's especially laughable given recent history. Please tell me how many days before the Ukraine invasion Russia had "no plans to invade".
> this war is not how you describe it: said 'much smaller country'
Personally I consider 1/3 the population "much smaller" but you do you.
> it's not a 1x1 war of big Russia vs small Ukraine: Ukraine got help from all over Europe, G.B., U.S. and Canada.
Exactly why the US remaining in NATO prevents a large scale conventional war. Because Russia is pathetic unless it is bullying smaller neighbors or threatening nuclear war.
I think it's the opposite: with US remaining in NATO, Europe will feel cocky enough to get dragged in a war, Russia will of course retaliate and further escalation (especially if Russia starts losing) highly likely will lead to the nukes.
Now look at the news: Germany sends troops (for permanent stationing) to Eastern Europe. GB, France and Germany discuss deployment of their troops to Ukraine.
