3 ms·
No, not good for Canada. Free trade is optimal, even if its unilateral. Canada should abolish their tariffs and let the clowns in the US do whatever they feel
by eru 2mo ago
No, not good for Canada. Free trade is optimal, even if its unilateral.
Canada should abolish their tariffs and let the clowns in the US do whatever they feel like.
- jambalaya8 2mo agonah
- plufz 2mo agoI guess it has a little to do with your goals. Optimal trade economically or avoiding giving something that looks like a win to this type of politicians with the goal of avoiding re-electing trump. I don’t know what science say here.
- wood_spirit 2mo agoYanis Varoufakis - aside from being radically left and becoming the finance minister in Greece after their financial crisis hit - is a professor in game theory and economics. He did a pretty good explanation of the difference between theory and practice in his Rest is Politics Leading podcast interview recently :). Sticks in my mind and well worth listening.
- eru 2mo agoThere's a reason his position ain't exactly the economic orthodoxy.
- intended 2mo agoIn a vacuum or thought experiment. China put tariffs specifically on the sectors that voted for Trump and depended on sales to China. When the other party is not playing the same game, or not playing in fairness, then the best game theoretical move is to cease cooperation and retaliate.
- twobitshifter 2mo agoit’s a repeating negotiation so that’s not always true, this tit for tat approach may work to make the US lower tariffs.
- jambalaya8 2mo agoam curious, what is it you think they are really negotiating?
- twobitshifter 2mo agorenewal of usmca and trade agreements
- mittensc 2mo agoTarriffs will hurt your existing industries, they will lose sales/revenue. Since you are getting hurt you play tit-for-tat to get the other to knock it off. So you add export taxes to items they care about (oil/fertilizer/...) and compensate the losses incurred by existing industries. You also add tarriffs on items that have alternatives, like alcohool. Maybe add tarriffs on items with elastic prices, say 100% tarriff on digital services. Software services will have to adjust prices so they end up the same after tarriffs since few people will accept youtube or netflix doubling in price. This hurts both countries but will get a result - either free trade or no trade. In the meanwhile, Trump's entourage has derivative bets on this and take massive proffits shorting everyone. For them, this is all massively profitable.
- eru 2mo agoImport tariffs and export tariffs have approximately equal influence on your economy. That's known as Lerner Symmetry. (A very narrow version of this can be proven in a mathematical sense, but the empirical effect is broader.) For bilateral trade it doesn't matter much whether country A imposes import tariffs or country B exposes export tariffs. Basically, the whole talk about retaliatory tariffs is silly.
- mittensc 2mo ago> Basically, the whole talk about retaliatory tariffs is silly. Why?, retaliatory - in response to US, tarriffs - taxes, whether on export or import, as you noted, doesnt matter much. Effect depends on who needs to either sell or buy the tarrifed items the most.
- eru 2mo agoI'm saying that the retaliation imposes basically the same costs on you that you are trying to avoid by getting the other guy to lower their tariffs. Just cut the crap, and unilaterally remove your tariffs and refuse to play the game. If the US wants to tax their importers, that's their own domestic silliness.