It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency.
The flow of goods is balanced by a flow of US dollars to other countries, which are ultimately cycled back into the US financial system - enabling budget deficits and an abundance of capital to invest in high growth industries.
The flip side of this is that it also drives inequality - the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries.
The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
As such, this administration's policies are foolish, but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens.
That is something that in the current American political climate seems a nearly impossible sell.
> but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens.
Agreed. However, by imposing tariffs it is not the privileged who are going to be affected the most. The pain is felt most by the low-skill workers you mentioned earlier.
If the solution was instead along the lines of changing tax-brackets to tax the 'privileged' more, that might have better addressed the problem you mention in the beginning.
Not only are the poor going to bear the brunt of these tariffs, but this has been tried multiple times before, and failed. As in, catastrophic failure.
"Those who don't learn from history are doomed to repeat it"
People should check out all the tariff insanity before and during the period of The Great Depression. That includes the justifications given.
> Agreed. However, by imposing tariffs it is not the privileged who are going to be affected the most.
I thought the idea was that the billionaires would buy up all the crashed stocks then suddenly the tariffs would be lifted so that they can sell them off as soon as they recover. If so, the privileged will be affected the most but only in terms of how much money they'll make while everyone else suffers in the meantime.
Nobody has faith in the governments ability to put that money to good use. The US gov uses significant amounts of its budget to fund weapon development, promote weapon sales, change unfriendly foreign governments, support friendly foreign governments, and genocide troublesome foreign populations. Who will support raising more taxes to maintain and expand such efforts?
Taxing the rich is wishful thinking. They don't just give up wealth. They will simply look at it as an additional cost and hike the prices of their products up causing more inflation and that means even more trade deficit.
> However, by imposing tariffs it is not the privileged who are going to be affected the most. The pain is felt most by the low-skill workers you mentioned earlier.
I don't think this is necessarily true. 1 day into tariffs and things are probably the same for the low-skill workers. So far, the stockholders are the ones taking a beating. Sure, that includes some low income retirees, but for the working poor, I would bet that proportionally they consume fewer foreign made goods. They're not drinking imported booze.
> the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries.
This is true only if we impose barriers to geographic mobility, which we do via artificial scarcity of housing in our major cities.
If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor.
> the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
We don't need more high-quality education nor do we need to onshore. We need to deregulate the housing market, we make it easier to migrate to the US (funny enough, yes that would help with inequality). And I do agree we need better social systems.
There is no way to frame this admin's policies that makes it look reasonable. It's a Crony Clown Club show.
> If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor.
Why would they want to do that? Their priorities are myriad, but raising a family, having a degree of autonomy and space to themselves, and remaining a part of their community are all generally on the list.
What’s generally not on the list is living in a tiny rabbit hutch, owning nothing, working a dead-end service job, trying to raise a family in a city (or just not trying at all), and paying a higher price for the privilege.
all the "low-skill" people would be able to move to the city and find a job
That this doesn't work is self-evident. Cities are currently filled with low skilled people. The vast majority of whom find no employment or employment in illegal activities.
Also:
We don't need more high-quality education
The idea that the world, and the US in particular, has no need for more and better education is laughable. Considering the fact that a lack of education is, arguably, what got the US into the current situation in the first place.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
what you're saying in short is that the US economy has changed from Manufacture-based to Service-based, just like China.
People don't realize this but China is moving toward Service-based, naturally, as they raised their standard of living, thus education.
What's missing is not raising tax on Income but taxing Wealth: the super rich has their wealth sitting and growing unproductively (house appreciating is not productive, buying farm lands and rent it to other farmer isn't productive). Holding Limited version of a Ferrari isn't productive. Feel free to find other Assets.
Once the super rich completed their journey in this world, they will inherit billions to their kids, whose productivity output does not match the wealth they inherited, again, not productive.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
You are assuming that this administration has the same goals as you, just different ("foolish") methods of arriving there. I'd posit that they have very different goals that these methods are solving for.
This is a regressive tax that hurts low skill and low wage workers proportionately more since basic necessities of life are going to increase in price - it will be a much larger share of wallet than rich. This will not materially change purchasing behavior of very rich (save maybe waiting to buy a car due to increased pricecs)
It would be beneficial to increase taxes on the massive service economy and use the proceeds to subsidize lower wage industries.
In trumps first term after tariffs affected farmers, they had to subisidize them to keep them afloat. It didn't quite work the way it was intended. The trade war relief program in the first term spent $30bn keeping farmers afloat.
Tariffs will probably be bad, but on the other hand the old system didn't really work either in the long run. Perhaps he can bring some manufacturing back and I don't really believe consumer goods getting more expensive will be immediately felt. Could be wrong though.
Well, at least it might get interesting if you like crazy. I don't really believe those crying the loudest that they are particularly interested in combating inequality or are too interested in protecting low income people. Yes, maybe they need industries protected by tarrifs instead of cheap t-shirts. Maybe this perspective is rather stupid though. We will find out if that works or not. Economics projecting the next depression aren't really sources to trust either.
> The obvious solution is... for the government to lower the cost of high-quality education
Not everyone is smart enough to land in the professional class. The US does its young population an enormous disservice by pushing low academic performers to go to college. There needs to be, somehow, a way for people to make a living with their hands, because for some people, that is genuinely all they are capable of.
> ... build out social systems...
The way you build out the social system is by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program. You don't take those jobs away by offshoring them.
I'm not saying I'm against offshoring in general or that I support Trump's tariffs - I don't. But it's not exactly controversial to point out that, since the end of the Cold War, the US prioritized the recommendations of economists over social cohesion and socially harmonious policy. A lot of people were thrown out of work and were left to fend for themselves. Many of them ended up as victims of the opioid epidemic. I'm not convinced that the prior system was completely peaches as cream.
What happened to the information economy? And getting everyone trained on that type of skills? Nowadays education seems to be frowned upon by those in charge.
> by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program
Like building out clean energy infrastructure?
Modern "ditch digging government programs" aren't necessarily low-skill. Even at the time, the new deal government programs were massively beneficial for society while also providing jobs for folks who needed it, at reasonable wages. Let's not shit on good government programs just because the right has been feeding us propaganda demonizing it for decades.
Thanks for your comment, it explains why there seems to be a high degree of support for these measures in some quarters (was looking at the youtube comments to the liberation day speech) vs the consensus here at HN.
Let's suppose these policies are to the benefit of some Americans over other the benefit of other Americans. The open question now is: does it matter? does it really have an influence on the gross profit numbers? Will an isolationist foreign policy destroy the international order and how could this effect the US in return?
As a highly skilled and comparatively highly paid worker, I feel it is outrageous to suggest that I am within the class that needs to give up any reputed "wealth" when I am nowhere near the 1% who hold more than 50% of it. Such a claim just contributes to the wealth making of the 1% misers even more. Class warfare! I have already had to give up significant amounts of college and retirement savings from these tariffs.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education
I'm always skeptical of the idea that we can just educate ourselves out of problems.
As I see it, that would only raise people's wage expectations which would make us even less competitive on a global market?
The need for blue collar workers doesn't just evaporate, and there's frankly only a finite demand for white collar workers. You give everyone expectations of a white collar job, and they end up working blue collar because there's no job for them, you're just setting society up for mass disappointment and resentment.
You give your average blue collar worker today a degree, are they actually more valuable to their current position? Probably not.
Your problem statement is missing "national security" angle. As I understand the current administration sees US de-industrialization as a threat to it and tariffs as a soution.
So basically: the solution is "do more of the same".
I suppose that's the point, people were tired of hearing the same old crap by leftists who fancy themselves as smarter, as their quality of life continued to drop, so they figured "screw it let's try the opposite".
> As such, this administration's policies are foolish, but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens.
Very few people who work as full-time devs are so wealthy that they are totally insulated from general social decline.
You're arguing from a steady state. In point of fact the pain of the at-this-point-seemingly-inevitable recession is absolutely going to be concentrated on the working class. Those of us with savings and work flexibility will do just fine.
Even someone making a first principles argument for a revision of US trade policy should agree that this is insane.
The real pain will hit the working class harder, but the nominal pain will hit the capital class harder. Historically, this is how inequality unwinds. See: recessions, World War II. Let's hope to god that this is "just" a recession and doesn't cook into World War III.
Yes! I've been consistently frustrated at both sides of the issue. It became salient for me when I read about how China had sanctioned three American drone manufacturers that were supplying Ukraine last year, and how it disrupted their supply chains and ultimately the war effort.
It is unacceptable for any other country to be able to do this to any part of the western-aligned military supply chain.
We needed a targeted policy -- I don't care about American cars except to the extent that those factories can be converted to aircraft and tank factories.
But the conversation has been frustratingly reduced to 'reshore low skill work' vs 'save my infinite trough of cheap plastic slop'.
I don't want to hear about tariffs bad, I want to hear about how subsidies are better or about how it doesn't matter anyway because of the structure of the Chinese economy (I saw it claimed without evidence that they depend on imports from places aligned with the west which is reassuring if substantiated).
There's an underlying issue everyone is dancing around.
I don't know why you are being down-voted, I think you raised some interesting points that add to the discussion.
National security / foreign interference hadn't occurred to me, and now I'm wondering what would happen to US economy and manufacturing if it was at war with China and or the EU over Taiwan and or Greenland.
How would US deal with Russian style sanctions? Can China simply ban all exports to the US?
In times of war, it probably is super important that a country and manufacture all essentials.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
You're proposing to tax an international supply chain. To tax something it has to be in your jurisdiction to begin with, and then you have several problems.
The most obvious of these is, what happens when the stuff just isn't there anymore? Suppose the US isn't competitive with China for manufacturing certain goods, e.g. because the US has a higher cost of living as a result of a purposeful housing shortage and then has higher labor costs, or for any other reason. So manufacturing moves to China, not just to sell to the US but also to sell to the domestic market in China and to Europe and India and the rest of the world. No part of those other transactions is in the US, so the US can't tax them and use the money to help the people in the US who used to be doing that manufacturing and selling those products to the rest of the world. Whereas if you sustain domestic manufacturing through some means then it exists and can make products to sell to the rest of the world because the fixed costs of establishing a manufacturing base can be covered by the domestic market and then it only has to compete in the international market on the basis of variable costs.
Next consider the industries where the US still makes stuff. You could tax those things because they're still in the US. But that makes the US less competitive in the global market for investment capital, which is highly mobile. If higher US taxes cause returns to be lower in the US than they are in other countries then investors go invest in the other countries instead, and then the thing stops being in the US. So that doesn't really work. You can see this in the case of e.g. Europe, which has even worse problems with the loss of manufacturing than the US.
Which leaves the activity where it's the other half of the transaction happening in the US, i.e. China is manufacturing something but the customer is in the US. That you could tax without a huge risk of capital flight, because companies can rarely change the location of their customers, but that still leaves you with two problems.
First, either of the countries participating in the transaction could levy the tax. In the case of China, then they can levy a tax (or some tax-equivalent) to only such an extent that it consumes the surplus in the transaction attributable to the competitive advantage of their country. China can do this because they have a lower cost of living etc., which doesn't work for the US. But because they do that, the US can't tax that portion of the surplus, which was the gain from moving manufacturing to China.
And second, a tax on imports is called a tariff. Which the US can impose to tax that portion of the transaction surplus that isn't attributable to the foreign country's cost advantage, i.e. the preexisting transaction surplus where it costs $8 to make something someone is willing to pay $10 for regardless of where it was made. But tariffs are the thing you don't like.
OR use borrowing (e.g. current account deficit). If government spending drives productivity growth then it’s a net positive?
OR tax wealth. If most return on international capital investment is being stored in the US, taxing this effectively taxes profits on international sales???
> for the government to lower the cost of high-quality education
Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs. For some reason, with intellectual labor, we are able to pretend that there is no threshold and everyone can do it. It's an idea that makes people feel good but what if it's just not true? Can everyone be made above average in something with enough education?
If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that? How do we maintain a democracy? Sometimes people float the idea of UBI, but that could turn out extremely dystopian with a huge underclass of UBI-collecting people in a state of hopelessness and boredom. That doesn't work much better for democracy than a huge underclass of under-employed and unemployed people.
To make matters worse: the fact that our past strategy works so well for increasing GDP means it it tends to inflate assets, including things like housing prices. The end result is a country that looks, to more than half its inhabitants, like a vacation town where outside capital inflates the cost of everything way above what local wages can support. It might not be a coincidence that San Francisco, New York, and other capitals of high margin high skill industries have real estate prices that lock ordinary people out of even "starter homes."
I absolutely do not support Trump's execution here -- it's ham-fisted, reckless, and badly thought out. If we are exiting this neoliberal model, Trump's exit from it is a little bit like Biden's exit from Afghanistan. Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind.
We can't keep doing that if we want a democracy. If we exclude 50-80% of the population from anything meaningful or any economic stability, we will get one of two things. Either we'll get the kind of totalitarian state that is required to maintain that kind of inequality in perpetuity, or we will get a string of revolutions or a failed state. People will not just sit around in hopelessness forever. Eventually they will be recruited by demagogues. Ironically Trump has been one of the most effective at this. I'm sure more will eventually show up though. There's a big market for them.
> If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that?
The most important thing here is to do something about the cost of living, i.e. the price of necessities.
Housing isn't inherently as expensive as it is in the US, it's made that way on purpose. Healthcare likewise. If you only make $25,000/year and housing is $20,000/year and healthcare is $12,500/year, you're screwed. If you only make $25,000/year and housing is $10,000/year and healthcare is $5000/year, you're not.
I’ve reflected that resource extraction jobs often end up in the high wage / low educational investment category, and I’ve wondered if that motivates the whole “annex Greenland” bit as much as “securing critical resources” does…
Will the US be able to survive as a superpower while severely cutting down the top 20%'s standard of living? They could simply defect somewhere that offers them a similar position in society as the US, similar to what the US has done to the rest of the world.
> Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
You still need education to become a nurse, caregiver, welder or kindergarten teacher. And the right subsidies (free education) allows people to make the switch.
> Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
Agree with this.
Also, what if there's just not a need for it?
Even if "everyone" in some abstract sense is capable of "high-skill" jobs, how many are really needed? Look at software jobs alone and the onslaught that is the current labor market.
I think there's nowhere near enough "work" ("real" or otherwise) to go around to maintain the level of employment necessary to support the population that we have at the costs that we have.
I don't think any sort of "UBI" (assuming you mean direct cash payments) is a realistic solution, either. People need to "work" in some organized fashion to avoid the common negative outcomes associated with "welfare" scenarios.
I legitimately, unironically, support the kinds of "fake" jobs that were prevalent in years' past (day in the life TikToks come to mind, Gov jobs where people send three emails a week, etc).
I guess in another sense I do support "UBI", as long as it's paired with the illusion of "work."
I understand this seems nonsensical, but just from practical experience it makes total sense to me.
Here's an example.
Years back I worked a software gig at a large non-"tech" F500 company. Much of the programming work there was extremely dull--occasional maintenance of large barely functional enterprise Java messes, writing a few SQL queries a week for wretched multi-table joins requiring all sorts of nasty casting and hacks as "normalization" was an alien concept to the original author and the like. Realistically, folks worked on this stuff perhaps 10 hours a week?
Anyway, I know a few people hit with a layoff that worked there a long time (decade+) and now they're back in the Thunderdome looking for work as "developers". The people in question are nearing retirement but presumably not there, for one reason or another.
Hows this going to work for them? I'm not denigrating them, but having worked with these folks, they're not going to be tearing into broken pipelines, adding React components, configuring Docker builds or whatever--there's a skill mismatch and the workload I've seen at roles lately is just so far beyond the pace, scope, and "scale" that there's no way they'd make it, if they can even get an interview at all.
In this example, would it be best to give them "UBI" payments, or some other slow near-sinecure where they have dignity?
> Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs.
"pfff it's easy-peasy, just go attend a (literal) bootcamp, you'll be fine, anyone can do it"
----
> Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind.
god yes
The elephant in the room here: there is no money for anyone not in the top20%, it all goes into their pockets and they just sit on it, leaving only scraps for everyone else, tax the rich, anyone with more than x% of the median amount of wealth should have everything above that taken away and redistributed to everyone, possibly by means such as UBI/welfare/etc!
But we ain't gonna get any of that without revolution. And honestly it feels like Trump's getting us closer and closer to the brink of that.
This is the kind of side debates you get by framing it as “low-skill” versus “high-skill”. Whether the “~20% of the ability” curve should help the poors from their apparent attraction to demagogues.
And how do you propose we do that? By giving schools even more money at taxpayer's expense?
> raising taxes at the high end
40.1% of US taxpayers on the low end of income distribution pay no income tax, 16.5% pay neither income nor payroll taxes. Top 1% pays 40.4% of all income tax (while holding about 30.8% of net worth, 13.8% of the total is held by top 0.1%). Top 1% (with the possible exception of a few billionaires) already pays through their nose.
Funding public universities and giving them the mission to keep tuition costs low. Public universities are capable of providing enormous value to students, but over the past two decades their funding has been substantially cut. The result is that those schools became more reliant on expensive out-of-state tuition, which in turn means competing with private institutions for students, which in turn means building more luxuries (awesome gyms) and not focusing on value for money.
What people don't discuss about the taxation is that rich people will universally pundit, preach, undermine, subvert, and squirm out of any law to tax themselves more. If you are preaching more taxes thinking it will affect the politically well-connected, it will be unwound and castrated by the politically well-connected. Or just deflected into somebody else's responsibility.
In that case, someone else is going to be holding the bill that you might not have intended.
I hate discussion of percentages, because every percentage seems reasonable by itself. It's the summation of the percentages that politicians have no interest in discussing.
In fact, it should be a requirement of government to sum the percentages of federal,state,medicare,social security, sales, resort, fuel, local levies, internet sales into one effective percentage that a given citizen in a given city has to pay.
Has anyone calculated that number for themselves? I've been collecting all my transactions and taxes to figure out what percentage of my income actually goes to taxes.
==40.1% of US taxpayers on the low end of income distribution pay no income tax==
According to 2022 IRS data, average deductions for those who itemized totaled $43,686 in tax year 2022 [0]. The 2022 bottom two quintiles of income were under $44k [1]. That means in 2022 rich people AND poor people didn't pay income taxes on their first $45k of income. Is that unfair to rich people?
Worth noting, the 25 richest Americans paid an average effective tax rate of 13%, as of 2018 when IRS data was leaked [2].
==Top 1% (with the possible exception of a few billionaires) already pays through their nose.==
"While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent." [3]
If the average effective rate hasn't changed, but the effective rate paid by the top 1% has fallen by ~40%, how is the difference made up? The 99% pay more.
this glib analysis neglects the part where decades of plans and budgets have been addressing " build out social systems" while simultaneously building crony networks of political appointees, guarding the hen house. Short term pain is loudly announced for the purpose of defeating the political opponent, not addressing the long standing inefficiencies in a swollen and obese wealth exchange centered in the USA.
tons of cynical one-liners from partisans drown out efforts to really examine the impacts over medium and long term. A horrible problem with this move is that it is not entirely wrong from a fundamentals point of view? It certainly creates winners and losers, no question about it.
The political class and plutocrats always wins regardless of the election outcome. The two party system guarantees they come out unscathed regardless of their jousting.
Nope. It's true that free trade WAS hugely beneficial to the US economy as a whole. Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long.
Free trade is not hurting the economy. American domestic policy impacting the distribution of the produce of the economy is, even in times of strong aggregate economic performance, hurting the felt effects of the economy on large swathes of the population, but throwing up protectionist policies that collapse both the global and local production possibilities curves doesn't help that; it just shrinks the pie without doing anything to deal with the bad distribution which makes people feel like the pie is shrinking even when it is growing. The results you can expect from that should be obvious without experiencing them, but it looks like we are all going to learn about them through painful experience real soon now.
How much do you expect to raise taxes to cover that gap? You double my taxes and I’m in the welfare line.
Further, and this is not referenced enough - the US must rollover ~9 trillion in treasuries this year. The lower the interest rate to do that, the better. Otherwise it increase the deficit even more.
The only way this ends is one of two paths - a path similar to what we are on; default.
We may not like this one, but default is world destroying because of the broad use of the Dollar around the globe.
Taxes should be raised on the rich. Elon Musk alone is worth $330 billion. There is plenty of money to pay for what we need. The question is whether we can muster the political will to do it.
From what I understand, de minimis exemption has also been removed.
That is a huge, huge deal. It effectively means that all goods imported from China will be slapped with a 30% import tax, as soon as said goods arrive the US border / customs.
Usually what happens then, is that the courier will pay that tax, and then bill the recipient later on - as well as charge some fee/fees for the work done.
This is why in some European countries, that $1 item from China with free shipping can end up costing $10, because you're paying $0.25 in VAT or import taxes, and $10 to the shipping courier for doing the paperwork.
If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
(That's just from the most obvious consumer example...then you have pretty much everything else. Goods, commodities, etc.)
So it is even worse, you either pay $25 per shipment, or 30% - whichever is higher. Then later it moves up to $50 per shipment, or 30% - whichever is higher.
a $1 item with $1 shipping will end up costing you as much as $52 after June!
> This is why in some European countries, that $1 item from China with free shipping can end up costing $10, because you're paying $0.25 in VAT or import taxes, and $10 to the shipping courier for doing the paperwork.
Not the big China exporters, not any more. They all include taxes in the price on your country specific web site, ship to their warehouses inside the EU, handle taxes and your local courier just delivers.
Now if you're talking DHL yes, they have you fill forms upon forms and charge you for the forms you didn't ask for. But if that happens, no one will have time to process all the forms so private imports from China will simply ... halt for a while. Until Temu/AliExpress/etc sort out for the US the same system they use in the EU.
If in the US, I'd hold on any direct purchases from China for 3-6 months.
> So it is even worse, you either pay $25 per shipment, or 30% - whichever is higher. Then later it moves up to $50 per shipment, or 30% - whichever is higher.
Hah. That's DHL commission territory :) Definitely hold from direct purchases until Temu sorts it out for you.
> Until Temu/AliExpress/etc sort out for the US the same system they use in the EU.
The thing is, the EU specifically set up a structure to make this easier for sellers and transparent for customers (the "import one-stop shop") and I don't see the US government doing any effort to make importations more seamless.
If I buy something from amazon.co.jp or Apple and it arrives from Japan or China with DHL/UPS, I don't do anything at all in Poland. It's all transparent, I just get the package for the price on the website.
I suspect that this $25/50 per item policy is to prevent people from claiming a lower value than the actual price of the item. I've received international packages marked "gift" with a value of $10 that I had paid much more for.
I doubt the US will even manufacture substitutes for most of the things I liked and ordered from AliExpress. People with hobbies primarily supplied by Chinese manufacturing (like mine- electronics, 3D printing, FPV drones) are just going to be paying more for the same thing. There's no way we'll get an American substitute for niche products- all the US chip fabs are going to be filled with orders for higher dollar parts.
Note that the fact sheet says per item, not per shipment. So there doesn't even seem to be a way to make one big purchase of several items to pay a single fee. They will hit you for every item in the shipment.
Quick edit: I also note that the fact sheet makes a distinction between things sent through international post vs. other means. If you send via UPS/FedEx/DHL there will be regular customs fees (34%?), and through post you will have the $25/50 per item fee. So I will definitely have to pay attention to the shipping method for anything bought from AliExpress from now on.
Quick edit 2: I literally have a PicoCalc from ClockworkPi coming in the mail in a few days- I guess we'll see if DHL charges me any extra fees.
Realistically, the $25 minimum is to cover the costs of handling the imports (with some premium), so it doesn't make sense to charge it for every item in a batch separately.
Great. AliExpress was the RadioShack of 2025. No way I’m spending $25+ for a strip of SMD resistors, and I expect to never see them available in the US at a price that makes sense as a hobbyist. This isn’t helping anyone, will prevent a lot of prototyping, and just be a bad experience in life. Thanks for ruining the fun of the last 5-10 years of DIY electronics golden age.
I had plans to build some animatronic Halloween decorations for this year over the summer. I’m not going to spend hundreds to thousands of dollars on parts that nominally cost less than $50.
My own pain is minor though compared to everyone I know who uses Temu and other things to basically outfit their life. This will be insanely regressive as they have the least to spend on “on brand” products, which themselves are imported too. This is like “super sales tax for the poor.” Me, I’ll just save my money and wait for the next president to undo the mess. My buddies not as successful monetarily as me? Their quality is life is going down the drain.
De minimis exemption expiring has been a planned thing for years through administrations of both parties. Trump admin has been delaying the already planned expiration during the Biden years to use as a negotiating carrot.
Basically it just means Temu/Aliexpress/Etc. will ship their goods to the US in bulk instead of bypassing customs on individual small orders, and distribute from domestic warehouses, having to now compete with US producers who do the same thing.
It does completely kill any business built on dropshipping individual orders from chinese factories without ever touching inventory however.
I'm inclined to believe they're already doing something like this. I don't shop them but my wife uses Shein and Temu pretty often, and commented last year that more and more stuff was shipping from the US rather than overseas now.
In Europe, Alibaba has their own warehouse in the Netherlands. I wonder if that's to be able to do a single "international" import. Could the same happen in the US?
Aliexpress does that as well, with a warehouse in Hungary. They ship the products there, import them en masse as a business, then relabel and send them off to the recipients.
They may be compelled to do that; there's 1.3 million packages from Chinese retailers a day coming in through the Netherlands, but since they're all individual packages, they fall under a threshold for import taxes. There's now calls to drop that threshold so that people pay import taxes for small items as well, and / or to compel Temu and co to stop shipping individual packages but do it in bulk.
Courier will only pay the tax if it's a DDP solution, and then bill it back to the actual merchant. FedEx, DHL, and UPS provide this as an option. If it goes USPS, or no DDP solution is in place, it's going DDU and it will simply be stuck in a sufferance warehouse or at the local post office until the recipient comes in and pays the bill.
Yeah, the stopping drugs thing is just performative propaganda. It’s really about the money, and the attempt to punish China (which will in fact mostly hurt Americans as much or more, anyways). If it were about the drugs only, there wouldn’t be such punitive measures, and the press release wouldn’t mention the fact that China doesn’t have a de minimus exception.
Do you expect their annual turnover to go up? They might get a bigger slize of the pie but the pie itself is getting smaller.
Pre trade AMZN was down 7%
Down 6% in premarket, will have to wait and see but likely wont help them much as tariffs will impact a significant amount of their products regardless.
In addition to what everyone else has said, if Europe goes through with the new "Big Tech tax" and/or tariffs on digital services, AWS would presumably take a big hit.
>> If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
All three of those stores are very popular in my part of Europe. So there must be some workaround. Based on your edit I would guess that they would import a bunch of orders in one shipment to make the 'per shipment' charge small per item/order.
>> If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
All three of those stores are very popular in my part of Europe. So there must be some workaround.
Well, the good news is almost nobody is gonna like this, so I don't anticipate it lasting beyond Trump's presidency, assuming he makes it 4 years at this rate. The bad news is that even after tariffs are removed, it will take years for prices to recover, if they ever do.
Actually one policy that Biden kept in place after the 2020 elections was the Trump Tariffs.
I think we are underestimating how popular protectionism is with progressives, it may turn out to be an unusual alliance between disaffected voters on the far right and left outnumbering free trade advocates in the center of both parties.
They're going to try to make sure we never have fair elections again. I'm not saying they're going to succeed, but they're sure as hell going to try, which is terrifying.
> This is why in some European countries, that $1 item from China with free shipping can end up costing $10
This is what strikes me about these new tariffs... for all the concern about how it's going to impact the US economy (and I don't doubt it will), this is STILL far, far, less protectionism than literally every other country in the entire world. Donald Trump's justification for all this is that the U.S. is propping up the entire world economy to it's own detriment, and I'm not sure he's necessarily wrong here.
"less protectionism than literally every other country in the entire world"
I ordered from Temu and it's shipped from China and arrives at my door with my local sales tax applied -- because Temu abides by Canadian law -- but otherwise with no additional fees. Got a pair of headphones and a three timer device yesterday for $10 CAD.
Or you know, Trump's constant yapping about Canada's diary tariff. In reality the US ships 4x more dairy to Canada tariff free than the reverse, and we, by design, do not target sending dairy to the US. But Trump takes advantage of the poorly informed and/or stupid, and it works amazingly.
>U.S. is propping up the entire world economy to it's own detriment
If you're sitting in the richest large country in the world, literally at the height of its economic accomplishment, and you really buy it when someone tells you that you're the victim, you might be profoundly misinformed and with literally zero context of reality.
The US has an amazing amount to fall, and it's going to happen. And when you're working on the assembly line doing extremely low value work, having been ostracized by the entire planet, enjoy how you made the libs pay.
Aside from everything else one thing what strikes me as particularly insane is how it’s not even defensible as a protective measure. My favorite everyday olive oil comes from Tunisia. They now have a 38% tariff on them. There are no out of work olive farmers in the US.
The orange man wanted tariffs, the orange man is going to get tariffs. Now we have to hope the American people aren’t so dumb as to still be convinced only he can solve their issues. I don’t hold out hope for that.
If Jan 6th didn't dissuade people, I don't think anything will.
Additionally, his base will not blame him, they will swallow whichever of the many narratives the propagandists are currently cooking up that suites their fancy.
I disagree with this. Jan 6th didn’t affect 99% of peoples lives directly. It was clearly bad, but few people saw impacts in their own lives.
Higher prices and a possible recession will affect every person in the country and even globally.
His MAGA base might not blame him, but that’s only like 30-40% of the electorate. The other 60-70% won’t be happy if their lives are negatively impacted.
One thing worth noting is that congress isn't pleased about the executive branch high jacking the powers of appropriations from them (i.e. imposing a tax on the people in the form of a tariff).
Jan 6 was far from many people's lives. It was a philisophical debate at most. When they get to the stores to buy groceries and they are 30-50% higher and their next TV, laptop the same way, they will realize that voting for an Oompa Loompa was a bad idea, and will want him out.
Spoke to a friend who is a big Trump supporter just yesterday - his view is that we shouldn't react to short term impact, these policies and tariffs should be viewed and judged in the long term. These tariffs will remake american manufacturing. I dont know if thats the current faux news talking point.
> There are no out of work olive farmers in the US.
Is that because we can't grow olives here, or because we don't have federal subsidies propping up a domestic olive industry that can compete with corn and soy?
I ready don't know the details well enough there, but it feels like this could just be selection bias at play.
You can grow olives in the US and there are some farms in CA. The quantities produced are orders of magnitude off though and given the time it takes to grow olive orchards we cannot replace our imports of olives in a reasonable time period.
There's a lot of examples like this. Coffee, and bananas come to mind. You can only grow those in Hawaii, or maybe Flordia, and there's absolutely not enough land to sate our imports. The whole theory behind international trade is that some countries do things well and others don't. In the case of food the reality is more that others can't.
The exact growing conditions for olive production aren’t common in the US, so most of the production comes from California - west of Sacramento and south along the San Joaquin river. There are a lot of barriers in bringing specialty crops to market related to know-how and contracting sale of product, so even in other areas where growth may be possible it may be infeasible.
US does produce olive oil, particularly in states like California, Arizona, Texas, Georgia, Florida, Oregon, and Hawaii. So you do have a few options:
1. Support local producers. There are high-quality olive oils made right here in the US that might surprise you.
2. Work with Tunisia manufacturers to move their production to the US
3. If you don't want to support local producers, pay extra and enjoy your Tunisia olive oil as much as you want
4. If politics is the real issue for you, move to Tunisia, there is no "orange man" there
That said, refusing to support local production out of principle isn’t really a solution.
I don't know how much you know about olive oil, but it comes from olives, which grow on olive trees. Olive trees are famously long-lived and, together with the very specific types of land that they grow on, they represent extremely persistent and valuable investments for the people who produce olive oil.
US consumption of olive oil is more than 10x domestic production of olive oil. It is not possible to spin up olive orchards in even a medium timespan as the trees take many years to grow. It’s not about wanting to support domestic producers, it legitimately is not possible.
You are right about olive oil. So why did he do it? The trade imbalance with Tunisia. Why is there are trade imbalance with Tunisia? US consumers have money to buy products from Tunisia, Tunisian consumers don't have the ability to afford products from the US. Why can't Tunisian's afford US products? This is the central question for every country in the trade war and it has myriad factors, but two of the biggest are: A higher cost US dollar, suppression of wages in countries like Tunisia (and Germany, and China, etc).
California produced 1.94 million gallons of olive oil in 2023. That same year the US used ~98.5 million gallons of olive oil. There just isn't enough space to produce that much olive oil in CA much less produce it profitably or in ways that wouldn't devastate the environment. And all that is ignoring that it takes around 10 years for an olive tree to get to consistent production.
>Onagri data show that Spain is the leading destination for Tunisian olive oil, with 47.4 percent flowing to Spanish ports, followed closely by Italy at 42.2 percent and the United States in third at 33.8 percent.
Why do you think it's a good idea to buy olive oil from Tunisia instead of from California? Are you aware of how much CO2 is released to ship a trivial commodity across the atlantic ocean?
Just a guess as he said his favorite olive oil so could it be one tastes better? I imagine like many other things taste can be effected by the region it is grown in.
As for your other point in a perfect world we would all care about global climate change but many are not going to eat something they don’t like to do their part. But really cargo ships are small fish in such a big problem. Ban private jets or cruise ships would be way more beneficial.
Help me understand your viewpoint here - is the assumption that an entire ship is dedicated to shipping trivial commodities and the cargo isn't co-mingled with anything else? At the same time, what isn't counted as a "trivial commodity", and should ships _only_ be used for those items?
>> There are no out of work olive farmers in the US.
I'm not sure this is true. I buy olive oil specifically from California. It's niche but could be larger if they weren't competing with lower overseas labor costs.
Not 50 times larger which is what it would need to be to supply the current domestic consumption. California only produced 1.94 million gallons of olive oil in 2023, that same year the US used ~98.5 million gallons of olive oil.
Even if we could snap our fingers and create the orchards out of thin air there's not enough land and water to grow 50x our current production. Then where's the worker population coming from? They're also trying to drive overall immigration to essentially zero.
According to Trump Tunisia has to buy olive oil from you for the same amount of money that you spent on Tunisias olive oil. Otherwise one side has a trade deficit and that's unfair!
So, we can and do grow olives here in California, but it is a very small industry compared Spain, Italy, etc.
However, one thing we absolutely cannot grow here in any sort of money-making way, is coffee. So 32% tariffs on imports of coffee from Indonesia.... when we do not even export coffee.
We get a lot of titanium from China. That's because the largest natural Ti deposits are in Eurasia. That is due to geology, not politics, and now US companies who need it (read: high performance transport, medical products) will pay substantially more for it.
Why wouldn't they? They can immediately raise prices by however many percent the tariff is. Probably a bit less because higher price causes lower demand. So let's say raise by half of the tariff.
Maybe it will partially offset the increased cost of everything they need to buy and sell olives.
Except none of that 38% extra in price is going to the farmers. It's a tax not extra profit for the producer. Crazy how many people still do not know how tariffs work.
If anything those Tunisian folks would have to reduce the price to compete. The tariffs go straight to the US coffers at the customs, nothing to do with the farmers.
> what strikes me as particularly insane is how it’s not even defensible as a protective measure
You must not have read many of the comments here. Way too many people are trying to defend this just because they don't want to have to admit that they were wrong on Trump being better for the economy.
The orange man is saying: "Looks like you are sending a lot of $$$ to those olive oil farmers in Tunisia. With my tariffs you now have two choices at your disposal: either you keep buying their Olive oil but then you are going to have to give me $$$ as well to pay for our national debt. You are going to buy less of it; and help your country in the process. Alternatively, you can decide that maybe you don't need olive oil all that much. We have this amazing product called 'corn oil' which is produced locally and is now comparatively less expensive, buy that instead and support your local farmer. Choice is yours".
Maybe you don't like either of these choices; but at the same time; saying "I believe that having cheap access to product produced halfway across the globe is a god given right to American people; how dare you imposing me to make such a choice" is part of the reason why we need 13 earth to sustain the modern US lifestyle.
I am really not a Trump supporter at all. But at the same time the gradual reduction of tariffs has been a key factor of increasing global trade; which in turn is a key component of the increase of CO2 emissions. Finding a way to dampen a bit the international component and making sure that locally sourced products and services are not affected seems not that bad.
The whole "decide that maybe you don't need olive oil that much" thing is what's going to crush the economy in the US. The problem is that demand does not shift to alternative supplies elastically. It takes years and sometimes decades to build an alternate supply chain for some industries. So what you're saying is that an entire generation of children in the US are going to have to grow up materially worse off than their parents and grandparents. And that's assuming that a bunch of businesses magically start overnight to fill the enormous gaps caused by a lack of access to international supply chains. If you look at other countries such as in South America or for example Italy where there are huge protective tariffs, the industries you expected to magically appear didn't. Instead people just have less and work less.
So your dichotomy applies, but it's not some magical ratchet out of globalization unless there's a corresponding push on the federal or state level to build competitive domestic industries to replace the international supply chains we've been cut off from.
> I am really not a Trump supporter at all. But at the same time the gradual reduction of tariffs has been a key factor of increasing global trade; which in turn is a key component of the increase of CO2 emissions. Finding a way to dampen a bit the international component and making sure that locally sourced products and services are not affected seems not that bad.
I'm not sure about that part.
International shipping in particular isn't a huge part of the energy cost of the goods that get shipped, so making the same things locally doesn't save much. This is from 2016 so things will have changed since then, but back then it was 1.6% of emissions from shipping, vs. 11.9% from road transport: https://ourworldindata.org/ghg-emissions-by-sector
What trade does increase directly is the global economy, and that in turn means more money is available to be spent on energy; historically the energy has been carbon intensive, but everyone is now producing as much green energy as they have factories to work with, and are making factories for those green energy systems as fast as they have bureaucracy to cope with.
IMHO the idea is that they are ready to accept the suffering of Tunisian oil lovers for the greater good, which is the empowerment of certain type of people like them.
It's basically Europe but hundred or more years ago.
The COOC web site lists California olive oils that they've certified. Last time I checked California Gold Olive Oil was certified, and they even sell it in half and full gallons. That's just one I've tried and liked-- there are a bunch of others listed on the COOC web site. (Edit: there are probably certification trade associations for other countries/regions, COOC is just the one I'm familiar with.)
The bit I love is that countries with which the US has a trade surplus aren't getting the opposite of a tariff (a grant, I guess) on their imports to the US, they aren't getting zero tariffs on their imports to the US, they're getting 10% tariffs.
Heard Island and McDonald Islands, two Australian territories inhabited only by penguins, get singled out for a 10% tariff.
Norfolk Island, an Australian community of 3000 with no exports to the US, gets its own 29% tariff. They're expecting a tourism boost from the publicity.
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."[0]
LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.
It is really silly to say that because an LLM gave a similar approach a single time and someone took a screencap of it without full context, that Elon and Trump are sitting in the whitehouse asking Grok what to. This level of hyperbole is why reading about anything to do with the two of them is really exhausting.
Wow. So they came up with zero-effort estimates of the tariff rate which would balance the trade deficit. The method is like something you'd be asked to criticise in A level economics.
Then they incorrectly labelled these numbers as reciprocal tarrifs implying this is what other countries charge the US.
The worst of it is that all of this misinformation will be happily accepted as truth by so many people. It's now going to be almost impossible to have people realise the truth, especially those people who support Trump. Ugh.
Are we factoring in digital/service trades? For example, Netflix is in Vietnam. There are many Netflix subscribers in Vietnam. Does that get factored into the trade deficit? Or is it only physical goods that get factored in?
Vietnam uses many US services such as Microsoft Office, Netflix, ChatGPT, Facebook ads, etc. This is revenue that directly go into the pockets of American companies.
No services, only goods. This is according to @JamesSurowiecki on Twitter, one of the first to reverse engineer the equation for how they’re coming up with the numbers. So Office, Netflix, etc wouldn’t count against the deficit.
Of course not. The entire time Trump is railing against the deficit, he's talking only about goods. He wants to bring back manufacturing to America, didn't you hear?
The Eu will take care of that by slapping taxes/tariffs or regulations, and the rest of the world will also do the same. Play stupid games, win stupid prizes.
I see how the tariff numbers may have been calculated. But why is it done that way? What is the rationale behind such a calculation? Is this a way to balance the existing trade deficits? How does it work?
Would appreciate you (or anybody else) shed some light on the economics of the thing.
The label "tariffs charged to the US" is just straight-up wrong, either due to incompetence or malice (likely to justify the high tariffs).
But basing the tariffs on import/export ratio makes sense if your goal is to be a net exporter with every country, as it discourages imports until that's the case. It's still somewhat arbitrary though; my guess is that the White House is pursuing that goal mostly for political, not economical reasons.
Interesting. While I think these tariffs are a bad idea, I'm not qualified to fully pass judgement. However, knowing Trump, when I saw the numbers I instantly suspected they would be wrong.
This won't bring home manufacturing but let's say that it will...
The US doesn't have the people to do the actual manufacturing. I saw a video recently explaining how sectors like the military, construction and the automotive industry each have 100K+ positions that they are unable to fill. A return to manufacturing adds to that shortage.
Apparently there's some 7 million young men of working age that are...missing in action. Self-isolated, gaming, addictions.
In construction, for every 5 people that retire, only 2 enter. And it's been like that for over 10 years. The people aren't there nor is the motivation.
I'm sure you'll have Apple investing in a mega plant where 50 educated people push some buttons though.
Plus, even assuming there existed lots of people to fill the gap, why would they sign up for manufacturing jobs? They pay like crap. Unions and worker rights have been gradually chipped away at for years and now they're straight up chainsawing them. Why work a monotonous job that pays at or just slightly above minimum wage, has skills that aren't really transferable should you decide to change careers, is rough on the body and doesn't even provide proper health care or sick days to rest, and employers will call you in during natural disasters with the threat of firing you otherwise and then leave you to literally die while pretending it's not their fault when you do die? [1]
It's companies and the government saying, "We want everything, and in exchange, we'll give you nothing. And you will be happy." No American sees their kid growing up and thinks, "I hope my child will one day work long hours at a factory." People in some countries do, and it's because those jobs are a step up from the current standard. Factory jobs in the US are, in many cases, a step down and that step keeps lowering. High tech/high skilled manufacturing can be an exception, but the bulk of the jobs they're hoping to bring back aren't that.
> Plus, even assuming there existed lots of people to fill the gap, why would they sign up for manufacturing jobs? They pay like crap.
Maybe that's just you talking from a position of relative privilege (e.g. as someone who's likely an extremely well-paid software engineer or some adjacent profession), and not really understanding other people's situation. Not everyone has a pick of the perfect career that ticks every box.
It's very well document that there are lots people bitter those manufacturing jobs got off-shored, and lots of communities that wish they'd reopen "the plant."
> Why work a monotonous job that pays at or just slightly above minimum wage,
If you torpedo the economy so people have no other sources of income, raise the price of all goods, and cut of all social supports and programs, people will have no choice but to take jobs they would have turned their noises up at before.
Then raise the wages. Yes that means products get more expensive, but so be it. The economy will find a new equilibrium. White collar workers will see their purchasing power decrease, but factory workers will see it increase.
>No American sees their kid growing up and thinks, "I hope my child will one day work long hours at a factory."
Maybe its just me, but I think theres something seriously wrong with society if people have existential dread over the thought of having to produce the things they consume. If the production of it is so unethical, it shouldn't be consumed at all.
> rough on the body and doesn't even provide proper health care or sick days to rest
That's why I'm bullish on human shaped drones controlled with full-body trackers. If you could do most physical jobs without being physically near the area you'd open them to more women (so widening the potential workforce) and improve on-the-job accidents statistics.
