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Answers to his issues with tariffs: > First, such tariffs are probably barred under trade agreements that are in place. To impose them, we would have to abrog

by csense 10y ago

Answers to his issues with tariffs: > First, such tariffs are probably barred under trade agreements that are in place. To impose them, we would have to abrogate those agreements. So what? Those trade agreements were made under the assumption that they'd be good for America. Now that we know they're bad for America, the assumptions under which they were made are invalid. > We have to wonder about retaliatory actions – wouldn’t other countries impose offsetting tariffs on U.S. exports that would further harm our manufacturing base? We're a net importer. Tariffs in other countries would only really hurt if we did a ton of exports. > What would happen to our ability to refinance our perpetually growing national debt if China, our biggest creditor, decided one day it wasn’t quite as eager to participate in new Treasury financings? Lower taxes and cut the size of government. Stop printing money and allow interest rates to rise. > What would rising barriers do to one of the main motivations behind the broadening of U.S. trade agreements since World War II: preventing conflict? A tariff is not a wall. Trade would still take place and there'd still be interdependence. > Finally, but most simply, what American wants to pay 50% more for a cellphone than he does today? An American who used to be unemployed or paid minimum wage, but has gotten a much better job with an greatly increased salary because he no longer has to compete with desperately poor people who will accept pay far below the US minimum wage.

dforrestwilson 10y ago
> So what? Those trade agreements were made under the assumption that they'd be good for America. Now that we know they're bad for America, the assumptions under which they were made are invalid. Do we know that? It's easy to quantify slower income gains, but harder to quantify lower costs for goods and services. I'm not even sure what the closes proxy would be. Inflation? >We're a net importer. Tariffs in other countries would only really hurt if we did a ton of exports. History has shown that tariffs do result in counter-tariffs, which end up being unprofitable for both sides, driving up costs. > Lower taxes and cut the size of government. Stop printing money and allow interest rates to rise. 100% agree. > A tariff is not a wall. Trade would still take place and there'd still be interdependence. But it is a barrier, starting as a low hurdle and tending to rise over time. > An American who used to be unemployed or paid minimum wage, but has gotten a much better job with an greatly increased salary because he no longer has to compete with desperately poor people who will accept pay far below the US minimum wage. Where and how do these new higher paying jobs come about?
- twblalock 10y ago
  Another very harmful and insidious consequence of tariffs: by preserving non-competitive industries that would not survive in a free market, tariffs delay, and worsen, the inevitable collapse of those industries. By hiding behind tariffs, we delay the replacement of non-competitive industries with competitive ones. When we finally drop the tariffs and start developing competitive industries, other countries will have had a head start in doing so. Our companies and workers will be behind their global competitors by years. The countries which declined protectionism and developed competitive industries when it first made sense to do so will reap the rewards. Someone might point out that we could avoid this situation by simply keeping the tariffs around forever. But that never happens. Eventually, the tariffs will become unpopular because people will know that outside of this country, the same goods cost significantly less. That gap is likely to increase over time. The Oak Tree Capital article uses a hypothetical example of cell phones being kept at a $150 price in the domestic market by tariffs, when they are available at $100 in the international market. After a few years, they will still be $150 here, but maybe down to $80 in the international market. A few years later, they may cost only $50 internationally. They won't become much cheaper in the domestic market because manufacturers will have no incentive to lower prices, because they are protected by the tariff. Furthermore, if the domestic manufacturers were capable of competing on price, the tariff never would have been necessary in the first place. At some point, the tariff will be too politically unpopular to be sustained. It's worth noting that one of the contributing factors to the collapse of communism in Europe in the late 1980s and early 1990s was the obvious and increasing divergence in quality of life between the communist and capitalist countries, and that protectionism and anti-trade policies in the communist countries, along with attempts at central planning, accounts for much of that. They had a good run, but they could not hide from economic reality forever when their neighbors obviously had it so much better. That's why tariffs can't survive indefinitely.
twblalock 10y ago
> So what? Those trade agreements were made under the assumption that they'd be good for America. Now that we know they're bad for America, the assumptions under which they were made are invalid. How do you know that? They have certainly hurt some Americans, but have resulted in lower consumer prices and a higher standard of living for almost everyone. This is covered in the article as a tradeoff of trade policy.

by csense 10y ago

dforrestwilson 10y ago

> So what? Those trade agreements were made under the assumption that they'd be good for America. Now that we know they're bad for America, the assumptions under which they were made are invalid. Do we know that? It's easy to quantify slower income gains, but harder to quantify lower costs for goods and services. I'm not even sure what the closes proxy would be. Inflation? >We're a net importer. Tariffs in other countries would only really hurt if we did a ton of exports. History has shown that tariffs do result in counter-tariffs, which end up being unprofitable for both sides, driving up costs. > Lower taxes and cut the size of government. Stop printing money and allow interest rates to rise. 100% agree. > A tariff is not a wall. Trade would still take place and there'd still be interdependence. But it is a barrier, starting as a low hurdle and tending to rise over time. > An American who used to be unemployed or paid minimum wage, but has gotten a much better job with an greatly increased salary because he no longer has to compete with desperately poor people who will accept pay far below the US minimum wage. Where and how do these new higher paying jobs come about?

twblalock 10y ago
Another very harmful and insidious consequence of tariffs: by preserving non-competitive industries that would not survive in a free market, tariffs delay, and worsen, the inevitable collapse of those industries. By hiding behind tariffs, we delay the replacement of non-competitive industries with competitive ones. When we finally drop the tariffs and start developing competitive industries, other countries will have had a head start in doing so. Our companies and workers will be behind their global competitors by years. The countries which declined protectionism and developed competitive industries when it first made sense to do so will reap the rewards. Someone might point out that we could avoid this situation by simply keeping the tariffs around forever. But that never happens. Eventually, the tariffs will become unpopular because people will know that outside of this country, the same goods cost significantly less. That gap is likely to increase over time. The Oak Tree Capital article uses a hypothetical example of cell phones being kept at a $150 price in the domestic market by tariffs, when they are available at $100 in the international market. After a few years, they will still be $150 here, but maybe down to $80 in the international market. A few years later, they may cost only $50 internationally. They won't become much cheaper in the domestic market because manufacturers will have no incentive to lower prices, because they are protected by the tariff. Furthermore, if the domestic manufacturers were capable of competing on price, the tariff never would have been necessary in the first place. At some point, the tariff will be too politically unpopular to be sustained. It's worth noting that one of the contributing factors to the collapse of communism in Europe in the late 1980s and early 1990s was the obvious and increasing divergence in quality of life between the communist and capitalist countries, and that protectionism and anti-trade policies in the communist countries, along with attempts at central planning, accounts for much of that. They had a good run, but they could not hide from economic reality forever when their neighbors obviously had it so much better. That's why tariffs can't survive indefinitely.

twblalock 10y ago

> So what? Those trade agreements were made under the assumption that they'd be good for America. Now that we know they're bad for America, the assumptions under which they were made are invalid. How do you know that? They have certainly hurt some Americans, but have resulted in lower consumer prices and a higher standard of living for almost everyone. This is covered in the article as a tradeoff of trade policy.