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The weighted average of the new U.S. tariffs will be 29% it seems. Maybe they know the consequences, but to give you a idea... it was 1.5% before. The new ones

• gscott 2y ago
  I was reading an interesting article about tariffs put on foreign garlic or mushrooms can't remember which, rather than buying American companies just paid more for the foreign product and charged higher prices. The American makers of the product didn't sell more the company's just didn't care. Prices will go up Americans will buy less deflation will occur because they have to sell the product.
  • vitorgrs 2y ago
    Likely will result in worse products as well (which is what happens when you remove competition). LaTam is perfect example on how bad this "wide" protectionism is. There's a ton of economic papers about it. If you really want protectionism, you could do something more similar to how South Korea did, by choosing specific sectors of economy you want to "protect", to create a "national industry". Most protectionist industrial policies also exempt imports of machines and other supplies used in factories. e.g. It makes no sense to put tariffs on machines used in a factory in the USA. AS that would make it more expensive for a factory to operate if they have to import a more expensive machine from Germany. "Buy a machine from the U.S", that would mean a more expensive machine likely, as it only exists because of tariffs. That basically means you'll have factories on best case scenario, but your cars, your computers, phones, won't be exported.
    • actionfromafar 2y ago
      It's great if you want to be self-sufficient pending a great war. The way things are going, it may be the only thing to justify such blatant self-sabotage, and hence necessary to start one.
      • jajko 2y ago
        Well if you do all you can to stirr some 'great war', you will eventually get it. Its only US saying there will be one though, rest of the world is in WTF mode. China doesn't care about anything global but Taiwan and its own security. They are probably more capitalist than US at this point and prefer having stable trade cash flows rather than expanding. So, if thats the real underlying reason for all these steps then US is the warmonger here attacking literally everybody preemptively. 5D chess at least.
      • jiggawatts 2y ago
        It can be a self-fulfilling prophecy : “We have to go to war with them because they retaliated with tariffs!” Trump has literally said that if Canada doesn’t like the tariffs, they should just let the US annex them!
      • pydry 2y ago
        Building up strategic industries is another reason. Or, in America's case, arresting their decline.
      • sethammons 2y ago
        If you make everyone rely on each other, war hurts everyone more and is more likely to be avoided. If going to war doesn't cost you a supplier, war is more palatable. Global trade reduces war
      • realityking 2y ago
        If you think a war is coming, why would you antagonize your closest allies?
  • bawolff 2y ago
    Short term consequences are probably different then long term. In the short term you can't just create a new garlic farm in a day. In the long term it will still be more expensive (if american garlic was the cheap option they would have used it from the get-go) but there will probably be more adjustments then in the short term That's part of the reason why these tarrifs are so stupid. There is no warning on the specifics so there isnt time for companies to come up with alternative plans. Given how inconsistent trump is, there is also limited incentive to seek alternative supply chains, because who knows if he will just change his mind again.
• russdill 2y ago
  This is also the start, other countries will retaliate and the current administration being the current administration will probably respond.
• nabla9 2y ago
  It's called Import Substitution. Import Substitution: A Tried and Tested Policy for Failure https://www.kspp.edu.in/blog/import-substitution-a-tried-and-tested-policy-for-failure https://www.kspp.edu.in/blog/import-substitution-a-tried-and... >Import substitution is a policy by which the state aims to increase the consumption of goods that are made domestically by levying high tariffs on foreign goods. This gives an advantage to the domestic manufacturers as their goods will be cheaper and preferable in the market compared to foreign products. India adopted this model post-independence, and it continued till the 1991 reforms. Due to import substitution, the domestic producers captured the entire Indian market, but there was slow progress in technological advancements, and the quality of Indian products was inferior to the foreign manufactured ones. But after the reforms, the Indian market was opened to everyone, and the consumer got the best value for the price he paid. The Make in India policy of the present government is reminiscent of the pre-1991 inward-looking Indian state. In the US it will be even worse. The US is already high-tech economy outsourcing low value-adding manufacturing to foreign countries while industries move towards higher value-adding products. After the tariffs, US manufacturing sector will sift to lower value-added, lower complexity products.
  • addicted 2y ago
    Yeah, but the U.S. govt funds a lot of important research so it may not fall behind technologically unlike India… Wait, what did you just say? The U.S. government has decimated its research funding? Oh, well, at least the U.S. has a lot of high quality colleges churning out highly educated Americans, so that still may not be as much of a problem…wait, did you say Americans are increasingly turning away from college due to the high costs and the resultant loans that cannot be terminated even in bankruptcy, because the government has been cutting back significantly on funding education for years now? Oh well, at least the U.S. is welcoming to immigrants who have founded over 50% of unicorns and usually tend to be the most dynamic and brightest slice of their country’s populations, so it may maintain its technological edge… Wait what? Oh god.
    • jeltz 2y ago
      Yeah, this is one of my biggest issues with this. There is no coherent plan.
