4 ms·

Trade war isn't a matter of people getting used to. You're adding actual frictions to the system.

• AnimalMuppet 9y ago
  To expand a bit: When you add frictions, you reduce the number of transactions that are profitable, and therefore reduce the number that happen. So total economic activity goes down.
• smileysteve 9y ago
  But this is optics/pr; let's remember that 2018 dropped the max corporate tax rate 14% to 21%. So, Tariffs add 25% friction on your steel usage or 10% on your aluminum, or x% on your chinese imports - but your value add is taxed at 14% less. It's really a shame the tariffs and the corporate tax rate weren't packaged together to be closer to revenue neutral.
  • fwdpropaganda 9y ago
    > let's remember that 2018 dropped the max corporate tax rate 14% to 21%. So, Tariffs add 25% friction on your steel usage or 10% on your aluminum, or x% on your chinese imports - but your value add is taxed at 14% less. I couldn't really tell what point you're trying to make. Also don't really why you're connecting those two. I'm sure in your mind it makes a lot of sense, but you gotta share it with the rest of us...
    • smileysteve 9y ago
      Thanks for letting me know that that wasn't clear. The point is that Tariffs are not happening in an economic vacuum; but are happening in the same space as a 14% corporate tax break. The extension of this is that tariffs collect revenue (much like taxes did) while enforcing a political agenda (encouraging changing of sources). If a "trade war" tariff exchange is isolated to raw materials (steel, aluminium, pork, etc) then tariffs are preferable to a higher finished good tax rate because there is margin on the finished good.