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I am in the minority here. These tariffs are fairly reasonable. Here's why: (1) The state has a compelling interest in regulating market risk tolerance. When t

• bonzini 2y ago
  > This will inoculate the economy against external supply chain shocks How so? There's hardly enough unemployment and there's also no incentive towards increasing the number of immigrant workers. Either suppliers eat the cost of the tariffs as the US administration says, or they don't and then everything becomes more expensive, but either way you have the exact same supply chain.
  • fnordpiglet 2y ago
    I mean, they generated the tariff schedule using ChatGPT. What could go wrong? https://www.newsweek.com/donald-trump-tariffs-chatgpt-2055203 https://www.newsweek.com/donald-trump-tariffs-chatgpt-205520...
    • claiir 2y ago
      Original clip is here [1]. This likely isn't real, though if ChatGPT were used, I suppose it worked out this time :> [1]: https://www.tiktok.com/@destinygnome/video/7489134016524733726 https://www.tiktok.com/@destinygnome/video/74891340165247337...
  • claiir 2y ago
    Thanks for the question. Three reasons: (1) Much like a carbon tax, when the economy becomes accountable for an externality (risk in this case, rather than carbon) it is priced in at every level, ending with consumers, whose demand is price-sensitive. Not all consumer goods of the same class will be impacted equally, creating a natural price advantage. (2) Once the economy adjusts to these new risk-adjusted prices, POTUS can always offer clemency for specific goods and industries to respond to global supply shocks, providing a large buffer for the now-adjusted American consumer. (3) Narrowly: it is exceedingly unlikely we won't see production onshoring in any capacity like you suggest. Economic analysis of the first-term Trump tariffs, for example, did indeed find production onshoring.
    • bonzini 2y ago
      Sure there will be some onshoring, but does it make more sense to onshore or pay given: 1) the instability of Trump's decisions, see Ukraine or Canada 2) you would have less economy of scale because you wouldn't sell any of your super expensive goods outside the USA 3) if the machines you need aren't produced in America they'd have tariffs too 4) the next president could make the tariffs more favorable. You also haven't touched unemployment (or lack thereof) yet. (And by the way, if tariffs stay, brace for deflation due to waiting until after the election in 2028).
• quickslowdown 2y ago
  I don't believe you or share your optimism, but I also don't want to get into an argument about it. I think it's too late to ponder if this is overall good or bad... We'll all find out either way soon enough.
• dronacharya 2y ago
  About (3): This will inoculate the economy against external supply chain shocks, e.g. war. The lead time required to set up realistic domestic production will mostly exceed this government's term. Setting up brand new supply chains doesn't happen overnight, does it?
  • claiir 2y ago
    Correct; it doesn't. However, (1) Tariffs will not affect all commodities in the same class equally, creating a natural price advantage, even at the level of consumers. While not absolute autarky, demand will continue to shift to less externally-dependent goods, which has and will continue to reduce our liability. (2) Ideally congress would codify the tariffs to prevent that. That said, it seems the first Trump term tariffs did induce production onshoring, despite that uncertainty. What would it take to change your mind on these tariffs?
    • p2detar 2y ago
      > demand will continue to shift to less externally-dependent goods, which has and will continue to reduce our liability. The cure for this type of wishful thinking is nothing else but reality itself. Still, it’s not the premise that’s wrong here, but the argument that the US society is capable to make this type of shift. It just isn’t gonna happen.
    • HarHarVeryFunny 2y ago
      > What would it take to change your mind on these tariffs? If there was a positive outcome? US citizens financially better off in 4 years than they are today? I don't think most MAGA voters would see it as a win if US was slightly less dependent on imports, but they personally are considerably worse off financially, which seems the likely outcome.
• inciampati 2y ago
  If tariffs will strengthen the economy while everyone else predicts disaster, you've discovered market insight worth billions. The Dow didn't just drop 2,200 points because investors are confused, it dropped because people with serious money and expertise believe these tariffs will damage the economy. If you're right and they're wrong, there's an obvious move: bet against them and get rich. p.s. Trump did this before in 2018-2019, giving us some hard data about the economic effects of tariffs on modern america that are guiding the economic consensus.
  • claiir 2y ago
    In the long-term. Hence "innoculation"--a prick today to prevent a serious illness tomorrow. In the grand scheme of things, the market movement we saw in response to these tariffs is dwarfed by the sustained market downturn throughout much of 2022. Fueled by persistent inflation concerns and the FED's aggressive interest rate hikes, the S&P 500 index shed approximately 25% from its peak in January 2022 to its low in October 2022, a far more significant and prolonged decline than a single day's reaction to tariff news. We recovered from those. We will recover from the short-term effects of these tariffs as our economy begins to price in the risk of external dependency.