I don't know that I agree with this. The US is too large a market to ignore, and this is effectively raising the profit margin for local production. Foreign companies will either move some portion of manufacturing to the US (for the domestic market), or cede the market completely, and I don't know that they're prepared to do that (well, maybe Chinese ones are). Factories have a long lead time, so even if this is abolished at the end of his term, they'll be locked in with sunk capital costs. The main reasons not to do this are a) abandoning the market, as mentioned, or b) you think you can hold out long enough until the political landscape changes.
If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages. Pay enough, and someone will do the job. This is especially true for low-skilled work. There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
And even if these jobs aren't in running these factories, they've still got to be built. Money is a powerful motivator, so I have no doubt they will. Companies will bleed because of this, but there are clear benefits for the US working class even if they're paying more. The gamble is obviously that the benefits outweigh the negatives of higher prices overall. Modern economics says no, but modern economics also believes in service-based economies, and that countries should only produce what they're good at, which, eventually, becomes a repudiation of the nation state. No country wants to buy bullets from an enemy, even if they're cheaper, and the web of infrastructure and industry necessary to maintain a defense industry mandates that at some point, you abandon the theory. Which is to say: I don't know, but I'm also skeptical that economists do.
> If the people aren't there, wages will rise until they show up. [...] There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
While this might be in a theoretical and pedantic way true, sometimes you do not have the economic context to provide those larger wages, so there will technically be no "shortage" - but just because the jobs themselves will disappear.
If you look at poor countries or regions, there is garbage, dirt and dilapidation everywhere. Clearly there is - in a practical way - a need for cleaners, but by your definition there is no "shortage" - because they cannot afford to pay anything for those jobs.
> effectively raising the profit margin for local production
This is the sad thing for US consumers.
If there is now a tariff on Product X that means instead of costing 100 it will now cost 125, I will guarantee you that the price for a locally produced competitor item will be 124.99 The local producers are not going to leave 25% profit on the table.
No-one will move any manufacturing because people don't expect this to last long enough for it to make sense.
The congress can remove Trump's authority to determine tariffs at any point by declaring the crisis to be over. The Republicans have a knife-edge margin in the house and the most consistent two rules in American elections are that the party with the president loses some support in the midterms and that bad economic times means that the opposition party gains.
It would take years to move production, and next congress is 20 months away. There is no world in which this ends up good for the USA. Even if you believe that this is a situation where short-term pain leads to long-term gain, there is no way this will continue long enough for that gain to ever materialize.
> If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages
I don't know about this in the US. Sure, we're not at full employment, but I don't know how factory jobs are going to change that. My impression is that there is already a deficit in labor willing to work hard for good pay (construction, trucking, etc.,) and tightening immigration policies will make this even worse.
You say foreign companies will move manufacturing to the US or cede the market. You leave out the most likely option: everything will stay the same yet you pay more for your imports.
There probably isn't enough labour to onshore everything like you're implying.
The US currently consumes about half of its goods from domestic manufacturing. There are about 12 million people currently employed in manufacturing, and 7 million unemployed people. Matching the historical all-time low for unemployment rate would give around 4 million unemployed still.
> There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
I mean, by that logic there's never a shortage of any profession. But in practice, I've seen what happens with a shortage of cleaners in a popular tourist town (my wife used to run a cleaning business) - it becomes nearly impossible to hire cleaners because everyone's salary in the area is inflated and people would rather work at an easier job. You run into persistent performance issues with your remaining cleaners - they're dishonest, simply stop showing up to work without notice, etc. You can't hire anyone from outside the area because there's no housing available other than dingy, overpriced basements. Holes get blown in the budgets of schools, hospitals, etc. because they have to contend with cleaning rates that are effectively set by the competitive market for cleaning AirBnBs.
I heard a great story from a colleague that worked in fashion development in the UK. There's a big push for "Made in the UK" clothing and consumers associate it with quality, but the items are lower quality, because the UK lost its garment manufacturing skills 50+ years ago. Meanwhile Asia has gained those skills, so if you buy clothes from China they are likely higher quality than you'd get here and cheaper.
This is not always the case, Italy still makes high quality leather goods, Portugal is still making good shirts and trousers etc, but for the most part as economies have moved away from manufacturing into services they have lost the skills and to force manufacturing to happen there means accepting higher priced, lower quality products.
This has probably little to do with skill being lost, and more with how little one gets paid to do this kind of work. Skilled people can get jobs in other fields that earn a lot more.
> The US doesn't have the people to do the actual manufacturing
The core issue is that, historically, experienced workers have passed down their knowledge to new generations, ensuring a steady accumulation of expertise. However, when factories close and seasoned workers retire or move to other fields without training successors, a vast amount of valuable knowledge is lost. Rebuilding this expertise is both difficult and time-consuming. Subsidies will be required to support local production - initially yielding lower-quality or significantly more expensive goods - until the Western world relearns how to manufacture at scale.
Furthermore, if you want to build something, you likely won’t do it by hand. You’ll need machines to automate the process or enable complex material operations. Rebuilding this capability from scratch will take time, as existing manufacturers lack the necessary capacity. Additionally, similar equipment is produced much more cheaply in China, creating another challenge that must be addressed. What’s likely to happen is that Chinese manufacturers will establish companies in the United States that replicate their production facilities elsewhere (e.g. mainland China). They’ll ship in parts, and final assembly will take place in the U.S. This approach allows them to bypass trade restrictions while maintaining cost advantages. I already know of several cases where this is happening.
A lot of that experience isn't needed though - automation replaced a large part of the expertise needs. I used to work at a factory, it produces as much as it ever did (though with a lot of modern innovations), but today only about 200 people work in it, compared to over 2000 in 1950. The CNC laser cutters replaced 70 people running saws with just 3.
No people, no supply chain, and no total lack of environmental regulations mean most manufacturing jobs are not coming back no matter what the tariffs are. It's not just one reason that the manufacturing jobs have left, but a conflation of reasons.
Unless… well, unless you eliminate the EPA, invade Canada and Greenland and take their raw materials, and make people so poor that they take up factory jobs again.
didnt you listen to the 70 year olds planning this? we're just going have the robots do it.
you know how people said putin was surrounded by an echo chamber and thats how he got stuck in ukraine? Thats the us now but with billionare VC's and 2nd tier 1980's NYC real estate developers. Look at their numbers and listen to them talk, they're genuinely not grounded in reality as whole group and theres no fixing that
No, this is the effect for the last 50 years' usual "I will have my high paid cushy job while some other country somewhere manufactures products for me, taking on all the negative effects. Only positive effects for me. Yes, you should use our currency and take part in our inflation. Or we'll invade you. We will print 6T USD[1] in 2 years and you need to absorb that along with us."
Thankfully, this is coming to an end soon. No tears anywhere.
I know a version of this is what happens in every human age, not singling anything out, but don't get onto the moral high ground of "I am just trying to ensure everyone is well paid".
[1] additionally, 80% of all US dollars added to the supply were added in the last 5 years.
This is basic economics that the administration refuses to understand.
Trade allows you to consume beyond your nation’s manpower and resource constraints.
And it’s even stupider when you’re putting tariffs on raw materials like Canadian lumber. So not only do we need to magically find millions of workers to work in these new factories we also need to find a bunch of lumberjacks and start cutting down our own trees? We’re at 4% unemployment, who’s going to do this work?
We literally don’t have the people to make this work.
(Spoilers, the problem they had was that even when they found companies to manufacture their bbq scrubber, it was harder to find someone in the USA to make the parts that are used to make the parts.)
Simone Giertz said on her channel her company approached multiple factories in the US, EU and China about manufacturing a product. None of the US factories even replied.
Suppose you even find those workers. How are american products going to compete with cheaper chinese / european ones. People over there are used to much lower wages / purchasing power. You can look at Tesla vs BYD prices as an example
More likely the goal is for foreign companies to set up factories in the US for the domestic market. The US market is too big for most industries to ignore, and as they move manufacturing there, they skill up the US population.
Industries don't exist in isolation, and you need to be able to make simpler things in order to cultivate the know-how to make complex things. If China makes better phones, it won't be long until they make better drones. This is as much a strategic initiative as it is an economic one.
And BYD should be a wake up call that the US cannot compete in high value goods anymore.
In real life, people are spending years looking for jobs making enough to barely survive. I should tell them about your video you saw, if only they know.
Eh. This always gets presented as a, "Why don't Millennial/Zoomer/Alpha men want to work?" Lack of training? Maybe. But I see that as more of a subset of the actual issue, which is two-fold: work conditions and compensation. So many jobs suck, and pay less than they should, and provide no real opportunity for growth. Let's break it down:
Jobs that suck: bad hours, bad bosses, bad processes that create inefficiency and stress.
Jobs that don't pay: can't afford a house, can't afford to date/get married/have children, can't establish a stable lifestyle .
Jobs that don't allow for growth: masters don't pass along their skills, managers don't promote (and, eventually, step aside), employers push employees out with stagnation and the hoarding of opportunities for nepo-hires or outsiders.
And why are we in this situation? Essentially, because someone likes the way things are. Managers and seniors don't want to change their work styles, even if those styles are dysfunctional. Employers don't want to pay. Older workers don't want to leave, or jeopardize their marketability by training juniors.
Every young worker can tell you about their experiences with older workers who promise to train and won't, managers who promise advancement and don't, having to be in the office at an ungodly hour or the warehouse or factory late into the night. And for what? Nothing of the American Dream, at least without putting up with the more ridiculous end of the job spectrum, or having been born into money, or having been lucky enough to rub shoulders with someone born into money.
It's Japan's hikikomori problem, transposed. Japanese authorities constantly blame the shut-ins, but outside observers recognize that the problem actually lies with the "functional" side of society, and its unwillingness to confront the way it alienates and produces perfectly reasonable, if dysfunctional, responses in these men (and women).
Agreed, the root of the problem is that America has relatively zero modern manufacturing infrastructure and manpower, especially compared to China. Those MAGA folks just don't know this. Offshoring happened not just because of cheaper price; China already had a much better environment even 20 years ago thanks to billions of people.
> sectors like the military, construction and the automotive industry each have 100K+ positions that they are unable to fill. A return to manufacturing adds to that shortage.
Feel free to offer higher wages than the previous stagnant wages.
> The US doesn't have the people to do the actual manufacturing
I am willing to move anywhere in the US to do any manufacturing job if it means that I will be paid enough to afford a house with two bedrooms and basic living expenses. I have a bachelor's degree and have been unable to find such an arrangement. So where exactly are all of these unfilled jobs that you speak of? Are they unfilled because we don't have the people, or because they're trying to pay in peanuts? Unfilled because we don't have the people, or because HR departments are filtering away qualified resumes based on voodoo? This outlandish claim you're making that we don't want to work is offensive to a lot of people who are aware of their own existence and know that you're spouting bullshit to trick people into more wealth inequality.
Your 7 million young men aren't 'missing', you're just refusing to hire them. The jobs don't exist.
The only question is how to get them employed where our economy needs them. Honestly I've worked in Manufacturing and it is fucking gnarly. Clean factories don't exist. Many of the men I worked with had some sort of mild mental disorder tending towards aggression. Constantly short serviced machines and price gouging by any contractors involved. There is a lot to figure out and before you end up with a hospitable work environment. I'm doubtful tubby mcgamesalot is going to hold down a job stamping metal parts all day getting his lunch eaten or pissed in.
Well, if I had to guess based on my own personal experience, it's easy to simply be... forgotten. Nobody asks you to do anything, and you don't have the will to do anything of your own accord because everything you want feels hopelessly out of reach.
No one will want to do lower income jobs while the cost of living is high and continues to rise. Wear and tear on the body is also not compensated, not to mention healthcare being expensive. Meanwhile, I do CRUD apps and work remotely 20/hours a week with no bodily harm (on the contrary, I have time to work out and make bad posts on HN)
No one in their right mind is going to choose manufacturing over what I have if they can do both, and most people could honestly learn to do CRUD apps. Even if my salary were to go down by 5-10% yoy due to people moving in, I'm still in a better position for the other reasons mentioned. I'd have to be below manufacturing and blue collar wages to get me to switch.
The only sensible explanation is that they're trying to force people to have to take these jobs by crashing the globalized parts of the economy because they are obviously better than starving and dying homeless.
All this assuming that Trump isn't just intentionally trying to destroy the country.
Can you blame the new generations for not wanting to work their asses off doing arduous manual labor, payed a minimum wage that is barely enough to afford a single room?
Republicans made work awful. I've heard some wanting to get rid of minimum wage too. Do you think this will help?
> The US doesn't have the people to do the actual manufacturing ... I'm sure you'll have Apple investing in a mega plant where 50 educated people push some buttons though.
I feel like this could be used to steel-man the Trump administration's plan, though, should you want to. The best-case outcome here for America is it forces large capital investment in automated manufacturing facilities based in the US by making manufacturing that relies on cheap overseas labour expensive enough that the investment is worth it.
I'm doubtful, but, in the unlikely event it works like that, and this comes online in the next couple of years without causing a catastrophic wipeout in the mid-terms, Trump will look like a genius.
IMO it would have been much smarter to explicitly incentivize this with tax breaks and start with small tariffs that would ramp up a little bit each month, if it's the plan, and not just incoherent policy making.
Why is that the best option instead of raising wages until those jobs are attractive to domestic workers? There's this weird back and forth where people bemoan stagnating wages for the working class but at the same time cheer on importing labor that is willing to work for those stagnant wages.
In any other market, the balance of supply and demand is reflected in the price. But for the labor market the perpetual solution put forward seems to be juicing the supply side so that the price does not move up to a new equilibrium.
I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities. These securities mature at varying intervals and require continuous "rolling" or refinancing to pay off old debt with new borrowing.
Significant rollovers are expected from April through September 2025, with additional short-term maturities due by June.
Higher interest rates significantly complicate US' ability to refinance. The cost of servicing this debt — paying interest rather than reducing principal — is already a major budget item, surpassing Medicare, approaching Defense and Social Security levels.
If rates don't come down soon it locks in higher costs for years. The country is at risk of a debt spiral.
How can rates come down? The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
Treasuries are considered safe during such crisis. Increased demand for Treasuries pushes their prices up and yields down, effectively lowering interest rates.
> How can rates come down? The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
Rising prices due to tariffs won't pressure the Fed to lower interest rates. It will increase inflation and worries of inflation, which will actually pressure the Fed to RAISE interest rates. A slowing economy won't stop inflation... We are likely entering into a period of "stagflation". The way out last time was very high interest rates and short term economic hardship.
Prices rising due to tariffs isn't "inflation" in any traditional sense. It's not driven by consumer demand, and therefore the logic for raising rates (i.e. slowing economic growth by reducing money in the market) doesn't apply.
+1. In my relatively uninformed opinion what trump is doing is accelerating a kind of global arbitration in which the US is no longer the dominant economic power. We are going to have to share our toys. The “3rd world” is developing and it isn’t as easy to bully the globe into doing all our dirty work.
In my imagination, 50 years from now we will have a quality of life more similar to Central Europe: fine, but nothing special. Most people will live much more simply, rent smaller spaces, drive less ostentatious cars that they share. People will live with their families out of necessity and strawberries won’t be available in December.
The logic is very reductive. It's like: "the Fed's job is to cut a snake, so if they see a snake around their head they'll just close their eyes and cut both".
Raising rates does Absolutely Nothing to undo the tariffs or bringing the price down. Fed is not a blind machine.
Since people won't actually have more money to spend, you would expect it to lower the prices of other things like housing or travel. So there should be a negligible impact on inflation depending on the weighting.
This is flat out wrong. The Fed raises and lowers interest rates to stimulate or tamp down demand. Raising interest rates because prices rise while demand drops due to a trade war would accomplish nothing.
1) Economic/Monetary Inflation, which is an increase in the money supply in an economy driven by government or central bank ("print money").
2) Price Inflation, which is an increase in the general price level of goods and services that people typically notice at the groceries or gas and usually derives from monetary inflation, but can also be due to the new tariffs.
Is the Fed going to do the same confusion and use 2 to justify higher rates for longer?
I think they shouldn't unless they're being disingenuous and politically motivated (push just enough to make the entire Trump mandate an unending crisis until Democrats get back in power).
> I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities. These securities mature at varying intervals and require continuous "rolling" or refinancing to pay off old debt with new borrowing.
No one is mentioning this because no one cares, least of all the guy who just signed massive tariffs.
What you're describing is the end result of 30-ish years of Republicans implementing "Read my lips: no new taxes" and this country refusing to have to a mature conversation about revenues. Also, over that period, wages remained stagnant, meaning more people look to the government for assistance, which then costs money in the form of deficit spending. The numerous expensive wars didn't help, either.
There's no good fix to this other than some serious revenue raising through taxes on people who can afford it. Of course, those people are of the opinion that they're entitled to net worths that measure as a significant portion of a trillion dollars, and will simply push the costs onto consumers in order to maintain share prices since that's what most of the net worth sits in.
You have to break those people of that idea. Talk of interest rates, Treasury securities, Federal Reserve policy, it's all just noise. The money going in must be a larger portion of the money going out, and significantly burdening the average American with more tax debt isn't going to solve the problem before causing social upheaval.
> I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities.
It's very hard to even assume that's a concern of the current US administration, based on not only the fundamentalist goal of radically cutting taxes and regulations, coupled with the fact that it's purposely pushing a recessive economic policy that defies any logic or reason.
The very least that you'd expect is a progressive tax policy that didn't excluded corporations and mega-rich. You're not seeing any of that.
The whining about how social security payouts was going to sink America while at the same time handing out tax cuts for corporations hints at a ideologically driven agenda.
Tariffs increase prices. This tends to cause a wage-price spiral, and indeed that's one of the stated objectives (increase US wages by onshoring manufacturing). The increase in prices and wages is inflation. This will cause the Treasury to raise rates to force contraction.
The next consideration is: what is the budget actually going to look like? Is it going to cut spending and leave taxes where they are, resulting in debt paid down, or is it going to be a huge tax giveaway to the top few % while increasing the deficit? (personally I'd bet on the latter)
Then the consideration: other players also get a move. What do the retaliatory tariffs look like? Does cutting off the ability of other countries to earn dollars negatively impact US exports?
Devaluing the dollar against other currencies will also force up rates by the arbitrage principle.
S&P down 4% so far today. Do we think that indicates the measures are good or bad for US industries?
I know there is a crowd that talks about debt alot and these are all legitimate concerns
However they could also raise taxes on capital gains and top end income brackets - which are at ludicrously low levels for folks of significant wealth - which would go a very long way here. Some estimates suggest it could put the US back in a surplus quite quickly
edit: I'm saying there is an argument for raising taxes. I don't think its off the table like some people suggest. I know it may not be popular with some but we could discuss the merits.
Cutting fundamental government services feels wrong too
The problem is that raising top end rates don't go far enough. It's a start, but we also need to raise the lower rates to solve the problem. That, or dramatically cut benefits.
It's been argued a lot that such a move would cause a good portion of American billionaires to just pack up and move to another country. Rich people are mobile in a way that poor people are not.
A) The Fed & Treasury have the ability to buy back the securities at any time if they wanted, since they can basically poof the currency into existence. And t-bonds are as good as cash anyways, so that money is basically already in the economy.
B) The country's national debt is also our citizens' savings accounts. Every major company in the country (and the gov't itself) holds an absurd amount of t-bonds because its the best place to store billions of dollars for safe keeping. Paying off the debt means this capital needs to go somewhere. Should it go to China? The EU? Canada? American real estate?
The national debt is probably the most misunderstood concept in the country. It's denominated in USD, unlike other countries, whose debt is borrowed in currencies they don't control. And "paying off" the national debt risks capital flight and/or asset bubbles - both of which are detrimental to the economy.
The system we have in place is a good one.
Thought experiment: consider what would happen if the US Treasury decided interest rates are negative. That is, you pay $10,000 for a bond and receive back $9,900 after 10 years. What do you think this would do to the economy?
Now ratchet up that negative rate to 100%, that is, you pay $10k for a t-bond and eventually it's worth $0 after 10 years. That's pretty much what paying off the national debt would do (in fact, that's probably how the national debt would be paid off, if ordered to do so, the fed would purchase these bonds and the treasury would use the proceeds to buy existing bonds off the open market). It's two sides to the same coin, but instead of prohibiting the purchase of t-bonds, you just disincentivize it.
All I know about this issue is what you wrote above, but it sounds to me like the US taxpayer is paying interest on bonds so that bond holders can earn interest.
I think its perfectly reasonable for the taxpayer to say they would rather not pay interest on those loans. The bond holder could lend the money somebody else instead.
In fact, I think its really unfair that one generation of people can leave debt behind for future generations to pay with higher taxes.
Many critical flaws. Your getting lost confusing the forest for the trees.
For starters you are focusing on the % on the interest payments which is a line item. However when all of your allies stop buying your goods and services you run into bigger problems.
Bonus problem: If one of your internal metrics is that you want to have a trade deficit but nobody to sell to because you have created a hostile environment for trade.
In the long term, yes. In the medium term, companies and people liquidating their assets and paying capital gains tax actually gives the state a windfall.
The flaw is that the USD is massively dropping because of the tarifs.
This will push up interest rates on US bonds, because bond holders want compensation for the value loss of their bond.
> The flaw is that the USD is massively dropping because of the tarifs.
That's all but certain. Currently it's dropping, but long-term it might as well rise, as the demand for foreign currencies from US importers (and by extension consumers) will go down.
> This will push up interest rates on US bonds, because bond holders want compensation for the value loss of their bond.
How do existing bondholders get to demand anything? They may want compensation for a reduced market value, but nobody owes them that. Fluctuating market values are part of the deal of buying bonds.
Yes, but if they let get into a debt spiral, the only solution becomes devaluation of the dollar to the point of hyperinflation. Only then debt is reduced, but it would be terrible for everybody except a few.
I don't see any way the actions we've already seen haven't moved up drastic action on the US debt by at least a decade. And it's only been a very-few months.
We were probably screwed when we cut taxes going into two crushingly-expensive wars, and certainly were when we cut taxes again, but now we're rushing toward crisis instead of trying to at least delay it.
A plan like that could backfire, as one of the primary things that the Fed looks at when setting interest rates is inflation. Increasing the costs of imports across the board will likely increase inflation, which would make a rate cut less likely.
But in general, I think this is too complicated. The simpler explanation for all this is the Executive branch is currently held by isolationist.
Wealth tax is a nice idea but non-starter in implementation.
It works in real estate (property taxes are wealth taxes) because the land can’t move.
One way to tax the super rich is to tax loans against assets. They don’t sell assets to buy a yacht, but borrow against them to avoid paying taxes and keep future gains. Tax those loans as if they sold assets.
> the United States needs to manage its massive national debt,
> The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
> What are the flaws in this thinking?
Flaw #1:
Massive treasury rollovers isn't new.
22% of all Treasuries have a duration of 1 year or less.
The only new thing is that rates have gone up.
Uncertainty is a short term solution to a long term problem.
Flaw #2:
Economic uncertainty and supply side shocks risks a recession.
Recessions usually increase national debt.
Flaw #3:
The right answer to reducing national debt is to ensure incomes exceed outgoings.
The current administration is so focused on extending trillion dollar tax cuts, no amount of tariffs or government efficiency is going to lower the national debt.
Flaw #4:
Treasuries only really go down during a recession.
Recessions are bad, not good.
If you think finding a tech job is hard now, or that your RSUs are hurting, wait until you see a serious recession.
The flaw is that it's like setting your house on fire because it's cold outside. It may well achieve your goal in the short term, but it won't last, and it's just going to make things much worse in the longer term.
One thing I am not sure about is how much reluctance foreign holders of US treasuries will have to buy more treasuries. My guess is both foreign government and commercial holdings will edge down quite a bit, even without any reciprocal activity. Just because they will have reduced US reserves, and in effect need for treasuries.
God knows what happens if reciprocal activity starts towards using another currency also for global trade.
> Increased demand for Treasuries pushes their prices up and yields down, effectively lowering interest rates.
> What are the flaws in this thinking?
Not sure why international investors would want to buy more t-bonds when the country issuing them is starting a trade war and their money could effectively be locked abroad.
The key, IMHO, is to maintain the status quo of the USD as the safe haven which also has the ability to destroy other safe havens. As long as the USD is the primary safe have the amount of debt is irrelevant.
this SHOULD be really obvious to those in charge, but I think is too subtle for them, or they're willfully ignoring it for the "trade deficit" narrative. I don't see how the end result is not a decline in the global role of the US and a whole bunch of pain for everybody as this all unwinds. All for the hubris of an old man...
If the Trump admin's goal were to reduce the national debt it would make way more sense to use fiscal policy (increase taxes) rather than some roundabout way to force the Fed's hand on monetary policy. The tariffs do basically function as a massive regressive tax increase in the form of a sales tax, but that comes with truly immense risks on the demand side of the economy. Guess what happens to tax revenue during a recession.
> The cost of servicing this debt — paying interest rather than reducing principal — is already a major budget item, surpassing Medicare, approaching Defense and Social Security levels.
Military ("defense") expenditures are always understated. Over $180 billion in veteran's benefits were paid last year. This is not counted as military expenditures. Also the debt you talk about is to not only pay for the money sent to Israel and the Ukraine last year, but still for the adventures in Afghanistan, Iraq etc. That just becomes generic debt in the skewed analysis, alienated from its past military adventures. The military budget is higher than stated.
Trump is a wildcard, but I could see the US defaulting on its debt, probably in some way that focuses the default burden on foreign countries holding US debt with some relief for domestic holders. I would definitely not be holding it over the coming few years.
I agree with you. To just offer a counterpoint, I sometimes see quotes like this one:
But plenty of economists looked at the economic hole left by the 2008 financial crisis,
and concluded the stimulus policies on the table weren't nearly big enough to fill it.
The size of the hole is all that matters.
Whatever level of deficit spending is required to fill it is the right level of deficit spending.[1]
or this one:
We need the government to be out there borrowing money because of the long-term investments it's making in our economy[2]
The line of reasoning seems to be
1) The government is special because it can go to extreme measures to repay loans if necessary (i.e., print more money or raise taxes)
2) The reliability of the government means that it can borrow at a low rate (say, 3%) and make investments that are worth far more than that (say, 10%).
Put those together, and the government's borrowing amounts to a net benefit to society.
This argument reminds me of the 'then a miracle occurs' comic [3]. It doesn't hold water because
1) The extreme measures are very harmful - they cause high inflation and hardship amongst taxpayers.
2) Even if we accept that government investment makes a good return (a highly questionable assertion), that return does not go to the government. If the government borrows money to build a new road, then there is no doubt some economic benefit, but the government does not receive that benefit, and they are on the hook for the repayment anyway. So government spending does represent a pure cost - not an "investment". And in any case, interest payments represent investment that can no longer happen.
I would also point out that back when we ran briefly ran a surplus in the late 1990s, economists were not exclaiming about how terrible this was, or how paying off the debt represented a missed opportunity or a catastophe in the making. Everyone agreed at that time that surpluses were good, and that paying down the debt was good. The current "this is fine" thinking smacks of economists who have a predisposition to accept and justify the status quo, whether it is objectively good or not.
So all of that is to say that I'm with you - government debt is bad. We are in danger of some combination of insolvency, default, or very high inflation. And once we enter that spiral it will be impossible to get out of it without permanent damage to the economy and the global standing of the US (such as it is).
> I would also point out that back when we ran briefly ran a surplus in the late 1990s, economists were not exclaiming about how terrible this was, or how paying off the debt represented a missed opportunity or a catastophe in the making. Everyone agreed at that time that surpluses were good, and that paying down the debt was good. The current "this is fine" thinking smacks of economists who have a predisposition to accept and justify the status quo, whether it is objectively good or not.
Oh? I remember all the teeth mashing about all those funds who have to buy treasuries and now what are they gonna doooo! And how this is unprecedented and how are the markets going to reacccct! Numerous articles about that sort of thing in The Economist and various other outlets.
> but the government does not receive that benefit
Yes it does, through increased tax revenues due to the increased economic activity brought about by the road existing earlier than it would have if the government had to wait several years to save up the money to build that road.
Also, at least in the US, the government is nominally "We the People," so if the general population experiences increased economic activity, then the government is benefiting, as it exists (nominally) for the benefit of the people.
-> Treasuries are considered safe during such crisis.
Is that truly still the case? Does the world consider the US stable right now?
I am astonished at how effectively the administration has blown up every pillar upholding the US economy, short, medium, and long term. The damage done here is incalculable. In all of human history never has so much wealth been destroyed so quickly.
This is just delusional. Everybody is looking for some reason that makes this less stupid than it looks, but there is none.
Intentionally causing a recession to lower the debt burden makes no sense, neither politically nor economically. Besides that the US is not some third world country that issues debt in a currency they have no sovereignty over.
I think what’s happening backstage in this magic show are desperate moves to recapitalize the country. Foreign and domestic investors are pledging to spend trillions, probably under duress. Stocks are being crashed to create a flight to treasuries. Dollars are partially anchored to crypto by so-called stable coins. Federal assets are getting dumped and operating costs cut.
Maybe we will get out of this without having to survive on cat food, but I’m not holding my breath.
Fed rate influences treasury rates, but it's not a direct impact. If creditors lose faith in our fiscal situation, rates will rise no matter what the Fed does.
> Treasuries are considered safe during such crisis.
No. Not during such crisis. It's already visible in prices of traditional safe havens (those based on US credibility) that this crisis isn't like the others. They are dropping like flies. Only gold remains.
The F-35 does work, and is deployed around the world right now including the middle east for the recent houthi operations.
National debt is absolutely a problem when interest payments crowd out the rest of your budget. Interest payments currently comprise about 17% of the budget, and this is set to grow. Those can only be paid with taxes or inflation, both of which hit joe taxpayer.
A progressive wealth tax starting at 2% on net worth from $50 million to $250 million and increasing to 8% for wealth over $10 billion is projected to raise $4.35 trillion over 10 years.
Seems like a great start to me.
Alas, I'll never understand people who make average wages defending billionaire wealth hoarding.
>The F-35 jet will cost over $1.5 Trillion, doesn't work and won't be used
You've bought literal Russian propaganda hook, line, and sinker.
The F35 is an incredible piece of technology.
Do you remember infamous articles saying it couldn't dogfight? Not only were those stupid propaganda (you can't dogfight at 100km engagement ranges), all the people repeating them seemed to miss the comment by the older aircraft pilot that the radar assisted gunsight on their gen 4 fighter could not track the F35!, not even at knife fighting range. Go lookup how good gunnery was in WW2 if you want to understand how hilariously bad that is for gen 4 fighters.
The F35 is pricey to run, $40k an hour, but so was the F14, which is correctly understood to be a high tech masterpiece, a tech platform, and one of the best aircraft ever made.
We've already built 1000s of them, and they are already being used today. Israel's attack on Iran that showed just how impotent soviet era air defenses are was conducted with f35s.
"Israel used more than 100 aircraft, carrying fewer than 100 munitions, and with no aircraft getting within 100 miles of the target in the first wave, and that took down nearly the entirety of Iran's air-defense system,"
It's a very impressive machine, that everyone wants, and China is really rushing to build something competitive.
>There are nearly 1,000 BILLIONAIRES in the US, the debt is their problem, they can pay more taxes until it's down to a number you like.
150% correct. The USA is stupidly wealthy on the world stage. We don't have to play pretend poverty, if we would tax the people who have hoarded all that wealth.
Everyone is quick to deride this move as stupid. I don’t disagree that there are downsides to the approach, but there is a set of very real national problems that this might address.
For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well? Increased foreign competition pulls down domestic wages; telling people that they should shut up and be okay with that because they can get cheaper goods isn’t palatable to a lot of people facing the negatives of globalization. Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
There really are structural challenges to onshoring production due to strength of the dollar due to its reserve currency status; our society as such is biased heavily toward importing goods rather than exporting goods. This is a real challenge that needs to be addressed as well.
Our national debt is not sustainable either. Either we pay it down some, or we inflate it away; these are the two ways it goes away, ignoring the option of a world-shattering default on the debt. Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
> Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
Wouldn't restoring the prior taxes to those with highest incomes, and adding a proper capital gains tax, address this directly? As I've started to accumulate small amounts of wealth I've realized, my capital gains are taxed lower than my income; when I sell my house, I get up to 500k of gains tax free. If I backdoor a Roth IRA, I get tax free gains there too. etc. Add additional taxes to investment properties, in the form of property taxes could be one approach as well - I personally know of one investor that owns at least 20 (SFH) properties for example. So I'd propose starting there, as it targets both the wealth gap as well as hits those who can most afford it directly.
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
If tariffs significantly reduce demand, or worse cause a recession, they will have the opposite effect. It would take time to sort out the full impact. But AFAIK, the tax cuts are proposed to be pushed through immediately, without firm corresponding spending reductions nor time to sort out the impact of the tariffs; similarly the tariffs are being implemented in what seems like a haphazard way, with everyone unsure of what they would / will be, how much, etc.
In general, I think if the plan were modest tax increases, esp. around capital gains policy and targeting SFH as investments, (very) modest tariffs, and well executed spending cuts, nobody would be in uproar. I will be pleasantly surprised if the current plan ends well, but it certainly feels as though only those steeped deeply in ideology are supportive of them at the present moment, and I think that is probably telling.
It is absolutely wild to me that money gained from letting it sit is taxed less than money gained from working your ass off. A crime against the working class.
Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer.
Also when talking about tariffs reducing demand and inflating prices, I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
If you believe in these tariffs then the major problem is how he enacted them. Businesses want certainty. It takes years to build factories. The next president could just wipe away these tariffs instantly. Hell, even the current one could. That does not give these companies the certainty they need to commit years of effort to building factories. If the goal is to spur domestic manufacturing then, at a minimum, he would get the tariffs enacted via a new law so they're more likely to stick for the long term.
This is the key point. Even if tariffs did everything Trump claims they will (they will not) no one is investing billions to build factories in America for tariffs that will not be there in a few years.
Turns out that governing based on the whims of the executive has downsides.
Tarrifs are a tool that must be applied strategically. You typically announce tarrifs years in advance so business can shift their logistics and build out manufacturing where you want it. However a daily change in tariffs only creates a chaos that the economy cannot simply respond to fast enough.
A new steel mill won't magically appear in the middle of the US within a month.
> What about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
What about all of the domestic producers of finished goods who can now can not afford their materials and supplies? What about the domestic supplier of that finished goods producer who has their orders cut because the finished goods producer needs to cut production? What about the domestic consumer who'd like to buy those finished goods, but they can't afford it because prices over all have increased? What about the barber shop by the finished goods plant that has to shut down because the finished goods plant cut their workforce by 50%?
100+ years of studying tariffs have shown that they are effective when very narrowly targeted. Otherwise they almost never achieve their stated goal of actually increasing domestic production.
Should we tax goods from Mississippi to NY to save jobs in NYC? After all, wages in NYC are way higher than in MS. Trade with MS pulls down wages with NYC.
So if people were trying to make the world a better place congratulations they succeeded. JD Vance uses a bit different framing(!).
Anyway, back to your question, IMHO the problem in thinking here is that it implies that there must be "They" and "Us". You can't just get prosperous as a humanity, it needs to be a subgroup like "Americans" or "Germans" that do amazing things and they are very unsatisfied that Chinese and Indians got advanced and no longer do the shitty jobs. When they say globalism has failed us, they mean we thought that Vietnamese will keep making our shoes but now they are making cars too.
Essentially the core of the problem(or ideal) is nationalism and borders associated with it, preventing of people move around and pursue happiness.
A group of people like the generations of Americans who pioneered many technologies and sciences built a world, then other group of people(mostly their offsprings or people who caught up thanks to proximity to the ground zero) operated within that world and made some choices and transformed the world into something else. Now, they are unhappy with the current state and propose teaming up around something like religion/attitudes around genders etc. If you subscribe to the idea that people should team around these things and if you think that you won't be suffering that much and you don't care that some people might suffer a lot, then yes the current actions actually makes sense.
> is that it implies that there must be "They" and "Us". You can't just get prosperous as a humanity
This idea of humanity transcending our genetic (due to geographic proximity) tribal groups is a uniquely European one. Pretending we can abandon all tribalism and integrate the entire world into a European model is either immensely incompetent or intentionally malicious (I tend to think the latter). The current billionaire class profits immensely from all the diversity (both generic and ideological) in the west. It’s much easier to parasitically rule a divided people than a unified one. Nationalism is a defense against these parasites.
> needs to be a subgroup like "Americans" or "Germans" that do amazing things and they are very unsatisfied that Chinese and Indians got advanced
The issue isn’t other countries improving. The issue is the average America should not have a degraded quality of life (barring major natural disasters etc) so that our billionaires can be richer. A nationalist elite class would correctly say “no, we keep those jobs here because it benefits my countryman even if I’m going to make less money”. We do not have this and the wealth gap continues to increase.
> If you're subscribe the idea that people should team around these things and if you think that you won't be suffering that much and you don't care that some people might suffer a lot
Do you think parents should prioritize their children? Not saying this snidely - there’s no black and white lines here, but I think universalism can only be accomplished by taking care of our own and growing our tent, as opposed to diminishing our own to lift up others (who in many cases do not share our universalist sentiments).
I agree with the goal. I disagree with the execution.
First, from the outside looking in, it appears these tariffs were implemented in an adhoc basis which disrupt supply chains potentially bankrupting companies and result in more layoffs in the short term.
Second, there should be a carve-out on tariff policy to respond to national security interests. e.g., if and when the US wants Ukraine to rebuild its fledgling export economy, the US should set the tariff on Ukraine's products to zero as it is in the US' interests that Ukraine is financially strong. Similarly, the US should use tariffs to protect industries it deems strategic such as manufacturing advanced computer chips.
In other words, instead of using a purely political process to set tariff policy, I would argue tariffs should be managed by an impartial semi-independent agency such as the Federal Reserve. The governors of such a tariff agency should be tasked with the goals of advancing long term US interests, economically, employment-wise, and national security interests.
The Trump administration set the Russia tariff to zero, and we do still import stuff from Russia in spite of all the sanctions and set the blanket ten percent rate on Ukraine as you write. Maybe this is simply the current administration's national security interest.
> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
Good faith negotiations with our allies and trading partners that creates a balance of trade and reduces wealth inequality in the west. I'm not opposed to the actual ideas being floated, but the people doing are are completely unserious and it's being implemented in a stupid nonsense way.
> Good faith negotiations with our allies and trading partners that creates a balance of trade and reduces wealth inequality in the west.
We can look at a 50+ year history of every major U.S. trade partner increasing their protectionist policies, largely targeting the U.S., while the U.S. allowed trade deficits to balloon out of control. I don't see evidence that this "good faith" approach you speak of has any viability at all. The global economy can't say with a straight face that it has been a fair trade partner with the United States. For the past 50+ years the U.S. market has been open for business for all global producers, but the same has been far from true for pretty much every major U.S. trade partner. You can't even operate a company in China without 50% Chinese ownership, for example. The global stance on trade has all but made this an inevitable outcome.
If it's fundamentally a jobs program, you can be a lot smarter about it than tariffs.
If companies couldn't compete before, they're now further disincentivized to compete, leaving the rest of us worse off and uncompetitive with the rest of the world.
That's the part I just don't get about the pro tariff as reshoring manufacturing argument. That industry only makes sense and will only be profitable in a world where the tariffs are permanent. The Vietnamese textile factories aren't going to just disappear their exports will shift to other parts of the world and if the tariffs ever disappear they'll shift right back to the US. So you'll have a tiny fragile industry beholden to the government for its continued existence that makes an expensive product only for domestic consumption... Maybe that's the actual goal create a new raft of client industries and workers in that industry who'll support the administration because to not do it will destroy them simply by lifting or easing the tariffs.
As a software engineer dealing with bits and bytes all day, it's easy to lose sight of the hard and sharp parts of reality. My wife is a chemical engineer who actually goes into a factory and is constantly dealing with production issues in actually making soap, ice cream, chemicals flow (different factories over her career).
JD Vance had an interview somewhere (I think in the NYTimes?) where he claimed that national prosperity is downstream of military might which is downstream of industrial base. It made me stop and think, because that does line up with what I was taught about how the Allies won WW2, and the US beat the Soviets in the Cold War: we outproduced them. I'm not sure if this is "fighting the last war", though, since I imagine a lot of warfare going forward is going to be technological and with things like drones, etc.
It's just so easy to deal with our economic abstraction, of dollars flying around, and computer work, and services and so on, that I sometimes do wonder about your point here about the actual physical, production of goods, and how important that is. Can you have a long term, stable, healthy, successful country that doesn't (and can't) produce anything physical?
We clearly can still make some stuff. I have a great squat rack and barbell set from Rogue Fitness, which makes stuff here in the USA (captured in this beautiful advertisement video[0]), and it's awesome. But I also have a made-in-the-USA wood pellet smoker which is garbage, and which I kind of wish I had just bought from China.
All to say, yeah, I think there's the potential for there to be something along the lines of what you're saying. That said, the implementation is maybe not great. Even taking the Tesla Texas Gigafactory, which was built in warp speed (construction to first cars in about 1.5 years), that's only leaving 2 years before a potential next administration could roll back the tariffs if they wanted.
Agreed there are serious restructuring that needs to happen in the US.
That said this approach doesn't make a lot of sense. There are many ways to do this without antagonizing all of your allies which only helps out your enemies and ostracizes the U.S.
Loss of confidence in the greenback is deeply problematic for US power.
>For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
We could instead pay for re-education and training for these folks to find jobs that do align better with the global economy and bolster social safety nets to help with job loss.
Tariffs are no guarantee the jobs will come back either or even if some of the manufacturing does come back to the US, that it will employ people who need it most or in the same number. Manufacturing automation is quite sophisticated nowadays. Even if the manufacturing comes back to the US - which I don't think is going to happen en masse if at all - the employment prospects that you're suggesting in this line of reasoning won't come back with them, is what the evidence suggests.
>There really are structural challenges to onshoring production due to strength of the dollar due to its reserve currency status; our society as such is biased heavily toward importing goods rather than exporting goods. This is a real challenge that needs to be addressed as well.
Why? Why is onshoring production of non critical goods a benefit to the US as a whole over the long term? Why do we want to protect manufacturing interests at the expense of other interests? These questions haven't been addressed. Not to mention the pain tariffs are going to cause isn't being addressed either, we're simply told to 'grin and bear it', and for what are we doing that exactly? Whats the actual nuts and bolts plan here?
Everywhere I look at the argument for tariffs I come up short on legitimate answers to these questions
>Our national debt is not sustainable either. Either we pay it down some, or we inflate it away; these are the two ways it goes away, ignoring the option of a world-shattering default on the debt. Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
There's other ways to handle the national debt than put broad tariffs on all our trading partners - including allies who have actually been very generous about their trade terms and investments in the US, like Japan, the UK (really much of western Europe), Canada etc.
If we really want to strength the dollar, we could raise wealth taxes (like capital gains or instituting a land value tax for example) and moderate spending. Why are tariffs superior to this? Tariffs only hurt the poor and middle classes anyway, who can't simply fly out of the country for large purchases to avoid them.
I really want to read a good response to this comment. I have the same questions, and I’ll add one more thought.
Lots of people talk about how the US should be more like Europe. People say the average European has a better quality of life, etc. Well, Europe has tariffs…
So does the US??? Ex - we've been placing tariffs on solar/ev parts for many years now to drive investment in those industries (And this is hardly the only place we've done this).
Targeted tariffs to protect and strengthen specific industries are fine - especially if done slowly and while supporting those industries internally to make sure that they aren't disrupted, and that they can actually capitalize on the space provided by a tariff.
---
This policy is not fucking that. It's just a backdoor tax on everyone, with zero planning and support internally to bring those industries back.
Simple terms for your simple comment:
A morbidly obese guy slowly exercising is great.
A morbidly obese guy getting dropped into a marathon with no prep is a recipe for a heart attack.
Doesn't the US already have the most progressive tax system in the world? If you want more public services the tax rate would need to increase at all levels but dramatically so at the middle to low end.
