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It's also very regressive, at least in isolation. Income tax rates are progressive, but lower income families spend more of their total income on goods so tarif

It's also very regressive, at least in isolation. Income tax rates are progressive, but lower income families spend more of their total income on goods so tariff will hurt them more proportionally.

Spivak 2y ago
It does seem like that is The Point.
Auracle 2y ago
I’d think that low income people would spend a larger proportion of their money on stuff made primarily in the US - food being the biggest thing. Clothing aside, most things that we get internationally are wants, not needs…and clothing itself can become that once you have enough.
- Majromax 2y ago
  > I’d think that low income people would spend a larger proportion of their money on stuff made primarily in the US The distributional effects are still bad for consumers, even purchasing made-in-America goods. The domestic good will still be higher-cost than the pre-tariff foreign good, so low-income consumers will be worse off than the status quo. If the tariffs are set at a moderate level (i.e. not so high as to make imports effectively impossible), basic supply and demand suggests that the sticker price of American goods should equal the post-tariff price of imported goods. That's essentially what consumers saw with tariffs on appliances in Trump's first term. Protective tariffs could still arguably make sense in a demand-constrained economy where there was a lot of unemployment to go around: individual consumers would be worse off but more people would be employed. However, breathless media aside this conflicts with basic statistics that show the prime-age employment[†] rate (https://fred.stlouisfed.org/graph/?g=1DUXA https://fred.stlouisfed.org/graph/?g=1DUXA) near cyclical peak levels, currently above the pre-financial-crisis level. Tariffs are a lousy solution for the more common complaint that stuff is just too expensive. [†] — I use the prime age employment rate to avoid problems with "discouraged workers" or disability being excluded from unemployment and to correct for basic demographic shifts. If fewer people are employed because more people are retired, that's an entirely different problem.

It's also very regressive, at least in isolation. Income tax rates are progressive, but lower income families spend more of their total income on goods so tariff will hurt them more proportionally.

Spivak 2y ago

It does seem like that is The Point.

Auracle 2y ago

I’d think that low income people would spend a larger proportion of their money on stuff made primarily in the US - food being the biggest thing. Clothing aside, most things that we get internationally are wants, not needs…and clothing itself can become that once you have enough.

Majromax 2y ago
> I’d think that low income people would spend a larger proportion of their money on stuff made primarily in the US The distributional effects are still bad for consumers, even purchasing made-in-America goods. The domestic good will still be higher-cost than the pre-tariff foreign good, so low-income consumers will be worse off than the status quo. If the tariffs are set at a moderate level (i.e. not so high as to make imports effectively impossible), basic supply and demand suggests that the sticker price of American goods should equal the post-tariff price of imported goods. That's essentially what consumers saw with tariffs on appliances in Trump's first term. Protective tariffs could still arguably make sense in a demand-constrained economy where there was a lot of unemployment to go around: individual consumers would be worse off but more people would be employed. However, breathless media aside this conflicts with basic statistics that show the prime-age employment[†] rate (https://fred.stlouisfed.org/graph/?g=1DUXA https://fred.stlouisfed.org/graph/?g=1DUXA) near cyclical peak levels, currently above the pre-financial-crisis level. Tariffs are a lousy solution for the more common complaint that stuff is just too expensive. [†] — I use the prime age employment rate to avoid problems with "discouraged workers" or disability being excluded from unemployment and to correct for basic demographic shifts. If fewer people are employed because more people are retired, that's an entirely different problem.