    • selimthegrim 2y ago
      This must be one of those multi stage inoculations where the prick keeps coming back.
• tinktank 2y ago
  To (1): - Tariffs are not a lever, they distort risk tolerance. - Tariffs are crude, they are like a huge hammer hitting everyone, including allies - Tariffs cause loss of confidence and loss of credit To (2): - Blanket tariffs target allies; they're isolating us and we're creating blocks polarized to us and weaning themselves off our economic output. - Tariffs only reduce dependency if there is internal capacity, of which there is none. We'll best case shift our dependency via third-party countries - We're concentrating our risk on fewer countries where tariffs are lower To (3): - We're reducing our efficiency and increasing prices, job losses are coming, productivity will stagnate. We're reducing our agility and our headroom - Historically, autarky has lead to stagnation. The economic consensus against these tariffs is real. It's exceedingly likely the US will destroy its economy, alienate itself and isolate itself because of them :)
  • claiir 2y ago
    Long-term trade deficits are intrinsically bad. The tariffs directly address this by being exactly weighed by said deficit. See the OTR report [1]: > To conceptualize reciprocal tariffs, the tariff rates that would drive bilateral trade deficits to zero were computed. While models of international trade generally assume that trade will balance itself over time, the United States has run persistent current account deficits for five decades, indicating that the core premise of most trade models is incorrect. > The failure of trade deficits to balance has many causes, with tariff and non-tariff economic fundamentals as major contributors. Regulatory barriers to American products, environmental reviews, differences in consumption tax rates, compliance hurdles and costs, currency manipulation and undervaluation all serve to deter American goods and keep trade balances distorted. As a result, U.S. consumer demand has been siphoned out of the U.S. economy into the global economy, leading to the closure of more than 90,000 American factories since 1997, and a decline in our manufacturing workforce of more than 6.6 million jobs, more than a third from its peak. > While individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible, their combined effects can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero. If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair. [1]: https://ustr.gov/issue-areas/reciprocal-tariff-calculations https://ustr.gov/issue-areas/reciprocal-tariff-calculations > Tariffs are not a lever, they distort risk tolerance. The "distortion" / divergence from market trends is exactly the point. This is no different from the FED setting the risk-free interest rate, or a carbon tax being levied. The government is holding actors accountable for an externality (trade deficit). > Tariffs are crude, they are like a huge hammer hitting everyone, including allies The intrinsically bad part is the trade imbalance, not adversarial nation status; these tariffs are structured such that if adhered to, ceteris paribus, we will have zero trade imbalance. See the OTR report. These tariffs are anything but crude, rather calculated and surgical. Countries with little deficit will be changed little tariff; those with large deficit a proportional, calculated tariff. > Tariffs cause loss of confidence and loss of credit This has yet to be shown in the long term. > Blanket tariffs target allies; they're isolating us and we're creating blocks polarized to us and weaning themselves off our economic output. Again, these are not "blanket tariffs." They are strategic, surgical and calculated, based directly on the particular trade deficit--especially indicated for allies who have gone unchecked for far too long. It's unclear if adversarial BLOCs have much to do with tariffs, and the US's economic exports (especially key exports like oil and LNG) have only increased amidst recently increasing strategic import controls. > Tariffs only reduce dependency if there is internal capacity, of which there is none. You're putting the cart before the horse. We need demand before we see an increase in production. > We'll best case shift our dependency via third-party countries > We're concentrating our risk on fewer countries where tariffs are lower Reciprocal tariffs are calculated and recalculated based on current trade deficit--this won't happen. Intrinsically, the "bucketing" of trade along geopolitical borders (we sum all exports and imports along national lines), actually incentives nation-heterogeneity, not nation-homogeneity, in imports, which is directly in line with national security interest. > We're reducing our efficiency and increasing prices, job losses are coming, productivity will stagnate. We're reducing our agility and our headroom Prices will increase, naturally. That's the entire point. See the OTR report. Jobs likely won't decrease, though, given the cost of labor will be relatively cheaper than the cost of goods, incentivizing hiring. Additionally, the FED is likely to lower interest rates, which will put further demand on the labor market. :> We certainly have a lot more negotiating power and agility and headroom now that we can strategically peel away tariffs to absorb supply shocks, once the economy adjusts to the new status quo. > Historically, autarky has lead to stagnation. When has the US ever been in autarky? Ultimately, like the FED setting the risk-free interest rates, the POTUS is tempering the market's risk-taking behavior by internalizing the externality of trade deficit for economic agents.