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Tariffs come in as a trigger for domestic industrial revival. The thinking is: by making imports expensive, you create room for U.S. producers to step in But he

Tariffs come in as a trigger for domestic industrial revival. The thinking is: by making imports expensive, you create room for U.S. producers to step in But here’s the problem: American factories can’t scale up overnight. So in the short term, consumers will face higher prices. The administration knows this. That’s why they’re front-loading the pain now, betting that by 2026, the benefits will be visible. In the meantime, they’re offering some near-term relief. Tax cuts have already been floated to help offset the cost burden on households. And while risky, currency devaluation may follow later to make imports cheaper without lifting tariffs. https://threadreaderapp.com/thread/1907880105369845865.html https://threadreaderapp.com/thread/1907880105369845865.html

zozbot234 2y ago
The problem with that theory is that the higher prices and wealth destruction are not just "short term", they're here to stay for the foreseeable future unless these political choices are reversed. Think about what factories make - durable goods. Which means if a cost rise is genuinely time-limited, it's just offset by drawing down inventories and you aren't going to see it. That's not what's going on, if anything it's the exact opposite with stuff being hoarded to be sold at even higher prices later.
t-writescode 2y ago
How would tax cuts help when: * tariffs are taxes paid by the buyer * sales tax is state and lower level and keeps states themselves afloat. ? "End of year taxes"? Getting another $200/mo in wages isn't going to even be seen as a wage increase when you go to the store and everyday items are 30% more expensive.
joezydeco 2y ago
That sounds like an actual plan, which is five sentences more than the administration has presented to date. You've pulled the rug out from consumers' pocketbooks, your stock price is in the toilet, and there's no idea what will come tomorrow, next week, or next year from this group. How do you raise money and plan to onshore your manufacturing in an environment like that? You're better off hunkering down and doing nothing.
Balgair 2y ago
Ratna's math, in the second tweet, is high on the savings by 10x. > If rolled into 10-yr bonds, every 1 basis point drop in rates saves approx $1B/year; so a 0.5% drop would save $500B over a decade. It would be $50B on this math. Also, and I am an econ idiot here, how does the $9.2T refinancing work? Who is the US negotiating with to do this, itself? > Lower yields free up fiscal room—without them, core spending gets crowded out. What does this sentence mean? Fiscal room relative to what, to do what? > But cheap refinancing isn’t enough on its own. Even at lower rates, the debt remains enormous. Especially when Congress is about to vote on a bill to explode the debt again. Like, refinancing at $50B/year for savings isn't going to mean a thing compared to extending the tax cuts. > Don’t forget: tariffs also bring in revenue. Estimates suggest they could raise over $700 million within the first year. That’s not a game-changer on its own, but it gives the Treasury a bit more room to maneuver—especially if paired with deficit cuts. Again, that's 1.4% of the $50B. Literally a rounding error. No room is given to do anything. Also, what is a deficit cut, do you mean spending cuts (genuine question)? The only real spending cuts we can do to anything are, what, ~1/6th of the budget? > Still, this approach isn’t without risks. If domestic supply chains can’t catch up, or if global retaliation kicks in, inflation could rise again. And if that happens, the Fed may be forced to raise rates—which would blow a hole in the low-yield plan. That’s the tightrope. This was written on Apr 3. So, it seems that the tightrope that Ratna talks about has failed, the plan is over. Look, the thread was an attempt at sanewashing the policy, it lasted about a day. Obviously, there is no plan.
- deleted 2y ago
  [deleted]
- _DeadFred_ 2y ago
  'Trump came up with a tariff plan in the 1980s and talked about it way in the past on the Opra show, all because he knew it would help reduce bond costs in 2025' is just more cult level cope about the man.
jsnell 2y ago
> And while risky, currency devaluation may follow later to make imports cheaper without lifting tariffs. Devaluation means a decrease in the value of the currency, making imports more expensive, not cheaper. That your source can make such a fundamental mistake should give a good idea of how little credence it deserves.

zozbot234 2y ago

The problem with that theory is that the higher prices and wealth destruction are not just "short term", they're here to stay for the foreseeable future unless these political choices are reversed. Think about what factories make - durable goods. Which means if a cost rise is genuinely time-limited, it's just offset by drawing down inventories and you aren't going to see it. That's not what's going on, if anything it's the exact opposite with stuff being hoarded to be sold at even higher prices later.

t-writescode 2y ago

How would tax cuts help when: * tariffs are taxes paid by the buyer * sales tax is state and lower level and keeps states themselves afloat. ? "End of year taxes"? Getting another $200/mo in wages isn't going to even be seen as a wage increase when you go to the store and everyday items are 30% more expensive.

joezydeco 2y ago

That sounds like an actual plan, which is five sentences more than the administration has presented to date. You've pulled the rug out from consumers' pocketbooks, your stock price is in the toilet, and there's no idea what will come tomorrow, next week, or next year from this group. How do you raise money and plan to onshore your manufacturing in an environment like that? You're better off hunkering down and doing nothing.

Balgair 2y ago

Ratna's math, in the second tweet, is high on the savings by 10x. > If rolled into 10-yr bonds, every 1 basis point drop in rates saves approx $1B/year; so a 0.5% drop would save $500B over a decade. It would be $50B on this math. Also, and I am an econ idiot here, how does the $9.2T refinancing work? Who is the US negotiating with to do this, itself? > Lower yields free up fiscal room—without them, core spending gets crowded out. What does this sentence mean? Fiscal room relative to what, to do what? > But cheap refinancing isn’t enough on its own. Even at lower rates, the debt remains enormous. Especially when Congress is about to vote on a bill to explode the debt again. Like, refinancing at $50B/year for savings isn't going to mean a thing compared to extending the tax cuts. > Don’t forget: tariffs also bring in revenue. Estimates suggest they could raise over $700 million within the first year. That’s not a game-changer on its own, but it gives the Treasury a bit more room to maneuver—especially if paired with deficit cuts. Again, that's 1.4% of the $50B. Literally a rounding error. No room is given to do anything. Also, what is a deficit cut, do you mean spending cuts (genuine question)? The only real spending cuts we can do to anything are, what, ~1/6th of the budget? > Still, this approach isn’t without risks. If domestic supply chains can’t catch up, or if global retaliation kicks in, inflation could rise again. And if that happens, the Fed may be forced to raise rates—which would blow a hole in the low-yield plan. That’s the tightrope. This was written on Apr 3. So, it seems that the tightrope that Ratna talks about has failed, the plan is over. Look, the thread was an attempt at sanewashing the policy, it lasted about a day. Obviously, there is no plan.

deleted 2y ago
[deleted]
_DeadFred_ 2y ago
'Trump came up with a tariff plan in the 1980s and talked about it way in the past on the Opra show, all because he knew it would help reduce bond costs in 2025' is just more cult level cope about the man.

jsnell 2y ago

> And while risky, currency devaluation may follow later to make imports cheaper without lifting tariffs. Devaluation means a decrease in the value of the currency, making imports more expensive, not cheaper. That your source can make such a fundamental mistake should give a good idea of how little credence it deserves.