• DeathArrow 2y ago
  >The United States will be an autarchy, similar to how LaTam was in the 70's, when tried this exact idea. The tariffs being as high instantly, will impact the economy, later, the country will probably grow, which is what they expect, but this is not a productive grow. Because your new factories now are not competing with external products, so your productivity go down, this means real income will also go down. If what you say is true, tarrifs should not exist in any country. And yet, most countries are using tarrifs. What if a particular country is using dumping and sell at prices so low, it will kill a particular industry? And after they kill it, they start jacking prices at unseen levels and you will have to pay because you don't have a choice?
  • vitorgrs 2y ago
    Most countries do specific tariffs on areas of the economy they want to develop/protect them. If a country is doing price dumping, there's even legal ways of protecting these sectors, by applying to WTO (but the U.S basically killed the WTO). But even if the U.S don't trust the WTO, they could apply antidumping tariffs to these specific sectors (like the 100% tariffs Biden administration did to EVs). U.S is not doing this right now, it's protecting "all sectors" of the economy. There's no other reasonable developed country with a 29% tariff. You can check here: https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS You'll also notice that most developed or growing economics have low tariffs...
  • razakel 2y ago
    >And yet, most countries are using tarrifs. On specific industries they want to protect. Not completely across the board.
    • carlosjobim 2y ago
      VAT on imports are across the board, as far as consumer goods go.
      • detaro 2y ago
        VAT by definition applies to domestic products as well, and is thus not putting foreign sellers at a disadvantage.
• mytailorisrich 2y ago
  China has many tariffs and non-tariffs restrictions. They are targeted as tariffs tend to be (well...). For instance, tariffs on cars vary from 25% to 47%. It is quite the status symbol to drive an imported car. Their policy has always been to develop their own car industry, so foreign manufacturers had to set up factories in the country but even that could not be fully foreign-owned and had to be through a joint-venture with a local manufacturer. I believe Tesla's Gigafactory in Shanghai (opened in 2019) was the first fully foreign-owned car factory they allowed.
• danmaz74 2y ago
  By the way, what I find most baffling in these discussions is that these calculations are always based only on physical goods, ignoring services, where the US usually has a positive balance - eg, with the EU, the US has a 109B positive balance. In our economies, which are more and more service based, why are services ignored?
  • stakhanov 2y ago
    Services are ignored by Trump for precisely the reason you mention. The big question is: What will other countries do, like Germany, who tend to export goods to the U.S. but import services. Right now, those are the countries who would rather prevent this thing from escalating, but if escalation it must be and they run out of ammunition within the scope of tariffs on goods, where will they go next?
    • poincaredisk 2y ago
      Tariffs on services may also be less popular with the citizens. It's not obvious that the locally produced fridge is only cheaper because of tariffs. It will be more obvious that everyone non-EU based pays more. It will also be harder to control (how will EU extract tariffs for payments I do to companies with no EU presence?) But I don't how much about it, maybe these are already solved problems. After all VAT already exists and faces similar challenges.
  • AnimalMuppet 2y ago
    There are two kinds of "services". You have jobs that are in finance and software, which make good money, and you have jobs in cosmetology and fast food, which have terrible pay. The services that we export are the former. Your high school grad (or high school dropout) isn't going to get one of those finance or software jobs. But they could get a factory job, if we can get those back. So the best spin I could put on this is that the emphasis is on physical goods because that's where the people who are hurting in the current economy could find real work. (Of course, if that were the case, the reasonable thing to do would be to explain that, instead of just acting like services didn't exist as something that is traded.)
  • 2y ago
• mapt 2y ago
  It's hard to imagine that there's a way they thought this through in several redundant dimensions. I understand rationally that there was an economy before the US plunged the world into neoliberalist global free trade in order to build its trade empire, and there will probably be an economy after... but likely not a US trade empire. But another thing is investment uncertainty. The mechanism by which protectionist tariffs are supposed to work functions over a timespan of a decade or two - foreign imported goods are made more expensive, and so when investors believe they're confident in future tariff conditions, they spend money on domestic factories to produce goods, which have a large setup cost and gradually pay back the difference relative to their good-importer competitors that are paying high tariffs. If investors can't form a confident prediction on future tariff conditions, investors can't invest; The sheer uncertainty of having a lunatic making up random numbers for every country over lunch and then rolling them out at close of market is instead going to scare them off. Trump has gone back and forth over tariffs with Canada and Mexico over the past couple months, and this doesn't just demonstrate that tariffs can be set extraordinarily high for arbitrary reasons, but that they can be set back to zero for arbitrary reasons. Both of these transitions cause economic ruin for one investor or other; If it's going to happen every few months then nobody is going to build factories or launch import supplychains, at least not for competitive prices. The risk of going bankrupt tomorrow (or in four years when the next administration takes over and abruptly cancels every tariff) on what is basically a coinflip then gets priced into consumer goods for both producers and importers. The most frustrating of Trump's projects are not just when he shreds your rights or shreds precedent or tries to topple the government, but when he looks favorably at a policy you think is a good idea (like having a manufacturing sector) and chooses to pursue it by running around with a flamethrower setting everything ablaze because on some lever somebody's taught him about the Broken Windows Fallacy wrong, as a joke, and he's upgraded it. During his administration, we circle the wagons and declare that the policy is a terrible idea. Post-Trump, the absolute ruin that the execution of that policy predictably brought will discredit it for the rest of your adult life.