If you really want to onshore production, you don't increase taxes on the import of raw materials, parts, and components, you only do so for finished goods. That isn't what this administration has done though. They say they want to increase domestic manufacturing, but their actions clearly prove that that is not their goal.
There are two different questions here: (1) is Trump's strategy a good one to accomplish his goals? and (2) what are other good ideas to do so?
Just because there aren't many ideas in bucket #2 doesn't mean you should do #1.
For a trivial example, consider steel and aluminum tariffs (Larry Summers gave this example on Bloomberg yesterday):
There are 60x more jobs in industries that rely on steel/aluminum inputs than there are in the US steel/aluminium producers. 60x!
Steel/aluminum tariffs increase the cost of inputs to the companies that employ those 60x more people; their businesses suffer; those jobs are more at risk.
Meanwhile, it will take a decade for steel/aluminum production to be fully done within the US, and even then it will be a higher cost (i.e. the reason the US imports a big share of aluminium from Canada is that Canada uses cheap hydro energy to produce it - something that the US can't do).
Through that decade, every single item that uses imported steel/aluminum as an input will be more expensive for average Americans.
So you risk 60x the jobs, for a slow and ultimately non-competitive local industry rebuild, and meanwhile average Americans pay higher costs.
Now multiply that across every category of good in the economy?
#1 is bad. I don't have a great idea for #2, but #1 is bad.
Look at it from Trump's perspective for a moment. The only tool he has is tariffs, and the people he's negotiating with are not just foreign governments but also Congress. Because he has this authority he can use it to try to bring any of those to the table and negotiate alternative approaches. Not saying that's what he's doing. Just saying that's a possibility.
> very real national problems that this might address.
This is a dubious claim to begin with. If you believe that 'trade deficits are bad,' can you explain why? Post Covid, the US economy has emerged in significantly better shape than nearly every other country in the world, so I'm failing to see how these deficits are meaningful.
> Globalization has played a big role in creating the massive income inequality in our country
What is your source for this belief, especially when comparing globalization with other factors that cause inequality? From my understanding, the biggest recent contributors to a higher cost of living in the US are housing, health, and education. Health and education purely services-oriented, and housing is one-third a labor cost.
> our society as such is biased heavily toward importing goods rather than exporting goods
I think that's great. America exports services. We innovate to create new technology, are a leader in designing the things and systems that people want (think of our tech industry), and we delegate the work of manufacturing to others. That seems fine to me, and a function of having (relatively) open, free trade.
> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
At a high level, the problem is that free trade makes the pie bigger, but causes distribution/inequality problems. So generally speaking, the best measures are going to be those that improve inequality while minimizing the impact to the size of the pie. Raise taxes on the wealthy, increase spending on social programs to the non-wealthy, fund investments in programs that benefit everyone equally. (Public transit, libraries, healthcare, education, etc.)
Tariffs shrink the pie, and I'd heavily bet against those hurt by globalization being those who are able to grab a bigger slice under the current administration.
According to the Bureau of Labor statistics, there are 7 million unemployed in the U.S. currently.
I don't know how you expect these to cover for all the manufacturing you imply might come back to the U.S. with these tariffs, and that's assuming the space and the production means (factories, etc.) are here already. They aren't, and not for a couple years.
Combined to the fact that the U.S. is clearly sending a signal that coming there is dangerous now, especially for any other category than white males, and I don't see how you can even imagine that this situation is going to be working out.
There is a net outflow of US dollars, because we keep issuing new debt. The fix there is to stop issuing new debt, by fixing the budget. Sadly, no one seems to think this administration will do that.
Globalization is fine. Wages in this country are quite high overall. Inequality isn't caused by trade, it's caused by low taxes on rich people, weak unions, and weak labor regulation.
The terrible state of US production is a myth. The US is the second largest manufacturer in the world. The #1 spot is occupied by a country with over 4x our population. Manufacturing employment is down because our manufacturing productivity is really high. Yeah, we don't assemble smartphones or make plastic trinkets. We make cars and jetliners and computer chips.
If you want to address the national debt and inequality, the solution is to correct the power imbalance between employers and employees by strengthening labor regulations and unions, and to raise taxes, especially on high incomes, and especially on the super wealthy. Taxing people like Elon Musk down to a more manageable 10 or 11 figures of net worth won't do a lot for the nation's finances directly, but it will do a lot to curb their power and get the government to be more responsive to our interests instead of theirs.
(And no, tariffs are not a good way to do this, since they're regressive.)
Aren't "weak unions" caused by globalization? Unless the union is global, employers can always respond to stronger unions by pulling the off-shoring lever even more vigorously than they already do.
Tax corporations and the wealthy since they receive the majority of the benefits. They benefit from a trained healthy workforce, social safety nets, infrastructure like roads and electricity and water. They benefit form the US dollar being the reserve currency for most of the world. I literally cannot list all the ways these two groups benefit in a real tangible outsized way than any other individual.
Trump wants to eliminate all federal taxes. That's NOT going to reduce the deficit. The current republican spending bill includes a 4.5T tax cut to the wealthy and businesses, while cutting only 2T in spending from entitlements WE PAY INTO SEPARATE FROM TAXES. I am entitled to the money that me and my employer pay into Social Security, it's an investment, not a tax.
Let's stop taking from working people who are quickly falling further and further into poverty and start taking from the people who literally own everything!
> For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete
That misses the point on so many levels. First of all consider that this is a domestic problem too. What about all the businesses abandoning California for Texas because wages are so much lower to achieve an equivalent cost of living?
Cheaper goods produced elsewhere is not necessarily a security concern for the economy. Silicon produced only in Taiwan is a security concern for the US, for example, but rubber production isn't even though the US cannot produce natural rubber.
Finally, and most importantly, price depreciation of goods due to global options frees up American businesses and employees to seek more lucrative ventures as the market demands that would other not exist due to opportunity costs.
Do you honestly believe that there are significant numbers of US citizens lining up to take up low-margin manufacturing work as is currently done in China or elsewhere?
Chinese manufacturing workers live on a $25k/y income ($15k without adjusting for purchasing parity!). Do you beliefe that raising prices on goods by 30%ish is enough to make those jobs attractive to US citizens?
What sectors would you suggest primarily sourcing domestic manufacturing workers from, and would you agree that just doing that is going to lead to further cost increase for the average consumer?
In my view, the current tariff approach is a rather naive attempt at improving national self-sufficiency at the cost of the average citizen, and the administrations explicit statements and goals make this pretty clear-- shifting government income from taxes to tariffs is a very obvious losing move for the vast majority of people that spend most of their income.
US economy right now is heavily biased towards providing services and high-tech goods because that is the most valuable use of its citizens according to market dynamics. Managing the economy in a "I know better than the market way" certainly did not work out for the soviets...
Sometimes I feel that people construct elaborate theories of how Trumps policies will end up beneficial for the average citizen, despite clear, explicit descriptions of how that is not the goal and historical precedent of acting directly against working-class interests (i.e. raising estate tax exemptions above literal 1%er-thresholds).
So you are okay with exploiting people for labour, often in inhumane conditions just so you can buy some unnecessary junk for cheaper?
> US economy right now is heavily biased towards providing services and high-tech goods because that is the most valuable use of its citizens according to market dynamics
So basically geared for upper class / banking industry? US has some of the highest wealth inequality of the developed world.
But by far the most important aspect is military. Manufacturing capability is extremely important for military. US may be the most advanced, but a $10m rocket will not beat 10,000 $1000 drones.
You can't look at this move as something in isolation. Trump has also completely flipped geopolitics on their head.
Here's other things he's done:
- Threatened Canada
- Threatened Greenland/Denmark
- Supported Russia (it's obvious)
- Told NATO allies export F-35s will be nerfed just in case we come into conflict
Americans are already very insular, I don't think you all realise just how much you've pissed off Europe and Canada (I live in both places throughout the year, family in both)...
American multinationals have benefited greatly from trade with other countries... Look around the world: iPhones and Apple products everywhere, Windows computers, Google dominates search, the USA is a top travel destination, American weapons are used by most allies, etc...
Right now in Canada and European countries we're talking about completely cutting out all US trade and travel. Like all of it. It won't be policy but the US has completely destroyed all goodwill and cultural influence it has across the "West".
Because of immense hatred of Russia, China is now the "lesser evil" and pretty much all developed countries will band together. And not only will countries move on from US hegemony, they'll accept any pain that comes with it because Russia is threatening Europe and the USA is threatening their neighbours. Without the geopolitical aspect, the US might have won this trade war. But no one is going to bow to the US to then get sold out and conquered by Russia...
One unintended benefit of this move might be reducing greenhouse gas emissions from global shipping ... if US consumers are consuming more US made products, the supply chain for those projects will have gotten significantly shorter in nautical miles.
I'm hesitant credit President Trump with this too soon though, after all, his motto is "drill drill drill", but It's going to be interesting to see what happens.
Emissions from shipping are about 3-5% of global greenhouse gases, and my understanding is that also includes all domestic shipping.
Emissions from personal vehicles (not including freight trucks) is at something like 10%.
I don't have specific numbers for America on hand, but I'd be very surprised if Trump's administration broke even, let alone cause an overall reduction.
> Everyone is quick to deride this move as stupid. I don’t disagree that there are downsides to the approach, but there is a set of very real national problems that this might address.
Because it is stupid. It's important to point out that this is stupid and not only doesn't help with problems that come with the benefits of globalization but makes it worse. How will a deep recession fox anything? Including debt(which is high but manageable under a sane government)
This is a bunch of nonsense that is not driven by data and not even worth a response.
I am tired of people spitting BS just to defend Trump's inane policies and everyone else having to rederive modern economic trade theory in comments in order to counter it.
Physicists used to get a bunch of derision for thinking their high skills in analytical thinking in physics easily carried over to other fields, and now we have CS majors thinking the same.
Regardless I will do some of the countering:
> what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
We had a candidates that offered job re-training programs. Those candidates weren't selected and those jobs went away even as we tried to put up protectionist domestic policy.
> our society as such is biased heavily toward importing goods rather than exporting goods.
This is fine. Comparative advantages and all. We just need to produce the goods necessary for national security. It worked out well so far. Do we actually want to have other countries do the high value services and us doing the low value manufacturing???? Why are you justifying engaging in a trade war with Cambodia and Vietnam?
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
This is not backed by any data. Every single economic thinkthank worth a damn, including conservative ones, have detailed how it will raise the national debt.
I am tired of people saying ridiculous arguments just so they can stave off cognitive dissonance.
Tearing down our soft power and throwig out every trade deal we have carefully crafted since WWII is absolutely ridiculous.
A blanket 10% minimum tariff is a great excuse for any local US manufacturing to increase their prices.
I used to live in a country with heavy tariffs, every time tariffs were raised the local producers increased prices to be just below the imports. Even after the tariffs were abolished the prices (on local and imports) never really lowered in any significant way.
That always seems to happen with this sort of protections. It's like when the government tries to incentivize people to buy electric cars by paying 25% of it (example from the climate bonus in Sweden, which was given for years), but what happens is that buyers actually end up paying just maybe 5% less as the car companies now can increase their prices and still sell the cars they produce while making more money.
That happened in New Zealand, where the govt. paid $5,000 for electric cars. When this subsidy expired, prices decreased by a few thousand.
If a consumer was willing to pay $20,000 for a car why would they sell it to them for less than $25,000 when the final bill to the consumer will be $20,000, with the govt. paying an extra $5,000.
That this would happen is evident to everybody with a minimum knowledge of economics. It’s the same reason UBI won’t work because it would make prices skyrocket.
A laborer in a subsidized, low-productivity industry is one less worker available for a high-tech, high-productivity sector. With a finite workforce, misallocating labor like this inevitably hampers innovation and economic growth. The U.S. should focus on being a powerhouse of technology and innovation, not divert resources to low-value tasks like picking olives from trees.
I live in a country where we have many protectionist tariffs and the locally produced goods are expensive and lower quality compared to imported goods which guarantees profits at the expense of consumers.
I don't understand why people still believe in this day and age that wages will ever increase despite data showing the opposite for literal decades.
I also don't think it's enough to justify moving manufacturing to the US. The investments are to high, especially for something that might only last for four years. The US also doesn't have enough workers, so wages would increase.
Count on it. Especially after Trump (AKA we the taxpayers) gave the oligopolies and monopolies huge corporate tax handouts, for which they thanked us with massive price hikes and the current "inflation."
Oh, and of course there were Trump's tax hikes on middle-class Americans to boot.
This is expected and normal? Demand for locally sourced goods will skyrocket which means prices should as well. What you are leaving out is that the US is well capitalized and those sky high prices will be a strong incentive for more competitors to join the market. With competition in place prices will eventually fall. Prices will likely never go back as low but at least our fellow countrymen will be employed, housed and hopeful instead of on the streets doing fentanyl.
People will starting fighting against more houses being built to protect their wealth even more than now. You'll be earning like $25/hr at the factory and all the single-family houses are 300k+ with significant interest. Assuming they never have a huge healthcare bill which also shows no signs of becoming affordable, if the factory jobs even offer decent benefits but my guess is they will all be high deductible plans.
So the US has been, more or less, the best place in the world to do business. Stocks historically soaring, yadda yadda yadda ... and somehow this guy sells the story that the US has been taking advantage of by all the other evil countries in the world. It does not, in any way, make sense.
What a clown. A totalitorian clown unfortunately.
Taking Vietnam as an example, keep in mind that the trade deficit calculation only uses physical goods.
Vietnam exports low value physical goods to the US. The US sells high value non-physical services such as Microsoft office, ChatGPT, Netflix, Facebook ads, iOS Appstore fees, iCloud subscriptions, etc to Vietnam. Other services include engineering consultants, US tax auditors, US consulting companies, etc. None of these are factored into the formula.
So a country like Vietnam gets royally screwed by this formula. They are actually buying way more from the US than just the physical goods.
If you're Vietnam, it's very hard to "just take it" as suggested by Treasury Secretary Scott Bessent. The formula is flawed in the first place.
If we truly want fair, the formula should be based on total profit of the goods and services sold. Services have much higher margins than physical goods typically.
The tariffs might be a bad idea, but this accusation is ridiculous. For a simple methodology like this, it's trivial to prompt engineer a LLM to produce the same response. It doesn't mean that that's how the administration came up with the policy, any more than a LLM getting the same (correct) solution as a student on an assignment means the student used a LLM on that assignment.
Specifically they used 2024 trade balance figures. Example: take a random country, like Botswana, and the country's page at https://www.census.gov/foreign-trade/balance/c7930.html shows a 2024 trade balance of 104.3 (exports) and 405.1 (imports) so 1-104.3/405.1 = 0.74 which matches the "74%" "tariffs charged to the USA" claimed by Trump...
Rarely you get handed such blatant evidence that someone produced bullshit numbers and/or doesn't understand where the numbers come from !
Edit: someone said it doesn't work for Japan but it does. Every country I checked by hand matches the figures exactly... For Japan the figures are from https://www.census.gov/foreign-trade/balance/c5880.html and their 2024 trade balance is: 79,740.8 (exports) and 148,208.6 (imports) so 1-79740/148208 = 0.46 which matches the 46% "Tariffs charged to the USA
" from the table shown by Trump...
thanks for the information. In light of this, it seems pretty silly: economy on a world scale isn't a line, it's more like a ring (country A has a deficit with country B, which has a deficit with country ... N which has a deficit with country A) at best. Isn't it like saying everyone should trade everything at the same price with everyone?
...and every country USA has a positive trade with, will get slapped with the 10% tariff. Every country on the table Trump posted, that have received the 10% tariff, the US have a positive trade with.
Not saying I agree with it, but Trump has communicated that ideally these international companies would build factories in the US. There would be no point in doing that if not for some floor tariff.
I think a lot of people assume the economic consequences like these have not been understood by the WH. Although I don't like this administration I beg to differ: they know what's going to happen, and they expect the coming storm because they seek what follows.
They want to repudiate foreign held debt, or devalue it, by revaluation of the USD and they will wear what they think of as a one time economic shock to get their reset in a belief they can make it less like the Smoot-Hawley great depression because so many other economic levers exist now, including floating currency, MMT, and massive fintech.
Personally I think it's a mistake but hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care. Some amount of foreign trade will absorb the cost. Not all, not most. Not all prices in the US will rise and some substitution will happen although spinning up cheap labor factories again isn't going to happen in 2025. Maybe by 2027? Rust belt sewing shops and Walmart grade cheap goods production lines?
What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
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 will be equivalent to Brazilian tariffs in 1989 before opening the economy (31%, data from World Bank).
Now, Brazilian tariffs, which have one if the most closed economies, by weighted average, is 7%.
China, have 2.2%.
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.
So yeah, some people at best (if is not a robot doing the job) will have a job in a factory, but on what he will be able to spend with his wage won't make it worth even for this person.
>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.
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?
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.
>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?
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.
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.
People are also getting way too caught up in the math and numbers. They think WH calculated the percentages through incompetence but the 25% tariffs weren't based on anything very real either. The entire goal is not carefully calculated trade equality, it's mafia style intimidation to get some easy concessions as quickly as possible from everybody... before the economy crashes too hard. Spamming tariffs to see what sticks. The math is just a plausible justification for something they would have done anyway.
It's bully tactics.
For ex see Canada's fentynal importation issue, which was something invented to justify a natsec emergency legally. The numbers don't have to be real, just plausibly deniable.
>They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
Devaluing dollar does not reduce debt measured in dollars. It only makes US debt less valuable to forefingers.
Devaluing dollar can work well only if foreign investments into US stop or reverse. "foreign investors at the end of last year owned 18% of U.S. stocks, according to Goldman Sachs" The trend has already reversed https://www.reuters.com/markets/us/foreign-demand-us-assets-... Killing foreign demand for US assets more permanently is possible but it means financial market crash.
I certainly don't understand enough of economics, but:
- If everything overnight costs 20% more for the American consumer, it equals 20% less disposable income and less purchasing power.
- US companies, even the few ones not directly affected by tariffs, are going to be hit by less demand, and that in the aggregate is going to affect the performance of all American companies.
- So, it makes sense to dump as much American stock (and perhaps other instruments) as rationally possible.
The rest of the world is also going to feel the shock, though at this point is unknowable to what extent, and it also depends on the policies governments outside USA enact. In Sweden for example, we react to imported USA inflation by increasing central bank rates and catapulting the country into recession, and I totally see that happening in the next few weeks. Even it does not, it is what the public expects, and already many may be reigning in on consumption and investment. And dumping American stocks like crazy.
Yes and no. As a headline "I reduced $7t of foreign debt" is pretty good. The plan appears to be to invite people to Mar a Lago and offer to trade the existing debt for new instruments out in the never-never.
Domestic debt might not be such a big deal? Who is coming to collect?
Still fits within a populist agenda. Not a lot of sympathy for mutual funds and the wealthy holding treasury notes that get inflated away.
I'm not excited that 20% of federal revenue goes pay debt interest to some investors and stockholders. Especially when much of the original debt spending also went into the pockets of stockholders, sometimes the same ones.
Of course, the actual problem is lack of control and debt spending, not the fact that investors exist.
People say that public debt doesn't matter because it domestic, but the recipients and payers are different. It doesn't cancel out when I'm responsible for paying taxes and Vanguard or JPMorgan get the debt interest.
Given everything recent I’d say competence in the WH is a stretch
The prez is literally holding up placards where half the numbers on it are mislabelled and they rest of the numbers are that mislabelled/misunderstood number divided by half
That sounds like garden variety incompetence to me not 5D chess
There is a low cunning at work though - Trump now runs the largest military in the world and the largest economy and if the only way he can impress other people is to use that power he will use it to try to beat them into submission. Chaos at this point is his friend as he attempts to stay in power as long as possible, so expect trade wars, war, domestic chaos and forcing others to show loyalty to him personally and pay him off as the biggest bully in the room. He sees this in very simple terms. So no there is not a high intelligence at work but he is not without agency and cunning. He has operated this way all his life due to inherited money and got away with it.
And damn the consequences for everyone else, including the people who elected him, he doesn’t consider that in his calculations, which is what makes them so confusing for those who think he is playing by normal rules of politics or business.
The bring manufacturing back to the US never made sense to be numbers wise.
Thing A is currently manufactured in China | Vietnam | whatever lower cost country and sold for $x today. Slap on 50% tariffs so now it costs $1.5x. That provides an incentive to produce thing A locally sure.
But if you can already produce thing A locally for $x, you wouldn't have offshored the production in the first place. Maybe producing thing A locally will cost less than $1.5x, but it'll still be more than $x. So cost still end up increasing.
The missing piece is not all costs are passed on to consumers.
Company absorb costs all the time. If you think cutting your price by 10% will boost sales by 20%, you do it because total profit is higher even though per unit profit is lower.
And the reverse is true - companies might increase prices and accept lower volume.
Not to mention not all items are interchangeable. Is a car made in Mexico worth the same as the same model made in Germany?
Two typical scenarios that we know from the past in industries like cars for example.
Corp one has two factories one smaller one in the us one bigger one in the eu. They will now shift more of the production to the us from eu to avoid tariffs.
Corp two only has a factory in the eu. They will now build another factory in the us to be able to avoid tariffs and keep selling their goods at competitive prices.
That’s may be true. But why does Vietnam have such high tariffs? They should be competitive based on their lower costs right? So it’s simple: Vietnam can eliminate tariffs on imports and the U.S. would eliminate tariffs as well.
The one thing I hope Americans think about is to believe in democracy, and discuss with others on the other side of the aisle. Really, most have voted the way they did for real, valid reasons. And recognizing them is the path to heal your country. Only through understanding will democracy prevail.
Do not spiral into dividing your own country. That is the real goal of authoritarian regimes.
The answer to this is pretty simple, although American Exceptionalism makes it hard to see for many Americans. For every other country, most could see pretty clearly that they'll not plan on holding free elections going forward.
I said they expect the outcomes people are complaining about. They've workshopped this, and are aware how this is playing out. I would be very surprised if there is a significant leak of "we didn't expect this" anytime soon.
> they know what's going to happen, and they expect the coming storm because they seek what follows
If they do they’re lying. The mechanism by which tariffs restore production is by raising prices. That makes it more lucrative to invest in serving that market. If producers have to absorb the tariff, they won’t boost production and the tariff is just a corporate tax increase.
> to repudiate foreign held debt, or devalue it, by revaluation of the USD
My personal opinion is less complicated: they're pulling the economic levers they have in a way that they can use to enrich the top 0.1% even more. The richest of the rich got very wealthy during COVID (economic fallout, buying up lots of stocks at a discount then the biggest stock market bull run we've ever seen) and they want to make it happen again.
I am amazed at how many people are still imputing intelligence to Donald Trump. Him winning the presidency again after everything is less about him being some deep mastermind and more an exposure of the issues with America that have been there building for decades now.
The difference between Trump 1 and Trump 2 is that all the "establishment" R politicians who were "corrupt" or "deep state" but willing to work with him could at least steer the ship in the first term. Those people are gone and all who remain are ideologues and yes-men. Trying to find logic in the madness strikes me as someone going through the stages of grief near death, trying to find sense in a senseless, uncaring world. Take occam's razor, no one is steering the ship at the white house right now.
> a lot of people assume the economic consequences like these have not been understood by the WH
I think you're making the same mistake a lot of observers are making: you're looking at this from an economic perspective, and think those decisions were taken on an economic basis. But that is likely not the case.
The Trumpist movement is entirely focused on political aims: re-establishing old hierarchies of power inside the country, and entrenching them for good. The important work is the slashing and burning of welfare and safeguards for lower and middle classes, putting minorities "back in their place", and entrenching the wealthy into positions of absolute dominance. Everything else is a distraction, to keep newspeople busy and the population focused on recreating an idealized, "Happy Days" 1950 society. Enemies will be created to make you hate, this or that policy will be picked up or dropped just to keep you arguing, and meanwhile the important work is made irreversible. Once you destroy what was built over a century, it will take decades to rebuild them, and meanwhile the New Normal will take root and become impossibly hard to remove.
Fascism and nazism did not move from economic principles - they picked up what they needed as they went, opportunistically, because their main aims were fundamentally political. The Trump II administration works in the same way: the priority is political dominance to achieve political aims at societal level, everything else is tangential and opportunistic.
> hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care
I think they know, they care and decided that it is a reasonable way forward given very limited (trade and budget deficit) options. Otherwise I think you are spot on.
To spitball some ideas on your midterm comment (again, agree to it). One possibility is they see it as an unavoidable loss, plan on using veto to maintain course set during the first 2 years (which is why they rush) and hope to be in the updraft phase by the November 2028 elections. Maybe.
This seems likely, but I cannot figure out why they are not trying to pass more legislation in the first 2 years if they're fairly sure they're going to lose the midterms.
The only conclusion that can be drawn from their public actions is that they believe they can more or less enforce all their policies by executive order and that they're very sure they will be keeping the executive in 2028.
I don't think its about devaluing the currency to pay back debt at all. I believe it's about a fundamental vision of an autark USA, decoupled from any international obligations, whether its NATO, WHO or WTO and focused purely on producing and selling domestically whilst having a "beautiful ocean on each side".
I believe that's an unrealistic vision, not least since America's debt means it cannot afford significant shrinkage of its global market or a loss of its status as reserve currency, but I believe autarkie is the goal none the less.
> and they expect the coming storm because they seek what follows.
Well, a lot of economists, including one Nobel Prize winner (Paul Krugman) have commented on this being a bad idea for the economy...
On the off chance that those people who are supposed to know what they are talking about are all wrong and haven't thought about it being some genius diversion tactics -- it's generally still a pretty bad idea for a government to effectively ask everyone to "tough it out" and "just trust me bro".
It's really disappointing that people are actually trying to theorize this as some kind of genius plan. It doesn't take a genius to figure out the amount of irreparable damage they have already done to regular folks is unacceptable (uh... I'm sure some nutters out there think that DOGE is keeping track of all the damages they have done and will pay everyone once their genius plans have worked out).
paul krugman isnt useful example because he is a liberal democrat and people will try to say thats why he said its stupid. even though hes right and it is stupid. plenty of conservative economists are basically saying wtf Bro to these tarrifs. Sadly that will also probably not help but it has more of a chance to do something
> they know what's going to happen, and they expect the coming storm because they seek what follows.
I agree that that's their understanding. I'd argue that in reality they don't, they can't. International relations are a very complex system. And there is no precedent of an empire wilfully dismantling its periphery.
I really don't enjoy the whole "may you live in interesting times" thingy
> They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
Given how dependent usa is on foreign debt, that sounds crazy to me.
If they accomplish that sort of thing, they wont be able to borrow at favourable rates anymore. That seems incredibly bad for usa. Am i missing something on how severe that would be?
> They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
I don't understand, who's holding that "foreign held debt"? foreign countries I suppose, so which countries do you have in mind?
For one, it's not China, which holds a large amount of US treasury bonds (so basically, China is a lender of USD). So the revaluation of USD would work great for China: one, the value of the China-held USD bonds increases, and second, the price of Chinese exports decreases in USD terms.
So help me understand, what's the plan with the revaluation of USD?
That runs against basic financial reality. The treasuries are the basis of all U.S. liquidity. Owning commercial papers or stocks doesn't help as companies own treasuries. Putting deposits in banks won't help either because banks hold treasuries.
You've read up on the purported "Mar a lago" accord model? The idea is to threaten a repudiated debt, or agree to convert to long term non interest earning debt alternatives which can't be traded.
Of course there are people who know. But not the decision maker. I notice the use of collective pronouns, but there is only one person driving this. Everyone else is riding the tiger.
Not sure why, despite long and consistent experience, that people keep thinking he’s anyone but exactly who he appears to be. There’s no grand plan, calculated risk, or 4D-chess. The clown is just putting on a performance, based on his immediate feelings, and the immediate reaction of the crowd. There’s nothing else there.
Foreign held debt is less than 30% of outstanding, and less than that is sovereign-owned, so I don't think devaluing or attempting to restructure foreign debt via "century bonds" will have much effect on US debt obligations.
I seriously doubt this administration understands any of this. I agree that they don't care, but I don't think they know what's going to happen. No one does.
In my opinion you are giving the US government far too much credit. Trump has through his usage of social media created a weapon that he can strike at anyone that stands in his way. With all branches under Republican control there's simply no one left who can stand up to him without having his political career destroyed. We've seen this story unfold so many times in countries around the world - Turkey would be one recent example where the misguided policies of Erdogan have left the country with record inflation rates for years.
> I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
They tried to steal an election already - it's pretty easy to understand why they are making decisions as if they don't have to worry about elections anymore
If it didn't hit midterms it would hit the next presidential race. You gotta pick your poison. I guess they decided it's better to just get it over with.
As a professional armchair economist, I would call it a power off rather than a reset.
It took over a hundred years for countries to once again have economic trust with France again when they went hard on tariffs in the 1600s causing war.
Who in their right mind would negotiate with a man known to rip up existing agreements on a whim?!
I have a feeling that this will knock the United States down a peg economically to the point where we look back on Liberation Day as America’s Brexit
This was a macro argument assuming a benevolent intention. However if we look purely at self interests the main thrust is to increase revenue on paper to cut taxes. At the same time raise debt ceiling. And when the tarifs proof unsustainable then well, we are in happy deficit spending land with no fault on the drivers side.
> Rust belt sewing shops and Walmart grade cheap goods production lines?
Are we really going to see this happening in 2 years? I'm not sure about this. The cost of Mexican/South Asian factories are still a lot lower than US.
The plan may be that there are no more elections, or that the only people who are allowed to vote are identified MAGA supporters. Does this seem impossible? Everything Trump has done would have been considered impossible only a couple of months ago.
What Trump reveals is the utter apathy of Americans. They're sheep in lions' clothing, not the other way around.
> "they have no idea what's coming" are I believe naive.
There could be someone who understands this. But this someone never shows their face in public, or provides any rationale for the policies beyond the nonsense like "reciprocal tariffs" or similar nonsense. I mean the literal board with tariff percentages that was held up had numbers that made NO sense, to anyone! Yet there are no critical questions?
It's beginning to feel like a conspiracy theory. That behind the obvious idiots who are the faces of the policies, are some other, less inept people who are pulling the strings. But who would this be?
> they expect the coming storm because they seek what follows.
If there are elections in 2026 and 2030 then what follows is a blue wave in the midterms and millions of disappointed voters who had their 401k's gutted, saw prices of most goods increase 10%+ in 2 years, saw little to no tax cuts, lost their jobs if they worked for the government, and lost their social security.
So I asked this question back when the wiki page for exorbitant privilege[0], the term used to refer to the US’ status, was posted. I was provided with a few links of people who do seem to understand[1]. The Hudson Bay capital piece was probably the most interesting[2].
Why on earth would you spend millions and billions of dollars on investing into a ROI-10-year factory, when a cheeseburger overdose or, heaven forbid, the Dems winning another election will take that investment and turn it straight into the toilet?
Not to mention that you'll be locked out of the world's markets, thanks to reciprocal tariffs.
they understand first order effects, but second or higher orders are seldom predictable in this matters. So the risk is huge. This massive shock will reveal hidden frailties.
Trump ran on a campaign that voting is a pain and you won't have to do it again if he wins. Since then he's maintained that third term is the plan. Doesn't really matter how upset the voting population is if you're going to ignore their votes.
Foreign debt is held in US treasuries, surely they know that? Trump can decide that treasuries can no longer be redeemed, but foreigners only hold 20% of them, so…he would have to somehow make them selectively redeemable, and anyways, there would go the USA’s credit, unless you mean other countries can bribe Trump with treasuries to bring down their tariff? They could also depreciate the USD reducing its debt in real terms but that will most definitely cause hyper inflation along with tariffs.
They have no plan, not even a concept of a plan. Trump is just hoping that he can get lucky with a good outcome, but that is really improbable. This is a huge opportunity for China though if they make deals with everyone else to the exclusion of the USA.
Even the idea of moving production back the USA is misguided, we are already at low unemployment, and haven’t made enough investments in automation like the Chinese are doing ATM. I doubt China will let us import that tech to setup our own factories quickly without worrying about who will work them.
They might be smart about it like you said, but they might also just be stupid. And the theory that they are smart about it is based on a whole bunch more assumptions...
This sounds like typical NYT sane-washing. After the Signal fiasco I've lost all confidence this administration is secretly super competent but just refuses to let any of us see it. There is no big plan here. This is just an old man surrounded by too many yes-men.
There is also a camp of ideologues that don’t care if they implode the economy if they get to LARP the TV version of the 1950s. Imploding the economy might even make it easier to sell traditionalist politics.
This is, as they say, “sanewashing”. Trump is doing this out of a mix of spite and a view of trade as a zero sum game. He may be advised into a path to try to pivot this into a “win” by large scale debt restructuring, but that is not the overarching motive.
Fully agreed. Tariffs are one thing that Trump has always been clear about. He likes them, he sees them as beneficial and now that he has no brakes in this administration he is finally going to try and put them in place.
I had hoped that this kind of "Trump is actually playing 4d chess, you just don't understand" argument would be dismissed after seeing him through the first term, but apparently not.
This is a good take, but I think I can answer your question about the midterms. This is timed specifically for them. The drop we're seeing in markets right now isn't a pricing in of the tariffs, per se (at least, not yet), it's a pricing in of policy uncertainty that is going to lead to a near-term drop in investment.
However, because they are doing it so early, they will have time to recalibrate and bake in exemptions until the market / inflation is happy. Up to and including backing off of the policy entirely, if that ends up being necessary. As a political strategy, it is perfectly timed to allow Trump to "save the economy" from his own policies. This is true imo independently of what you may think about the policy as policy.
When it comes to the policy as such, recipirocal tariffs, conceptually, are designed to incentivize the overall global reduction in tariffs. So, as a headline, implementing "reciprocal tariffs" is actually favorable to free trade. However, there are some important details that they have fucked up, such as identifying tariffs with trade deficits in general, and in particular identifying them with trade deficits in goods only. That is really the component of the policy that doesn't make sense, and it is important.
Most likely, they will recalibrate and/or provide a lot of exemptions, particularly as the midterms approach. As a political tactic, I think it will work out fairly well, if they respond to the feedback appropriately - that's the big question though, and that uncertainty is the most significant reason for the market drop.
So my pessimism they can't "heal" this in time is the weak bit, if there are multiple levers they can tweak leading into the midterms to say "it's morning in america"
I say pessimism but in case it's not clear I'd prefer a democrat victory, both in the immediate past and in the coming midterms.
> the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
There won't be any elections. We will stick with Trumpism. We will be our own best friends, Morty. The outside world will be our enemy. We will do great things Morty, we will do the greatest things. A Trump administration for a 100 years. A Trump administration forever. Over and over. Running around, the Trump administration forever.
You have seen nothing yet. Next he will want a mineral deal with each country to pay back the money they stole from the USA in the past. "Primate Behavior Reference 21": https://youtu.be/GhxqIITtTtU
We even have aspiring leadership in Australia who see this as a win win and have proposed offering JV in uranium, lithium and rare earths. Murdoch press backs the idea, even when criticism of Trump is overt they always go to "we need him more than they need us" because of 50+ years of Defense posture which assumes we're insured by US forces.
Always keep in mind that Blackrock manages the retirement/social insurance funds of a lot of countries. If the USD crashes, they will, too.
The aftermath will probably be complete isolation of the US, because no country will want to trade with them. And the administration is fine with that, because they're not interested in keeping the status quo of democracy alive.
More influence for them, less influence from outside. That's how oligarchs think and act.
Is this a thought held by any serious person? The only major country to indefinitely postpone an election recently has been Ukraine. This idea that the midterms wouldn’t be held is tin foil nonsense.
That all sounds fine except that the admin have no intention of keeping these tariffs, rendering your point kind of moot. Trump will enact/retract these tariffs multiple times over just the next month, and few to none of them will still be this high in three months. Since we are just speculating here - what is probably going on is that Trump has some very bad ideas and no one is allowed to contradict him. I'm sure there are people around him that know better, but he really is this simple minded. To your point about midterms, I'm sure his Project 2025 handlers are beside themselves that he's doing this, but there is little they can do to stop him.
> What amazes me is the timing: the midterms will hit while the bottom is still chugging along.
I think Trump is getting unpopular actions out of the way quickly, perhaps planning to announce an income tax reduction later to save the midterm elections.
I have followed writings of the many in this administration, seen their interviews etc. Anyone who thinks there is a "5D chess", "the plan" etc. is purely drinking cope here.
> cheap labor factories again isn't going to happen in 2025
It is not going to happen ever unless we plan to move people from better paying jobs in McDonalds and WellsFargo to China styled factories or we allow much higher immigration levels from South America.
Trump admin and his advisors genuinely believe that tariffs are good, that they will create factories and jobs within USA and enable white families to raise families on a single income. They think rest of the world's existence is a mistake, they hate Europe, China, India and South America. They don't know much about Africa and admire Russia.
They didn't learn from the last time, when U.S. soybean farmers got screwed (the first time) and other countries established alternate supply chains that of course didn't involve the U.S. at all.
As the USA makes itself a trade pariah and other countries forge new relationships amongst themselves, we're permanently devalued. The world will (continue to) move on without a backward-looking, unreliable, sad, and obnoxious USA.
I have never caught even the slightest whiff of Trump knowing what he's doing on any topic. I'm genuinely not trying to be glib either, this is a sincere observation. When has he publicly or privately intimated that he understands how tariffs or trade work? Or energy or immigration or infrastructure or technology? His public persona gives facile and misleading explanations that are ostensibly just politicking, but every tidbit of leaked insider accounts or hot mics or unguarded moments don't show anything more than the same persona.
Probably the plan for that is to do massive gaslighting on social media and find someone to blame for the hardship. Leveraging emotions (especially the aggressive ones) may be an effective way to keep support of the base.
I really wish I was more optimistic and share your position that voters are driven by self-interest. I hope you're right though.
There may have been a hint of strategy at one time. But the sheer level of gross incompetence coming from every side of this administration does not really lead one to believe that "global 4d chess trade war" is within the actual abilities of this administration to grasp.
Trump wasted his inheritance and has been several times in bankruptcies - and not "I took risks" bankrupt, more "I f*cked up" and "I lied" bankruptcies.
>> hot takes "they have no idea what's coming" are I believe naive
While I agree they probably have some idea what will happen, don't forget that these same people added a journalist to a group chat where they planned a military attack. They fired a bunch of critical people and then didn't know how to get in touch with them to try and rehire them. Assuming they're total idiots isn't much of a stretch.
While we cannot predict the future, it's moving faster. The world system is under immense stress. Complexity at this scale increases the chance of black swans and unpredictable outcomes. Many powerful actors are reacting simultaneously in divergent directions, which can reshape the trajectory altogether. We are vulnerable to cascading surprises.
By the time the midterms come along I doubt there will be many people left who want the job of fixing up this mess. So they will likely get to keep it.
I tend to agree with you that they know. However the signal leeks showed me that they are not just playing stupid in public - it seems that they are like that for real.
Personally I think that their bet is - it will hurt US, but it will devastate EU and hurt China more than US. EU is fragile economically and political instability will follow if its economy crashes. Especially if US pushes OPEC to jack up the prices.
>What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
tax cut financed by the tariffs? Will buy/mislead a lot of voters when those checks would get sent mid next year.
Especially those voters who couldn't notice that all those countries having tariffs (and VAT) are worse economically than US in major part because US didn't until now have much tariffs to speak of.
This explanation doesn’t make sense because dollar denominated debt doesn’t change with devaluation.
What is the more likely explanation is all the countries with trade surpluses will feel the pain long before the US and agree to much better terms than before.
The PM of Canada had already indicated progress is being made on their trade deal.
bit of an 11 dimensional chess answer. Senator Chris Murphy has a much better explanation, which is simply this is Trump's way of holding private industry hostage [1]. The tariffs will be incrementally removed as various private industries give him loyalty pledges just as he is doing with large law firms and universities. that's it! so simple.
Rich people are typically insulated from economic downturns, especially ones they cause, by their ability to shift investments and asset allocations to mitigate and/or profit from changing tides.
Furthermore, Trump has never bought his own groceries, pumped his own gas, or interviewed for a job so retail prices and layoffs are abstractions "for plebs". Plus, he's reaching the end of his life so he doesn't have very much proverbial skin in the game since his motivations revolve almost exclusively around himself.
I hold a more pessimistic view of the cause and I do agree with your argument that they do know the consequences. But they don't care for another reason.
The plutocracy has fully captured the government and now seeks its ultimate goal: complete transfer of all tax burden to the 99%. For this end they cut the government spending, wrecking the democracy and they impose tariffs to generate fake temporary revenues, so they can argue that the huge tax cut (dwarfing all that came before) is economically sound and fully justified.
This will wreck the global economy and with the coming bad times (wars, famine, extreme migration) nobody will have the presence or the governmental weight to rein in these few rich man.
It looks too complex, IMO. As someone living in Trump's beloved country (Russia), I'd say you should ask, "Cui prodest?" If some oligarchs (currently called billionaires, but we'll see) surrounding Trump benefit financially from these tariffs, then the plan isn't about state debt—it's about their personal wealth.
From the people in my life who talked about their preference for this administration, the economy was the core reason I heard. Specifically interest rates, but ignoring that that’s the federal reserve and the president has no impact on that.
Whatever - all that said, I can’t imagine this leads to an economic boom or anything near it by the midterms. Are the republicans going to lose midterms if the economy is shit? I’m not sure, but I can’t imagine this works out well. I’m no economist though, so what do I know.
If we have something closely enough representing a "free and fair election", there's zero chance Republicans hold the House of Representatives in the mid-terms. But they'll still have the Executive branch, the Senate, and a frighteningly strong hold on the Judicial branch.
Though it seems clear and likely that any means of voter suppression that can be used against areas and demographics that traditionally lean strongly Democrat will be utilized, with a lot less checks and balances than have existed in the past.
It's insane, because all those people have now backpedaled and no longer bring up the economy as their primary concern.
Also insane because all of this was so predictable. Trump couldn't stop talking about tariffs throughout all of 2024. It was obvious that he was going to do this, and obvious that it would tank the economy.
It's fascism, reasoning with people won't work. The economy was the problem because Biden was in power. Now it's fine because trump is "doing what is needed and we all need to pay higher prices".
> “The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”
The “Liberation Day” tariffs aren’t random—they’re step one in a broader strategy called the Mar-a-Lago Accord (yes, named after Trump’s resort). Here’s the playbook from Stephen Miran’s framework and what’s likely next:
The Mar-a-Lago Accord Framework
1. Tariffs as Leverage
• Impose tariffs to force trading partners to revalue their currencies downward (making U.S. exports cheaper globally).
• Example: The “reciprocal” tariffs target countries with trade surpluses (China, EU) to pressure concessions.
2. Currency Realignment
• Weaken the dollar to boost U.S. manufacturing (counteracting its “overvaluation”).
• Miran argues a weaker dollar would make imports pricier and exports more competitive.
3. Debt Restructuring
• Swap existing U.S. Treasury debt into 100-year “century bonds” to reduce interest payments.
• Foreign holders (like China/Japan) would “voluntarily” accept this to maintain U.S. security ties.
4. Sovereign Wealth Fund
• Use tariff revenue to create a fund buying foreign currencies, artificially depressing the dollar.
• (Not implemented yet—still theoretical.)
Where “Liberation Day” Fits?
—> You are here | Step 1 <—
The 10% baseline tariff + “reciprocal” rates (up to 50%) kickstart Miran’s plan by:
- • Generating revenue ($300B+/year) to fund future steps.
- • Forcing allies/adversaries to negotiate (or face higher costs).
- • Goal: Create chaos to pressure partners into accepting dollar devaluation and debt swaps.
What’s Next (If the Playbook Holds)?
1. The ̶C̶l̶o̶n̶e̶ Currency Wars
Expect Trump to accuse China/EU of “currency manipulation” to justify further dollar interventions.
2. Debt Shakeup
Pressure foreign Treasury holders (like Japan) to swap debt for century bonds. If they refuse? More tariffs.
3. Sector-Specific Tariffs
Pharma, lumber, and tech tariffs are likely next to “protect” U.S. industries.
4. Retaliation Escalation
Allies like Canada/EU will counter with tariffs, risking global recession.
The Perils Lying Ahead (Miran’s paper admits risks)
Miran’s paper admits risks:
• Tariffs might strengthen the dollar short-term (investors flock to USD safety), undermining manufacturing goals.
• Debt restructuring could trigger a Treasury sell-off, spiking interest rates.
Bottom line: “Liberation Day” is phase one of a high-risk plan. Success depends on whether trading partners blink first.
"The Road goes ever on and on, Down from the door where it began. Now far ahead the Road has gone, And I must follow, if I can." - Tolkien
A possible retaliation by the EU could be to not enforce US intellectual property rights in the EU anymore. Or we could start taxing cloud companies, who, until now, have not paid taxes in the EU for profits that they generate in the EU.
This is exactly what I was thinking. Is not the US export far higher than import if they take into account the software and other IT services they sell?
I would expect other countires to tarrif that.
That would work of we had viable alternatives (on par with the US offers or as an easy migration). But we don’t really, so if the EU also adds tariffs than we’ll have the same issues the US is going to have. Meaning higher prices for the same offer since we’ll have no other choice but to stick with the US IT offer.
Like other comments said, this could work only if this was long term and everybody bites the bullet until they have a good local alternative to foreign offers with high tariffs. And the chances of having a lower offer as the one you were importing are really high. So, everybody is betting on short term.
I don't think the current US administration understand the EU.
There are some things where I have my doubts about the current actions of the European countries, like rearmament. Will that be dropped the minute a new US administration enters? What the EU does well, like really well, is trade and bureaucracy. It is, in my mind one of the few areas where the EU can absolutely run circles around the US, while managing to protect and isolate itself from the worst fallout. We've already seen this with the current EU tariffs, they are extremely precise and targets Republican votes at almost no cost to EU consumers. I think that will continue, rather than imposing broad tariffs, the EU will target things Trump care about specifically.
I have a pet theory on why that is. In EU to become a Brussels career bureaucrat you need to be able to speak a couple of languages fluently. This serves as a kind of a filter. Whatever they are, dumb they most certainly are not. To a lesser extent this applies to European politicians too.
Why not? Multiple politicians have already mentioned IP as a possible method of retaliation. Also, the goal is to hurt Trump, his voters and his allies. Tech Bro's are Trumps allies nowadays.
When americans are angry, they tend to spread that frustration with a shovel on everyone.
My country as been hot by 29% tariffs.. I can't say what we did to upset americans, given that we do not compete with any american industry in any substantial way, bu we are bearing the wrath of the wounded american blue collar worker regardless.
I wonder what the net effect of tariffs will be in an year, americans are so used to cheap imports, especially all those shien/aliexpress/temu stuff.
Your country didn't do anything. America is being run by a madman, quite simply. This isn't reflective of Americans broadly. The people who voted for Trump wanted cheaper prices, now Trump is making everything more expensive.
The next month is going to be very interesting. The business community is going to put huge pressure on Republican representatives to undo this, and Trump's own supporters will revolt once they see the new prices reflected at Wal-Mart.
I don't know how it's going to play out, but this isn't the end. It's just the beginning.
I wouldn't count out Trump sending out "tariff profit" checks (with his face of course) to all Americans. If he gives everyone a $2000-5000 check (undoubably paid for by borrowings not real tariff income) then he'll get a pass for at least a few months.
Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs? In my home country VAT is ultimately charged the end-customer and this happens regardless of the origin of the goods. How can this be a seen as a tariff?
Besides, isn't the "Use tax" most(?) American states have more or less equivalent in function?
Others pointed out that the tariff rate they are pointing to is actually just calculated based on trade imbalance. So the logic is that they have a number they want to get to and are throwing around terms that their constituents don't understand to make it sound reasonable
VAT is not a tariff, no one reasonable thinks it's a tariff but the US doesn't use the term VAT so enough people won't second guess it if trump says it's an tax on american goods
VAT is effectively a tariff though, because it disincentivizes import/trade with the US (and other foreign countries). Since the US has no VAT, it's leading to unfair competition.
Well, they are saying, EU market is harder to operate in (because everyone pays VAT) than the US market (no VAT, also lower regulatory barriers it seems), and also EU firms have a "home advantage" benefit, for example the regulation is written for their benefit.
So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit.
Additionally, US car tariff used to be 2.5%, whereas EUs is 10%. The imbalance is short in justification, though across the board, EU and US charge each other similar tariff amounts altogether, so there are other areas where the US charges more.
Whether that justifies broad brush enormous tariffs in everything, and whether US does the same in other industries (defence for example) is an exercise I leave for the trader.
> EU market is harder to operate in (because everyone pays VAT)
Surely it's not exactly rocket-science to handle VAT...
Explain how it's an disadvantage for an US exporter compared to a domestic company... Give an example instead of handwaving. I'm willing to admit I don't understand all the details, but you wont convince me using this vague statement: "harder to operate in (because everyone pays VAT)" ...
If the US adjusted selected tariffs to protect selected industries the outcry wouldn't be the same, so I'm not very interested in specific examples where the US have a lower tariff than the "counterpart".
> So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit.
It's completely without merit. Do you really think US regulation isn't written for the benefit of US companies? It is!
> Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs?
There is no logic. VAT isn’t tariffs and is not discriminatory. In the same way as trade imbalance is not theft. It’s just Trump trying to find reasons to complain and present the US as a victim.
The only logic is that since the USA doesn’t have a VAT system, there is no way to do export VAT rebates.
> Export VAT rebates mean to refund the VAT paid in various domestic production stages to exporters. The purpose is to ensure that the prices of exported products are free of taxes in order to maintain a level playing field for international markets.
So that can’t exist at all for American exporters, since the USA doesn’t use VAT, their goods are taxed at a higher rate (as far as the exporters are concerned). It’s confusing, but Trump could have just asked for negotiations to get rid of this distortion.
A tariff is a tax specifically on foreign goods. It is an artificial barrier to trade used to make domestic products more competitive. VAT is a tax applied to all products equally, so it isn't a trade barrier. You might be able to construe a convoluted argument that it is easier for domestic companies to work through domestic regulation, but that's pretty weak.
The US seems to have simply taken the value of the trade deficit with a country, divided it by total imports from that country, and used that as the tariff percentage. So in their logic, wherever there is a trade imbalance, this must be explained by barriers to trade. So in a sense this is also a repudiation of the core hypothesis of global free trade as an ideology: That, if countries trade freely with one another, they can specialise on certain production and a virtuous cycle makes everyone richer. In Trump's ideology, trade is a zero sum game, and having a trade deficit means that you are losing.
European VAT makes it difficult for American companies to compete in Europe. US has no VAT, making it easier for European companies to compete in America...
Combined with the fact that the US is the de-facto largest benefactor of NATO, Ukraine, UN, etc... then the US is getting shafted by the EU and Trump is correct in seeking ways to mitigate that.
Applying this economical pressure on the EU is a valid strategy, IMHO.
European companies pay VAT in Europe.
American companies pay VAT in Europe.
European companies do not pay VAT in US.
American companies do not pay VAT in US.
For those who don't follow the link, here's an extract from the article explaining the core situation:
Imagine a car that costs $30,000 to produce before tax. Now compare four scenarios:
1) BMW sells the car in Germany (domestic sale): Germany’s VAT (let’s say 20% for simplicity) is added on the final sale. The German consumer pays 20% VAT, i.e., an extra $6,000, for a total price of $36,000. BMW forwards that $6,000 to the German government as VAT.
2) BMW exports the car to the U.S.: Since the car is exported, BMW does not charge German VAT. Any VAT BMW paid on parts or inputs is refunded by the German tax authority. The U.S. buyer pays the $30,000 price, and since the U.S. has no federal VAT, there’s no equivalent federal tax on that sale. (A state sales tax might apply at the point of sale, but we’ll come back to that.) The key point: the German government collects no VAT on an item consumed in the U.S.. This makes complete sense because that car’s being enjoyed by an American buyer, not a German resident.
3) GM sells the car in the U.S. (domestic sale): The U.S. has no VAT, so the American consumer pays $30,000 (ignoring any state sales tax). No federal consumption tax is collected. (In states with a sales tax, the consumer might pay, say, 7% extra to the state government, but again, the federal treatment is no tax.)
4) GM exports the car to Germany: When the car arrives in Germany, it faces the same 20% VAT as any car sold in Germany. So a German customer buying the American-made car pays $30,000 + $6,000 VAT = $36,000. That $6,000 goes to the German government. From GM’s perspective, it doesn’t owe U.S. tax on that export sale (since the U.S. doesn’t tax exports of goods), but its product will bear German VAT when consumed in Germany.
What outcome do we have here? In Germany, both the BMW and the GM car cost the same $36,000 after tax, and the German government collects VAT on both. In the U.S., both cars cost $30,000 before any state sales taxes, and the U.S. government collects no federal consumption tax on either. Each country taxes consumption within its borders—no matter where the product came from—and does not tax consumption outside its borders. This is precisely the goal of destination-based taxation: neutrality. Consumers in each country face the same tax on a given product, whether it’s domestically produced or imported. And neither country’s producers carry their home consumption tax as a “ball and chain” when they go compete in foreign markets.
US formally don't have VAT, when most other developed countries have.
As I know, US states few decades spent on talks about implement VAT, but have not achieved agreement yet.
For equivalent, most US states have trade tax, could be returned with set of rules.
So, on some abstract level it could be considered as far equivalent of VAT, which is also could be returned with set of rules.
The De Minimis loophole is highly significant with FOUR Million packages per day (What ???). The clause to address this loophole needs to be stated more accurately - It should be clearly defined to be higher or lower of 30 % of the value of shipment under $800 OR $25 per shipment and not either. If either then the De Minimis loophole will be continue to be used at $25 per shipment.
Source : https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...
The whole table doesn't make sense. We (NL/EU) don't charge the US 39% to import . Apparently orange guy (not the Dutch) doesn't understand VAT rates.
Car? max 4.5 + 21% VAT = 25%. But it simply doesn't matter bc we don't want their cars.. Except for thee Dodge RAM, which can be converted to a tax efficient company car (crazy)..
What amazes me even more is that Elon doesn't seems to understand it either.
The thing is that Europeans wanted the Tesla cars. They fit perfectly into the Europeans identity - had Tesla kept on and kept the Tesla cars competitive without any political interference, then that could have been great car exports from the US to the EU.
They wanted it because at the launch until 2018 it was basically free because of all the tax incentives. You got the following benefits (Netherlands):
Model-S was about 85K excluding VAT (21%) for the plain version
Added tax incentives of 36% MIA
Added tax incentives of 28% KIA
Accelerated depreciation of 75% in the first year VAMIL
Free parking in the cities (normal hourly rate 5 - 7.50/hr)
More/better parking options
A free charger in front of your house regardless where (basically your private parking spot until maybe 4 years ago).
0 BPM tax (can be up to 40% of the price)
0 road tax (could be anywhere from 80-150 per month for type of car)
0 personal fiscal penalties of 25% of the new value of the car, including VAT (which would be a virtual 26K/year extra salary. At 51% tax that's about 1000 per month AFTER taxes)
The 85K car resulted in 90K deductibles in the first year.
The 85K car, including everything was cheaper to drive / own than a FREE car.
Almost all of that stopped in 2022, and what do you know? People stopped buying. THIS is politics. Setting policies which drive behavior.
The government "decides" what you will want to buy / drive / etc.
As found elsewhere on this thread, the rate is based on trade deficit. Trump believes that having a negative trade balance with a country means that they're cheating somehow, as opposed to meaning that you just buy a lot of manufactured or raw goods for them.
And no, that does not make any sense, and you're not missing anything. He believes this because he's a fucking idiot. He's aggressively racist, comically petty and thin-skinned, and overtly authoritarian, and as far as I can tell actively wants to permanently destroy American science and civil society out of spite, but he's also really, really, really dumb. In this case, he's managed to combine his powers to take a goal that's born out of racism and xenophobia and then implement it in the most idiotic way possible, and somehow the result is even worse than the sum of its components.
It doesn't make sense because you didn't read the original board. It clearly states 'including trade barriers'. You're attacking a strawman.
Countries, including the EU, like to have 'low tariffs' and then have sneaky backdoor taxes or outright bans on US goods through things like milk quotas (Canada), 'biosecurity' (Australia) or EU courts issuing spurious fines on US companies (based on vague laws that only get enforced against US companies, like DMA).
I think you might be granting the administration too much benefit of the doubt. They aren't based on "tariffs + trade barriers", they're just based on trade deficit alone.
VAT is not a "sneaky backdoor tax", it's imposed on all goods, regardless of where they're produced or imported from.
DMA (and similarly, GDPR) are enforced in EU countries just as much. It's just that the US tends to have more gigantic tech companies that do shady things with user data. Apparently the US doesn't care, but the EU actually does, and so it enforces its laws.
EU has signed up to lucrative trade deals with Canada and Mexico since Brexit and has many more similar ones with other Asian countries. International trade is complicated and it is very much something the EU specialises in.
Not really, if the whole world sinks into an economic depression then the percentages won’t matter much. What will matter is the starting position and whether the country’s economy has enough headroom to ride it out.
That has 10% across the board starting April 5th, then unspecified rates for the “worst offenders” starting April 9th.
I say “semi official” because it’s not official until US Customs and Border Patrol publishes the rates. So far I don’t think they’ve done that. Their announcements page here doesn’t have anything:
Yes Trump has a history of announcing shocks and then quietly back-peddling etc.
But the numbers come from the big placard he holds up. There are pics of his announcement holding his rate card in article if you scroll down.
Yeah, I’ve seen the boards he was holding up, but the fact that those numbers are not on the whitehouse.gov page and that they’ll be implemented a few days later makes me think they’re not final yet. Plus we don’t know if they’re in addition to or replace the existing China tariffs, for example.
Here's something I want to understand: In 1930 the Smoot-Hawley Tariff Act was passed by congress - an act of legislation. Nearly 100 years later we have the president unilaterally picking any tariff numbers he wants. What happened?
He invoked the International Emergency Economic Powers Act (IEEPA), which gives him the ability to levy tariffs in an “emergency”. There is no actual emergency, of course, but Congress does not have the political will to stop him.
Congress could stop this tomorrow if they wanted. They ceded all control to the executive. [Republican] Congress is hoping to claim credit for anything good that happens, but scapegoat Trump when things crash.
>Some goods will not be subject to the Reciprocal Tariff. These include: (1) articles subject to 50 USC 1702(b); (2) steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and lumber articles; (4) all articles that may become subject to future Section 232 tariffs; (5) bullion; and (6) energy and other certain minerals that are not available in the United States.
Exempting chips alone doesn't make sense. Does Intel have to pay 20% on ASML lithography machines or more on Japanese ones? Meanwhile TSMC can fab chips in Taiwan and export to the US without tariffs.
I thought the tariff goal was also to fix the issue with Pharmaceuticals where the R&D happened in the US, the company then “exported” the IP to the EU factories, and now import the drugs back. This results in a US tax rate of 0%.
I was thinking the same. IT is a huge business, the best kind of business right now, the pinnacle of human technology at this point in time. America is the world leader in development, and "exports" of IT. You can't really tariff software, as it's some kind of IP.
On the other hand, much of the "digital infrastructure" is free and open. Perhaps if rival powers put enough effort into sanctioning US effective sales in IT, however that may work, America could lose it all.
With regards to goods, the EU exports more than it imports from the US, but we do import more services from the US, which can likely be taxed in retaliation.
Yes, but only because iPhones, Dell computers, HP printers are shipped from China and not the US. Yet the majority of profits from these trades are accrued in US companies or offshore tax shelters owned by them.
- each country will impose equivalent taxes on the import of US goods - this is not only expected, but the norm under international trade law.
- with the rest of the world, still having free trade agreements between them, will start trading around the US, the US won't be able to compete
The value of the US$ will likely drop by the value of the tariffs. If everyone starts trading around the US we'll probably lose the US$ as a standard currency to trade in, maybe switching to yuan or euros, the US$ is buoyed by it being the currency everyone uses, that's going to drive it even lower.
But the US$ is kept artificially high because it's used as a reserve currency for things like oil/etc - this is IMHO the main reason why the US is in this position, it wont let its currency float down leaving exporters screwed (but cheap imports for the masses). Just increasing the cost of imports but not making export prices higher (lower in fact because other countries will be raising tariffs against the US)
It's very much a case of "you can't have your cake and eat it too" fix an artificially high US$ and you can force everyone to trade in it for oil, but as a side effect you screw your exporters
Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense.
Devaluing the dollar and subsidizing production in the US makes far more sense.
America got richer and outgrew the phase where tons of factory jobs made sense. It seems pretty clear to me that well-paying manufacturing job in developed countries were the product of a particular moment in time where poorer countries couldn't do it yet. Now they can. It was never going to last.
I live in NJ and people often make a lot of noise every time there's a report of people moving out of NJ because of high taxes and high housing costs (yet NJ's overall population has increased).
To me, it makes sense: NJ is a place where you live to make a high salary (proximity to NYC and Philadelphia) and raise a family (very good public school systems as a result of those high taxes). When you no longer have a need for those circumstances, you move.
Likewise, the US is not a great place for certain types of manufacturing because the labor and raw material supply chain simply isn't there. Why not focus on the things that we are good at instead?
It was never going to last if the US allowed for very low cost imports from those countries. This is literally one of the largest points of tariffs - protecting domestic manufacturing. We could have had high tariffs the whole time and offshoring would have been much less pronounced. I'm not saying that would have been a net positive, but to say it would never last is only true under certain circumstances.
Can you please explain a bit more about this 'hurt'?
My understanding is that a significant majority of sources of US 'hurt' are internal and there has been ample opportunity to vote at least some of it away, but the votes keep going in the direction of making it worse.
The worst thing about it is that the situation has essentially been perpetrated on the citizens of the US by those with power and influence for the simple human weakness of greed. Unfortunately they've got the power and resources to effectively do large scale "convincing".
The error is assuming that Americans are homogenous. Wealthy ones benefited tremendously by reducing their production costs while the less fortunate were put into international labour productivity competition.
They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice.
> Because now most Americans don't slave away in unsafe factories 7 days/week for dollars an hour.
Now they're collecting disability in their unsafe neighborhoods, getting morbidly obese while their substance abusing kids play vidya games in the basement into their 30s.
Yes, it's really like that. People want their factories and incomes back. I don't claim that anything happening here is going to deliver that, but that's the pitch they're voting for. To their credit, at least they're pursuing that in lieu of some UBI ideocracy made of fantasy money.
As for you: it's fine to point out all the ways they may be misguided and/or misled, but unless you have an alternative that doesn't amount to expecting everyone to somehow earn an advanced degree, and then discover it's next to worthless (even before "AI",) your really not contributing much. So what do you have?
I've met a lot of people in St. Louis working various factory jobs. Making different kinds of specialized equipment, food products. I think they get paid $25+ an hour starting out. A fair amount seem like tedious jobs.
There's around 12.8 million people in the US working in manufacturing.
some benefit. many have been in a state of perpetual poverty/welfare, but we don't see those in the official stats because the rich are so rich here it skews numbers
> Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense.
Yeah, some tariffs aren't a bad idea. But this plan? Just stupid, without any thought or strategy behind it.
The tariffs should be used more strategically to reorganize supply chains, not these blanket tariffs of low cost and high cost places. And probably ratchet them up slowly, to give time for production to move, instead of a big bang of putting them up everywhere.
So tariff China and Mexico, not Canada and Germany.
I'm an American. I've generally benefited from the system here (which speaks to my privilege, of which I'm aware). I don't want to wade into political battles, but I'm genuinely concerned for my future and the future of my children from an economic standpoint, based on where things seem to be going.
I am considering options on the spectrum with ends like:
* Staying here, because this is where I was born and raised and I've felt like the country has generally taken care of me - and hey, it can't stay bad forever, right?
* Leaving to another country, because I am feeling less and less like the country's leadership care about building a society or economy that tries to take care of its people and creates incentives to innovate.
This isn't because of just the last few months; I view the last few months as big symptoms of something more systemic that's been building up. I am also not looking to jump ship quickly because things "temporarily got hard."
On the flip side, I'm also feeling incredibly jaded these days: how could it be much better anywhere else?
Are there places out in the world where my wife and I could take our experience (mine being a strong career in tech, my wife's being a strong nursing career) and put it to use elsewhere where I could hope for a good standard of living, more stability in government leadership, and incentives similar to the economic system I grew up in, where our children could thrive and build a life?
I'm not pulling any triggers quickly or easily... I'm just trying to gather some data and different perspectives, even those that might challenge my own. Maybe an answer is "stop reading news."
If you want to relocate to another country focus on the "pull factors" of that place, rather than the "push factors."
I moved to Sweden because my wife and I felt that was the best place to start a family. I'm on parental leave and cherish every moment I get to spend with my kid.
We would have made the move no matter what was happening in the US. Well, unless there was a major cultural shift and a generous grant of child care benefits equivalent to SWE.
If it continues on the current trajectory, literally all the OECD countries will offer a better life than the US. In every meaningful measure they already do
I've traveled a bit to some of the other OECD countries and haven't felt any disparities in comfort and such while traveling, but traveling and building a life and career are two very different things.
Heard. The thought of moving to another country is, honestly, scary, like starting over, figuring out how to live and build from from 0 again.
It's not just my partner, but also my kids I'm concerned about. The idea of moving my whole family to another country feels overwhelming, but it's a sacrifice I'm willing to make if it means my children can have a chance at a good life, versus what I'm starting to fear they'll experience here.
Yeah, go gentrify the locals in some lower-cost-of-living country. You sure 'deserve' it because for some reason you have a 'right' to just immigrate there and buy their housing and sh*t from under their feet.
What motivates such a rude answer? The parent is genuinely exposing a personal question. Nothing in his post suggests that he would go gentrify a low COL place.
I appreciate your frustration, dumbledoren. Your comment speaks to perspectives I could expect to face in another country - thank you.
I can only say my personal intent isn't that. I live a simple life. My family has a small, old home. We garden, grow our own food, and are respectful to our environment.
I prioritize supporting small, local businesses.
I wouldn't want to parachute into another country acting as though I Know Better™ and bringing my "American sensibilities" to another country.
If I were to leave the US, I see myself entering another country, hat in hand, knowing fully I'm not better or special, and it's my job to adapt and to respect the culture and country.
So, it already starts affecting stuff. I and 10 other recent hires were cut today because our next round is in jeopardy. That startup is in sales and hiring area, so it senses recession much sooner than other industries, but there's that.
"The UK has duties on approximately 5,000 tariff lines, including on certain agricultural products, ceramics, chemicals, bioethanol, and vehicles. Tariffs on some products such as bananas, raw cane sugar, and apparel, which tend not to be import sensitive for the UK, are maintained to provide for preferential access for imports from certain developing countries into the UK compared to the MFN rate. The UK has some high tariffs that affect U.S. exports, such as rates of up to 25.0 percent for some fish and seafood products, 10.0 percent for trucks, 10.0 percent for passenger vehicles, and up to 6.5 percent for certain mineral or chemical fertilizers"
The idea that a giant regressive tax, which these are, will help the lower or middle class or do anything but kill demand and destroy jobs is madness.
It also won't help the debt because even though we might collect some money in the short term, the long term solution is we need to grow our way out and these policies are recessionary.
The goal of the world now is to specifically target red swing states with counter tariffs so that the democrats will win the midterms, pass legislation to prevent the president from being able to unilaterally impose tariffs in the future and thus put a swift end to the golden age.
Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports. I think more and more we see lots of evidence they don't know what they're doing.
> Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports.
Note that the White House has both (1) officially denied this, (2) provided the formula they assert was used as support for that denial; but the formula is exactly what they are denying but with two additional globally-constant elasticity factors in the divisor, however, those elasticity factors are 4 and 0.25, so...
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."
I've seen people use "sanewashing" to refer to the type of comment you're replying to, there's no sane explanation but people try to come up with one because the world doesn't make sense otherwise
To give further evidence that they don't know what they're doing, it's easy to generate this tariff plan using a fairly simple LLM prompt that gives back that same ratio:
If anyone needed any more evidence that they don't know what they're doing, what I find interesting is that the various French overseas territories that are part of the EU are tariffed at different rates than the rest of the EU (treating those as separate countries is traditional for any US company, which is sometimes a headache when you want to order something).
Réunion is at 37%, which isn't a problem because any company in Reunion could just use an address on mainland France, but there's more: Guadeloupe, Martinique and French Guiana are tariffed at 10%.
Does that make an easy loophole for any EU company wishing to export things to the US at a 10% tariff?
If these published rates actually going to be enforced this way, it seems like the whole EU has a very easy way to use the 10% rate.
LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.
I watched the man with my own eyes as he seriously floated the idea of injecting disinfectants to treat Covid-19. That was five years ago. His mental faculties have not improved since then.
Yes. These are College Freshman Essay economics, where you know just enough to declare it's time to go bold and are still stupid enough to believe it will work.
It's not that there's no strategy, it's that it was designed by reckless amateurs who haven't done the reading, haven't consulted with anyone that understands all the trade-offs, and have an uncapped appetite for risk.
The TV version works out perfectly, since the writers control the ending.
It's not: in the formula they posted, phi is the "passthrough from tariffs to import prices". That's where the country's own tariffs are factored in. Or am I reading this wrong?
Have you considered the possibility that they know perfectly well what they're doing and they're just lying about it? Lutnick, the commerce secretary, has been CEO of Cantor Fitzgerald for over 2 decades. The treasury secretary has a similarly stellar resume. There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.
Trump personally may or may not understand it (I think he does) but his political superpower is his willingness to stand up in public and say complete bullshit knowing that it's bullshit, knowing that some people are fools who will uncritically believe the bullshit, and other people are cynics who who will nod along with the bullshit either to make money out of the rubes or because they think it serves a strategic purpose.
You can waste years wondering which side of Hanlon's razor someone is on, but it's important to remember that obsessing over such dilemmas can lead to paralysis. Just like there are a lot of street hustles and cons that depend on confusing/misleading the mark before tricking or mugging them out of their money, there are a lot of political gambits that depend on inducing analysis-paralysis in opponents. Manufacturing dilemmas is also a key element in military strategy.
My advice is to stop worrying about whether these people are such fools that you owe them some sort of empathy and an effort to save them from themselves, or you will end up like Charlie Brown having the football pulled way by Lucy yet again. It is OK to cut them off and treat them as bad actors, for the same reason you should often round off quantitative values instead of obsessing over precision.
Let’s not forget Congress could assert its authority over tariffs at any time. This isn’t just the executive branch unilaterally creating the biggest, most regressive tax hike in our lifetimes, it’s a coordinated GOP operation.
>Have you considered the possibility that they know perfectly well what they're doing and they're just lying about it?
Politicians are just pretending to be dumb? Why?
>There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.
I don't think most people deny that these are capable individuals. The problem is - I think the people in Trump's inner circle now are sycophants first. They know what Trump is doing is destructive, but they are just choose to be yes men. Remember, this isn't Trump's first go-around, and the majority of people who stood up to Trump the first time (Pence, Barr, Perry, Price, Rex Tillerson) are gone.
Funny enough wikipedia has an article[1] about this that is so large that it has many sub articles. Ultimately, I can't trust that his appointments are exercising any sort of discernment because a large number of his 2016 appointees were fired for doing so.
In short, Fitzgerald could be a genius, but all signs point to him being a yes-man that would rather sink the ship than stand up to Trump.
>Lutnick, the commerce secretary, has been CEO of Cantor Fitzgerald for over 2 decades.
Lutnick clearly has zero actual influence in this administration. He's a barking dog sent to do TV soundbites, and his explanations are often full-bore nonsensical or completely contradictory to his prior explanations. Foreign officials (such as Canada) have repeatedly come out of meetings with Lutnick almost...assuaged....as if Lutnick is saying "he isn't really going to do this...there's no way", because even Lutnick doesn't realize just how stubborn Trump is about his outrageously stupid ways. These guys keep trying to pretend this is all some masterful negotiating strategy by the Art of the Deal master.
And based upon 100% of Trump's history in government, it won't be long before Lutnick and Bessent are out of this admin, both will be "RINOs" attacked by the MAGA cult, and they'll both be telling the tale of how outrageously stupid Donald Trump is. Like closing on 100% of Trump's administration in the first term.
Just look at the lead up to these tariffs. The day before Trump was still "deciding". This is something that a team of expert economists should have worked on for months, probably to conclude that free and liberal trade is what made the US the richest large country on Earth, but instead it was something that everyone had to sit around and wait for Trump to pull something out of his ass.
Trump has openly and widely talked about tariffs replacing income tax for years. This administration is clearly one where no one ever can counter any harebrained idea from Trump -- and they're all incredibly stupid ideas from that incredibly stupid man -- so whatever nonsensical takes he has they have to all try to make talking points around and create some post facto rationalizations. It is the most dangerous administration in human history, and the American voter looked at this traitorous, constitution-shredding, law-breaking imbecile and said "more please!"
There is no 4D chess happening here[1]. There isn't even checkers happening. No masterful long term negotiating strategy. It's just a fumbling moron (rapist, charity-stealing imbecile) that is doing the most nonsensical way to deal with a deficit rather than, you know, raising taxes. And to be clear the US deficit is untenable and needs to be dealt with, and the head in the sand approach by successive governments is not reasonable, but combining DOGE's ham-fisted stupidity with Trump's economic destruction and the deficit is likely going to be much, much worse. The US is on the fast track to insolvency.
"But China....next war....China!"
Trump started this whole thing by attacking allies. By dissolving alliances and trying to economically harm its closest friends. Precisely the opposite of expectations if the US were seriously trying to counter China.
[1] Aside from corruption. Tariffs are the foundation of corruption because everyone has to come, hat in hand, begging for exemptions. There is going to be a line to the White House of manufacturers and importers, from Apple to military contractors, begging for special waivers. Which they'll get if they grease the right palms, as this is the most blatantly corrupt administration in US history. He's selling pardons in the open, and operating a literal protection racket, and this is just...an ordinary day now.
Does the exact percentage of the tariffs matter? I suspect it doesn't - these look like approximate numbers to obtain concessions, and a complex formula doesn't really help anything.
Far as I can tell, the ideal would have been to simply double incoming tariffs, but that would be infeasibly large. This was a way to generate a plausible smaller number that can be increased later on an individual basis depending on how the country responds.
Now control the SEC so the privileged won't get investigated for insider trading.
That's how you devolve into a 3rd world country by the way. I've lived in 3rd world countries and seen this over and over again. That's why 3rd world country stock markets don't go up - because locals and international investors have a distrust in them. Locals know insider trading is rampant.
Once this kind of corruption is accepted in society, everyone will need corruption in order to stay ahead.
Many people including doctors and health professionals apply restrictions to their diet including avoiding complex carbs or proteins, or reducing their salt or sugar intake while talking about balance diets. No complaints.
But when I decide to reduce all foods by at least 10%, lower my protein and carbs by 25%, pledge I'll remove at least 30% of metals from my diet and will be doing a 4 day fast twice a week in order to become an olympic level athlete by next year, people say I don't know what I'm doing!
How can people possibly be against nuanced thoughtful dieting yet be against my sudden do it all at once approach? It's totally inconsistent, what idiots everyone else is.
Here in the EU, you'd generally just pay VAT of imports. And to be clear, we pay the same VAT on internal goods.
To make it convenient for consumers, large foreign platforms would automatically handle VAT at point of sale, reducing friction and thereby pushing more import.
Some specific things had tariffs - e.g., nuclear reactors, and chinese electric cars - but it was by no means the norm, and I don't think citizens liked this. The Chinese car tariff in particular feels like German automotive lobbying, stifling competition. Tesla, pre-DOGE, also showed that we would have an unsatiable hunger for import of competitive cars, it's just that an F150 isn't a competitive car in EU.
Now, because if the trade war, we end up with blanket retaliatory tariffs and a strong push for buying local products, killing imports, that just wasn't there before. US and China was already in a trade war, so I guess that was the current state of affairs there.
Well because they are applying them in a blanket fashion with no warning basically everywhere.
Tarrifs are a tool. They have both positive and negative consequences. It seems like the manner they are being applied are just random and will get most of the negative consequences with very little of the positive.
Why? Because the US is smarter than the others. By having open trade, we've benefited greatly. Now you could argue that other countries have benefited more, and that made me true but the benefits of free trade are that the pie keeps growing. So other countries getting a bigger slice is not shrinking our slice.
For what it's worth, I bought a $2000 robotic hand from US a year ago, and paid about €400 in VAT and €32 (so like 2%) in import duties / tariffs.
Obviously VAT isn't a "trade barrier", if anything it's a "consumption barrier" and it's the same for every business that EU citizens give money to (i.e. if I bought a robot hand that cost $2000 to make from an EU company, I'd likewise be paying €400 VAT on top of that).
It would help if people answer than downvote. Both these kind of questions and economic answers are getting buried.
My understanding so far based on buried comments is: other countries have tariffs on individual products they're historically good at manufacturing and they want to retain it. e.g. Milk in the Nordics, Cars in Japan and EU, Bikes in India, etc.
keyword: "selective to retain"
US is applying it across the board blindly, not to retain something that's existing, but what appears to be a blind hope of starting everything from scratch.
Buried comments say "strategy" is lacking, because these tariffs also apply on the very raw materials needed to start from scratch. The policy does not intelligently select and separate items by their current or future use to the US industry.
There is a prediction that this blunt hammer will not yield to a more productive situation, in couple of years it would only have to be quietly rolled back and strategic thinking would have to be re-applied.
The counter-counter argument is, maybe a real strategy is being worked upon, and this blunt hammer is just a leverage tool. But so far there are no concrete signals of strategic thinking, so it's currently perceived as "let's keep turning one knob after another". The lack of accompanying software updates, calculations, projections, personnel planning, etc all contribute to the notion that there is no strategy.
And at this point, it devolves into emotion and personality, which is better to stay away from.
The United States maintains the world's most powerful corporations and attracts exceptional talent, yet appears to be hastening toward what some consider an inevitable conflict—one that exists largely in political rhetoric rather than reality. Setting an ambitious four-year timeline to rebuild manufacturing capabilities seems impractical. More concerning is how this approach risks dismantling the global governance system that took generations to establish, while alienating allies who could be valuable partners rather than burdens. The potential costs of such a strategy are immense, explaining why many observers question whether there's a coherent strategy behind these actions.
> What's amazing me is the lack of consistent thinking by the commenters here.
I feel your "consistency" is based on a facile model where big percentages correspond to badness and that's everything.
An analogy:
1. Roommate Trump who falsely claims you're in a common-law marriage: "You're running a trade-deficit with your grocery store, so every time you buy groceries from them I'm going to punish you by taking 25% of the cost. If you don't like it, you should work there part-time to reduce the deficit. You're about equal in paying friends for food versus them paying you for food, but they need you more than you need them, so to make you hustle I'm still taking 15% from any money that goes out. Finally, you have an extreme trade-surplus with your regular employer because they just send you checks, hurray!... That'll be 10%, because reasons."
2. Critics: "That idiot is insane. That's not how any of this works. Find a divorce lawyer ASAP."
3. You: "You guys aren't consistent thinkers! I mean, why aren't you complaining about how Mrs. Johnson adds a 100% cost onto Mr. Johnson's purchases of cigarettes, as a way to get him to quit? 100% is a much bigger number, so obviously Mrs. Johnson's the real villain here, and you don't seem to care!"
____________
If you're so certain Trump has a coherent and non-dumb strategy, please describe how it's supposed to work and why you expect the results to be good things.
Can you provide an example, especially for the EU?
From what I read, the average tariff applied by the EU is under 1%. Other comments say Trump has just divided imports by exports to calculate his tariff rates.
>Many other countries, including EU members and China, already apply tariffs and non-tariff barriers far in excess of what the US is applying now.
This has been persistently claimed but I have yet to see evidence on this. In most cases it's including VAT which doesn't make sense since local manufacturers pay that as well.
It's not really inconsistent as as far as I'm aware the US is the only country in the world with a universal baseline tariff on all imports. Other countries have tariffs that seek to protect certain industries and balance this with trade agreements that cover other goods or certain countries.
For example Japan wants to protect its farmers so has tariffs on rice. But that is not a simple tariff on all rice imports. There are various rules and a tariff free allowance. The largest importer of tariff free rice to Japan is the US.
I think there's a few things wrong with Trump's go to of tariffs as weapons:
- America seems to want total freedom to trade on its terms, not as partners. E.g. expecting countries to import American goods that do no satisfy customer demand or local laws.
- Trump's unpredictability will mean that companies will be hesitant to make large investments if they think the policy will change on a whim. US policy is largely controlled by a single, unpredictable, vindictive and fragile ego. That's not a good environment to build a stable and healthy company.
- The hyperbole such as calling international trade raping & pillaging. This is voluntary trade we're talking about.
- The main issue is that it's not solving the real problems of the average American. Globalization has big issues, it's kept some countries in poverty and contributed to declining living standards especially in western manufacturing. However it is just one factor amongst many that are causing hardship for small town America. A reversing of globalisation does not solve massive wealth inequality, it does not intrinsically solve low wages or abandoned factory towns. At the same time that Trump installs tariffs he's making it easier for the wealthy to concentrate ownership of assets, increase inequality, reduce employment laws and erase social protections. 14 billionaires with elite projection are not working to benefit the average American, they're working to benefit their own average.
This is just a stray thought of mine - but I feel like the US might go down a very dangerous path - I think to avoid retaliatory tariffs, US companies, such as NVIDIA might decide to create foreign subsidiaries, and license the technology to them - after all the tariffs don't apply if Europe does business with a Taiwanese subsidiary.
But this will expose them to a technology exfiltration scheme and/or hostile takeover in the vein of what happened to ARM China.
They already wouldn't be subject to this tariff if they bought directly from Taiwan. Tariffs only happen when goods cross the border so unless Nvidia's logistics required them to ship into the US to get goods to Europe they shouldn't be affected by the tariffs directly.
Genuine questions: why are they calling it “reciprocal”? Is the US just matching the tariffs set by the other countries?
Also, this announcement has wiped out any plans of buying tech products this year, plus a holiday to the US and Canada later in the year. Good thing too, as the entire globe is probably staring down the barrel of a recession.
Someone calculated the formula used. They divided the trade deficit of each country by total trade of each country and assumed that was all a tariff.
So for example Indonesia and the US traded $28 billion. The US has a 17.9 billion trade deficit with Indonesia. 17.9/28 =0.639, or 64%, which is assumed to be all caused by tariffs. So they divide by two and impose 32%.
Anyway no the US isn't matching tariffs they're dramatically exceeding them.
That's a bit of a messed up way to calculate things.
I also think the US deficits are hugely overstated because much of what the US produces is intellectual capital rather than physical goods and the profits are made to appear in foreign subsidiaries for tax reasons. Like if I buy Microsoft stuff in the UK, Microsoft make out it was made in Ireland for tax purposes, but really the value is created in and owned by the US. The US company both wrote the software and owns Microsoft Ireland. So much of the perceived unfairness Trump is having a go at isn't real.
Because when the blowback comes, people will be looking to cast blame for starting this whole trade war, and when that time comes Trump will point to the word "reciprocal" and say "we didn't start this, we were only reciprocating".
> Is the US just matching the tariffs set by the other countries?
No. Trump claims that the new tariffs are a 50% discount on what those countries tariff US goods at. (Even if that's questionable - is VAT a tariff?)
If he's correct, or anywhere close, this is a "tough love" strategy to force negotiations. We'll see how it goes. It also plays to his base - why should we tariff any less than they do us? And they have a point, it's the principle of the thing.
According to [1], the White House claims Vietnam has a 90% tariff rate.
According to [2], 90.4% is the ratio of Vietnam's trade deficit with the US -- they have a deficit of $123.5B on $136.6B of exports.
The same math holds true for other countries, e.g. Japan's claimed 46% tariff rate is their deficit of $68.5B on $148.2B of exports. The EU's claimed 39% tariff rate is their deficit of $235.6B on $605.8B of exports.
Who knows, maaaaybe it just so happens that these countries magically have tariff rates that match the ratio of their trade deficits.
Or maybe, the reason Vietnam doesn't buy a lot of US stuff is because they're poor. The reason they sell the US a bunch of stuff is because their labour is cheap to Americans. (They do have tariffs, but they're nowhere near 90%: [3].)
America's government is not trustworthy. Assuming that what they say is truthful is a poor use of time.
And there are a lot more countries in that list, South Korea and Taiwan are going to really hurt for electronics. And I assume Vietnam, Cambodia, Bangladesh and other countries will hurt for other good that are made cheaply there.
> And I assume Vietnam, Cambodia, Bangladesh and other countries will hurt for other good that are made cheaply there
Vietnam and Bangladesh would hurt American consumers (clothes). Cambodia not really.
Silver lining, Brazil and Colombia (edit: and the rest of Latin America) are kept at baseline, and Philippines is now the lowest tariff developing Asian economy.
We'll probably see a significant amount of capital returning to Philippines (who saw de-industrialization when South Korea signed their FTA with Vietnam).
> Are those in addition to existing tariffs?
Yes (Edit: not sure now, I'm hearing some say they include the 2017 tariff regime of flat 10% - smh shows how this was just a political ploy that answers for such a critical question are mixed)
(Edit 2: was right initially - thanks u/inverted_flag)
> Yes (Edit: not sure now, I'm hearing some say they include the 2017 tariff regime of flat 10% - smh shows how this was just a political ploy that answers for such a critical question are mixed)
I'm a freelance selling software services. Some of my customers are in the US. Am I affected? These tariff don't impact software, right?
Different countries have different tariff. Is there room for arbitration? In which a 3rd party business from a country with low tariff would buy a product in one of the countries with high tariff and export that to the US, taking a small cut.
Services aren't traditionally part of tariffs; tariffs apply only to physical stuff moving across borders.
That being said: I work in a services-oriented business right now "exporting" services to the U.S. and the leadership of that company is seemingly getting very worried, trying to diversify their customer base out of the U.S.
If, in the cycle of retaliatory action, they run out of ammunition with tariffs on stuff, who knows what other crazy ideas will come to the surface: Tariffs on services do come to mind, maybe restrictions around recognition/enforcement of foreign-owned intellectual property,...
Tariffs on services are much harder to enforce. There's point of entry so it's harder to check.
However, some countries have a withholding tax for services provided by foreign companies. The client is responsible for withholding the amount from any payment and paying the government.
And banks play a role in the enforcement if needed.
Usually this is happening where you import "parts" and the final assembly "the product" is "made in" and sold as "product xyx". Then the origin country of the parts do not matter.
I don’t buy the blanket statement that the consumer always pays the tariff. It depends on what alternative companies have. If a company can purchase the same clothing from Chinese, Vietnamese, or Mexican vendors, a tax on China only could make the Chinese vendors lower the price or risk losing the business.
However, a blanket tax on every country, regardless of available alternatives, would leave businesses with fewer options and make it more likely that the cost is passed on to consumers.
For taxes to work in raising money, they have to be paid. So, if the goal is to make revenue from the taxes, then raising costs is expected?
If the goal is to incentivize alternatives, then the tax has to be such that it raises the price above the gap there now. So, even if you do drive people to an alternative source, the new price will be higher than the old. (Unless the thought is that people were choosing to not buy the cheaper source to begin with?)
I suppose you can argue that some suppliers have such a margin that the tax could be an effort to get them to cut into that? I have not seen evidence that that is the case?
> If a company can purchase the same clothing from Chinese, Vietnamese, or Mexican vendors, a tax on China only could make the Chinese vendors lower the price or risk losing the business.
This example implies producers are already in competition with one another, so it's unlikely that any of them can lower the price much. On the other hand, if some producers leave the market due to the tariffs, then there's less competition overall and the other producers can charge more.
The objective reality of the situation is that there is a transaction between a buyer and a seller. That transaction is what pays the tariff, VAT, property transfer tax or whatever vampirical suckage by whatevername.
Both transacting counterparties are robbed.
How that is distributed between them is a matter of which has more alternatives. E.g. if the seller has lots of prospective buyers, most of whom are not subject to the tax, then the market price they demand is not sensitive to the rare buyer who does pay the tax.
If a big fraction of the seller's prospective buyers face a tax, then it makes their product or service look more expensive to a good chunk of the market, which exerts downward pressure on the price. The downward pressure on the price means that the seller effectively pays some of the tax, through lost revenue.
So, the transaction pays the tax as such, but how much of it is distributed between buyer and seller depends on the degree of influence of the tax on the price point.
This is true, but the amount of production in China dwarfs everyone else, and definitely what America can bring up anytime soon, so two consequences:
A. Tariff for Chinese goods will be reflected in consumer prices pretty much directly.
B. Domestic suppliers if the same goods have very limited capacity, giving them the pricing power to raise their prices by the tariff amount, and take it as extra profit.
Take for example cars. We will see American cars go up by the same amount as imports as long as they are oversubscribed on capacity.
Except it seems like the president has more control over tariffs.
Taxes are approved by congress, so this was surprising to me. Does the president essentially has full reign to tariff whoever they want (for whatever reason) until the end of their term?
Maybe this is less about economic independence and more about grabbing whatever power is within reach. If domestic taxes were up to the president and tariffs were up to congress, would we see exactly the same situation with domestic taxes?
An item sold for $1000 say would pay $100 at 10% VAT. The items in the supply chain all charge VAT and reclaim VAT they spent. I think usually this terminates at the import (maybe?)
Factories are not coming back to the USA in large number, for a lot of reasons, at least not until full automation + tariffs makes them economical. But the biggest reason is that what's going to happen is that the average joe is going to suffer a bit, then will vote against these policies in the next election, and that's only 3.5 years away. If it takes a year to build a factory -- and frankly these tariffs could be adjusted again or removed in a few months -- and then they're likely to be fully removed in 3.5 years, I'm just not sure it makes sense to invest in a factory.
My suspicion is that Trump will declare a national emergency and suspend elections at the mid-term if it looks like the Republicans will lose seats in the House.
Want to bet that Trump's argument for a third term hinges on the US being in a recession/depression and needing him to see the economy through the struggles?
This doesn't come as a surprise as we all know it's going to come.
My question is, how does the US prepare to re-industrialize itself? Is the tariff good enough to provide incentives so that factories start to appear domestically? I fear this might not be the case.
The US never lost manufacturing. It just automated it. Those people who know how to run a factory still exist.
However there is no getting around it taking years to setup a factory (less if you can import the assembly line back from China). So nobody sane will start a new one in the next year based on these tariffs - odds are too high that in 2 years the democrats take over congress (the house not flipping would be a shock: typically the out of power party gains a few seats in non-presidential elections and only a few seats need to flip. The senate is somewhat unlikely, but the loss of the house would have ripple effects there).
Even ignoring the above, any few factory would be highly automated. There won't be thousands of new no college required jobs created in any new factory. It will be maybe 100 (probably less), with a bunch more engineering degree required.
The De Minimis loophole is highly significant with 4 Million packages per day (What ?). The clause to address this loophole needs to be stated more accurately - It should clearly define it to be higher / lower of 30 % of value of shipment under $800 or $25 per shipment and not either
This is absolutely shocking. As these tariffs are reflective of trade deficits this administration is taxing the cheapest sources of goods for the American economy in proportion of volume.
This is economic handbrake territory. It will impact every industry that imports goods (as well as many raw materials and components) and will devestate many, if not all SMEs who rely on importing goods to sell to local customers. Fashion retail in particular and drop shippers will have to raise their prices considerably.
While I imagine the ideas behind these tariffs have some sense of justification, the numbers simply don't add up. Manufacturing clothing in the US simply isn't viable at the sorts of scales for mass consumption. For example, you can pick up Levis at Walmart for around $25 that have been manufactured abroad. The Levi Vintage run, which are made within the US, have prices starting at $150. So all this will do is force people will less money to spend an extra ~50% (or $12.5 in this case) on their jeans, as this will still be cheaper than $150. Obviously to entirely succeed at the supposed aim would to create a world where all jeans cost $150 and this would simply mean that most people would not be able to afford jeans.
So has anyone an idea how those tariffs would affect software sales? Say I'm a German guy selling a license for my software to someone in the US. Will this fall under tariffs, too. Or are software licenses somehow exempt? Asking for a friend(me).
My opinion. (Also as a German guy doing a similar thing).
On the first order no. The tariffs just announced are only on goods and are collected at the ports when you physically import them.
On the second and third order. What I think will happen is that the EU will mostly retaliate against US services. And then trump might counter retaliate against EU services. So I would start looking for customers outside the US.
It won’t unless you’re shipping an item to the USA.
I think the eu should look into taxes on u.s. services, instead of tariffs on products. Taxing AWS/Azure/etc +25% would do a lot in getting similar services in the eu expanded.
Out of curiosity, would you still need to pay the full tariff, if the cost of an item that was shifted to a token/smart contract, that only enabled a right to purchase, but reduce the device cost to like a dollar or shipping.
It’d be pretty cool if someone derived a legal smart contract solution. One could argue that, the tech enabled products are two things a digital service, and a manufactured product. Those costs could be potentially be seperated.
As a preview of our future, it's now a good time to review the decline of standard of living that occurred when Great Britain lost the privilege of having the World's reserve currency, the Pound Sterling.
My estimate is we're in for a 75% haircut to our personal standard of living as the US Dollar loses it's place, and we actually have to pay for everything we want in hard currency or real goods. Trump killed the golden Goose, and threw it into a wood chipper.
Yep what many people overlook is that this deficient just means the rest of the world is financing the US overconsumption. And the only reason they are happy to do it is because they are happy to hold USD and are happy to invest in the US economy.
This is basically the Kim Jong-Un approach to foreign policy:
Kim: threaten a nuclear war, see if people will pay you to stop
Trump: threaten to crash the world economy, see if other countries will pay to stop you
He doesn't care that this will shrink the global economy, or even, at least in the short term, the US economy. If other countries submit in order to negotiate tariffs down then he has his "win" politically, if not then he has someone to blame.
1. On the face of it, this looks horrible. I won't rehash the many arguments against it here, though. This page is already chock-full of those arguments.
2. Robot labor could make ultra-low-cost manufacturing possible in the US, to the point that many things become cheaper to make locally than to ship from abroad, tariffs or or no tariffs.
3. If any major country/region negotiates lower tariffs by fully opening its market to US products, every other country/region will be forced to do the same, expanding free trade everywhere.
>Robot labor could make ultra-low-cost manufacturing possible in the US, to the point that many things become cheaper to make locally than to ship from abroad, tariffs or or no tariffs.
That's not a solution to anything though. All it does is ensure your money goes to Mr. I-own-the-robots instead of to Foxcon's Mr I-own-the-people
The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we make.
If you no longer want the trade deficit that means payments of fealty by those who trade in dollars, which countries aren't likely to tolerate, or abandoning the USD as a global reserve currency, which would be disastrous, truly disastrous. Our debts would suddenly become existential because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy. I don't think many truly understand just how disastrous it will be.
This isn't America's liberation day. This is Russia's and China's liberation day. While America was once able to check their power, America is no longer in a position to do so, we will barely be in a position to satisfy our own military's logistics requirements.
This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies. It is not only a de facto soft blockade of American trade, but it is an attack on the mechanics of American hegemony. Politicians already ask for money instead of votes or actions. That means if foreign governments spend money, they can elect their preferred candidates. America's own government was a result of french support. We institute regime change in other counties, and I see no reason to believe we are immune.
If trade stops occurring in US Dollar, which is a consequence of the stated goal of our current ruling regime, that would be the coup de grace on this country's hegemony. It is the definitive end to it, and the birth of Chinese hegemony.
What still baffles me is how people act like this was some kind of thoughtful decision.
When you put someone incompetent in charge of a country, a company, or a sports team, collapse is inevitable, no exceptions. We’ve seen it play out over and over again because of stupid choices only driven by ego.
For extra sauce on the "they're barely even thinking about this" cake someone figured out where those crazy "Tariff Charged" numbers were coming from, they're taking the trade deficit and dividing by the total imports from that country.
edit: The White House deputy press secretary posted their formula and it is just trade_deficit/2*total_imports per country just dressed up with a lot of fancy language to make it seem smarter but the two extra terms are constants.
It’s been our turn for a hot minute. Republicans have been blowing up the status quo since Reagan, and the Democrats enforcing austerity since Clinton. American corporate leadership is excellent at hitting quarter-after-quarter KPIs for bonuses and share price growth, but there’s ample data it has all come at the expense of workers - increased precarity, decreased wages, increased costs of everything, as the country is plundered down to its core and sold off piecemeal.
Post-Carter United States (and South Korea, and Japan, and the UK, and much of the developed world in general) is a prime example of the follies of prioritizing numbers-on-a-spreadsheet growth in the short term, over a balanced and robust domestic economic engine that ensures a healthy, happy, stable populace that wants to have kids (since they have the money and time to be good parents).
> What still baffles me is how people act like this was some kind of thoughtful decision.
I'm no economist, but I can see that there are second order effects that this addresses that other systems would lack.
1) Tit for tat on tariffs doesn't work because of other barriers to trade such as currency manipulation, subsidies, regulations, etc.
2) We've learned from games such as iterated prisoner's dilemma that strategies that succeed are ones that clearly communicate how they'll act and respond. A clear formula such as deficit/imports accomplished this. Countries know exactly what they must address in order to access US markets.
3) You can end up playing whack a mole with countries in that they can set up shop in other countries to bypass tariffs in their own country. By applying a consistent formula to all countries, you no longer have to play whack a mole.
It seems thoughtful if you or your children or your friends are heavily invested in crypto and think removing the USD as the primary currency of trade is a good idea.
I know it's a Republican joke to blame evil meddling globalists for the US's problems but it sure seems like a bunch of people looking to ruin the US for their own global ambitions are running the show right now.
This is what forced me vastly curtail my news consumption for the most part. I can only take so much breathless reporting about the "strategy" of the Trump administration, when it's plainly sheer incompetence with the winds of malice in the background. There is no actual plan to "make America great again", it's non-stop incompetent pandering to a base that just wants others to suffer.
In this case it's much much worse than just incompetent. You're looking at someone who takes an evil delight it doing the opposite of what smart people say to do, and destroying stuff.
There’s been many people opposed to free trade for decades, on both sides like Pat Buchanan and Bernie Sanders. You can think those guys are incorrect in their analysis, but calling it “mindless” is just ridiculous.
This tariff regime is simply a “minimal viable product” aimed at the idea of reducing structural trade deficits.
I'm really do appreciate all those on HN who comment either for or against these tariff measures by including cogent arguments and relevant facts. As against ...
> What still baffles me is how people act like this was some kind of thoughtful decision.
I'm afraid it is. An unholy coalition of capitalist-anarchists and ultra-conservatives is the driving force behind it. They both want to reduce the influence of the government to a level as small as possible. That can only be done by dismantling the current federal government.
The clearest evidence of incompetence for all to see is Trump's cabinet from his first term. If they're actively speaking out against him, something is seriously wrong.
> Rex Tillerson on Trump: ‘Undisciplined,’ ‘doesn’t like to read' and tries to do illegal things
Sadly, people didn't vote for Trump so much as they voted for "anti-woke." Or: I am tired of being looked down on and this is my revenge.
With the tariffs in Asia (Vietnam: 46%, Thailand: 36%, Cambodia: 49%) it feels like a good opportunity for China to increase their trade/influence in the region as well.
Sri Lankan here. They just slapped 44% on us (higher than on China). The country is just trying to recover from the economic crisis and the sovereign debt default of 2022, so we have very high import duties on certain items (e.g. vehicles) to discourage dollar outflow. Looks like the US just saw that as hostile and decided to strike back.
> it feels like a good opportunity for China to increase their trade/influence in the region as well
influence for sure. But trade? Vietnam/Thailand/Cambodia already have ~40% of their imports from China and 5% or so from the US, I don't think this tariff can realistically increase trade between China and SEA countries much.
To add to the comment: If you want to be the capital of an empire, you have to act like it—like Troy, Rome, or Constantinople—meaning you run deficits and play buyer of last resort. When you are no longer that, the empire has indeed collapsed.
"The golden prize for America's enemies is to remove the US dollar as a global reserve currency."
I would argue that for this to become even remotely possible, America's list of enemies must not automatically become everyone else's enemies too.
that is to say: the USA's secondary statutes have to become ineffective.
To do this, the EU's blocking statutes (to ignore secondary sanctions) have to be effective. Right now Europe's own companies just ignore the statutes to keep their US trade.
To make the blocking statues effective, the EU's own research recommended fines/sanctions/bans/… on licences for foreign (read US) banks, and companies that ignore the statue and don't serve EU companies trading with sanctioned countries.
But to do that, the EU would need alternatives to American services.
Europeans have a lot of alternatives to American services, including building out their own.
What Europeans truly lack is the ability to defend itself without the U.S. They have the technical know how and can build the manufacturing capacity but that will take a decade at least.
Also, European financing is just not as strong.
However, with the U.S. voluntarily walking away from its role as the center of the world, this may not be a problem for too long.
Tech is the easiest service to replace considering American tech workers by insisting on WFH have already largely eliminated the geographical advantages American tech used to have.
> Right now Europe's own companies just ignore the statutes to keep their US trade.
If it’s the trade keeping EU companies in line, isn’t the destruction of trade that these tariffs are intended to achieve precisely the kind of thing that will then prevent them from staying in line in the future?
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade.
This is just one facet of a broader point. When people talk about a "trade deficit" what they are really talking about is what's known in Economics as a "Current Account deficit". When discussing international trade and Balance of Payments, there are two accounts - Current Account (goods and services flow) and Capital Account (asset and liability flow). By definition, the two must net to zero. That's not an equation, it's an identity. If you have a Current Account deficit then you have an equivalent Capital Account surplus. It works in both directions. For example, foreign direct investment into another country in the form of a loan leads to a flow of funds into the country (Capital Account surplus) and then those funds are used to buy things (import) from the first country or other countries, leading to a Current Account deficit.
I was just thinking about this and I'll bet you anything that Trump is 100% hung up on the word "deficit" and that's about it. If we said "net importer" or "goods taker" or something like that we would not be in this situation.
It's more likely to be related to culture and political structure than education is my guess. Unless, maybe, we want to use a different definition for education than just degree attainment. For example, Finland has lower attainment rates for bachelor degree equivalents than the US. This would seem to disprove your point.
The real issue is the two party split and urbanized distribution. The way the voting works and the structure of the houses means that once you reach about 85% urbanization the rural areas won't matter. We can see this at many state levels that mimic national political structure. We have multiple nations within our county, with the biggest divide probably being between urban and rural. So all you have you have to do is promise the rural group who feels they are increasingly marginalized a candidate who will look out for their interest. The specifics of those promises don't really matter because in the 2 party system it's us vs them more than actual policy positions. You will find a much bigger difference looking at the urbanization based metrics than you will at the roughly 10pt difference in who people with bachelor degrees voted for.
Switzerland. Power is extremelly distributed between municipalities, cantons and, in the Federal Government, there are 7 equal ministers. The system is not only robust by definition, but encourage dialogue and citizens participation in politics at every level through popular vote, educating people during centuries.
Germany.
The country was designed to be incredibly hard to takeover from the inside.
Central government is weak, even if AFD would takeover the chancellorship there are few measures that would immediately allow them to intervene in the federal states or „Länder“, much much less than in the US e.g. unless there is war there is no way to use the military to force compliance.
You would have to take over the country 17 times, and since the elections are not synchronised you would have to convince everybody all the time that this is good idea.
Individual German federal states could be taken over much easier, Thuringia probably will be the first in 2028.
The biggest weakness than is that the legal prosecution on German federal state level is under control of the executive and could be used to prosecute political adversaries.
But if this goes to far the remaining parts of the country could vote to takeover the executive if there was a breach of the constitution.
His analysis complements the crucial discussions elsewhere in this thread about the economic details (reserve currency risks, the tariff math) and specific geopolitical impacts, by focusing on the political drivers; the nature of post-truth populism, underlying societal weaknesses, the challenge of maintaining civic coherence in the midst of it all, etc.
Doesn't matter how intelligent or educated or homogenous culturally the Finns are...if Russia were to decide to invade.
Domestic political antifragility means nothing if you're not anti-fragile in terms of the outside world.
It's called the anarchic global system for a reason. The only thing enforcing norms is power and the fear of it.
Antifragility would be the EU finally forming a real union. As someone living in Finland, I'm not holding my breath that happens in our lifetimes. If you take a sample of average, non-cosmopolitan Europeans, they can barely even communicate with each other in the same language. Let alone come to agreements on who's going to pay for each others bloated social welfare expectations.
The EU is the very definition of Fragility. While Finland has made far more rational decisions than its EU neighbors (having correctly prioritized energy security, military, and technology), it doesn't matter because size is more important.
You can look at countries that have remained democratically stable for a long time. The UK and Switzerland come to mind. I live in the UK and we have an odd system that I used to consider a bit of a gimmick for the tourists to take photos of but appreciate more these days. Basically the fact that we have a king but with severely curtailed powers delegated to the elected folk makes it very hard for one of them to appoint themselves effectively king, especially as the military all swear allegiance to the actual king (or queen).
It's partly effective because they system wasn't really designed but evolved out of a lot of bloody power battles, going back to at least 1215 https://en.wikipedia.org/wiki/Magna_Carta
I used to think it was silly but if you look at rival European powers they had Russia with Stalin, Hitler in Germany, Napoleon in France, Franco in Spain, Mussolini in Italy etc. The UK is one of the very few which avoided having a dictator.
[Edit - I was kind of talking about the wrong thing - avoiding dictators rather than Trump types]
It would also help to have a population without a deep-seated beef going back to the civil war. You arguably have two separate 'America's split down that historical line that might not ever see eye-to-eye and, just like the US itself has installed dictators or favourable governments by funding disruption abroad, it is open to be exploited the same way.
To be fair this strategy will work if other countries cannot tolerate tariffs for long enough to come up with non-USD trade that is accepted by everyone. Which to be fair may take them a very long time.
If they fold and remove tariffs on the US (so the US can drop the tariffs on them) before coming to an agreement because the economical pressure of tariffs is too high, then this will result in the largest market expansion the United States has ever seen.
My point is: yes lots of negatives can happen, but let’s also look at what happens if it works out so we are intellectually honest about what’s going on here.
The issue with this is the "reciprocal" tariffs that were announced are not related in any way to tariffs imposed by other nations. According to the administration, they set the tariff rate for each country as (trade deficit / (imports * 2)). Obviously the country in question cannot undo this even by zeroing all tariffs with the US, because none of this is based on tariff rates.
That would require other countries trusting the promises of the current administration, yes? How much credibility does the Orange One have on the world stage?
Part of the problem is that Trumps's definition of tariffs doesn't make any sense. VAT isn't a tariff but according to Trump it is.
Does he seriously expect other nations to just get rid of VAT? Or somehow replace it overnight with some other system all just to appease the US? Because that's the only way you can lower 'tariffs' to zero.
It just won't happen and we'll be in a continual standoff until Trump concedes that trade barriers are not in fact a good thing for anyone. He'll never admit it, but it wouldn't surprise me at all if the illusion of a 'deal' is struck in order to save face and reverse this mess once it becomes clear it's not sustainable unless you want to shrink your economy and destroy others at the same time.
As these countries move away from the dollar, there becomes a glut of US dollars in the world, triggering inflation like we have never seen before. Ignoring the barriers to trade that the tariffs represent and what that will do with our productivity. Ignoring the additional cost of an uncertain market future (because all decisions are made from the gut and could change tomorrow). The massive stagflationary impact of foreign countries unloading the 75% of US dollars they hold would effectively kill them US economy. The tariffs wouldn't even matter because you effectively couldn't give US dollars away -- they'd be worthless internationally. No one that is not rich could afford to import anything.
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
I think it is misleading to speak in terms of enemies even if that plays to the fears of US isolationists. It is good rhetoric but I think it obscures the truth, There was a time when the stability and strength of the US made the dollar a good choice for friends and enemies alike. The world is changing and the current US administration is accelerating some of those changes. China is going to play an increasing role as the US turns inward but I doubt they will ever replace the US dollar as a reserve currency. The Euro is the second most held currency after the dollar and there are probably a few others ahead of China.
> Our debts would suddenly become existential because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy.
Can you elaborate on this? Every other country does not have the luxury of having its currency be the reserve currency but still manages to both inflate that currency when needed and import good just fine.
If India buys a widget off Brazil it will probably be paid in dollars. Therefore, people need to own dollars. Thus a demand for US debt. This lowers the potential interest rate. Other countries who's currency is not a need for people to buy, their debt is purchased by the attractiveness of its offering (i.e interest rate). If US dollar is no longer required than government bonds have to be attractive. Also, not all sovereign debt is issued in the home countries currency, which means that the printing press doesn't help. US debt is very large, interest repayment are close to military spending. Without the reserve currency that would get worse. Something like 68% of world holding is dollar 17% Euro, nothing else of note.
The other side is that as there is a demand for dollars. The value of the currency is higher than if it wasn't which increases the price of exports and reduce price of imports. Trump might want to weaken the dollar.
> Foreign countries buy US dollars so they can trade with other people
Who are those other people and why do they want to be paid in USD so badly instead of their own currency in which they presumably pay their employees and taxes? I never understood that.
In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? Way back in time, US Dollars were one to one based on gold in fort knox. Right? But no country has a gold reserve now. Most countries have a dollar reserve to back the paper money they print themselves. This is the main reason the dollar hasn't collapsed already.
[edit] someone who graduated college with an economics degree please come and correct the following vague and possibly totally wrong perceptions I have as a subject of the American empire /edit
The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve. Only the US gets away with having no actual reserve ...because a combination of military might and cultural strategic dominance has allowed it to BE the reserve for everyone else. This is why it somehow makes sense for America's economy to be based entirely on consumption rather than production.
OP is right. Whichever superpower controls the levers of global trade is the one that can sell debt and enforce the currency regime.
Some of us think that it's a lucky thing that it's been America, rather than a more authoritarian power, who had held that control for the past 80 years. Europe would not have recovered from WWII otherwise, and be living behind an iron curtain. Anyone who controls global trade after America is likely to be worse from a human rights perspective.
Because you can easily and cheaply convert USD to any other currency, and because it is the usual currency for international trade you can use it to pay someone else.
Suppose a British company imports tea from Sri Lanka and Kenya, blends and packages it, and exports it to retail chains in multiple countries. If all the buyers pay in the same currency used to pay the suppliers the British company does not have to convert more to GBP than required to meet its costs (and profits!) so loses less on converting currency at all. The usual currency used for this is USD.
we have customers currencies -> USD -> suppliers currencies.
Edit: I have not explained very well in the bit immediately above. The point is that the British company will not need to convert the currency at all as they will be paid in USD and will pay in USD. In most countries you get better rates converting to USD, and its easier to hedge this way. Even more so if there is a longer supply chain as then you get
There are a few wrinkles on this in that customers may already have USD accounts, and suppliers might keep some money in USD, but obviously customers will be paid by their customers in their own currency, and will pay their staff and most other costs in their own currency.
Hard reason: Oil was traded in U.S. dollars. This was basically built off America’s status as the only open superpower and its military strength.
Soft reasons: U.S. political stability (yeah, it’s hard to understand that now after the past decade, but generally the U.S. has been extremely politically stable with Presidents largely maintaining their predecessors foreign policy even if they didn’t agree with them), US company culture which is much cleaner than the rest of the world (American companies are far less likely to bribe, for example), and strong financial institutions like the independent Fed and the publishing of reliable and open data.
Other currencies are not always great: for example, being under sanctions Russia sold oil to India for Indian rupees; then it found out that you cannot simply take rupees abroad or exchange and you need to invest them locally [1].
But I also wonder what's wrong with other currencies and why they are not used more often.
But of course, current US move will greatly help recent Russian efforts in persuading other countries to switch the trade from US-controlled dollars.
If I'm Romanian and my currency is leu (RON) and you're Mexican and your currency is pesos (MXN), you don't want my RON since you can't use it for anything except for imports from Romania and I don't want your MXN since I can only use it for imports from Mexico.
If we both agree on USD, I can go to any other country which wants USD (all of them) and buy whatever I want.
God damn you nailed it. All the stupid wars for nothing. Rarely do I see anyone talk about these shenanigans as the mechanism to end the reserve status of the $ and the end for influence and affluence. It will breed a lot of resentment from some Americans thinking the world is against them. They could be used for war.
One thing I don’t understand here, genuine question: If, hypothetically, US manufacturing was to become so competitive that the trade deficit would go away, would that have the same disastrous effects for the US dollar as a trade/reserve currency? Or how would that work?
It's impossible for both things to be true. For the dollar to be the reserve currency countries need to accumulate dollars. They can't do that unless more dollars leave the US than come back.
The problem is that countries don't just take the dollars and sit on them. We're on the third iteration of solving this intractable problem:
Try 1 was gold. The US was running out of gold and Nixon had to end redemption of dollars for gold.
Try 2 was assets (think the Japanese buying everything in the 80s). That was unpopular and the Plaza Accords put an end to it with significant damage to the Japanese economy
Try 3 is government debt. But it's the same fundamental problem. The US isn't ever willingly going to give back assets for this debt. Everyone agrees with the polite fiction that the US will and so things are fine. But if they ever expect actual stuff for that debt it will all break down again.
US manufacturing is better than it ever has been by all measures except number of people working in them. This means that there isn't much need for someone to get good at putting a nut on a bolt and other such mindless work that is skilled only in that with a lot of practice you can get really fast as doing it. People who don't want to spend a lot of years in school are thus not doing very well because there isn't much need for people who don't want to use their brain.
It's typical Empire Hubris: thinking you can get away with anything because you are special.
Trump doesn't really know what he's doing. He surrounded himself with yes-men that know perfectly not to contradict him.
The global Dollar order was built to American advantage. Trump is dismantling it for no reason. If the dollar order crumbles, the US will discover it has much lower productivity.
There is no American exceptionalism: it's just Dollar exceptionalism. No Dollar, no exceptionalism.
I agree, losing reserve currency status would make American gdp / living standards to come way closer to Europe for the simple fact it won't be able to permanently increase its debt deficits.
However its far from clear losing reserve status is going to happen, sure some countries will try to diversify but others are probably too tight inside the American umbrella (for defense for example).
But yeah, surprises can happen so interesting times.
"because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy."
You can't inflate your currency to payoff a debt that's due in in a different currency. As soon as you inflate your currency, the exchange rate changes.
The US issues debt in dollars and repays those debts in dollars. The purchasing power of dollars can change due to inflation. If you suddenly increase the global supply of dollars by 2x, dollars that existed prior to the increased supply will be able to purchase less.
This comment is good, yet it also reflects a lot of what I dislike about political discourse online.
You've identified a potential severe negative consequence of a change or new policy, but you write as if this is a guaranteed logical corollary and there is no scenario where this consequence does not materialize. This creates an alarmist rather than genuine and analytical tone.
Describing tariffs as a "decapitation strike" feels hyperbolic and even perhaps conspiratorial. Saying this guarantees Chinese hegemony is exaggerated and ignores all the other equally (if not more) significant factors influencing both American and Chinese trajectories. Applying Dalio's broad thesis to tariffs specifically is a stretch -- tariffs may exacerbate tensions Dalio describes, but they aren't necessarily the coup de grace to hegemony.
Basically, you're highlighting real risks and issues, but packaging them in language that overstates their likelihood and doesn't take into account any other factors at play simultaneously. If your goal is to paint a doomsday picture of the future, this works well. If your goal is to understand the impact of tariffs on the world, there's too much emotion and speculation and not enough hard analytical work here.
Yeah, the whole "decapitation strike" talking point betrays a serious bias. It also implies something which no evidence is provided for. The idea that foreign actors got someone elected, then managed to get that person to implement a specific strategy that rapidly destroys the dollar as a reserve currency, all for the benefit of the foreign actor, is quite the stretch.
The Euro is already a reserve currency and makes up about 20% of worldwide reserves. Which is of course not as much as the dollar which is about 60%, but these numbers could of course shift.
The new reserve currency won't be a single country's currency but a basket of currencies, where the ratio contribution of component currencies gets adjusted every once in a while.
BRICS has been proposing a sort of basket mechanism. Bitcoin is not yet thickly enough capitalized. The historical standard was gold for 3000 years, and that's what backed the dollar until that was "temporarily suspended" in 01971. That's the default.
Bitcoin would be the most fair choice for a new reserve currency. It has equivalent properties as gold but is more practical to use, and there's no geographic inequality to mining it.
No government could benefit from manipulating it. How cool is that ?
The Chinese yuan is not a viable reserve currency. Why? Because it's pegged to a basket of other currencies. It should really inflate in value but Chinese government policy is to undervalue it to aid exports. Exports are ~20% of China's economy. It would devastate the economy if the yuan was allowed to freely float, or at least float with the level of central bank management that other developed nations' fiat currencies have.
China has repeatedly tried to activate a consumption economy (like the US) but the Chinese just save and buy real estate, in part because there is no retirement benefits so they have to self-fund that.
So what currency? Currently, there is no viable alternative to the US dollar. It is backed by the largest economy in the world AND the US military.
You might find people who talk about BRICS like it's a real thing. It is not. It's just a group of randomly selected countries meant to sound nice (literally, South Africa is only there for the S sound) with no unified policy or currency.
It's not the euro either. Europe ultimately is still dependent on US defence and beholden to US foreign policy.
I’m past the point of thinking people are just being crazy or paranoid. Any baffling move this administration makes, I just ask myself: what would Russia want?
And without fail, it explains the unexplainable. This move is a prime example. This doesn’t help the billionaires in America, it doesn’t help ANYONE in America, but is sure is a massive bailout to a Russian economy that was on the verge of collapse.
I agree tariffs are harmful and counterproductive, even if they're applied by the other side. My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.
It is interesting to note that none of this panic applied when US trading partners imposed tariffs on US.
But if this is part of a larger shift in terms of funding the government, I would be somewhat open minded. For instance, if instead of taxing income, we had tariffs that play a role of basically a sales tax, I think that has some benefits. For one, I think tax policy should encourage productive work (income) as opposed to consumption (sales). So a shift from income to consumption taxes would be a positive development. You can make adjustments so that its progressive (i.e. tax credits to cover the first N dollars in consumption tax). The big problem is the geo-political effect less trade might have and the effect on the markets.
> My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.
The thing is that we don't. That 39% Trump claims Europe is levying on US goods? It doesn't exist. I've heard they include VAT in this which makes no sense because it applies to all goods including those made locally. That is not a trade tariff. It's just internal taxation.
However I've also heard they calculated it with the trade deficit (which in itself makes no sense, it's not a tariff) but in the case of the EU that makes even less sense as Trump always quotes the deficit on goods, but ignores the deficit on services (eg IT) which is highly in favour of the US.
Also when I hear people say "they don't buy American cars in Europe", we do have American brands like Ford and Tesla. Ford just sell smaller models designed for our market here. Those big SUVs and pickups are not suitable for our traffic or environment.
> It is the definitive end to it, and the birth of Chinese hegemony.
I think you’re spot on about the risks of the tariffs (I’m not really sure where I stand on them today), but your arguments don’t produce this conclusion. China is far more protective of its markets, nobody has or will have any interest in trading in any Chinese currency, and tariffs from not just the US but other nations will continue to exacerbate existing problems at home for China.
Companies like Temu came into existence because global pullback on purchasing Chinese manufactured goods is resulting in job losses, and instead of having factories go under the Chinese government would prefer to sell products that very quickly fall apart or are built extremely cheaply or with very poor environmental practices to at least get some money.
Further, while these tariffs seem questionable and everyone is piling on Trump (which is deserved, with prejudice, in my mind), let’s not pretend that the EU, Japan, and others are saints here. They do enact trade barriers to protect their own domestic industries as well. On the tech side for example there’s simply no argument that the EU is fining US tech companies just because they happened to enact policies and rules that the US companies break all the time. Some portion of that is a shakedown or a form of a trade restriction.
That's an over-simplified answer. There are many people who share in the blame. Him for doing it as a visible catalyst, everyone who voted for him, presidential advisers who recommended these disastrous policies, and those who sat idly by and let the country be destroyed without acting to prevent it, especially those with greater-than-ordinary power who failed to act.
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade.
But then they sell it back. What you’re describing is not a trade deficit. To produce trade deficits they need to actually trade with the US. Buying forex does not do that.
> If trade stops occurring in US Dollar, which is a consequence of the stated goal of our current ruling regime, that would be the coup de grace on this country's hegemony. It is the definitive end to it, and the birth of Chinese hegemony.
Nobody will use Chinese currency because it doesn’t float and it’s subject to tight capital controls. Nobody in their right mind would switch to that from outside of China.
You can argue that China could become a hegemony anyway, but that is because everyone wants to trade with them, not because they want to use their currency in 3rd party transactions.
Foreign countries buy USD through trade. Japan needs dollars for international trade so the US Treasury prints dollars and gives them to Japan and in return Japan gives the US Nintendo Switches or whatever. Those dollars go into the international trade system and some of those dollars will just circulate internationally indefinitely and won't ever make their way back to the US, hence the perpetual trade deficit. This is a great deal for the US because at the national level they effectively got those Nintendo Switches for free.
People trade in USD because the US is the largest of large economies. Everyone trading in USD understands already that the US can manipulate its own currency. But they take a low-risk bet that it probably would have far less incentive or inclination to do so than an authoritarian state like China or a small economy like Argentina. Capital flows to the US because the dollar has been "safe"... it inflates, but predictably slower. The Chinese regime is more than capable of opening the illusion of free markets and making 50-year promises not to interfere with free trade and capital, tempting foreign investment, only to break those promises with an iron fist.
Regardless of the response from China, America is showing that it is irrationally willing to cede its incredible advantage for no decipherable reason beyond that some logarithmic curve of population idiocy has crossed the already absurd hockey stick of its own national wealth. It's a realtime lesson in the ancient rule dating back to the fertile crescent, that civilizations destroy themselves from within before they're conquered from without.
I think you’re somewhat missing the point, which is that the collapse of the dollar as the reserve currency around the world will eventually lead to default of US debt, which has cascading consequences domestically and internationally. This is the direction the US is heading if it really continues to alienate its allies and try to “fix” its trade deficit.
However, the OP was wrong about the fact that China will become a hegemony, for reasons like you mention, and so what’s likely happening isn’t the change of hegemony, it’s the beginning of the end of the era of the American Empire and to a likely a multi polar world. It’s going to take another world war, in some form, to create enough of a vacuum to give us another superpower/hegemony like we have with the US currently.
Something tells me that both China and Russia know all this and yet, the US administration is completely blind to it or are naively playing into their hands.
> This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies
Decapitation Strike seems to be not a general principle that is applying here, but the title of a specific polemic against the Trump administration. Just mentioning for clarity, as it sounded like a general thing warned about in past times that's applicable here.
When the history is written I think the Citizens United decision might be pegged as the end of the American republic. It allowed endless amounts of dark money including foreign money to pour into US elections.
In any case, I think we're seeing the beginning of the Chinese century.
1) Chicago-school interest groups successfully putting people on courts and in the legislature to all but completely eliminate anti-trust enforcement, starting in the '70s. TL;DR policy used to be that a company holding too much market share was per se bad for the country and that the government could act on it, the shift added more tests making it slower (so, also more expensive) and harder to successfully enforce anti-trust, so much so that we all but stopped doing it.
2) Failure to send Nixon to prison.
3) Loss of the Fairness Doctrine under Reagan.
4) Failure to send a whole list of Reagan's folks (and maybe Reagan) to prison over Iran-Contra and other misdeeds. And those same names keep popping up, making things worse for the '90s and '00s. This was a huge mistake.
5) The Democrats totally surrendering economics policy to a newly farther-right [edit: more accurately, a set of policies championed by a certain set of pro-capital right wing interests—we recently saw this totally overthrown by right-populist policy, when Trump took over the party in 2016, which was the most remarkable development in US party politics since the '80s] Republican view, in the '80s, and adopting basically the same policy. This set the stage for the current backlash, because this all-in neoliberal shit was never popular, but persisted because both parties supported it.
6) Loosened media reach ownership rules in the early '00s.
7) CU
8) Nobody at any point finding a way to dismantle the Heritage Foundation and Federalist Society (if you're wondering "how", it seems the NRA had been doing all sorts of illegal shenanigans for a loooong time—I'd be absolutely floored if these two don't have some big ol' skeletons hanging around)
9) We all watch a coup attempt live on TV (re-watch some of the news footage if your memory is fading, it remains shocking) and then the Biden administration dicked around during the six months or so when it might have been possible to go after the leaders of it.
10) The Internet putting intense pressure on the news media, leading to even more profit-focus than before (and see also the loss of various controls above) with nothing done to try to mitigate that.
11) Extreme centralization of control of the narrative online under a handful of platforms (and the narrative is "whatever gets us more eyeballs", see again #11) and nothing done to fix that.
My long term wish is in 40 years, after civil wars/world war and rebuilding efforts, that we discover a better alternative to democracy; we have gone all in on it the past 200+ years and is utterly exploitable in the information age, as the populace gets less informed and more malleable to any malicious actor. It is a pretty fatal problem if the success of your government model depends on citizens not being total idiots.
My anarchist wish is that we figure out that large states have large benefits but also very large downsides. A country as big as many Western countries have simply no business existing, as they are unworkable. How is it realistic to have a functional government for 300 something millions souls and an area the size of the United States?
I assure you that the fantasy of this being a band-aid rip-off moment will turn sour when the sore becomes infected and you're living through a depression.
There's no reason to believe that Russia will not continue to be a declining, stumbling, brain-drained backwater hawking a nuclear arsenal over its current borders, Belarus, and The People's Freest and Greatestmost Republic of Donetsk-Luhansk.
I believe that's Trump's plan. According to the Triffin Dilemma, the source of US budgetary deficits are due to the USD being the world's reserve currency. Once that's not the case, trade should rebalance to a healthy surplus.
"Allies and historians say that his admiration of tariffs is one of his longest and most deeply held policy positions."
In the 1980s, Russia still had a state-run socialist economy, and China was just beginning to grow (albeit quickly) after its 1978 economic reforms. These countries did not purchase Donald Trump's policies.
If you're concerned about foreign influence and foreign money in American elections, you should be much more worried about Australian Rupert Murdoch, for example, who founded Fox News, or South African Elon Musk, who just spent a whopping $250 million to elect Donald Trump and is now personally dismantling the US government (although Musk's money didn't help in the local Wisconsin election), or Israel, which has had one of the most powerful and well-financed lobbies in Washington for decades.
The Pax Americana died during the first week of the Trump administration when he proceeded to turn on practically every single one of US' long standing allies and dissolve NATO for all intents and purposes. All the soft power disappeared right there.
Perhaps the world will be better for it in the end, but it's definitely a turning point. A new world order will emerge and America won't be at the helm.
I'd feel a lot better about it if more countries held values of free speech and democracy. If mainland China were like Taiwan, great. Unfortunately I fear those might just end up being viewed as instruments of America's decline.
I don’t get why it matters what currency people use - all currency is exchangeable, isn’t it? What does it matter if you buy something for dollars or pounds or euros or yen?
If I’m buying 1 barrel of oil for $100, does it matter whether I convert my USD into 150 of this currency or 50 of that currency, according to the current exchange rate, before I pay? I still get 1 barrel of oil, and the seller still received an equivalent to $100 in exchange?
>> Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we make.
This is called Triffin Dilemma- And in many lies at the core of the most basic question every power in history has faced.
That is- You can either be a Geo Economic Super power or a Geo political Super power, You can't be both at the same. You have to chose to be one. China seems to be chosing the former. USA chose to be the latter, but can't seem to be sure about its choices so far.
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD
I'm not convinced it works like that. When a foreign country buys something from another foreign country using USD, the seller country then receives that USD. The seller country then use those dollars do buy something else from a third country - unless they have imbalanced trade and keep accumulating the dollars, like China does. But, in general case, there's only a need for a limited number of USD in circulation to serve as "working capital" for all foreign exchange. There's no need to keep getting new dollars, as the old ones get recirculated.
It is not correct that an Asian business doing business with a Italian company first exchanges their currency to USD by selling the US goods then using that USD to complete the transaction.
I agree with you that the current situation in the world really benefits the US and the current policies seem to undermine that.
> It is not correct that an Asian business doing business with a Italian company first exchanges their currency to USD by selling the US goods then using that USD to complete the transaction.
The only way around that is the EUR. Otherwise, most countries have very little connections to one another. Even neighbors will trade with USD and settle in New York.
If I understand Trump correctly he wants a weaker U.S dollar to make American exports more attractive. I'm not sure though he wants it to become THAT weak that its on longer the reserve currency.
However, simply abandoning the Dollar will prove quite difficult for many countries because there is no clear alternative (the Euro perhaps but it has a tiny market share currently) and also I'm certain Trump will threaten to remove American military support from anyone who dumps the Dollar - so Europe will probably stay, Australia, Canada, Saudi and quite a few more.
It's not "dumping the dollar" that would be a concern. It's bumping US federal treasury bills (the US debt) which are mostly held by China, the UK, Luxembourg, and Canada. If the latter three just dump their T-bills in retaliation (and do nothing else) the dollar will bottom out. Also, the likely buyer is China. End result: China owns the US and the RMB becomes the new reserve currency.
> and also I'm certain Trump will threaten to remove American military support from anyone who dumps the Dollar - so Europe will probably stay, Australia, Canada, Saudi and quite a few more.
Europe already has the mindset US military support is no longer a given. Europe is already re-arming. I wonder if additional threats by the Trump administration are going to make much of a difference. Even though it will take atleast half a decade to re-arm the main adversary, Russia, is currently in no shape to launch any kind of new offensive against a European country.
> I'm not sure though he wants it to become THAT weak that its on longer the reserve currency.
Intentions aside, with big moves like these the question will be how much control he has over what happens next.
The entirety of this scheme, in its soft and hard power forms, was financed by the parasitic impoverishment of the US populace. Everything the commenters on this site complain about: Runaway inflation, unaffordable housing, extreme financialization, excessive military budget, enrichment of the top, unaffordable healthcare, unjustifiable wars, all of it has partial or total roots in the money printing, artificially low interest rates, colossal trade deficits, and military adventurism that underpin the global US dollar reserve scheme.
I think it apt to boil it down to a binary choice: Either we give up our global empire and allow the multipolar paradigm to emerge for the chance at domestic prosperity, or we grip the iron to the bitter end and force the entire country to become the dystopic open-air homeless cities of the west coast.
Why is it a binary choice? This is just reductive. The idea that we couldn't maintain American hegemony and return more of the benefits of it to the middle/lower classes seems silly.
This is about tearing down a system / world order that a lot of people are angry about, with little thought to how to replace it and make it work for the citizens. The global economy has changed, manufacturing capabilities in the west will never be competitive again for a wide variety of products, and those jobs are not ones that regular Americans want anyway. Just like they don't want the farming jobs that illegal immigrants are doing.
This vision to essentially return America to a idealized view of 1900 is in for a rude awakening.
>The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Its also the golden prize for America's victims, it has to be said.
We can't keep propping up the USA as a moral position to aspire to, when that state continually gets away with mass murder and human rights violations beyond the scale of any other peer.
The USA is the worlds #1 funder of terrorism, and violator of international law on the subject of war.
So its not just about 'enemies'. Its really about victims.
I certainly wont disagree with the US not representing any moral heights especially now, however do you have sources for the US being particularly egregious in relation to its peers in its actions?
Russia is the number one war criminal in the world. Of course now that Russia owns American leadership, we can partially blame them for American human rights abuses.
A lot of people fundamentally misunderstand why trade happens in USD and what creates demand for USD.
For example, you hear people say that the US invaded Iraq because Iraq was threatening to denominate oil sales in the euro. This particular conspiracy theory used to be more popular ~20 years ago for obvious reasons. Even if true, it's absolutely no threat to the petrodollar. You could sell oil in euros and what would most sellers then do? Immediately convert those euros into USD.
Trade occurs in USD because there's demand for USD not the other way around.
What really underpins the USD is the US military and the US still being the largest economy. So the USD will remain the global reserve currency up until the US collapses and/or another power rises to displace it, which really means the same thing at this point. That might ultimately be China but it's not yet and the Chinese yuan is wholly unsuitable to be a global reserve currency currently.
> until the US collapses and/or another power rises to displace it, which really means the same thing at this point. That might ultimately be China but it's not yet
I imagine the Euro is a contender also even though the EU it's not one homogenous power.
> and the Chinese yuan is wholly unsuitable to be a global reserve currency currently.
Curious why you say this? I was considering holding some EUR and CNY in the event that one of those becomes a replacement for USD
The Trump admin wants to devalue the dollar substantially, enact protectionism and maintain its reserve status. I can see them succeed with the latter two, but with these actions, the world has no choice but to move away from the USD as the reserve currency. It will take many years, but whatever replaces it certainly won't be to the US's advantage.
Maybe Russia, that's the only country which has not been slapped with tariffs. Apart from Russia, there are nuances. There are peaceful enemies like the EU, Canada, Australia etc. and there are threatening enemies like the Houthis or Iran.
My take on all this is that everyone seems focused on the U.S. dollar’s dominance, the empire, trade deficits, and exchange rates. And sure, there’s some validity to that, but the real issue, or really the real goal, is getting people back to work.
You might not see it, and maybe I don’t fully see it either, but as office workers, bureaucrats, and technologists staring at screens all day, we’ve lost sight of the fact that America no longer produces like it used to. Yes, there are still people out there working with their hands, feeding the country, and running small industries. But broadly speaking, the U.S. relies heavily on other countries for complex manufacturing — for actual building. Shipbuilding is just one obvious example. A lot of critical industries have withered to the point where they can't even meet domestic demand, let alone compete globally. Meanwhile, other countries are pushing forward in tech, producing better, more efficient, more productive products — and pulling ahead.
It’s not happening all at once. It’s a slow decay. Generational knowledge industrial skills, trades, machinists are all fading. And when those go, the backbone of resilience and self-sufficiency starts to collapse. A nation that can’t produce can’t stand. Export power becomes a dream.
And I think part of the issue is that we’ve become lazy. People don’t want to work anymore — they want things handed to them. Entitlements, bonuses, luxury homes, multiple cars, the works. But someone has to build all that. Someone has to maintain the food supply. Someone has to assemble the vehicles. Someone has to keep production alive. Yes, technology can help fill gaps, and we’ve done amazing things — and still do — but America’s edge in tech? That’s slipping away. China has surpassed the U.S. in key areas of advanced technologies, auto manufacturing, aerospace, and absolutely obliterating in shipbuilding. U.S. industry? Ashes in many places.
So what’s the answer? Unfortunately, hardship. Nobody likes to say it, but raising prices and tightening the belt forces people to make hard choices. And when that happens, the jobs that matter won’t be office jobs or desk jobs — they’ll be builders, machinists, welders, factory workers. Producers. And those jobs will start commanding the wages. People who’ve been unemployed or living on subsidies will be pushed — or pulled — back into that kind of work. Slowly, painfully, maybe, but steadily. And maybe, just maybe, we’ll rebuild that base. Maybe industry will return. Maybe factories and production will grow again.
That’s the end goal here; even if we don’t like how it’s being done. Even if it’s painful. Even if it doesn’t work the way it’s intended. Because maybe we’re not as strong as we think we are. Maybe we fail. It’s happened before — look at the USSR collapse. It was a fake economy built on fake production and apathy. They endured 20 years of hardship, and they’re still trying to catch up.
So yeah, that’s where I think we’re headed. Is Trump the guy to do it? He’s doing it. Someone had to. Is it the right way? I don’t know. Is it going to work? No clue. Will we succeed? Who knows. Or maybe we just keep punting the problem further down the road; business as usual — until it breaks completely.
But either way, the path forward is either a slow crumble followed by a rebuild, or a brutal reset with the hope of rebuilding something stronger on the other side.
Not one single job was moved offshore by a foreign country. Every single one was moved offshore by an American business looking to reduce costs and increase the quarterly bottom line.
Now they're run out of jobs to move offshore and they're looking to the government for the next handout. This time, it's by adding a new tax on Americans on what they buy from overseas.
The people to blame for the economic problems are rich Americans, and the solution is to increase taxes on poor Americans, but the story is that the problem is foreign devils and the solution is to make them pay. The misdirection is working and the magic trick is successful.
"A nation that can’t produce [physical goods] can’t stand."
Based on what evidence?
"And I think part of the issue is that we’ve become lazy. People don’t want to work anymore"
Americans work more hours per week than a majority of countries. Low-paying factory jobs are off-shored because they're low-paying.
"So what’s the answer? Unfortunately, hardship."
You probably should do more research on the subject, and successful onshoring regimes that have been implemented by other countries. If you, for e.g., determine that America needs to produce a certain quantity of semi-conductors to insulate from various natsec risks, there are ways to tackle that problem and usually they don't involve hoping an onshore industry magically appears because you've haphazardly shivved trade across the board.
> And I think part of the issue is that we’ve become lazy. People don’t want to work anymore — they want things handed to them. Entitlements, bonuses, luxury homes, multiple cars, the works. But someone has to build all that. Someone has to maintain the food supply. Someone has to assemble the vehicles. Someone has to keep production alive. Yes, technology can help fill gaps, and we’ve done amazing things — and still do — but America’s edge in tech? That’s slipping away. China has surpassed the U.S. in key areas of advanced technologies, auto manufacturing, aerospace, and absolutely obliterating in shipbuilding. U.S. industry? Ashes in many places.
It has nothing to do with "people being lazy" and everything to do with poorly-run companies combined with globalization.
This started in the 70s/80s with American auto manufacturers. The Japanese cars were much more fuel efficient and a much more robust build. The line worker wasn't responsible for that, management is.
Then the global free trade / NAFTA in the 90s. Ross Perot was as popular as he was, because a big segment of the US population saw this coming.
That all seems built on some romantic notion that a job making physical objects ("working with their hands") is fundamentally better than a job providing a service ("staring at screens"). But it's not obvious there is a lot of factual support for the idea, either on the level of individual jobs or the economy as a whole. You could certainly use protectionist barriers or subsidies to try to force industries like ship building back to the US, but would the US really be economically better off overall if you did so?
That said, it's really irrelevant since Trump's current approach isn't looking to support specific industries or outcomes, it's just across the board tariffs on everything. We're not just going to have to build our own ships or cars, but grow our own coffee and bananas. Targeted, strategic tariffs and subsidies on the industries we want to support could be arguable, but this is not that.
The US can use internal policies to support the industries and skills you mentioned. Tariffs as implemented, and greatly damaging longstanding relationships with allies, will have the opposite effect. The existing lead in services will be lost, consumption will drop, and the increase in production of goods due to tariffs won't offset it. I would recommend you read the outcome of the Smoot Hawley tariffs.
I hate this mindset that Americans are lazy, they are usually some of the hardest working people in the globe. The wealthy are greedy, and wealth and power continue to concentrate at the top while infrastructure, working conditions and public services crumble. I don't fault anyone for not wanting to contribute to that, quite the opposite. I don't see how the jobs you mentioned are going to start commanding better wages when everyone has to rush to do them because there are no more options.
Yes... and no. Having own currency as a global reserve currency has its disadvantages too. For instance it keeps value of the currency high, what makes whole USA production noncompetitive. USA exports two things: internet services (all those Googles, Facebooks, etc.) and military equipment.
The problem is that internet services are making rich small group of people (owners, software engineers), military production is a niche, so there is a big group of people who lose jobs, are on low paying positions, as being, say, a car factory worker, does not bring enough money. Those people voted Trump, so Trump is trying to solve their issue by bringing back production back to USA, and the way to do this is twofold: make USD weaker and make foreign goods more expensive.
All this was not a problem till early '00, when USA didn't have much competition (basically Western Europe and Japan), but the times has changed and USA is seeing that. BTW this is not a Trump thing, Obama, Biden administrations were also noticing that and taking actions, like (in)famous Obama reset with Russia to be able to expand trade over there. "Pivot" to Asia - failed Biden project of Indo-Pacific, that was supposed to convince Vietnam and others to follow USA job regulations, what would make their products more expensive. Surprisingly, they told Biden to go away...
Another thing is that for years USA was in a sense donating European industry, for instance taxes on European cars in USA were 2%, while taxes on American cars in Europe (that is European Union) were 10%. Trump puts this to an end.
>Another thing is that for years USA was in a sense donating European industry,
Sure and Europe is not at all donating to US arms industry or to US tech sector? Europe is pretty liberal about letting US dominate those domains inside the EU, without opposing that. Plus in geopolitics it simply follows the US, that's sort of been the deal.
Seems like this US leadership thinks it can both have its cake and eat it.
> For instance it keeps value of the currency high, what makes whole USA production noncompetitive.
But devaluation of the currency will hurt people who have savings in this currency, and cause higher inflation, right? On the other hand, paying back loans and mortgages becomes much easier.
There is no American hegemony in this current day and age. Probably dead like 15 years ago.
Say what you well regarding Trump, he understands this.
Trump is a smart man to spot problems, but he surely didn't know how to do it in a way that doesn't lead to self harm. He crazes for a bombastic firework that demands for all and any attention.
The US version of capitalistic economy has driven its internal inequality to the point the political system can no longer sustain it, while in the meantime, doesn't have an established social safe net, as major European countries have. So the populace elected Trump to root it up.
It is absurd, it is ridiculous, but deep down it is logical. Weird and dangerous time ahead.
This is why I don't get why my EU people are attacking Trump - he singlehandedly gave Europe political capital to rebuild itself as an independent player on the international stage. He created an environment where tighter EU integration might take precedence over petty interest squabbles. For example in what other scenario would Germany making massive investments in military be politically acceptable ? Even talking about military on EU level ?
Framing this as purely a win for China and Russia is very partisan, this has potential for all non-US countries to get away from under US thumb long term and at least for that we should be grateful to mr. Trump, from his foreign policy it seems like he is not interested in those games as he views them a net loss for US.
And the Greenland situation is showing us exactly what happens when you position yourself as leech on US military/NATO.
I don't think anyone has a problem with europe being a more independent player, it becoming a necessity is what people are upset about. I'd rather have germany make massive investments in infrastructure and health reform than its military.
>This is why I don't get why my EU people are attacking Trump - he singlehandedly gave Europe political capital to rebuild itself as an independent player on the international stage.
What a completely baffling statement. It's like saying the left arm should be grateful that the right arm cut itself off of the body because now the left arm has to strengthen itself. Sabotaging the alliance system that has prevailed since World War II leaving both Europe and the United States more dangerously exposed and compromising the safety of our shared democratic values that were once the bedrock of our alliance.
It's so obviously catastrophic that I can't fathom how someone would try to portray this as a win other than out of an appetite for a JV debate team sophistry. Europe is banding together not out of positive diplomatic achievements, but in the same sense that they would band together if a meteor is headed toward Earth and you're asking us to thank the meteor.
Some say many EU politicians are compromised by Russia and China...
I know squabbling is the norm for European countries but I feel there are some recent big own goals. Crazy how we can't get our crap together in such times. (Crazy opinion: UK needs to be in the EU again to be the grown up in the trio of UK, France and Germany)
Because they would prefer functional pro democratic world rather then constant struggle for domination with fascists from Russia and USA at the same time. EU people don't want to become poorer or suffer, not even to "own the USA".
Europeans you talk about see Russia as a threat. They are not fascists themselves, so Germany having to arm itself more because Russia just got new ally is not a good news.
Because it's a bit like someone telling you that they're going to burn your house down so you can claim on the insurance and you'll be better off.
It might be technically true in some circumstances, but I still don't want some jackass burning my house down thanks, I like my house. That's why I live there.
The real traitor is Biden who handed the presidency to Trump and only cared about covering himself and his family asses. I think that was the point where you realize the democrats have just given up and did their part of selling the country. Some people must be now moving Bitcoin, Gold and other valuables out of the country before the big unveiling kinda like what happened with the soviet union.
I have made a post about this after the election that got flagged: https://goldprice.org/
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Why is the reserve dollar good for Americans? Arguments in favor of reserve currency status make the U.S. economy seem utterly fake. It’s as if the world is paying us to maintain borders frozen in 1945.
It stops them from having to address their national debt, has allowed for incredible spending and the arguably pushed humanity forward with the wonderful inventions. Without it, it will be interesting to see how the future unfolds.
What most people don’t see is that we are basically under “shadow austerity” to correct for the not so hyperinflation we saw post COVID.
It is a combination of post WW2 Britain (China is the US in that analogy) - this helps to explain the Canada and Greenland issue; and Volcker era stagflation economics. It will not get any better in the short term, but there is likely to be substantial growth in the long term as a result.
What that means is the fed likely won’t reduce rates, and it may reduce its rate decrease to 1 this year, if even that. It is entirely possible the rate doesn’t come down at all.
Expect Layoffs to come, as the fed doesn’t seem to care about unemployment as its target is on inflation. Many zirp era businesses and funds will fail. Less cereal and eggs for the same dollar.
I am really hoping we don’t start to de-anchor from 2% inflation as a result of all this. I wonder how various US infrastructure projects can and will be financed. Reduction in entitlements. Possibly some type of mandate to hold treasuries.
Are we surprised? If anyone watched the presidential debates VP Kamala Harris told us about this.
From September 2024:
"What Goldman Sachs has said is that Donald Trump's plan would make the economy worse. Mine would strengthen the economy. What the Wharton School has said is Donald Trump's plan would actually explode the deficit. Sixteen Nobel laureates have described his economic plan as something that would increase inflation and by the middle of next year would invite a recession."
Emphasis on that last line:
would increase inflation and by the middle of next year would invite a recession.
btw the US Congress can stop this anytime they want.
Inheriting a strong economy beating all expectations that was just about to end its fight with inflation and burning it all away in a pump and dump crypto scheme fashion, while doing nothing (or even working to expand) unprecedented wealth inequality. Good luck, going to need it. The world reserve currency status is faltering, and so will the benefits it allowed US economy.
The economy has not been 'strong' since at least 2019.
CPI is a joke that just subs out everything when it gets more expensive. Oh food is only up 3%, let's ignore we were pricing beef and eggs and now we're subbing in chicken and tofu.
Inflation has been borderline runaway from 2019-2024. Just ask anyone who isn't rich.
That's the part where "unprecedented wealth inequality" comes in. By most metrics, 2024 was an excellent year and the US was far ahead other developed countries [0] in growth, labor market, consumer spending, net household wealth, and much more; the fundamentals were solid and no figures could point to a major economic downturn at that point, certainly not in a predictable manner. In 2025 the 90th percentile accounts for over half all consumer spending, the median household hasn't reaped the same benefits high-income, high-spending ones have. There is no indication this will change, and may get worse with the current and proposed policies.
If there is a deficit at all. Looking at the monetary flows it seems most of the deficit outflows where just flowing back into the US through the stock market.
The US economy was not strong in 2024. Cost of living was literally the most important election issue, and it is what decided the election undoubtedly.
It's partially because elites said 'the economy is great! look at my stocks!' while consumer goods had increased in price by 100% or more in only 4 years.
My dumb ass invested money in usa stocks when trump got elected because trump is pro business, right ? Should have invested in Asia, today china is the usa from 40 year ago.
China would be very risky. Trump in his previous term declared a trade war with china, and there is every reason to think he would again. China is also make geopolitical moves that give a significant chance of war in SE asia. I wouldn't invest there.
Now investing in Brazil or something might make sense.
Side concern: how impactful must the tarrifs be to make a noticable dent in global trend, and a noticable dent on climate change ?
(I mean, it would not be noticed by the USA anymore, since they're not into that whole "science" stuff, but I heard that Europeans have learned how to make a couple satellites on the side.)
The way I see it, it is more like a very-high initial negotiation position. From here on, each country will be dealt with individually. You accept our terms and get 5% discount on tariff ! Every country has a set of red lines. Fewer the red lines better they will be placed in one-to-one "trade agreements".
EDIT: Someone from white-house explicitly declined tariff to be a negotiation. Next few days will be interesting.
Maybe if the US would clean up their production to what people actually want to buy it would help.
EU does not just randomly target US products. No EU company would be allowed to sell food with the same processes (GMO, prohibited additives, medication traces, ...)
The US is just running into these restrictions more than others because of their (lack of) health and safety standards being at odds with other markets.
So, if the tarrifs lead to the world actually being able to buy something produced in the US with the dollars they were forced to accept, something real besides war equipment and (stale) IP bits, the problem would sort itself.
At least the EU has discovered 'sovereignty', after ignoring it to the hilt for the last 55 years. Ringing up the concept even a year ago was at best met with a shrug and more often with a 'conspiracy theory' label. Sadly I don't even think they mean it, but I would be pleasantly surprised.
Am I wrong to intuit that tariffs against everyone is less bad than tariffs against a few, because now the rest of the world has even more potentially willing replacement trade partners?
Trump really thinks America is in the 1950's. He thinks people want to work at factories doing manual labor. He doesn't understand that we DON'T want to work at factories. Americans like our plush corporate office jobs building intellectual property. We aren't oxen doing physical labor.
And we designed it that way. We pay thousands of dollars to each citizen in our public schools to teach them calculus, literature, world history, and science, so that they DON'T work at factories doing manual labor like we were oxen. We're supposed to be doing more valuable jobs in intellectual property and services.
It's going to be hard lesson to be learned by Trump and his working class supporters when the inflation hits them because our economy doesn't have any workers that want to work at factories, but it'll have to be a lesson they learn the hard way.
The correct economy is to let people do labor they're best at. If a foreigner can make a shirt cheaper than an American can, LET THEM. Our economy is already taken by the people that design the shirts.
Well, the unfortunate beauty of touching the incredibly hot stove of Tariffs is that the pain is immediate and obvious. So assuming that these tariffs go through as is, we'll immediately launch into one of the worst recessions we've seen with price increases unlike anything Americans are used to.
Yes. They - or other poor countries - are. And it's their responsibility to grow their citizenry in a neoliberal world. Economics doesn't care about liberal concern tools.
China eliminated poverty through neoliberalism. The rest of the world can, too. This is the benefit of neoliberalism: it lifts the world out of poverty through free trade and self-selected efficiency.
I agree with this. People seem to forget that factories and other manual labor positions were hard to fill. No one wanted to do them anymore in America. I don’t remember the timing, but there were articles about the whole situation. Well, those jobs went to other countries.
Bush Jr. was all about outsourcing to India and other countries. The India population were thrilled to take office gigs for Microsoft and Google and any other tech company.
The whole “put me to work” in middle-America doesn’t exist anymore. They don’t want to do that type of work.
I do think a missed opportunity is not increasing defense manufacturing in the US. That could mean a lot of jobs and skill-based jobs. NASA is another failed opportunity where it could be a huge skill and labor opportunity for America. I remember the thousands of workers on the shuttle program being devastated. I’m not saying we need another shuttle program, but the next evolution of NASA, aerospace, and defense would be great for jobs and America.
We have no one left thinking about the long-term big picture for America - and we now have a president trying to destroy America. Any current politicians are focused on just staying in power, more so than they ever have.
I think Bill Clinton was the last president to focus on America.
Even Obama failed to deliver to the American people. He was too focused on drone strikes.
> Even Obama failed to deliver to the American people. He was too focused on drone strikes.
I agree how Obama continued Bush's "war on terror" was a disappointment, but to state that as the reason for his relatively limited accomplishments is profoundly unserious. The Mitch McConnell's strategy was to do anything Obama did for no other reason than to make him look bad, because McConnell realised that Obama had the potential to be the most consequential president since FDR, with broad public support.
They used every trick in the book to hold up votes, to not schedule votes, voting against popular policy they themselves supported just a few years ago out of principle, etc.
I don't know how anyone could have forgotten this; the Republican party was not serious good faith participant in the democratic process long before Trump came along.
Looking forward to the retaliatory tariffs, which seems to be only language this administration understands.
I guess it will eventually be the year of FOSS software, I am only waiting for the administration going back to export restrictions in software as well.
I guess we Europeans have to get our stuff from elsewhere than a nation hostile to the world with an insane unpredictable leader. China may also be authoritarian, but at least they are stable.
The coolest thing to read are american takes that are like "hey this might be benefiting us for that obscure reason", totally ignoring the fact that you betrayed your allies. Land of fhe free my ass. The only ideology the US has is nihilistic greed paired with hyperindividualsm and transactionalism to the point where Americans think if someone else is getting a thing you are hurting.
If the US was a kid it wouldn't invite others over because it wants to eat the birthday cake alone. And then it shits on all the cakes at the bakery because it wants to be the only kid eating cakes. If that is the American idea of how to lead a great life the rest of the world is better of without it.
> totally ignoring the fact that you betrayed your allies
The US is following the example of its mentor, the UK. Perfidious Albion allied with the Germans and Russians to fight the French (Napoleonic Wars), then allied with the French and Russians to fight the Germans (WW1 & WW2), then allied with the French and Germans to counter the Russians (Cold War). Great powers don't have permanent friends, nor do they have permanent enemies, they only have permanent interests. Europeans were simply naive[0], thinking they were the equals of the world's hyperpower for some reason, just because our post-WW2 dealings were executed with substantially more carrot than stick. It's just normalcy bias. Somehow Europe didn't think they would ever end up like the South Vietnamese, the Hmong, the Kurds (against Saddam, in 1991[1]), the Afghans, the Kurds again (against the Turks[2]), and now the Ukrainians. Some argue there is more than a bit of latent racism involved, not expecting the White People Countries to be abused by the Empire the same way Brown People Countries are.[3]
> If the US was a kid it wouldn't invite others over because it wants to eat the birthday cake alone.
This is why I often state that Woodrow Wilson is the worst President in American history. Besides shackling us with both the Federal Reserve Banking System and Federal Income Tax, he dragged us into Europe's internecine bloodshed and normalized that interventionism despite Americans largely being comfortable with sticking to our own hemisphere. In 1913, the US already had the world's largest GDP, with a GDP per capita roughly equal to Imperial Germany and about 75% of the UK's (assuming Copilot isn't lying to me on this data). Imports were only 4% of GDP compared to 15% in 2023. I think the wealthy elite who are siding with Trump are charting a plan to return the US to the same kind of domestically-focused economy, but we don't have the sort of natural resources nor human capital to ensure a decent quality of life on a short timeframe (or perhaps even a longer one) given the "shock treatment" that they are implementing.
> I think the wealthy elite who are siding with Trump are charting a plan to return the US to the same kind of domestically-focused economy
You're delusional, if you think there is any kind of plan going on here. Nobody knew any plan beyond "tariffs" and ideas about invasions coming out of thin air. The tariff numbers are a complete joke.
No, there is no grand scheme, hidden behind an act of absolute incompetence. It's just a short-term money/power grab for the already rich. An attempt to turn the world's "hyperpower" as you put it, into a second-world oligarchy. This may end up in total disaster, that is, a thirld-world oligarchy, if you look at China. But it's hard to actually look at China from the West.
As if the things the US produces aren't predominantly made in China already. Cutting out the middleman can't hurt, especially if the middleman behaves like a mob boss.
The admin's think is that any negative trade balance is 'exploiting' the US. Logically, the opposite would mean US is exploiting others. So the only 'proper' balance is zero, which requires managed trade. An obvious impossibility in this age. There are ways to rebalance, they require time and patience and thought (the latter seems most lacking).
Trump is going for a 1-2 punch. First tariffs and then tax cuts to soften the blow of price increases. It also puts republicans in a choke hold to force the tax cut legislation through, because the fallout of tariffs with no tax cuts would be a death knell for the party.
Maybe in a sim city game this would balance out, but it's a tall order for a real world scenario. Prepare for a bumpy road ahead.
> It also puts republicans in a choke hold to force the tax cut legislation through, because the fallout of tariffs with no tax cuts would be a death knell for the party.
I mean, they could vote down the "emergency" Trump is using in order to obtain the authority to enact these tariffs instead, and that would be so much less work. But of course they won't go against their Dear Leader.
omg do you think elon started playing simcity recently, trying out all these ridiculous things, and now he's advising donald to do same in the real world, because he's convinced it'll work based on the simcity experience?
It’s all a grift for the wealthy anyway. He doesn’t care about the hurting 50k a year worker. Low income MAGA voters are just fodder for Trump to enrich himself and the wealthy around him.
US says there was an imbalance in trade, and that is true only if we look at goods. If we look at services, I think the picture changes.
What if the EU and rest of the world starts adding taxes to financial and IT services provided by the US? What if Amazon cloud and Netflix start costing 20% more?
And let's not forget US is printing dollars which are being used for worldwide trade and the rest of the world subsidies their inflation and their economy through that.
Let's not forget US exported the 2008 crysis and most of the world payed for that.
I don't think US will like if the rest of the world stops using US dollars, stops using US financial services and stops investing in US economy by buying shares, bonds, securities.
What will happen is the same as when my govt. added GST (sales tax) on all imports with no de minimus exception [1], the overseas retailers will agree to add it on at checkout so their packages will sail through customs.
From a practical perspective I can’t see any other way.
Closing the “GST loophole” as they called it didn’t help New Zealand retailers, but did increase tax revenue and raise prices for consumers.
[1] There is an exception if the retailer does less than a certain dollar figure of exports in total to New Zealand.
I wonder how long it takes until this trade war moves to the digital stage. It wouldn't be surprising to see that software license fees start increasing if this tit-for-tat continues for much longer
I'm European. While it's pretty childish to paint the US and the EU as two human being with a "relationship" it's of course pretty jarring to see a country that has for my entire life been the undisputed cultural hegemony simply check out of the world stage and suddenly treat everyone on "their" side (culturally, politically and economically) like an enemy, or at the very least an abuser.
I'm not an economist, but I don't think you have to be one to realize that kicking the entire global economy right between the legs will lead to a recession -- just look at the supply chain issues that echoed for years after Covid, and the massive "quantitative easing" that had to be done to avoid a recession.
The abandonment of trade partnerships I could live with, I'll make it through a recession and every country is free to elect their own politicians and make their own fiscal policies, dumb as they may be; I don't get my "feelings hurt" by Americans wanting to bring back manufacturing jobs -- although I have issues understanding the reasoning.
What worries, and actually saddens me, is the complete doing away with of values, that I do think have existed in the past. The US has never been a beacon of exemplary behavior, and I understand that "nations have no friends, only interests" -- one needs to look no further than the US treatment of the Kurds for an example of this -- but it's unbelievable to me how so many Americans can not see the American self-interest in making Russia pay for what they've done in Ukraine.
Russia has been the main antagonist of the US for the entire post-ww2 era. It's a totalitarian state and an obvious enemy to the US. Invading Ukraine was a massive mistake, and all the richest country in the world had to do to basically risk-free damage their biggest antagonist, was to keep pressing a dollar-button together with the EU. No boots on the ground, no Iraq- or Afghanistan scale disaster, just military and economic support for a country that could end up being an extremely close ally. There is literally zero chance Russia could win a war of attrition with this dynamic. Instead, it's like the Soviet union in the 70s would have given away Cuba for free and instead threatened to invade North Korea.
In the end, I think what makes me uncomfortable is that I truly do not understand what it is that the average American (or voter) wants, because the actions of the US on the international stage makes no sense to me, yet so many Americans seem to cheer it on.
Quality of life has been going down for most Americans over the past few decades. It's harder to buy a house, raise a family, etc. on a modest income. Increasing cost of goods has outpaced wage increases but there are probably other factors at play too.
Americans lived in a world where all you needed was a decent job and you could have a good life - defined by what I said above. That's not the case anymore and they're upset about it - they're looking for someone or something to blame.
The republican party chose to blame immigrants and the democrats chose to blame lack of DEI. This fractured the citizens into two camps who can seemingly find no middle ground anymore.
Meanwhile, the wealth gap continues to increase and the middle class is shrinking. But neither political party can run on a platform of reducing spending AND higher taxes on wealth. They'd lose their funding sources - so they're stuck with immigrants and DEI.
Meanwhile, Trump sees an opportunity to extract wealth from the working class by reducing government spending and diverting those savings to corporations and the wealthy. Moderate Americans feel a bit powerless given how quickly our long standing legal and government structures seem to be deteriorating.
I was told the average voter wanted cheaper goods (especially eggs). One candidate lied and said you'd get that day 1 (like someone running for class president who promises free ice cream at recess every day), the other was realistic and used coherent words to describe their policy.
My take on this is the right wing media re-defined the word “woke” to create an enemy, and take the propaganda to full blast to convince the average idiot that “woke” is the ultimate threat to society, and nothing else matters. Add to that the vicious religious practices and the false prophets who financially benefits from the brainwashed, to make it harder to question the new paradigm.
That’s what the average american/voter was told to “want”: destroying woke by all means. What “woke” actually means, and the fact the definition is so vague (meaningless?) is the true weapon.
#1 Per our Constitution, USA has minoritarian rule baked in.
There's many anti-democratic choke points: Electoral College for POTUS, Supreme Court, US Senate, gerrymandering effect on US House, long history of systemic disenfranchisement, etc. aka Vetocracy per Francis Fukuyama.
#2 ~6m Biden voters stayed home in 2024.
There's a sizeable cohort of infrequent voters and a huge cohort of non-voters who self disenfranchise. Due to nihilism (voting doesn't matter), both parties are the same, low motivation, whatever.
#3 Like most everywhere else, our information ecology is broken, fragmented.
The audience for "traditional" media's news is tiny, compared to social media. The Dems focus on "traditional" whereas GOP have successfully embraced "social". So for all the billions spent every presidential election (political advertising), most voters don't ever hear from Democrats.
Therefore, US voters are mostly unable to correlate policy positions with politic parties. So mass politics really comes down to marketing and vibes.
#4 Addressing these "legitamacy" issues (government by consent of the governed) is wicked hard when one of our two political parties has been utterly opposed to democracy and effective governance for decades.
Is there going to be a hearing into the stock transactions of any the cabinet related to this news? Seems to me like some people could make some significant money on information like this.
Trump must be a Russian asset. There can be no other explanation. To weaken NATO, remove U.S. dominance by withdrawing forces from bases worldwide, abandon maritime security, weaken the dollar, and implement hostile economic policies that maintain the dollar as the world’s currency, it seems that the final step of “America First” is to make the dollar the sole currency used only in the United States.
So now that the impacted countries will respond with tariffs, are there any chance they might include tariffs on digital services like AWS and Azure, or will they only target physical goods that cross the border?
I don't know how these things usually work in the best cases, and it seems like we're living in exceptionally stupid ones right now.
Foreign countries will probably start taxing Google/Facebook ads if not outright banning US tech companies from operating. When that happens, watch the whitehouse roll back everything
I don't know how I feel about this overall. But I do want to recount something from my childhood.
I'm American. I grew up in the rural Midwest. The truth is that much of this country is a depressing shell of its former self. The town I grew up in is all but dead -- about 12,000 people still live there, though. The nearest big city, previously a hub of manufacturing innovation, has been on a steady decline for decades. Since the 70s, more and more powerful drugs have been flooding into the broad geographic region, decimating entire communities and creating generational cycles of poverty and addiction. It's an absolutely brutal combination that has totally killed almost all innovation and output in huge swathes of this country. Candidly, even if you brought back manufacturing to the area, the local population is so dependent on drugs that you'd struggle to even find workers today.
Today's drugs are so powerful that addicts would rather live in total poverty with drugs daily than have a high-paying job without drugs. Every small business owner in these regions knows this, but the true scope and severity of the problem can otherwise be hard to fully notice and appreciate. It's not possible to operate a small business in these regions without encountering the drug problem on a regular basis.
Do I think tariffs are going to fix this? Honestly, probably not, for the simple reason that Trump is old and won't be here much longer even if he tries to install himself as a dictator. The winning strategy for much of the world is to likely wait this out to some degree -- best case scenario for others is that this will just get reversed or significantly mitigated in 3.5 years, which is the blink of an eye on global timescales.
Nonetheless, my heart goes out to the incredible loss this country has experienced over the last few decades. It's truly heartbreaking and devastating that we've sold out so much of the country for short-term profits to such a degree that we can probably never break out of the cycle without severe pain and sacrifice.
I see the drug problem in my midwest city too, it's literally on my doorstep on occasion.
The country is also not struggling with high unemployment or stagnant wage growth.
Multiple things can be true at once. Tariffs are a solution to an imagined problem.
And fwiw - reshoring has been happening already, through congressional action (CHIPS, IRA), rather than presidential decree, and was doning so without wrecking the economy.
The reshoring efforts you're talking about will not come remotely close to restoring what was lost and what could have been. We're so far behind outside of software and finance it's almost unfathomable. To grasp the full cost that has been paid, you need to imagine a scenario like all of NYC, Seattle, Austin, Denver, Silicon Valley, San Francisco, etc., just don't exist at all. That kind of scale is what we've lost out on -- not in software, of course, but in most other industries.
Fly-over country should have been the site of the greatest industrial and manufacturing innovation the world has ever seen. We threw away one of the greatest opportunities in history to juice stocks for a couple decades.
I think that’s part of what I find so frustrating about this. There’s an alternate history where we’d have a national effort to invest in domestic industry, especially outside of a few areas which are doing well, but that just wouldn’t look anything like this.
A good example I saw was living in New Haven years back, where they were struggling to build businesses around the Yale community. There’s a ton of unused industrial area, especially as you go east, but they didn’t have the right combination of funding environment, local workforce, and infrastructure so in practice everyone went to NYC or Boston, or SF, and the state of Connecticut kept losing out.
Fixing that would be huge, but tariffs won’t do it unless you also invest in those other things and also something like antitrust protection so the key decisions aren’t made by a handful of gigantic companies.
The lack of longevity to these tariffs is part of the problem with them. Why would anyone invest in a factory when everyone knows these tariffs are likely going to be short lived, making any capex wasted. Capital is going to try to wait this out. It's short term pain and long term pain.
This theme of "small town USA" is dying everywhere, even here in Upstate New York. Drugs and lack of opportunity has a chokehold on everywhere in America.
So many people around the world have been hurt by the terrorist US government. This lessening legitimacy will hopefully provide them some sort of justice.
And as tech guys we always wonder if the world is a better place with AI Agents taking over. My guess is that even gpt-3 would have come up with a better solution than this.
I'm wondering how this protectionist trend will impact overseas hires. Will US companies continue to hire talent remotely outside of their borders? Will they be incentivized to only hire in the US?
More businesses will be incentivised to locate in the US, to avoid tariffs, but they'll still be incentivised to hire from outside the US due to cheaper labour (there's no tariff on wages).
Trump is very popular among low-information citizens. If you corralled more of them into voting, he would have won by more. Call me an elitist, but at this point we'd be much better off if ignorant people stopped voting.
The only people who matter in an election are the voters so I'm always perplexed so many feel comfortable blaming non voters for the problems voters made.
This non voter shaming is quickly eroded as soon as you ask voters if non voting is an issue. They will report it that is is a huge problem. Then ask what candidates or parties support mandatory voting and you'll get crickets.
That's because it has nothing do with tackling the perceived problem of non voters and all to do with virtue signalling that you vote.
The US Administration is dead. America is occupied by creatures that simply want to destroy the current world order, sow chaos, and profit from that by means of power and utter hate and disrespect for ordinary people, who live from paycheck to paycheck. Keep advancing AI, so they wouldn't need to employ humans to kill other humans.
White collar jobs will be destroyed by AI/AGI. But the US workforce consists of a large portion of white collar workers.
To replace the coming destruction of white collar jobs, manufacturing and industry jobs must be brought back, along with new resource collection initiatives (e.g. mining). They will be needed anyhow to build robots, drones, and other machines to compete with China and India, technologically and militarily.
Globalization will be effectively dead, remaining trust in the petrodollar will be destroyed, therefore so will Pax Americana. Expect more wars.
There have been rapid recent advances in robotics, both classical industrial robotics (advanced by rapid iteration with digital twins and simulation environments like Omniverse), and humanoid robotics (pushed forwards by Boston Dynamics, Figure and a lot of other recent entrants). So if we really do achieve AGI that would take over white collar jobs, manufacturing jobs will likely too be taken over very soon thereafter.
According to the BBC reporting, it appears that for each country he's charging 50% of the tariff they place on US goods coming into those countries, or a baseline of 10% for some countries like the UK.
Let's imagine they do come back. Let's say you have a toaster factory in Vietnam, which allows the US company to produce low-cost toasters for about $100. The factory workers earn $1 per hour. Now, due to the tariffs, a toaster will cost $146. And you say, "Okay, they just need to move their factory to the US and then the problem will be solved - no more tariffs. " Fine. Do you really think a US worker will work for $1 per hour? Even if you automate 80% of the factory, you still won't offset the 46% tariff. You will never get a toaster priced at $100. More likely, it will be $300.
This is not a game. Others will not take it as a game, and will retaliate. You can only play the bully for so long before others start treating you as a bully, and stop backing down, even after you have backed down -- as they never know when you are bluffing.
Doesn’t matter if they’re gone in 6 months. The damage is done, businesses will see the United States as too unstable and unreliable to plan long term goals in. We will pay the penalty for decades. Even if you get a new administration, that administration can be gone in another 4 years.
All actions by this administration point to Trump working in cahoots with Putin, which we were told was "a hoax".
The White House dressing down of Zelensky, and this week Russias investment chief in the US, and just scads of obvious daily reminders that Trump has no bad words for his pal.
Odd.
Tariffs on our friends and allies while he speaks of dropping sanctions on Russia and meanwhile levies no tariffs upon goods from Russia, zero.
Odd.
There are secondary tariffs on those countries who buy from Russia and Venezuela or Iran. i.e. if you buy oil from Venezuela, then your export of clothing will invite 25% tarrifs.
Are the two mutually exclusive? Because using the same formula they apply to other countries, Russia would have tariffs as high as 84%. (I confess to using an LLM to get me the data.)
Autarky is just bad economic policy because comparative advantage is too powerful. Nobody benefits from this. The US loses and everyone else loses. The US loses the most however, both economically and in soft power.
This isn't even the China model. Slapping tariffs on raw inputs guarantees that US industry cannot compete internationally. This is more like the North Korean model.
While there are positives to targeted industrial policy, there are no positives to autarky.
> The US loses the most however, both economically and in soft power.
Yes. It loses most because 10-20% of world trade is for value added in the USA. The one exception is the USA of course, because their percentage is 100%. So USA is 100% effected, the rest of the world is 10-20% effected as they continue to happily trade with each other without tariffs.
I dunno about everywhere else, but in Australia the effects are already noticeable. Trade with the USA is dropping, and trade with Canada is growing.
Well it's positive for various countries that benefit from an end to US dominance over the world. :p
So for the US itself? The theory would be that the tariffs will increase US manufacturing sector. But the cold hard truth is that it isn't the 1830s anymore and last time tariffs were tried happened to line up exactly with the Great Depression.
Even an competent administration would have great difficulty making tariffs to restore manufacturing work in the US, if that is even at all possible. It fails because other countries just put the same tariffs back on the US.
So with the Trump's administration some kinda of serious economy meltdown is almost certainly the result.
Trump is saying the positives are the it will force companies to build stuff in the US, thus increasing our domestic manufacturing and increasing jobs. I don't see that happening in a significant way, but who knows?
But if that does happen, then the huge amount of revenue that Trump thinks is going to come to the government's coffers won't happen, and that revenue is meant to offset some of the tax breaks for the wealthy, so we're kinda screwed either way.
The Hawk-Dove game is a wise framework to consider. When both are Hawks, both get harmed. When one is a Hawk and the other a Dove, the Dove gets hurt, and the Hawk laughs. I hope both can be Doves, bringing tariffs to zero and making all great again.
These guys are untrustworthy liars. I assume there are thousands, possibly tens of thousands of carve outs for the tariffs, based on bribing the POTUS or approved affiliates.
Current tariffs for China are 45% because the original 25% tariffs from Trump I never went away and the 20% from Trump II are in addition. Source: have two containers en route from China at the moment, will be paying 45% on them.
I am not an economist but I see two things 1) usa has a huge debt, 2) this feels a lot like VAT applied on a federal level, without calling it VAT. Ok "VAT on imports". Why not.
Obviously this is being sold as a trading surplus BS, etc, but if you look at EU, the surplus is ridiculously low when you consider goods and services (something like 50B).
I don't think it's the worst idea ever, I just dislike the useless hatred that this guy is spreading around and all the idiots believing him. But hey if he hadn't done it, people would have said he is a socialist :)
There has been a lot of speculation about why this is being done, given that even a young child could understand that a grocery store is not taking advantage of you when you exchange your money for goods. Some say that it doesn't need an explanation, because the President has so much power that caprice and a little bad advice from a cabinet member is all it takes. That is not a complete picture, though, because power in the US is spread out enough that while only the President needs a reason to do something, many others must have a reason to allow it.
Here's one idea for a "why are his supporters allowing this," sort of explanation. In the US, educated professionals hold way more importance than the global average, due to the US's status as an exporter of services. They tend to vote for liberal (in the European sense) policies, whether Republican or Democrat.
If you wanted to destroy liberalism in the United States, you would have to drastically reduce the importance of higher education and professional labor. This can be done by placing very high taxes on the import of goods and base resources, so that young people who would have become engineers have to become miners, loggers and machinists instead. While I do not think this is true (blue-collar workers do not live up to the ultraright's "noble savage" sort of fantasy about their preferences and are actually just like anyone else... but if you're an elite you don't know that firsthand), it sounds plausible that enough of the people who are important for a season might believe it, and support it as a plan to remake American culture, not in their image, but in the image of a fantasy they share.
This works together with the strategic need to decouple from trade with a country before invading them, dramatically increasing the number of opportunities for self-aggrandizement through the threatening of war, high-stakes diplomacy, negotiations over individual prices... which also offer some respite for elected officials who would otherwise take an unending beating in the news over consumer data.
Naive question of a foreigner: I see a lot of approval on the youtube comments to Trump's liberation day speech and over at twitter. Now the consensus on HN is diametrically opposed. My question: why do some people think that this is a good idea? Why is there such a huge rift in US society and how do you plan to bridge this gap?
This anecdotal, but I feel like YouTube applies a positive sentiment filter to its all of its comments. Somehow on most videos I watch never see anything critical at the top of the comment section.
One thing I don't understand. US is much bigger than most countries. Why would a country the size of Belgium (~12M people) needs to import as much as it export from the US in order not to have tariffs > 10%?
My understandings reading some comments.
1. Prices will increase
2. US will need to manufacture things and they will need a lots of workers. There will be shortage of workers because factory pays minimal wages.
3. Factories will have to offer higher amount of salary that will increase price
Ultimately prices increases for everything and working class will suffer more.
Don't forget that you first have to build the factories and somehow resuscitate the knowledge that died a few generations ago. A factory isn't just a big warehouse full of low skilled people, you need machines we don't have anymore, processes we lost, &c.
More likely that prices will go up and wages will stay the same.
Factories take a long time to build and businesses know that Trump is erratic and therefore have no idea how long these tariffs will be in place for. So opening a totally new and otherwise unneeded factory is a big risk. (Some companies have made recent announcements about opening factories in the US but largely these factories were planned to meet existing marker needs, just not yet decided where they would be.)
The price of a product will only go down when the majority of demand can be met by tariff free means. Until then a US company will sell a product at the same price as the imported, tariffed product because that's what they do. Same happened during the recent inflationary spike. Businesses put prices up more than their costs went up as they had an excuse.
Large businesses hate putting up wages and the level of desperation in the US is such that there is a large pool of people to fill low paying factory jobs. The post-pandemic wage increases were noticeable for the opposition to them and that was a very short 12-18 month spike, with wage growth now back to normal.
Yes, either way, the working class, indeed the median American, suffer.
It's a scheme for the top-top to once again, not pay for anything because they pass the cost along. The W2 class gets to redistribute amongst themselves.
Nasdaq composite is down 5.6% at the time of writing this comment.
I honestly think Trump is doing this just to enrich himself and his friends. Stock market crashes always end up transfering wealth from the poor to the rich.
The attempts to force a mineral deal on to Ukraine, and also the attempts to get hold of Greenland, start to make sense if you assume that the Trump administration is preparing for a permanent global trade war.
Higher costs for mineral imports would hurt the US economy the most.
Number one rule of combat is that you need a very good homegrown industrial base. In order to be great country it needs to be combat-ready. If you apply that lens, what Trump is doing will start making sense. He is trying to revert globalisation and free trade in order to make the USA manufacturing superpower again. Not sure whether this will be successful or not, as China already has an order of magnitude advantage in manufacturing.
An interesting observation is that the tariffs are half of what the other country is charging. Does that mean this was a common strategy across the board? Or was strategic importance of goods considered?
>the tariffs are half of what the other country is charging
And that figure is questionable. Read "including currency manipulation and trade barriers". This is the same presidency that believes the "EU was made to screw USA over", and accused them, Japan and practically every other major economy of manipulating their own currency to harm US. It's improbable that rate has any basis in reality, but surely a detailed breakdown of how they came to that number will be published.. not.
Meanwhile the options level upgrade I asked e*trade for at 8am (before the 4pm announcement) so I can buy puts is still pending at 8am the following day.
TIL one should configure brokerage accounts well in advance of events.
He has talked about VAT, but in terms of how they ended up with those numbers, people noticed that the claimed rates don't have anything to do with the actual tariff/VAT/etc. rates, they're just based on the relative size of the US trade deficit with each country.
The gloss will be "this way captures all the various unfair things they're doing to us that are the cause of all these trade deficits" but that's just, well, gloss.
Maybe that applying VAT to imports is done asymmetrically? If, for example, I'm a US citizen importing a european widget, will federal and state sales tax be applied on import?
If they're not, then this might be why they're considered thus.
Not really, because the point of tariffs is that they apply only to imported goods, creating a preference for local ones. If VAT is applied equally to imported and local goods it's not a tariff, it's a tax that consumers pay in any case.
Uhh... Whether you're a citizen isn't a factor. There's no federal sales tax, although these tariffs act as an import tax that will increase the wholesale costs. And state sales taxes don't apply to imports or wholesale transactions, they are retail tax (or also often a use tax if a sales tax wasn't previously imposed).
VAT is not only a retail sales tax, it'll apply anytime the widget is somehow modified (value is added).
No, VAT is actually paid by companies (and also consumers of course), it's one of the subtle differences between VAT and sales tax.
The "thought experiment" you can make is the case of something not ending up being sold. In a VAT regime the manufacturer will have already paid the VAT on the inputs but since the customer hasn't paid the VAT on the finished product the manufacturer won't get their money back on the VAT they already paid (there might be other tax rebates or write offs, but that's a different matter)
In a sales tax regime the tax is only paid by the final consumer so if the manufacturer doesn't sell the product they are not out for any additional tax
Still doesn't change that neither of those are a tariff by any definition
My company pays VAT surplus to government every quarter since the VAT we collect on our products and services is higher then the VAT we pay for our purchases. How are we not paying it?
We used to not pay anything for stuff, for instance I bought items that were dropped shipped from China under a certain value but that has ended. https://www.wsj.com/livecoverage/trump-tariffs-trade-war-sto...
Sales taxes are on a state by state basis and online companies are required to collect it from the buyer and forward/report it to the state. Local purchases all have sales tax paid to state governments, some to city in urban areas. Some food items are exempt. A state can choose to not have a sales tax but most do IIRC. There is no federal sales tax. Until these tariffs which are essentially taxes.
Walton family, owners of Walmart, run the company by exploiting the labor force and social safety nets like welfare. Walmart is the largest company with the most employees on some sort of welfare. Tax payers are propping up their stock. This allows them to retain more of the profits versus sharing them and removing their employees from the welfare system. None of their listed actions have to do anything with globalization to retain their wealth.
Taxing the wealth and redistributing helps. Saw this in the 1950-1960s with building of new infrastructure to replace the aging or expand the supply to offset the demand. Using the money to pay for new training so lost jobs can be replaced where jobs are needed helps too. Even the simple act of ending starvation in children increases their intellect for the next generation and helps support the future. This method will never be perfect. These are band-aid solutions that have actual results.
Reality is that the inequality is a social problem masquerading as an economic problem. Society has moved to from respecting empathy and humanity to respecting greed and power. People mind set is anchored to, “That person is quite wealthy so they should be smart and some god must love them for it.” Reality is that person exploited a labor force to maximize their wealth. They are not more intelligent nor does some god like them better. Look at how many rich people fell for Elizabeth Holmes’s blood testing scam while a person that actually studies blood understands parts per millions in looking for test markers. A vial of blood or more is needed versus a drop.
Want to fix the system? Start looking at the wealthy with disgust and damnation. Demonize them for being the driving force in economic inequality. Move back to honoring and respecting empathy and humanity. Real intelligent people have empty. It lets them be placed in the shoes of others when they will never can experience it themselves.
I would also caption the wealth gab in the USA as modern day segregation. The world happiness index shows that equalizing the rich and poor creates a better sociality. Respecting the wealth and demonizing the poor is the complete inverse of a better society and maximizes soar.
PS. Why do people think bulling trade partners will be beneficial? Say you are store owner or product producer and you keep trying to bully me to by your products. I will not and go the competition, even with higher costs or deem the product or service not worth it. I already started boycotting USA bourbon manufacturers with their arrogant and bully statements during the Tariff Wars.
Do good, demonize extreme wealth. Irony is so many GOOD Christians even ignore Jesus’s statement on this matter with pretending Matthew 19:24 doesn’t exist.
The US particularly has an extremely large population of men (10s of millions) who don't work. Who knows if they'd be doing "low skill" manufacturing if somebody was around to hire them. But if you actually wanted this to work you would have started by subsidizing american raw materials.
You have to go back more years to see the trendline. BLS has a different chart showing the male participation rate dropping while female participation rate has remained fairly constant over the past decade.[1]
By my rough estimation that's ~7M men unaccounted for by simply not participating in the 'traditional' labour force. Keep in mind that it could also 'simply' be that a lot of those unaccounted men are working but in ways that the government(s) at different levels are unable to reliably track.
There have been some articles and attention picking up on this trend over the past few years.[2]
I believe the miscommunication here is that "total people not working" and "total unemployment" represent different subsets of the population. That is to say, there are people who are not working who aren't looking to work and aren't categorized as part of unemployment.
Civilization has always operated on the idea that men must work for it to function properly. When less people willingly work it can be detrimental for future welfare.
The way that unemployment is interpreted by the public now is not very accurate. The gig economy has grown massively since 2020, which counts towards labor statistics, but its arguable to say if they should. The number of small or local owned businesses have grown substantially since 2020 - but is that because of a surplus of opportunity or people looking for ways to make additional money? The quality of the labor matters.
Tesla in Berlin employs 12,000 workers and can produce 5000 cars a week.
The US will need a lot of factories to employ 10s of millions of workers.I also imagine new factories will employ less workers due to increased automation.
There are around 200m working age americans. So 100m working age american men. You are claiming that 20% of working age american men (at least) are playing video games all day (I assume that being in school or raising children or whatever is acceptable activity)? Where are you getting these numbers?
I am not a specialist; but isn't that the most "green" policy ever ? I mean:
- Tariffs will increase the price of virtually everything -> By law of supply and demand; global trade and production will decrease, leading to less CO2 production
- This effect will be stronger for stuff coming from far away (little for Canda / Mexico; more for EU; huge for China). So companies will have a tendency to rely on local producer (even at a higher price). This again will lower transoceanic shipping. Other countries will probably retaliate so this effect will go both for inbound and outbound shipping. Again; less CO2 production
- More money for the government. There more stuff you buy, the more tariffs you pay, so rich pay more than poors. Which again is what green parties are looking for.
I might be very wrong about this; I am not a Trump supporter in any way - and to be honest I ma not a fan of green parties either - but my initial reaction is that if we look at the conclusion of the policies; the results are looking to align quite well. Of course the surrounding storytelling is extremely different; which puzzles me a bit.
If you're into green policies, then tariffs are aligned with what you'd probably want, at least on some level. Though it's more complicated and by no means a slam dunk. One could say that producing things locally in more places is less efficient (lower economies of scale, etc.) which might result in more overhead per item, which might outweigh the extra transportation, etc. General assumption is that an unconstrained free market arrangement encourages system optimizing itself. But then there's a question what is it optimizing itself for, and that's definitely not ecological impact.
A change like that in a global economy has tons of non-linear effects, many of which it need to play over time, etc. Some changes are more easy to predict confidently, many not so much. But barely anyone argues from first principles, and its typically just tribal screeching on both sides.
There's a lot of speculation that the Switch 2 would be atleast hundred dollars less without this nonsense. The Japan exclusive version of the Switch 2 seems to support this, with it's restrictions that insulate Japan, support the notion that English actually isn't needed in Japan (nor any other languages), by releasing a version of the Switch 2 that is far cheaper but only allows you to play games in Japanese.
I think it is a mistake to approach this policy as if it is about other states. One sign that it is not is that it seems to be based on a crude, almost simplistic calculation, something like trade deficit divided by exports, with a ten percent blanket tariff on states with trade surplus or no trade.
Applying the same policy against everyone indicates it's not about them, it's about the usian 'us'. Another way to look at it might be as sanctions, but instead of applying them on another state, applying them at home. And sanctions are usually a means to influence oligarchs and industrialists in a state, which probably means this is a policy directed at those groups in the US.
Why would you want to hurt US industrialists and oligarchs? Because then you can ease their pain in exchange for their loyalty. This is the logic behind castles in Europe. It's a place where the king decides the taxes, taxing illoyal barons or whatever more than loyal ones, and if they militantly disagree, shut the door and have them expend their resources on a hopefully futile siege and then be weakened anyway. Similar policy was common in colonial settings too, if the colony was uppity, tax them harshly.
The world is changing fast anyway, the liberalist hegemony wasn't going to extend far into the future for many reasons, like climate change and the general rise of autocracy worldwide. Having guarantees of loyalty and stability from the state apparatus at home when the world order inevitably crumbles while burning some bridges that would likely fall apart anyway, instead of wasting resources keeping up a charade defending some 'status quo', has a kind of logic too it.
The media has been perpetuating that that tariffs are borne by consumers. This is partially the case, but not entirely: US dairy in Canada is not 3 x the price of Canadian dairy despite the 200% + tariff.
Admittedly without knowing much about our dairy industry and supply management, isn't this flawed logic? If a 200% import tariff means Canadian dairy can also be sold at a higher cost, then it's still the consumers bearing the cost--they are being denied access to cheaper dairy altogether.
It really also depends on how a product is imported. Is dairy imported into Canada as a ready to sell retail product, or as bulk 'raw material' for local companies to turn into consumer products. In the latter case the tariff is less significant to the final price since most of the price the end user sees are local markups rather than the cost of the raw ingredient.
> The media has been perpetuating that that tariffs are borne by consumers
They’ve not done that enough. The title is literally “34% tarriffs on China”. Heh, not __on__ China but 34% import tax on products which come indirectly or directly from China, imported by $country residents or companies.
Since the Nixon admin ended the dollar standard the world has basically been pumping the US economy in so many ways, enabling US imperialism.
1)Dollar standard guarantees countries will absorb US budget costs, since they all have to have dollars they have to accept their money devaluing as the US creates artificial inflation.
2)People buying the US stock market due to no fears of free trade, now why would a Chinese or citizens of certain other countries EVER risk buying US stocks? the trade has become so flimsy if even possible anymore, this is a cold war 2.0 at full scale, 54% tariffs on China are not a joke, that almost kills trade entirely, it wouldn't surprise me if China cut relations at some point now or if it keeps getting worse.
The real reason for this tariffs is a very Thucydides trap moment, ALL these tariffs were primarily targeted to China and countries that could potentially be a "threat" again if China were to "fall" economically, example: Japan, SK, India.
Oligarchs are for it because they want to eventually privatize the stock market and go back into a weird pseudo aristocracy, where they control the most powerful corporations in the world, just like back in the 1800s. (notice how Elon keeps SpaceX, Neuralink and others private?) Since the 90s unlike the rest of the world the stock market has halved in size in the US and the trend will keep going until only a couple individuals control the US economy.
This whole plan however has a flaw, it assume China won't eventually pass the US technology wise, but in the event that it happens, what then? will you not trade with China then? if that happens then you become basically North Korea where you are isolated from the latest technology, as the gap grows you get further and further behind in your standard of living. If that scenario happens it would be catastrophic for the US.
The blue collar workers are fine with enduring a bit more pain for a few months or even years as this pans out. Specifically if the investment classes (who will be most harmed) suffer more. Long term goals are other countries lower their tariffs with the US, more US manufacturing, a temporarily devalued US dollar to more easily pay down the national debt, and a renegotiation of the terms by which the US provides military protection to other nations. People who already had little if anything to lose not being able to buy cheap foreign goods they weren't going to purchase anyways for a chance to see if this works out, while seeing the tech bros, academics, and investment bankers squirm, rage, and seethe? Though I'll get down voted into oblivion, the unmitigated despair and outrage on display in these comments just make my smile that much wider.
Americans would want to have high value-added activities done in the USA, and low value-added activities done abroad. Tariffs are being marketed as trying to achieve that goal.
The five strategic areas/sectors identified as a priority for repatriating activity into the USA are pharmaceuticals, forestry, steel/aluminum, automobiles, and semiconductors.
How is forestry a high value added activity? Are we including furniture manufacturing, or maybe residential housing construction in that sector?
Are we including all of the byproducts of steel and aluminum in the steel/aluminum strategic area? I assume it's not just the raw materials?
Is software included as part of the semiconductor sector?
The bull case for the USA is 1. Reshoring actually happens 2. Other countries actually drop their tariffs/trade barriers 3. A new golden age of Pax Americana/free trade ensues, with Americans exporting their high value manufactured goods worldwide
The bear case for the USA is 1. Republicans get hammered in the midterms 2. Entire world raises tariffs against the USA 3. American factories close en masse 4. USA dollar is devalued and reserve currency status is threatened
Historically, the pattern seems to be: 1. Acquire global empire 2. Promote free trade inside that empire, benefiting high-value added domestic activities and limiting high-value added activities in areas outside the core of the empire 3. Run out of money due to the costs of fighting wars to maintain the empire 4. Military power declines 5. Through one or more wars, another power takes over
Proponents of tariffs argue that Trump is trying to take us back from Step 3 - run out of money to Step 2 - promote free trade. In order to understand this thinking, it's important to understand that your empire's colonies aren't supposed to be allowed to promote their own industries and limit free trade by enacting duties on your own high value exports. To enforce free trade, you then fight wars, you can send gunboats (Opium Wars) or invade (Gulf War). But you can't invade and fight everyone, and rising powers protect their own industries through various measures as they build up.
But power is most powerful when it's not used. The threat of action is much more powerful than the actual action. That's why I'm more than surprised and not too happy that tariffs on a large scale have actually gone forward. Ideally, the threat of tariffs would be used to actually cause other countries to drop their tariffs, and free trade ensues. I'm not sure about historical examples of this working for getting other countries to drop their tariffs. You could certainly try suppress the growth of other countries, I'm not sure how well that works in a global marketplace scenario.
The flip side of that is that if you threaten for too long and never actually do anything you may lose some credibility. But I don't think anyone is arguing that the Americans are gaining credibility by enacting tariffs. It's a big world, and unless Americans have the power to influence their trading partners not to trade with others, then everyone can just trade with each other instead of trading with the Americans.
Matches the expectation analysts have had from December 2024 [0]
"In the baseline scenario, we assume that the US will raise its effective WATR against Chinese goods by a total of 20 percentage points over 2025-27. We expect the effective tariff rate on China to rise by 5-10 percentage points in 2025, owing to the imposition of tariffs related to fentanyl smuggling disputes. Mr Trump will further phase in tariffs from late 2025 with a wider range of excuses and policy tools, eventually bringing the effective WATR facing Chinese exports to about 30% by 2027."
For China maybe, I doubt any serious analysts were expecting this high of tariffs on most other countries, like Mexico, the UK, and Canada.
The methodology of counting non-price barriers on certain goods then applying it across the board on all goods as tariffs is bonkers.
Doubtlessly they aren’t including all the non-price tariffs the US imposes on other countries either.
I’m extremely skeptical the EU has effective tariff rates of 40% on all US goods, and furthermore skeptical that if so the US doesn’t have countervailing effective tariff rates at the same rate.
It is not a conspiracy anymore. Problem - Reaction - Solution.
Start a war in the middle of Europe and Gaza. Tariffs. Recession - Panic - Digital ID, Social scoring, CDBC, Digital dollar, AI governance, tech feudalism.
That's all folks. :)
It’s not like mom and pop stores are equipped to source things locally any better than Walmart. They would also be relying on the same imports from abroad, but would not have the bargaining power that Walmart has.
> aren't their employees on food stamps at some ridiculously high rate?
Welfare like food stamps is a subsidy /against/ Walmart, not for it. You are supporting the employees by paying for their food, which means they can negotiate for higher wages, which means Walmart pays them more.
An example of the other kind would be literal wage subsidies, which are sometimes paid so companies will hire mentally disabled people.
3.5) rescinded/paused [30-61) days. There will be some bluster, and then announcements with the large trading partners like Japan, South Korea, etc., that some new deals have been struck.
This is how a lot of people around the world live their lives. Dubai wisely provides this as a service to surrounding countries, to their great enrichment.
If you bring back goods worth more than $800 it has to be declared and a duty paid.
Judging from the changes (currently paused) to the de minimus shipping rules (also formerly $800) I’d expect the threshold to be lowered substantially. Possibly arbitrarily while I’m on a trip and have already bought the goods.
The risk being if detained by DHS for who knows how long is not worth saving $400 on a MacBook personally.
>25% on South Korea, 32% on Taiwan, 36% on Thailand, 46% on Vietnam
Harley Davidson moved some of its production to Thailand in 2018 to avoid a 31% tariff the EU had on US manufactured motorcycles, announced in 2024 it was moving more production there, and prior to today had plans to sell the Thailand produced bikes back into the US, as the US had a 0% tariff on bikes. Not surprisingly Thailand has a 60% tariff on imported motorcycles.
This tariff jumping is real. I guess we will see how it works out for the US.
This underscores the difficulty companies have trying to navigate through this. Even if Trump doesn't change his mind tomorrow, as he's liable to, he's only around for another four years and for most companies that's not enough time to justify a supply chain overhaul.
What's the actual strategy behind the current US administration slapping tariffs on everything? Feels like they're handing them out like Halloween candy. Is there a long game here, or is it just managed chaos and alienating trade partners for short term optics?
They claim that they are "reciprocal" tariffs, and their chart shows them at exactly half the tariffs they claim are imposed by the target or 10%, whichever is higher. But it is suspicious that the column on their infographic showing the foreign tariffs has fine print indicating that includes other non-tariff things that you can't easily calculated as a neat rate the way tariffs are. And, some people running the numbers have determined that the quoted foreign "tariff" amounts are consistently the US trade deficit in goods with the target country divided by that country's exports to the US, with a minimum of 10%.
So, despite being labelled "tariffs", the actual basis for calculating the "reciprocal tariffs" has nothing to do with tariffs.
A rebirth of mercantilism. Peter Navarro is a huge fan of it, and in his heterodox fever dreams, laments that most of the world abandoned it several centuries ago. In his mind, a net surplus of currency is every bit as important as having a strong military. People like Lighthizer have drunk the coloured sugar-water.
The TLDR is Miran sold to Trump US can Plaza Accord everyone, devalue USD to reindustrialize US, draw down US debt/commitments, keep exorbitant privelege... all by slapping tariffs (Trump's fav hammer) to scare countries into signing (converting) existing US commitments to "century bonds" in US favour while tying them to US orbit for foreseeable future. Is US strong enough to coerce others to sign on? IMO doesn't matter, this seems like plan specifically tailered to Trump preferences and ego, so as long as Trump thinks so Miran gets the job.
E: there is logic to the plan, logic that appeals to Trump -> US strength and monetary manipulation skills can force others to fall in line. And TBH countries have fallen in line in the past.
I'm on the side of free trade and dont think there is a single policy. The strongest arguments I can think of are:
1) raise tax revenue in a way that partially falls on foreign nationals
2) reduce trade deficits and foreign purchasing of treasuries.
3) Increase relative power if other economies are damaged more than the US. There are situations where zero and negative sum strategies are optimal, like war, where it is better to have a larger % of a smaller overall pie.
Trump is using century-old misinformation about tariffs to raise tax revenue to pay for tax cuts on the wealthy. In reality, it's an added tax on all spending that accelerates inflation.
Tariffs are theoretically supposed to encourage domestic production, but rely on the false premise that all raw and intermediate materials can be sourced domestically at a cost below the import price. That has generally proven to not work unless tariffs are in the hundreds of percent. But at that level, import taxes tend to poison entire sectors due to supply lag instead of drive domestic economies.
Category error to think there's a strategy. Trump doesn't even know what a tariff is. People try to project a strategy because it's probably too discomfiting to believe that the greatest superpower the world has ever known elected a complete nimrod king.
The cost to move these industries to the U.S. exceeds the cost of these tariffs. The market will pass the cost of what are import taxes to the American consumer, resulting in inflation.
True, the shareholders will take a pay cut too, because something less than 100% of American consumers will just suck it up without changing their behavior. But in aggregate, we will all save less.
If inflation takes off again, maybe eventually there's some monestizing of debt. But in less than 4 years these tariffs will go away, which is why companies won't spent billions of dollars investing in state side manufacturing that'll take maybe 5 years to plan and build. Therefore I'm not sold on the montizing debt motivation yet.
It depends.. For some goods possible to just immediately raise prices, for others, business will try to compensate from another source.
As example, Daimler stated, they will cut cheapest models from export to US, so some segment will got less concurrent market, and probably prices will raise.
Probably, this is because Daimler have much higher profits on expensive models, so they could just lower profits on them. Other variant, also possible, expensive niches are more tolerant to price raise.
For small countries, tariff raise nearly guarantee prices rise, but US is big country, things are not so simple.
10% tariffs on the Heard Island and McDonald Islands which are uninhabited, and can be reached only by sea, which from Australia takes two weeks by vessel.
And also 10% on Svalbard and Jan Mayen which is also uninhabited. That will teach them not to ripoff the USA!
Both Svalbard and Jan Mayen are inhabited. Jan Mayen only by about 35 people, though. Svalbard has both Norwegian and Russian settlements, but of course entirely too small to have impact on US trade.
Politically it's going to be just like how most everyone fell into line fervently supporting the Iraq War when the corpo media told them to. Then after the unavoidable truth finally seeped in, equivocation and rationalization from "I didn't really support it" to "we were misled". With a lot more visible economic pain, of course.
Then that anger from having been "tricked" will be used as raw energy to drive the next con, and so forth. A broken clock is at least right twice a day, but these low information voters will sabotage themselves every single time.
> but these low information voters will sabotage themselves every single time.
It is generally not cool to blame the voters. There was a ton of misinformation preceding the Iraq war as you point out, but even then there was a massive popular opposition to it. Hundreds of thousands protested against the war before the invasion in New York and Washington DC. Some polls showed that 5% of all Americans participated in a rally or a protest in the weeks leading up to and following the invasion. And despite that popular opposition, among politicians there was a bipartisan support and just a handful of MPs opposed to it. Meaning the public was never really given a choice. In short, the Iraq war was the fault of the politicians and the politicians alone, the voters came nowhere near it.
The more I think about Trumpian strategies the more I suspect that he got some friends together (or they came to him) and decided they'll short everything, then he'll do this for a while. He and those friends would be able to 'generate billions' that way, by legal insider trading (since we learned that anything he does "in an official capacity" is legal and he can pardon anyone who ever got caught).
Last term he did some tax on bauxite that had a similar effect of costing billions to a whole industry that processes or buys aluminum, but one of the few bauxite mines in the US, run by a Trump ally of some kind, made bank.
Please don't take this thread or any HN thread into even more of a political flamewar hell. It's not what this site is for, and destroys what it is for.
Edit: it looks like your account has been using HN primarily for political battle. That's a line at which we ban accounts, regardless of what your politics are or aren't. See https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme... for past explanations.
If you'd please revert to using HN as intended, we'd appreciate it.
a) Republicans did the math and figured out that a lot of people who vote Democrat didn't have IDs. Old black people, in particular, were not likely to have IDs. Republicans also did stuff like accept fishing and hunting licenses for voting, but not university ID. None of this is a secret. A think-tank called ALEC came up with it. In-person voter fraud, the only kind of election rigging that voter ID laws prevent, is next to impossible in the US system and basically never occurs on more than a one-off basis.
b) A lot of those people who didn't have IDs have either gotten IDs or died off by now, so the Republican advantage of voter ID laws has faded.
c) Given (b), Republicans have moved on to other tactics like voter purges, shutting down registration offices and polling stations to create long lines in urban districts, gerrymandering, and limiting early voting and mail in voting. One of their favorite tactics is limiting early-voting mailboxes to one per precinct, whether that precinct has 1,000 voters or 1,000,000. You can guess which way the crowded urban precincts tend to vote.
The whole idea is just to put their thumb on the scale enough to discourage some small % of voters in the swing states that determine our president every four years. If you live in California, no one cares how you vote for President.
As a French I used to think too, "what's the big deal", "it has never been an issue here". But that's because we are used to it and getting an ID is easy and almost automatic. Whereas in a country like the US, it means missing several days of work, driving potentially hundreds of kilometers, and their geographic segregation means it's easy to make getting an ID harder for black people than for whites.
As a European I also find insane elections are held on workdays (in France it is always on Sundays), that you may have to wait in line for hours to vote, that voting stations may be hours from where you live, etc.
That's because you live someplace where the things described in the various links in this comment [1] do not happen or happen way less than they do in the US.
You've fallen victim to GOP propaganda. They use 'Voter ID' as a reasonable sounding shorthand for a lot of policies that just make it harder to vote. The other responders highlighted many of them.
I don't, but we have a functioning citizen registration system; every voting eligible citizen gets sent a voting card when elections come up. That can only work if you're registered and have a known address. "Illegal aliens" don't have that, so they can't vote. Foreign nationals that are registered / stay here legally also don't get voting rights so they simply don't get the voting card mailed to them.
But also because of that registration, getting a kind of ID involves making an appointment at the county house, filling in a form and handing over a recent portrait photo. It's a bit of a hassle but nothing extreme.
If it makes you feel any better the UK Conservatives tried this under the "we have to stop voting fraud" excuse. Turns out it backfired because the oldies couldn't figure out the new requirements leading to this scandalous quote from pantomime villain Jacob Reese-Mogg:
> Parties that try and gerrymander end up finding that their clever scheme comes back to bite them, as dare I say we found by insisting on voter ID for elections.
> We found the people who didn't have ID were elderly and they by and large voted Conservative, so we made it hard for our own voters and we upset a system that worked perfectly well.
It's a different culture, one which is not used to have and use a national ID, which is completely common in the EU (with the exception of Ireland perhaps?)
This whole thread is gold. People just casually discussing why it is necessary for America to enslave the world AND it is beneficial for the world. The color revolutions were successful in other countries until the DeepState decided to bring that "social engineering technology" to home. Somehow people think they can contain such moral corruption just as plasma is contained using electromagnetic coils in fusion reactors.
That Democrats have held both the white house and congress several times over the last decades, and didn't try to put in place some reasonable voter ID laws is really sick.
Basically the law they would need is "states can do whatever voter ID they want, if it's free and easy to get ID and 9X% of voters not just _can get it, but actually actually have it, otherwise they can't". Or they could have made a federal ID and ensured everyone gets it.
But Democrats always felt that even going ner voter id laws were a bit dangerous. It always rang like "voter suppression" to them (and in many ways it probably was). But they missed the chance to make it impossible for Republicans to abuse it as voter suppression - and here we are now, worrying that there will be voter ID laws despite many lacking ID. It's infuriating.
Why the idea of "we'll just make sure people have ID" is so unimaginable is just completely impossible to understand. It doesn't matter that there is no actual in-person voter fraud. Voter ID laws are a good thing anyway - if everyone actually has ID. It adds trust to the process and god knows the US needs a process where people actually believe it's secure, not just one that IS secure.
On the scale of concern, voter ID is way down there. You've already had both "prosecute main political opponent" and "storm the legislature".
Voter ID is very common and sensible. The UK introduced it recently and while it did disenfranchise people this was not to the benefit of the party in power when the law was introduced.
This historical period will be remembered by being a cause for legislation to introduce strict testing for mental illness in government positions.
Ask any psychologist and it’s clear what it is, but they won’t say it publicly because of Goldwater “rule”.
fact is they have the most dangerous and destructive mental illness known, and they captured the power exactly because of their disorderly mindset.
Yet for months and years everyone is observing and discussing what people with a serious mental illness are doing when they are given highest post in power and unlimited money.
This is the equivalent of the "mentally ill lone wolf" rationales given for American mass shootings.
What possible difference would a psychological test make when an pre-existing felony conviction is not enough to keep him from voting, but also to actually sit as head of state?
What is happening in America simply doesn't happen without broad-based, implicit, systemic support at all the important decision-making junctures. In 2017, several of the highest-profile executive orders were slapped down in court within days. In 2025, the government is not even pretending to abide by court rulings on their EOs, and are detaining people without charge and revoking their visas without due process.
Do you have some required reading to share here? As I remember it, the body of knowledge on economy is that tarriffs are good for collecting revenue, but bad for economic growth.
What is the phase called? What is this amputation and what spreading is it stopping?
Yes, it is bad for economic growth, but this is not the tactic of protectionism. It is in the name that the purpose is to protect domestic production. It is done by forcing competition barriers on external producers
> What is the phase called?
Economic crisis / intense rivalry. US is economically threatened by the rise of China, it has been on the radar for many years. Things have reached a point where US can't just sit there and do nothing as China challenges the global status quo.
> What is this amputation and what spreading is it stopping?
The spreading is the slow but ongoing rise of Chinas economic power. The amputation is thr free-trade bariers
lately in conversations with people who have always openly hated the US hegemony and the "western system" (and I can myself see the many issues with that system) I see a certain glee at the current state of affairs, as if they are happy that finally the pain inflicted by "the west" on third-world countries is finally coming back to haunt the US and Europe. They don't seem to think two or three steps ahead, what is the alternative they are cheering for? A russian style oligarchy? A chinese style one party dictatorship?
Broken systems should be fixed or replaced, is that the type of thinking you abhor?
If you prefer living in a broken system I guess you have a lot of options available. What we have been doing in America has utterly failed humanity, sounds like your making a lot of money off a failed state and don't want your income to be threatened. I wish your type of thinking didn't exist, the world would be a much better place.
I've talked to several Iranians, they pretty much said that that's what happened to Iran. People tore it down because they were unhappy with their current government, but they didn't have a replacement. Authoritarians with false promises filled the void and created Iran as we know it today.
Sounds like the way things are going to me and it's what a lot of people are rooting for. I think America did a really good job of compartmentalizing the rich and the poor so the rich are completely unaware of what everyone else is dealing with.
OP's comment sounds like a red herring to me - is it the "broken legal system" that still keeps Trump away of turning the US into a technocracy/autocracy?
Just take it literally, the US legal system is utterly broken, as in it does not function. It's the reason we literally put black men in jail for Life over and over again for minor crimes, because we have a broken legal system, it's why in America whoever has the most money wins it's why all of our politicians are lawyers because the legal system is broken.
Why haven't we questioned the asymmetric high tariffs imposed by the EU on America for decades?
The EU imposed a 10% tariff on US cars for decades while the US only imposed 2.5% on the EU. And this happened while the EU exerted a significant trade surplus against the US on automobiles.
I don't advocate trade wars, but I can understand the case for some rebalancing, given the historic context. Hopefully Trump will only use tariffs as a negotiating tool, and they will soon be lifted. He's a dealmaker.
Of course a lot of the vehicles that would be interesting to the US market are not classified as cars, but as (light) trucks, and have a 25% tariff applied (originally due to a minor tariff "war" in the 1960s around chicken exports). It's just wrong that the US until now has not questioned and acted upon foreign tariffs.
>The EU imposed a 10% tariff on US cars for decades while the US only imposed 2.5% on the EU.
Whose faults?
Someone signed the deal, someone let the deal stand 'for decades'.
Trump could have 'rebalanced' any disparities...er, 'nicely', and been annoyingly victorious.
As it is, nah.
Lost trust.
Not visiting, either.
All the gigabrains trying to be economists ITT don't understand this is a political move for Trump's base. It is not about what is technically best or the most logical according to the academics. It is an emotional decision more than anything. It stems from the working class in America being given cheap crap from Asia that barely works in exchange for shipping the good jobs overseas to the lowest bidder.
The working class has enough TVs, iPhones, and toys. We want secure housing, good education, healthy food, and an opportunity for promotion in life. Those things can only come with good jobs that are accessible to the whole working class, not just the well educated who make up most of the service economy.
> We want secure housing, good education, healthy food, and an opportunity for promotion in life. Those things can only come with good jobs that are accessible to the whole working class, not just the well educated who make up most of the service economy.
What level of confidence do you have that the tariffs are a path to this outcome?
I understand the "and 10% on everyone else" part of the tariffs.
Do you think the media is too dumb to understand that, or are they just playing games when they point out a 10% tariff in someone who does not export to the US?
If we could manage the country using HN experts, we'd be incredibly prosperous. People here know so much more than the actual professionals in the government.
Only a few people pointed out the obvious. Trump aims to bring everyone to table to renegotiate global commerce. Every country's economic strategy today is to have positive trade with the US and that is unsustainable.
A risky tactic, but refreshing after decades of the old tired policies that brought us the collapse of parts of US manufacturing and so much pain during COVID due to a complete dependence on foreign suppliers for... Well, everything.
I don't know if this will work. But I know what we had before wasn't working. We'll see.
This is the most mind-blowing thing to me: a bunch of multi-hundred-billionaries all standing beside a billionaire that shits in a gold toilet and is in charge of the richest country on Earth angrily proclaiming that "Everyone is taking advantage of us!"
> Trump aims to bring everyone to table to renegotiate global commerce.
Throwing the gauntlet in the dirt isn't how you achieve this type of diplomacy, as the world will just form new economical alliances with more predictable trade partners instead of wasting time trying to appease Donald Trump.
> A risky tactic, but refreshing after decades of the old tired policies that brought us the collapse of parts of US manufacturing and so much pain during COVID due to a complete dependence on foreign suppliers for... Well, everything.
By "policies" do you mean US corporations trying to make as much profit as possible by moving manufacturing to cheaper countries?
The result of tariffs, even if manufacturing for some products moves back to the US, will be higher prices for consumers even in the long run as you cannot produce things as cheaply as other countries. In a country where wages have not kept up with inflation the economic pain will keep mounting.
> I don't know if this will work. But I know what we had before wasn't working. We'll see.
Coupled with:
> People here know so much more than the actual professionals in the government.
Is funny to read; If you had those actual professionals in the government, they would be able to show you some serious predictions about how these moves will improve the economy and when you can expect the "golden age" to show up.
That's a bit misleading.
Make no mistake, current US tariffs are UNIVERSAL. Not specific to e.g. chicken or automobiles or purebred horses. They cover absolutely everything.
While you may see 38% or more tariff on chocolate, chocolate export to the EU from the US is hardly an important issue. And for dairy products, the tariff is a fixed euro amount per weight, not %.
I wasn't touching the first two categories anyway, tariffs or no tariffs.
First one because I don't understand why i should risk a milk based product that has traveled for months across an ocean. Or even from another EU country, when I can buy stuff made in a 200 km radius around me.
Second one because afaik it's legal to call "chocolate" something that does not contain any actual cocoa in the US.
> Second one because afaik it's legal to call "chocolate" something that does not contain any actual cocoa in the US.
Well, no. It cannot be called "chocolate" if it is something that consumers would expect to be made from actual chocolate. However, it can contain the term "chocolate" if cocoa or another cacao product is the sole source of its chocolate flavor, and as long as consumers have a pre-established understanding that it is likely to not be made from chocolate. For example, people generally understand that chocolate cake is likely made with cocoa, not chocolate, and so it can be labeled "chocolate cake". If there is no such general understanding, the product must be labeled "chocolate flavored".
(See the US FDA CPG Sec 515.800, "Labeling of Products Purporting to be 'Chocolate' or 'Chocolate Flavored'")
Now if we could just get them to stop calling chocolate products with dairy in them "dark" (I'm looking at you, Hershey...)
Cheese is the obvious one here. I can get a variety of foreign cheeses even at my local big-box grocery. Much better options than most domestically produced cheese.
Irish/Finnish butter (Kerrygold/Finlandia) is also fairly popular here.
If properly refrigerated, milk can last for months especially if pasteurized.
You can also evaporate milk and it will last nearly forever unrefrigerated if kept dry
Careful: The rate mentioned for alcoholic beverages (and confectionery) may include Excise Duty.
Excise Duty usually have the non-discriminatory aspect of VAT : they’re also applied on local production.
Interesting that people are downvoting heavily those information. If reality does not match our view of the World, well, let's ignore reality. The truth is that EU kept higher tariffs on US goods than the other way, Trump is changing that and there is an outcry, because it was Trump who did that. If that was Kamala, nobody would even notice.
The next phase is likely geopolitical. Countries will begin negotiating directly with the U.S. administration to secure exemptions or reductions in tariffs.
In effect, it’s the formation of a new American sphere of influence / empire.
This breakthrough in nuclear fusion energy is a significant milestone, but it's important to remember that practical, commercial-scale fusion power is still likely decades away. Nonetheless, this achievement validates the massive investments and brings us one step closer to a potentially transformative carbon-free energy source.
I'm surprised by how many concerns there are here related to how the tariff amounts were calculated.
It seems like they used a pretty simple algorithm to do it. Isn't that a good thing? Countries were treated the same and the tariff was decided primarily by the trade imbalance (with a minimum of 10%). Would we rather them use a combination of completely incomprehensible calculations and backroom deals?
Its open season for debating whether tariffs will work, or even what the underlying motivations are. Attacking the use of a simple algorithm across the board just feels lazy and either emotionally or politically charged.
Why is it stupid? They claim to be concerned with trade imbalances, and that those imbalances are a problem. Using those trade imbalances to calculate a tariff seems reasonable, assuming the concerns are right.
If tariffs are to be imposed, I'd at least rather be able to see how they were calculated and know it was done the same for every country.
It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency.
The flow of goods is balanced by a flow of US dollars to other countries, which are ultimately cycled back into the US financial system - enabling budget deficits and an abundance of capital to invest in high growth industries.
The flip side of this is that it also drives inequality - the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries.
The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
As such, this administration's policies are foolish, but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens.
That is something that in the current American political climate seems a nearly impossible sell.
> but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens.
Agreed. However, by imposing tariffs it is not the privileged who are going to be affected the most. The pain is felt most by the low-skill workers you mentioned earlier.
If the solution was instead along the lines of changing tax-brackets to tax the 'privileged' more, that might have better addressed the problem you mention in the beginning.
Not only are the poor going to bear the brunt of these tariffs, but this has been tried multiple times before, and failed. As in, catastrophic failure.
"Those who don't learn from history are doomed to repeat it"
People should check out all the tariff insanity before and during the period of The Great Depression. That includes the justifications given.
Yeah, isn't this just regressive taxation?
How much all the imports are realistically going to be made in the US?
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> Agreed. However, by imposing tariffs it is not the privileged who are going to be affected the most.
I thought the idea was that the billionaires would buy up all the crashed stocks then suddenly the tariffs would be lifted so that they can sell them off as soon as they recover. If so, the privileged will be affected the most but only in terms of how much money they'll make while everyone else suffers in the meantime.
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Nobody has faith in the governments ability to put that money to good use. The US gov uses significant amounts of its budget to fund weapon development, promote weapon sales, change unfriendly foreign governments, support friendly foreign governments, and genocide troublesome foreign populations. Who will support raising more taxes to maintain and expand such efforts?
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Taxing the rich is wishful thinking. They don't just give up wealth. They will simply look at it as an additional cost and hike the prices of their products up causing more inflation and that means even more trade deficit.
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> However, by imposing tariffs it is not the privileged who are going to be affected the most. The pain is felt most by the low-skill workers you mentioned earlier.
I don't think this is necessarily true. 1 day into tariffs and things are probably the same for the low-skill workers. So far, the stockholders are the ones taking a beating. Sure, that includes some low income retirees, but for the working poor, I would bet that proportionally they consume fewer foreign made goods. They're not drinking imported booze.
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Yes! "Trade Wars are Class Wars" by Klein & Pettis is the book to read if you want to hear actual economists with actual data talk about this.
For what it's worth Pettis thinks tariffs would be beneficial for the American economy: https://www.foreignaffairs.com/united-states/how-tariffs-can...
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Stellar book. Can't recommend it enough. Wanted to chime in on how good this book is.
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> the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries.
This is true only if we impose barriers to geographic mobility, which we do via artificial scarcity of housing in our major cities.
If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor.
> the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
We don't need more high-quality education nor do we need to onshore. We need to deregulate the housing market, we make it easier to migrate to the US (funny enough, yes that would help with inequality). And I do agree we need better social systems.
There is no way to frame this admin's policies that makes it look reasonable. It's a Crony Clown Club show.
> If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor.
Why would they want to do that? Their priorities are myriad, but raising a family, having a degree of autonomy and space to themselves, and remaining a part of their community are all generally on the list.
What’s generally not on the list is living in a tiny rabbit hutch, owning nothing, working a dead-end service job, trying to raise a family in a city (or just not trying at all), and paying a higher price for the privilege.
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all the "low-skill" people would be able to move to the city and find a job
That this doesn't work is self-evident. Cities are currently filled with low skilled people. The vast majority of whom find no employment or employment in illegal activities.
Also:
We don't need more high-quality education
The idea that the world, and the US in particular, has no need for more and better education is laughable. Considering the fact that a lack of education is, arguably, what got the US into the current situation in the first place.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
Like... Scandinavia?
As an example, yes.
Yes.
Scandinavia is the gold standard for liberals.
Unless you are talking about immigration, and then no one ever heard of them.
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Scandinavia is using oil and gas reserves as a captive tax base. It doesn't really generalize to markets where capital is mobile.
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what you're saying in short is that the US economy has changed from Manufacture-based to Service-based, just like China.
People don't realize this but China is moving toward Service-based, naturally, as they raised their standard of living, thus education.
What's missing is not raising tax on Income but taxing Wealth: the super rich has their wealth sitting and growing unproductively (house appreciating is not productive, buying farm lands and rent it to other farmer isn't productive). Holding Limited version of a Ferrari isn't productive. Feel free to find other Assets.
Once the super rich completed their journey in this world, they will inherit billions to their kids, whose productivity output does not match the wealth they inherited, again, not productive.
Tax their Wealth.
Even if this were implemented, any country taxing wealth would see a flight of capital to other countries not taxing it.
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> It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency.
It's true that free trade is hugely beneficial to large cap U.S. companies and their shareholders.
If you are U.S. worker without a lot of equity in the market all you notice is that your job gets outsourced.
This “free money” also inflates housing prices. It’s one application of “trickle down economics” that works; except it’s housing prices.
Even for highly paid Silicon Valley engineers what does it matter if much of that money goes right back to landlords?
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
You are assuming that this administration has the same goals as you, just different ("foolish") methods of arriving there. I'd posit that they have very different goals that these methods are solving for.
This is a regressive tax that hurts low skill and low wage workers proportionately more since basic necessities of life are going to increase in price - it will be a much larger share of wallet than rich. This will not materially change purchasing behavior of very rich (save maybe waiting to buy a car due to increased pricecs)
It would be beneficial to increase taxes on the massive service economy and use the proceeds to subsidize lower wage industries.
In trumps first term after tariffs affected farmers, they had to subisidize them to keep them afloat. It didn't quite work the way it was intended. The trade war relief program in the first term spent $30bn keeping farmers afloat.
Tariffs will probably be bad, but on the other hand the old system didn't really work either in the long run. Perhaps he can bring some manufacturing back and I don't really believe consumer goods getting more expensive will be immediately felt. Could be wrong though.
Well, at least it might get interesting if you like crazy. I don't really believe those crying the loudest that they are particularly interested in combating inequality or are too interested in protecting low income people. Yes, maybe they need industries protected by tarrifs instead of cheap t-shirts. Maybe this perspective is rather stupid though. We will find out if that works or not. Economics projecting the next depression aren't really sources to trust either.
> The obvious solution is... for the government to lower the cost of high-quality education
Not everyone is smart enough to land in the professional class. The US does its young population an enormous disservice by pushing low academic performers to go to college. There needs to be, somehow, a way for people to make a living with their hands, because for some people, that is genuinely all they are capable of.
> ... build out social systems...
The way you build out the social system is by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program. You don't take those jobs away by offshoring them.
I'm not saying I'm against offshoring in general or that I support Trump's tariffs - I don't. But it's not exactly controversial to point out that, since the end of the Cold War, the US prioritized the recommendations of economists over social cohesion and socially harmonious policy. A lot of people were thrown out of work and were left to fend for themselves. Many of them ended up as victims of the opioid epidemic. I'm not convinced that the prior system was completely peaches as cream.
What happened to the information economy? And getting everyone trained on that type of skills? Nowadays education seems to be frowned upon by those in charge.
Edit: looks like this is discussed in a sibling thread: https://news.ycombinator.com/item?id=43573036
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> by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program
Like building out clean energy infrastructure?
Modern "ditch digging government programs" aren't necessarily low-skill. Even at the time, the new deal government programs were massively beneficial for society while also providing jobs for folks who needed it, at reasonable wages. Let's not shit on good government programs just because the right has been feeding us propaganda demonizing it for decades.
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Thanks for your comment, it explains why there seems to be a high degree of support for these measures in some quarters (was looking at the youtube comments to the liberation day speech) vs the consensus here at HN.
Let's suppose these policies are to the benefit of some Americans over other the benefit of other Americans. The open question now is: does it matter? does it really have an influence on the gross profit numbers? Will an isolationist foreign policy destroy the international order and how could this effect the US in return?
As a highly skilled and comparatively highly paid worker, I feel it is outrageous to suggest that I am within the class that needs to give up any reputed "wealth" when I am nowhere near the 1% who hold more than 50% of it. Such a claim just contributes to the wealth making of the 1% misers even more. Class warfare! I have already had to give up significant amounts of college and retirement savings from these tariffs.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education
I'm always skeptical of the idea that we can just educate ourselves out of problems.
As I see it, that would only raise people's wage expectations which would make us even less competitive on a global market?
The need for blue collar workers doesn't just evaporate, and there's frankly only a finite demand for white collar workers. You give everyone expectations of a white collar job, and they end up working blue collar because there's no job for them, you're just setting society up for mass disappointment and resentment.
You give your average blue collar worker today a degree, are they actually more valuable to their current position? Probably not.
Your problem statement is missing "national security" angle. As I understand the current administration sees US de-industrialization as a threat to it and tariffs as a soution.
So basically: the solution is "do more of the same".
I suppose that's the point, people were tired of hearing the same old crap by leftists who fancy themselves as smarter, as their quality of life continued to drop, so they figured "screw it let's try the opposite".
Guess we'll see where it lands.
> As such, this administration's policies are foolish, but many on this very site would need to give up a little bit of their privilege to reduce the pain felt by many of their fellow citizens.
Very few people who work as full-time devs are so wealthy that they are totally insulated from general social decline.
You're arguing from a steady state. In point of fact the pain of the at-this-point-seemingly-inevitable recession is absolutely going to be concentrated on the working class. Those of us with savings and work flexibility will do just fine.
Even someone making a first principles argument for a revision of US trade policy should agree that this is insane.
The real pain will hit the working class harder, but the nominal pain will hit the capital class harder. Historically, this is how inequality unwinds. See: recessions, World War II. Let's hope to god that this is "just" a recession and doesn't cook into World War III.
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I think my comment is entirely compatible with what you said, no?
its also assuming there is any plan here do get somewhere, they just asked chatgpt for number, it spewed them out and those became the final numbers.
there's no plan for anything here.
Yes! I've been consistently frustrated at both sides of the issue. It became salient for me when I read about how China had sanctioned three American drone manufacturers that were supplying Ukraine last year, and how it disrupted their supply chains and ultimately the war effort.
It is unacceptable for any other country to be able to do this to any part of the western-aligned military supply chain.
We needed a targeted policy -- I don't care about American cars except to the extent that those factories can be converted to aircraft and tank factories.
But the conversation has been frustratingly reduced to 'reshore low skill work' vs 'save my infinite trough of cheap plastic slop'.
I don't want to hear about tariffs bad, I want to hear about how subsidies are better or about how it doesn't matter anyway because of the structure of the Chinese economy (I saw it claimed without evidence that they depend on imports from places aligned with the west which is reassuring if substantiated).
There's an underlying issue everyone is dancing around.
I don't know why you are being down-voted, I think you raised some interesting points that add to the discussion.
National security / foreign interference hadn't occurred to me, and now I'm wondering what would happen to US economy and manufacturing if it was at war with China and or the EU over Taiwan and or Greenland.
How would US deal with Russian style sanctions? Can China simply ban all exports to the US?
In times of war, it probably is super important that a country and manufacture all essentials.
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> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
You're proposing to tax an international supply chain. To tax something it has to be in your jurisdiction to begin with, and then you have several problems.
The most obvious of these is, what happens when the stuff just isn't there anymore? Suppose the US isn't competitive with China for manufacturing certain goods, e.g. because the US has a higher cost of living as a result of a purposeful housing shortage and then has higher labor costs, or for any other reason. So manufacturing moves to China, not just to sell to the US but also to sell to the domestic market in China and to Europe and India and the rest of the world. No part of those other transactions is in the US, so the US can't tax them and use the money to help the people in the US who used to be doing that manufacturing and selling those products to the rest of the world. Whereas if you sustain domestic manufacturing through some means then it exists and can make products to sell to the rest of the world because the fixed costs of establishing a manufacturing base can be covered by the domestic market and then it only has to compete in the international market on the basis of variable costs.
Next consider the industries where the US still makes stuff. You could tax those things because they're still in the US. But that makes the US less competitive in the global market for investment capital, which is highly mobile. If higher US taxes cause returns to be lower in the US than they are in other countries then investors go invest in the other countries instead, and then the thing stops being in the US. So that doesn't really work. You can see this in the case of e.g. Europe, which has even worse problems with the loss of manufacturing than the US.
Which leaves the activity where it's the other half of the transaction happening in the US, i.e. China is manufacturing something but the customer is in the US. That you could tax without a huge risk of capital flight, because companies can rarely change the location of their customers, but that still leaves you with two problems.
First, either of the countries participating in the transaction could levy the tax. In the case of China, then they can levy a tax (or some tax-equivalent) to only such an extent that it consumes the surplus in the transaction attributable to the competitive advantage of their country. China can do this because they have a lower cost of living etc., which doesn't work for the US. But because they do that, the US can't tax that portion of the surplus, which was the gain from moving manufacturing to China.
And second, a tax on imports is called a tariff. Which the US can impose to tax that portion of the transaction surplus that isn't attributable to the foreign country's cost advantage, i.e. the preexisting transaction surplus where it costs $8 to make something someone is willing to pay $10 for regardless of where it was made. But tariffs are the thing you don't like.
OR use borrowing (e.g. current account deficit). If government spending drives productivity growth then it’s a net positive?
OR tax wealth. If most return on international capital investment is being stored in the US, taxing this effectively taxes profits on international sales???
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You can’t make everyone above average.
> for the government to lower the cost of high-quality education
Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs. For some reason, with intellectual labor, we are able to pretend that there is no threshold and everyone can do it. It's an idea that makes people feel good but what if it's just not true? Can everyone be made above average in something with enough education?
If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that? How do we maintain a democracy? Sometimes people float the idea of UBI, but that could turn out extremely dystopian with a huge underclass of UBI-collecting people in a state of hopelessness and boredom. That doesn't work much better for democracy than a huge underclass of under-employed and unemployed people.
To make matters worse: the fact that our past strategy works so well for increasing GDP means it it tends to inflate assets, including things like housing prices. The end result is a country that looks, to more than half its inhabitants, like a vacation town where outside capital inflates the cost of everything way above what local wages can support. It might not be a coincidence that San Francisco, New York, and other capitals of high margin high skill industries have real estate prices that lock ordinary people out of even "starter homes."
I absolutely do not support Trump's execution here -- it's ham-fisted, reckless, and badly thought out. If we are exiting this neoliberal model, Trump's exit from it is a little bit like Biden's exit from Afghanistan. Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind.
We can't keep doing that if we want a democracy. If we exclude 50-80% of the population from anything meaningful or any economic stability, we will get one of two things. Either we'll get the kind of totalitarian state that is required to maintain that kind of inequality in perpetuity, or we will get a string of revolutions or a failed state. People will not just sit around in hopelessness forever. Eventually they will be recruited by demagogues. Ironically Trump has been one of the most effective at this. I'm sure more will eventually show up though. There's a big market for them.
> If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that?
The most important thing here is to do something about the cost of living, i.e. the price of necessities.
Housing isn't inherently as expensive as it is in the US, it's made that way on purpose. Healthcare likewise. If you only make $25,000/year and housing is $20,000/year and healthcare is $12,500/year, you're screwed. If you only make $25,000/year and housing is $10,000/year and healthcare is $5000/year, you're not.
I’ve reflected that resource extraction jobs often end up in the high wage / low educational investment category, and I’ve wondered if that motivates the whole “annex Greenland” bit as much as “securing critical resources” does…
Will the US be able to survive as a superpower while severely cutting down the top 20%'s standard of living? They could simply defect somewhere that offers them a similar position in society as the US, similar to what the US has done to the rest of the world.
> Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
You still need education to become a nurse, caregiver, welder or kindergarten teacher. And the right subsidies (free education) allows people to make the switch.
> Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
Agree with this.
Also, what if there's just not a need for it?
Even if "everyone" in some abstract sense is capable of "high-skill" jobs, how many are really needed? Look at software jobs alone and the onslaught that is the current labor market.
I think there's nowhere near enough "work" ("real" or otherwise) to go around to maintain the level of employment necessary to support the population that we have at the costs that we have.
I don't think any sort of "UBI" (assuming you mean direct cash payments) is a realistic solution, either. People need to "work" in some organized fashion to avoid the common negative outcomes associated with "welfare" scenarios.
I legitimately, unironically, support the kinds of "fake" jobs that were prevalent in years' past (day in the life TikToks come to mind, Gov jobs where people send three emails a week, etc).
I guess in another sense I do support "UBI", as long as it's paired with the illusion of "work."
I understand this seems nonsensical, but just from practical experience it makes total sense to me.
Here's an example.
Years back I worked a software gig at a large non-"tech" F500 company. Much of the programming work there was extremely dull--occasional maintenance of large barely functional enterprise Java messes, writing a few SQL queries a week for wretched multi-table joins requiring all sorts of nasty casting and hacks as "normalization" was an alien concept to the original author and the like. Realistically, folks worked on this stuff perhaps 10 hours a week?
Anyway, I know a few people hit with a layoff that worked there a long time (decade+) and now they're back in the Thunderdome looking for work as "developers". The people in question are nearing retirement but presumably not there, for one reason or another.
Hows this going to work for them? I'm not denigrating them, but having worked with these folks, they're not going to be tearing into broken pipelines, adding React components, configuring Docker builds or whatever--there's a skill mismatch and the workload I've seen at roles lately is just so far beyond the pace, scope, and "scale" that there's no way they'd make it, if they can even get an interview at all.
In this example, would it be best to give them "UBI" payments, or some other slow near-sinecure where they have dignity?
Maybe I'm just soft.
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> Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs.
"pfff it's easy-peasy, just go attend a (literal) bootcamp, you'll be fine, anyone can do it"
----
> Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind.
god yes
The elephant in the room here: there is no money for anyone not in the top20%, it all goes into their pockets and they just sit on it, leaving only scraps for everyone else, tax the rich, anyone with more than x% of the median amount of wealth should have everything above that taken away and redistributed to everyone, possibly by means such as UBI/welfare/etc!
But we ain't gonna get any of that without revolution. And honestly it feels like Trump's getting us closer and closer to the brink of that.
This is the kind of side debates you get by framing it as “low-skill” versus “high-skill”. Whether the “~20% of the ability” curve should help the poors from their apparent attraction to demagogues.
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> lower the cost of high-quality education
And how do you propose we do that? By giving schools even more money at taxpayer's expense?
> raising taxes at the high end
40.1% of US taxpayers on the low end of income distribution pay no income tax, 16.5% pay neither income nor payroll taxes. Top 1% pays 40.4% of all income tax (while holding about 30.8% of net worth, 13.8% of the total is held by top 0.1%). Top 1% (with the possible exception of a few billionaires) already pays through their nose.
Funding public universities and giving them the mission to keep tuition costs low. Public universities are capable of providing enormous value to students, but over the past two decades their funding has been substantially cut. The result is that those schools became more reliant on expensive out-of-state tuition, which in turn means competing with private institutions for students, which in turn means building more luxuries (awesome gyms) and not focusing on value for money.
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What people don't discuss about the taxation is that rich people will universally pundit, preach, undermine, subvert, and squirm out of any law to tax themselves more. If you are preaching more taxes thinking it will affect the politically well-connected, it will be unwound and castrated by the politically well-connected. Or just deflected into somebody else's responsibility.
In that case, someone else is going to be holding the bill that you might not have intended.
I hate discussion of percentages, because every percentage seems reasonable by itself. It's the summation of the percentages that politicians have no interest in discussing.
In fact, it should be a requirement of government to sum the percentages of federal,state,medicare,social security, sales, resort, fuel, local levies, internet sales into one effective percentage that a given citizen in a given city has to pay.
Has anyone calculated that number for themselves? I've been collecting all my transactions and taxes to figure out what percentage of my income actually goes to taxes.
==40.1% of US taxpayers on the low end of income distribution pay no income tax==
According to 2022 IRS data, average deductions for those who itemized totaled $43,686 in tax year 2022 [0]. The 2022 bottom two quintiles of income were under $44k [1]. That means in 2022 rich people AND poor people didn't pay income taxes on their first $45k of income. Is that unfair to rich people?
Worth noting, the 25 richest Americans paid an average effective tax rate of 13%, as of 2018 when IRS data was leaked [2].
==Top 1% (with the possible exception of a few billionaires) already pays through their nose.==
"While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent." [3]
If the average effective rate hasn't changed, but the effective rate paid by the top 1% has fallen by ~40%, how is the difference made up? The 99% pay more.
[0] https://www.pgpf.org/article/7-key-charts-on-tax-breaks/
[1] https://data.census.gov/table/ACSDT1Y2022.B19081?q=income+qu...
[2] https://www.propublica.org/article/you-may-be-paying-a-highe...
[3] https://taxpolicycenter.org/taxvox/effective-income-tax-rate...
this glib analysis neglects the part where decades of plans and budgets have been addressing " build out social systems" while simultaneously building crony networks of political appointees, guarding the hen house. Short term pain is loudly announced for the purpose of defeating the political opponent, not addressing the long standing inefficiencies in a swollen and obese wealth exchange centered in the USA.
tons of cynical one-liners from partisans drown out efforts to really examine the impacts over medium and long term. A horrible problem with this move is that it is not entirely wrong from a fundamentals point of view? It certainly creates winners and losers, no question about it.
The political class and plutocrats always wins regardless of the election outcome. The two party system guarantees they come out unscathed regardless of their jousting.
Nope. It's true that free trade WAS hugely beneficial to the US economy as a whole. Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long.
> Now free trade is hurting USA economy
Then why is the economy crashing under these new tariffs when it was recovering nicely just a few months ago?
Free trade is not hurting the economy. American domestic policy impacting the distribution of the produce of the economy is, even in times of strong aggregate economic performance, hurting the felt effects of the economy on large swathes of the population, but throwing up protectionist policies that collapse both the global and local production possibilities curves doesn't help that; it just shrinks the pie without doing anything to deal with the bad distribution which makes people feel like the pie is shrinking even when it is growing. The results you can expect from that should be obvious without experiencing them, but it looks like we are all going to learn about them through painful experience real soon now.
> Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long.
Explain how is it hurting US economy?
The deficit is 2 trillion.
Income taxes on individuals are 2.4 trillion.
How much do you expect to raise taxes to cover that gap? You double my taxes and I’m in the welfare line.
Further, and this is not referenced enough - the US must rollover ~9 trillion in treasuries this year. The lower the interest rate to do that, the better. Otherwise it increase the deficit even more.
The only way this ends is one of two paths - a path similar to what we are on; default.
We may not like this one, but default is world destroying because of the broad use of the Dollar around the globe.
The deficit is not in fact 2 trillion. Source: https://www.bea.gov/system/files/trad0225.png (and many other official documents)
Also, this is a false dichotomy.
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The current administration has no interest in reducing the fiscal deficit. Their expressed policies will make it larger.
Taxes should be raised on the rich. Elon Musk alone is worth $330 billion. There is plenty of money to pay for what we need. The question is whether we can muster the political will to do it.
From what I understand, de minimis exemption has also been removed.
That is a huge, huge deal. It effectively means that all goods imported from China will be slapped with a 30% import tax, as soon as said goods arrive the US border / customs.
Usually what happens then, is that the courier will pay that tax, and then bill the recipient later on - as well as charge some fee/fees for the work done.
This is why in some European countries, that $1 item from China with free shipping can end up costing $10, because you're paying $0.25 in VAT or import taxes, and $10 to the shipping courier for doing the paperwork.
If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
(That's just from the most obvious consumer example...then you have pretty much everything else. Goods, commodities, etc.)
EDIT: I found more info here https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...
So it is even worse, you either pay $25 per shipment, or 30% - whichever is higher. Then later it moves up to $50 per shipment, or 30% - whichever is higher.
a $1 item with $1 shipping will end up costing you as much as $52 after June!
> This is why in some European countries, that $1 item from China with free shipping can end up costing $10, because you're paying $0.25 in VAT or import taxes, and $10 to the shipping courier for doing the paperwork.
Not the big China exporters, not any more. They all include taxes in the price on your country specific web site, ship to their warehouses inside the EU, handle taxes and your local courier just delivers.
Now if you're talking DHL yes, they have you fill forms upon forms and charge you for the forms you didn't ask for. But if that happens, no one will have time to process all the forms so private imports from China will simply ... halt for a while. Until Temu/AliExpress/etc sort out for the US the same system they use in the EU.
If in the US, I'd hold on any direct purchases from China for 3-6 months.
> So it is even worse, you either pay $25 per shipment, or 30% - whichever is higher. Then later it moves up to $50 per shipment, or 30% - whichever is higher.
Hah. That's DHL commission territory :) Definitely hold from direct purchases until Temu sorts it out for you.
> Until Temu/AliExpress/etc sort out for the US the same system they use in the EU.
The thing is, the EU specifically set up a structure to make this easier for sellers and transparent for customers (the "import one-stop shop") and I don't see the US government doing any effort to make importations more seamless.
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If I buy something from amazon.co.jp or Apple and it arrives from Japan or China with DHL/UPS, I don't do anything at all in Poland. It's all transparent, I just get the package for the price on the website.
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I suspect that this $25/50 per item policy is to prevent people from claiming a lower value than the actual price of the item. I've received international packages marked "gift" with a value of $10 that I had paid much more for.
I doubt the US will even manufacture substitutes for most of the things I liked and ordered from AliExpress. People with hobbies primarily supplied by Chinese manufacturing (like mine- electronics, 3D printing, FPV drones) are just going to be paying more for the same thing. There's no way we'll get an American substitute for niche products- all the US chip fabs are going to be filled with orders for higher dollar parts.
Note that the fact sheet says per item, not per shipment. So there doesn't even seem to be a way to make one big purchase of several items to pay a single fee. They will hit you for every item in the shipment.
Quick edit: I also note that the fact sheet makes a distinction between things sent through international post vs. other means. If you send via UPS/FedEx/DHL there will be regular customs fees (34%?), and through post you will have the $25/50 per item fee. So I will definitely have to pay attention to the shipping method for anything bought from AliExpress from now on.
Quick edit 2: I literally have a PicoCalc from ClockworkPi coming in the mail in a few days- I guess we'll see if DHL charges me any extra fees.
I wonder how item will be defined. If I order a pack of 100 tiny magnets from AliExpress, is that $30 or $3000?
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Realistically, the $25 minimum is to cover the costs of handling the imports (with some premium), so it doesn't make sense to charge it for every item in a batch separately.
Great. AliExpress was the RadioShack of 2025. No way I’m spending $25+ for a strip of SMD resistors, and I expect to never see them available in the US at a price that makes sense as a hobbyist. This isn’t helping anyone, will prevent a lot of prototyping, and just be a bad experience in life. Thanks for ruining the fun of the last 5-10 years of DIY electronics golden age.
I had plans to build some animatronic Halloween decorations for this year over the summer. I’m not going to spend hundreds to thousands of dollars on parts that nominally cost less than $50.
My own pain is minor though compared to everyone I know who uses Temu and other things to basically outfit their life. This will be insanely regressive as they have the least to spend on “on brand” products, which themselves are imported too. This is like “super sales tax for the poor.” Me, I’ll just save my money and wait for the next president to undo the mess. My buddies not as successful monetarily as me? Their quality is life is going down the drain.
People will just ship large quantities and then warehouse them in the US.
Sounds like you have some cool projects planned.... do you have any pics/links you can share?
De minimis exemption expiring has been a planned thing for years through administrations of both parties. Trump admin has been delaying the already planned expiration during the Biden years to use as a negotiating carrot.
Basically it just means Temu/Aliexpress/Etc. will ship their goods to the US in bulk instead of bypassing customs on individual small orders, and distribute from domestic warehouses, having to now compete with US producers who do the same thing.
It does completely kill any business built on dropshipping individual orders from chinese factories without ever touching inventory however.
I'm inclined to believe they're already doing something like this. I don't shop them but my wife uses Shein and Temu pretty often, and commented last year that more and more stuff was shipping from the US rather than overseas now.
In Europe, Alibaba has their own warehouse in the Netherlands. I wonder if that's to be able to do a single "international" import. Could the same happen in the US?
Aliexpress does that as well, with a warehouse in Hungary. They ship the products there, import them en masse as a business, then relabel and send them off to the recipients.
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They may be compelled to do that; there's 1.3 million packages from Chinese retailers a day coming in through the Netherlands, but since they're all individual packages, they fall under a threshold for import taxes. There's now calls to drop that threshold so that people pay import taxes for small items as well, and / or to compel Temu and co to stop shipping individual packages but do it in bulk.
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FWIW eliminating the de minimis exemption had already been proposed by President Biden late last year:
https://bidenwhitehouse.archives.gov/briefing-room/statement...
Courier will only pay the tax if it's a DDP solution, and then bill it back to the actual merchant. FedEx, DHL, and UPS provide this as an option. If it goes USPS, or no DDP solution is in place, it's going DDU and it will simply be stuck in a sufferance warehouse or at the local post office until the recipient comes in and pays the bill.
Sounds like a good idea, but how are they actually going to implement and enforce that?
Do they open every package? What stops Temu or whatever from just keep sending them? I mean drugs get through so ..
Yeah, the stopping drugs thing is just performative propaganda. It’s really about the money, and the attempt to punish China (which will in fact mostly hurt Americans as much or more, anyways). If it were about the drugs only, there wouldn’t be such punitive measures, and the press release wouldn’t mention the fact that China doesn’t have a de minimus exception.
I had not heard about the de minimis removal. That would be crazy. I assume that would be the end of every dollar store in the country right?
So is AMZN stock up?
Do you expect their annual turnover to go up? They might get a bigger slize of the pie but the pie itself is getting smaller. Pre trade AMZN was down 7%
Down 6% in premarket, will have to wait and see but likely wont help them much as tariffs will impact a significant amount of their products regardless.
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Well, given that 90% of stuff on Amazon is relabeled crud from Ali Express...
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Most of the stuff on amazon comes from China, so I doubt it.
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In addition to what everyone else has said, if Europe goes through with the new "Big Tech tax" and/or tariffs on digital services, AWS would presumably take a big hit.
>> If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
All three of those stores are very popular in my part of Europe. So there must be some workaround. Based on your edit I would guess that they would import a bunch of orders in one shipment to make the 'per shipment' charge small per item/order.
Many of extra bills are absolutely not going to get paid.
>> If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
All three of those stores are very popular in my part of Europe. So there must be some workaround.
Well, the good news is almost nobody is gonna like this, so I don't anticipate it lasting beyond Trump's presidency, assuming he makes it 4 years at this rate. The bad news is that even after tariffs are removed, it will take years for prices to recover, if they ever do.
Actually one policy that Biden kept in place after the 2020 elections was the Trump Tariffs.
I think we are underestimating how popular protectionism is with progressives, it may turn out to be an unusual alliance between disaffected voters on the far right and left outnumbering free trade advocates in the center of both parties.
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They're going to try to make sure we never have fair elections again. I'm not saying they're going to succeed, but they're sure as hell going to try, which is terrifying.
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Do not post ChatGPT output on HN.
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> This is why in some European countries, that $1 item from China with free shipping can end up costing $10
This is what strikes me about these new tariffs... for all the concern about how it's going to impact the US economy (and I don't doubt it will), this is STILL far, far, less protectionism than literally every other country in the entire world. Donald Trump's justification for all this is that the U.S. is propping up the entire world economy to it's own detriment, and I'm not sure he's necessarily wrong here.
Based upon someone's imaginary example?
"less protectionism than literally every other country in the entire world"
I ordered from Temu and it's shipped from China and arrives at my door with my local sales tax applied -- because Temu abides by Canadian law -- but otherwise with no additional fees. Got a pair of headphones and a three timer device yesterday for $10 CAD.
Or you know, Trump's constant yapping about Canada's diary tariff. In reality the US ships 4x more dairy to Canada tariff free than the reverse, and we, by design, do not target sending dairy to the US. But Trump takes advantage of the poorly informed and/or stupid, and it works amazingly.
>U.S. is propping up the entire world economy to it's own detriment
If you're sitting in the richest large country in the world, literally at the height of its economic accomplishment, and you really buy it when someone tells you that you're the victim, you might be profoundly misinformed and with literally zero context of reality.
The US has an amazing amount to fall, and it's going to happen. And when you're working on the assembly line doing extremely low value work, having been ostracized by the entire planet, enjoy how you made the libs pay.
Aside from everything else one thing what strikes me as particularly insane is how it’s not even defensible as a protective measure. My favorite everyday olive oil comes from Tunisia. They now have a 38% tariff on them. There are no out of work olive farmers in the US.
The orange man wanted tariffs, the orange man is going to get tariffs. Now we have to hope the American people aren’t so dumb as to still be convinced only he can solve their issues. I don’t hold out hope for that.
If Jan 6th didn't dissuade people, I don't think anything will.
Additionally, his base will not blame him, they will swallow whichever of the many narratives the propagandists are currently cooking up that suites their fancy.
I disagree with this. Jan 6th didn’t affect 99% of peoples lives directly. It was clearly bad, but few people saw impacts in their own lives.
Higher prices and a possible recession will affect every person in the country and even globally.
His MAGA base might not blame him, but that’s only like 30-40% of the electorate. The other 60-70% won’t be happy if their lives are negatively impacted.
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One thing worth noting is that congress isn't pleased about the executive branch high jacking the powers of appropriations from them (i.e. imposing a tax on the people in the form of a tariff).
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Jan 6 was far from many people's lives. It was a philisophical debate at most. When they get to the stores to buy groceries and they are 30-50% higher and their next TV, laptop the same way, they will realize that voting for an Oompa Loompa was a bad idea, and will want him out.
Spoke to a friend who is a big Trump supporter just yesterday - his view is that we shouldn't react to short term impact, these policies and tariffs should be viewed and judged in the long term. These tariffs will remake american manufacturing. I dont know if thats the current faux news talking point.
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The thing is that Jan 6th was done by part of the "people", so it's now America versus America.
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"If propaganda doesn't dissuade people I don't think anything will."
You accidentally answered your own question.
“The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”
> There are no out of work olive farmers in the US.
Is that because we can't grow olives here, or because we don't have federal subsidies propping up a domestic olive industry that can compete with corn and soy?
I ready don't know the details well enough there, but it feels like this could just be selection bias at play.
You can grow olives in the US and there are some farms in CA. The quantities produced are orders of magnitude off though and given the time it takes to grow olive orchards we cannot replace our imports of olives in a reasonable time period.
There's a lot of examples like this. Coffee, and bananas come to mind. You can only grow those in Hawaii, or maybe Flordia, and there's absolutely not enough land to sate our imports. The whole theory behind international trade is that some countries do things well and others don't. In the case of food the reality is more that others can't.
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Surely the null hypothesis isn't "The USA would have a domestic industry for every crop known to man if not for external factors"
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The exact growing conditions for olive production aren’t common in the US, so most of the production comes from California - west of Sacramento and south along the San Joaquin river. There are a lot of barriers in bringing specialty crops to market related to know-how and contracting sale of product, so even in other areas where growth may be possible it may be infeasible.
https://www.agmrc.org/commodities-products/fruits/olives
https://croplandcros.scinet.usda.gov/
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An olive tree reaches the peak of its productivity after 15 years and can live for several centuries.
An adult tree can be so expensive that there are cases of theft. It takes a heavy truck and a tree puller to steal an olive tree.
Hard for me to believe that even with a surplus of domestic production that comparative advantage of importing still wouldn't be better.
Almost all the olive oil in my local Costco comes from California
US does produce olive oil, particularly in states like California, Arizona, Texas, Georgia, Florida, Oregon, and Hawaii. So you do have a few options:
That said, refusing to support local production out of principle isn’t really a solution.
Difficult to move the production of olive oil.
I don't know how much you know about olive oil, but it comes from olives, which grow on olive trees. Olive trees are famously long-lived and, together with the very specific types of land that they grow on, they represent extremely persistent and valuable investments for the people who produce olive oil.
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You forgot about
5. Switch to another source of fat, like lard or butter.
Even if there isn't a local industry that produces something, tariffs increase the competitiveness of domestic substitute goods.
US consumption of olive oil is more than 10x domestic production of olive oil. It is not possible to spin up olive orchards in even a medium timespan as the trees take many years to grow. It’s not about wanting to support domestic producers, it legitimately is not possible.
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You are right about olive oil. So why did he do it? The trade imbalance with Tunisia. Why is there are trade imbalance with Tunisia? US consumers have money to buy products from Tunisia, Tunisian consumers don't have the ability to afford products from the US. Why can't Tunisian's afford US products? This is the central question for every country in the trade war and it has myriad factors, but two of the biggest are: A higher cost US dollar, suppression of wages in countries like Tunisia (and Germany, and China, etc).
> Tunisian consumers don't have the ability to afford products from the US.
They do use products from the US, just not physical ones. It's weird to read such takes on HN of all sites.
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California produces very high quality olive oil. I buy it at Costco. The Kirkland brand likely comes from outside the country.
California produced 1.94 million gallons of olive oil in 2023. That same year the US used ~98.5 million gallons of olive oil. There just isn't enough space to produce that much olive oil in CA much less produce it profitably or in ways that wouldn't devastate the environment. And all that is ignoring that it takes around 10 years for an olive tree to get to consistent production.
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Maybe we can make British olive oil by getting Tunisian olive oil and putting it in a British bottle? Then it's only 10%.
The whole thing is kind of nuts.
Tunisian here. Tunisians on social media are baffled/amused because olive oil is basically the only product imported by the US.
And apparently the US bought 33% of it
>Onagri data show that Spain is the leading destination for Tunisian olive oil, with 47.4 percent flowing to Spanish ports, followed closely by Italy at 42.2 percent and the United States in third at 33.8 percent.
https://www.oliveoiltimes.com/business/africa-middle-east/as...
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What is Tunisia buying from the United States?
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Work with your government to drop the tariffs on the US. Problem solved.
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Why do you think it's a good idea to buy olive oil from Tunisia instead of from California? Are you aware of how much CO2 is released to ship a trivial commodity across the atlantic ocean?
Just a guess as he said his favorite olive oil so could it be one tastes better? I imagine like many other things taste can be effected by the region it is grown in. As for your other point in a perfect world we would all care about global climate change but many are not going to eat something they don’t like to do their part. But really cargo ships are small fish in such a big problem. Ban private jets or cruise ships would be way more beneficial.
Help me understand your viewpoint here - is the assumption that an entire ship is dedicated to shipping trivial commodities and the cargo isn't co-mingled with anything else? At the same time, what isn't counted as a "trivial commodity", and should ships _only_ be used for those items?
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His approval numbers will decrease 20-30% over the next few months. Only the most cultish cultists will stick with him when inflation spikes to 15%.
>> There are no out of work olive farmers in the US.
I'm not sure this is true. I buy olive oil specifically from California. It's niche but could be larger if they weren't competing with lower overseas labor costs.
Not 50 times larger which is what it would need to be to supply the current domestic consumption. California only produced 1.94 million gallons of olive oil in 2023, that same year the US used ~98.5 million gallons of olive oil.
Even if we could snap our fingers and create the orchards out of thin air there's not enough land and water to grow 50x our current production. Then where's the worker population coming from? They're also trying to drive overall immigration to essentially zero.
Don't olive trees take decades to reach maturity?
It takes time to ramp up olive oil production, so it’s way more cost effective to just import olive oil from countries with established crop.
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According to Trump Tunisia has to buy olive oil from you for the same amount of money that you spent on Tunisias olive oil. Otherwise one side has a trade deficit and that's unfair!
So, we can and do grow olives here in California, but it is a very small industry compared Spain, Italy, etc.
However, one thing we absolutely cannot grow here in any sort of money-making way, is coffee. So 32% tariffs on imports of coffee from Indonesia.... when we do not even export coffee.
The US has a trade surplus with the UK, and the UK got a 10% tariff :-) Who's ripping off who?
We get a lot of titanium from China. That's because the largest natural Ti deposits are in Eurasia. That is due to geology, not politics, and now US companies who need it (read: high performance transport, medical products) will pay substantially more for it.
There are small olive oil producers in the US. Do they see this as a good thing?
I've put together a directory of olive oil producers from California:) https://www.californiaoliveoil.info/
Why wouldn't they? They can immediately raise prices by however many percent the tariff is. Probably a bit less because higher price causes lower demand. So let's say raise by half of the tariff.
Maybe it will partially offset the increased cost of everything they need to buy and sell olives.
Now when I think of it it might be a wash.
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Olive oil, coffee, chocolate, vanilla, tea, lots of fruits, sugar. These will all be massively stressed.
I would happily pay 38% extra for high quality Tunisian olive oil, it is already super undervalued because it's reputation is lower than it should be.
It's gotten so bad that Tunisian olives are shipped to Italy, pressed into oil, and labelled as Italian Olive oil.
Except none of that 38% extra in price is going to the farmers. It's a tax not extra profit for the producer. Crazy how many people still do not know how tariffs work.
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If anything those Tunisian folks would have to reduce the price to compete. The tariffs go straight to the US coffers at the customs, nothing to do with the farmers.
https://www.oxfordeconomics.com/resource/tariffs-101-what-ar...
I think you started to form a persuasive argument, but you discredit yourself by saying "orange man".
Yep, that’s the problem. If only people treated the man who mocks disabled reporters with respect then he would have lost.
> what strikes me as particularly insane is how it’s not even defensible as a protective measure
You must not have read many of the comments here. Way too many people are trying to defend this just because they don't want to have to admit that they were wrong on Trump being better for the economy.
> There are no out of work olive farmers in the US.
You should be using America corn oil. /s
Well, no you see vegetable oils are actually bad and we should cook everything in beef fat or butter.
Surely that's not stupidly expensive, right?
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No offense, but the benefits may outweigh problems like getting your favorite Tunisian olive oil.
The orange man is saying: "Looks like you are sending a lot of $$$ to those olive oil farmers in Tunisia. With my tariffs you now have two choices at your disposal: either you keep buying their Olive oil but then you are going to have to give me $$$ as well to pay for our national debt. You are going to buy less of it; and help your country in the process. Alternatively, you can decide that maybe you don't need olive oil all that much. We have this amazing product called 'corn oil' which is produced locally and is now comparatively less expensive, buy that instead and support your local farmer. Choice is yours".
Maybe you don't like either of these choices; but at the same time; saying "I believe that having cheap access to product produced halfway across the globe is a god given right to American people; how dare you imposing me to make such a choice" is part of the reason why we need 13 earth to sustain the modern US lifestyle.
I am really not a Trump supporter at all. But at the same time the gradual reduction of tariffs has been a key factor of increasing global trade; which in turn is a key component of the increase of CO2 emissions. Finding a way to dampen a bit the international component and making sure that locally sourced products and services are not affected seems not that bad.
The whole "decide that maybe you don't need olive oil that much" thing is what's going to crush the economy in the US. The problem is that demand does not shift to alternative supplies elastically. It takes years and sometimes decades to build an alternate supply chain for some industries. So what you're saying is that an entire generation of children in the US are going to have to grow up materially worse off than their parents and grandparents. And that's assuming that a bunch of businesses magically start overnight to fill the enormous gaps caused by a lack of access to international supply chains. If you look at other countries such as in South America or for example Italy where there are huge protective tariffs, the industries you expected to magically appear didn't. Instead people just have less and work less.
So your dichotomy applies, but it's not some magical ratchet out of globalization unless there's a corresponding push on the federal or state level to build competitive domestic industries to replace the international supply chains we've been cut off from.
> but then you are going to have to give me $$$ as well to pay for our national debt
You realize this money will not be used to pay down the national debt, but rather fund commensurate tax cuts for the very rich?
Their plan for the budget deficit is instead to slash expenditures (see DOGE and what they’re up to).
> I am really not a Trump supporter at all. But at the same time the gradual reduction of tariffs has been a key factor of increasing global trade; which in turn is a key component of the increase of CO2 emissions. Finding a way to dampen a bit the international component and making sure that locally sourced products and services are not affected seems not that bad.
I'm not sure about that part.
International shipping in particular isn't a huge part of the energy cost of the goods that get shipped, so making the same things locally doesn't save much. This is from 2016 so things will have changed since then, but back then it was 1.6% of emissions from shipping, vs. 11.9% from road transport: https://ourworldindata.org/ghg-emissions-by-sector
What trade does increase directly is the global economy, and that in turn means more money is available to be spent on energy; historically the energy has been carbon intensive, but everyone is now producing as much green energy as they have factories to work with, and are making factories for those green energy systems as fast as they have bureaucracy to cope with.
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Sounds like a good argument for a carbon tax!
IMHO the idea is that they are ready to accept the suffering of Tunisian oil lovers for the greater good, which is the empowerment of certain type of people like them.
It's basically Europe but hundred or more years ago.
> My favorite everyday olive oil comes from Tunisia. They now have a 38% tariff on them.
"Silver lining:" there's a good chance that oil was either rancid or doesn't pass basic quality tests for the "extra-virgin" part:
https://www.ucdavis.edu/news/imported-olive-oil-quality-unre...
The COOC web site lists California olive oils that they've certified. Last time I checked California Gold Olive Oil was certified, and they even sell it in half and full gallons. That's just one I've tried and liked-- there are a bunch of others listed on the COOC web site. (Edit: there are probably certification trade associations for other countries/regions, COOC is just the one I'm familiar with.)
Here's a csv and google sheet of the data. Turns out they aren't tariffs countries charge us. They are trade imbalance percentages. Unreal:
https://docs.google.com/spreadsheets/d/1xK0OQ5VGl8JHmDSIgbXh...
https://gist.github.com/mcoliver/69fe48d03c12388e29cc0cd87eb...
The bit I love is that countries with which the US has a trade surplus aren't getting the opposite of a tariff (a grant, I guess) on their imports to the US, they aren't getting zero tariffs on their imports to the US, they're getting 10% tariffs.
Heard Island and McDonald Islands, two Australian territories inhabited only by penguins, get singled out for a 10% tariff.
Norfolk Island, an Australian community of 3000 with no exports to the US, gets its own 29% tariff. They're expecting a tourism boost from the publicity.
https://www.theguardian.com/us-news/2025/apr/03/donald-trump...
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And zero tariff for his dear friend putin. Insane!
It's even worse, they literally got their formula from a llm model (probably Grok?) => https://bsky.app/profile/dansinker.com/post/3llunnyfeoj2v
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."[0]
[0] https://ustr.gov/issue-areas/reciprocal-tariff-calculations
Do I understand this right: The evidence that they took it from a LLM is that all LLMs give the same answer and this answer describes what they did?
By that logic, it looks like Pythagoras got his theorem from an LLM...
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LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.
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It is really silly to say that because an LLM gave a similar approach a single time and someone took a screencap of it without full context, that Elon and Trump are sitting in the whitehouse asking Grok what to. This level of hyperbole is why reading about anything to do with the two of them is really exhausting.
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Wow. So they came up with zero-effort estimates of the tariff rate which would balance the trade deficit. The method is like something you'd be asked to criticise in A level economics.
Then they incorrectly labelled these numbers as reciprocal tarrifs implying this is what other countries charge the US.
The worst of it is that all of this misinformation will be happily accepted as truth by so many people. It's now going to be almost impossible to have people realise the truth, especially those people who support Trump. Ugh.
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Are we factoring in digital/service trades? For example, Netflix is in Vietnam. There are many Netflix subscribers in Vietnam. Does that get factored into the trade deficit? Or is it only physical goods that get factored in?
Vietnam uses many US services such as Microsoft Office, Netflix, ChatGPT, Facebook ads, etc. This is revenue that directly go into the pockets of American companies.
No services, only goods. This is according to @JamesSurowiecki on Twitter, one of the first to reverse engineer the equation for how they’re coming up with the numbers. So Office, Netflix, etc wouldn’t count against the deficit.
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Wow, everything's computer!
>Are we factoring in digital/service trades?
???
Of course not. The entire time Trump is railing against the deficit, he's talking only about goods. He wants to bring back manufacturing to America, didn't you hear?
No one asked him this shit on the campaign trail?
There is a dedicated article in an Austrian newspaper about that: https://www.derstandard.at/story/3000000264129/das-verrueckt... They essentially call it batshit crazy.
Funny how Russia is absent from the list
They’re sanctioned up the wazoo
> U.S. total goods trade with Russia were an estimated $3.5 billion in 2024.
Among European Union members:
> The total bilateral trade in goods reached €851 billion in 2023.
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Current US sanctions on Russia make trade a moot point, that’s why.
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Besides the sanctions, the G7+EU hold something around 300 billion $ of funds so far owned by the Ruzzian central bank. