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A reminder, most tariffs will not be paid because consumers will just shift their spending habits to match or just buy less. Tariffs are a double edged sword b

A reminder, most tariffs will not be paid because consumers will just shift their spending habits to match or just buy less. Tariffs are a double edged sword because the hurt purchasing power of consumers without really generating much money for the government. The administration is going to focus on the fact that tariffs don't really drive inflation, but are going to miss the forest for the trees: prices won't go up because we all have become a little poorer.

AnimalMuppet 1y ago
I don't think that's quite right. Here's a thing with a punitive tariff on it. People won't buy it because the price went up too much. It is because prices went up that nobody buys it. (And we all become poorer because we can afford less, whether or not the price increase shows up in the inflation statistics.) Tariffs have their own Laffer Curve just like income taxes do. Sure, you can set them so that the government gets zero (or close) revenue. But you don't have to. You can set them so that the government gets quite a bit of money. (Note well: I am not claiming that Trump is setting them there.)
- legitster 1y ago
  I think that's correct to say it's not an on-off switch, but I am just saying that inflation should not be an expected outcome of tariffs.
Spartan-S63 1y ago
The real double-edged sword is that tariffs can be both recessionary and inflationary. Consumers cutting spending habits will slow the economy and trigger layoffs, which in turn will continue slowing the economy. On the flip side, we still import most of our goods because we don't have an industrial base sizable enough–and likely won't for several decades—so those tariffs will drive prices up. It's a positive feedback loop that results in a halting economy. If the Trump admin was serious about rebuilding the industrial base, they'd be providing subsidies and federal grants, not tariffs. They'd also be sucking money out of the economy by increasing the number and top marginal rates on the income tax and patching loopholes in the corporate tax code. At the same time, they'd be cutting taxes for the bottom 80% of America and providing healthcare and childcare subsidies.
bdcravens 1y ago
The oversimplified (and naive) response has been that prices will go up, but the shift to domestic production and consumption will in turn increase household incomes, and that will (hand-wavingly) balance out.
- unclad5968 1y ago
  Do you have any resources for other solutions for improving American manufacturing capability? I'm ignorant to most of this but I'm interested in what solutions people have proposed.
  - rob_c 1y ago
    Tariffs and tax breaks mostly. Usually to bring big existing companies back either by choice or kicking and screaming about being weaned off unsustainably cheap labour... As for new companies, other than the valley or DoD contracts what's new? Electric cars which aren't popular in a country that doesn't apply tax at the pump.
  - klooney 1y ago
    You generally need to subsidize too, and if you look at the real industrial powerhouses like China or Germany you'll see deep government involvement in things like "ensuring super cheap energy for industry" and "removing red tape" that we're not really tackling.
    - MandieD 1y ago
      Germany… government… “removing red tape”… Ich lach mich kaputt (I love it here, but “removing red tape”?!)
fsckboy 1y ago
>without really generating much money for the government it's been reported that tariff collections have soared to the point that the budgeted spending is no longer in the red. this article is written in a confusing way, but your statement "not generating much money for the govt" appears to be incorrect https://www.cnbc.com/2025/07/11/treasury-posts-unexpected-surplus-in-june-as-tariff-receipts-surge.html https://www.cnbc.com/2025/07/11/treasury-posts-unexpected-su...
- deleted 1y ago
  [deleted]
- JumpCrisscross 1y ago
  > tariff collections have soared to the point that the budgeted spending is no longer in the red "The federal government ran a monthly surplus of $26 billion in June. However, this was because government payments typically due June 1 shifted into May this year as June 1 fell on a weekend. Accounting for this timing shift, the government ran a monthly deficit of $71 billion" [1]. Tariffs have brought in like $55bn in extra revenue to date [2]. One would expect that to decrease as trade deals are negotiated and consumers shift behaviour. [1] https://bipartisanpolicy.org/report/deficit-tracker/ https://bipartisanpolicy.org/report/deficit-tracker/ [2] https://www.politico.com/interactives/2025/trump-tariff-income-tracker/ https://www.politico.com/interactives/2025/trump-tariff-inco...

AnimalMuppet 1y ago

I don't think that's quite right. Here's a thing with a punitive tariff on it. People won't buy it because the price went up too much. It is because prices went up that nobody buys it. (And we all become poorer because we can afford less, whether or not the price increase shows up in the inflation statistics.) Tariffs have their own Laffer Curve just like income taxes do. Sure, you can set them so that the government gets zero (or close) revenue. But you don't have to. You can set them so that the government gets quite a bit of money. (Note well: I am not claiming that Trump is setting them there.)

legitster 1y ago
I think that's correct to say it's not an on-off switch, but I am just saying that inflation should not be an expected outcome of tariffs.

Spartan-S63 1y ago

The real double-edged sword is that tariffs can be both recessionary and inflationary. Consumers cutting spending habits will slow the economy and trigger layoffs, which in turn will continue slowing the economy. On the flip side, we still import most of our goods because we don't have an industrial base sizable enough–and likely won't for several decades—so those tariffs will drive prices up. It's a positive feedback loop that results in a halting economy. If the Trump admin was serious about rebuilding the industrial base, they'd be providing subsidies and federal grants, not tariffs. They'd also be sucking money out of the economy by increasing the number and top marginal rates on the income tax and patching loopholes in the corporate tax code. At the same time, they'd be cutting taxes for the bottom 80% of America and providing healthcare and childcare subsidies.

bdcravens 1y ago

The oversimplified (and naive) response has been that prices will go up, but the shift to domestic production and consumption will in turn increase household incomes, and that will (hand-wavingly) balance out.

unclad5968 1y ago
Do you have any resources for other solutions for improving American manufacturing capability? I'm ignorant to most of this but I'm interested in what solutions people have proposed.
- rob_c 1y ago
  Tariffs and tax breaks mostly. Usually to bring big existing companies back either by choice or kicking and screaming about being weaned off unsustainably cheap labour... As for new companies, other than the valley or DoD contracts what's new? Electric cars which aren't popular in a country that doesn't apply tax at the pump.
- klooney 1y ago
  You generally need to subsidize too, and if you look at the real industrial powerhouses like China or Germany you'll see deep government involvement in things like "ensuring super cheap energy for industry" and "removing red tape" that we're not really tackling.
  - MandieD 1y ago
    Germany… government… “removing red tape”… Ich lach mich kaputt (I love it here, but “removing red tape”?!)

fsckboy 1y ago

>without really generating much money for the government it's been reported that tariff collections have soared to the point that the budgeted spending is no longer in the red. this article is written in a confusing way, but your statement "not generating much money for the govt" appears to be incorrect https://www.cnbc.com/2025/07/11/treasury-posts-unexpected-surplus-in-june-as-tariff-receipts-surge.html https://www.cnbc.com/2025/07/11/treasury-posts-unexpected-su...

deleted 1y ago
[deleted]
JumpCrisscross 1y ago
> tariff collections have soared to the point that the budgeted spending is no longer in the red "The federal government ran a monthly surplus of $26 billion in June. However, this was because government payments typically due June 1 shifted into May this year as June 1 fell on a weekend. Accounting for this timing shift, the government ran a monthly deficit of $71 billion" [1]. Tariffs have brought in like $55bn in extra revenue to date [2]. One would expect that to decrease as trade deals are negotiated and consumers shift behaviour. [1] https://bipartisanpolicy.org/report/deficit-tracker/ https://bipartisanpolicy.org/report/deficit-tracker/ [2] https://www.politico.com/interactives/2025/trump-tariff-income-tracker/ https://www.politico.com/interactives/2025/trump-tariff-inco...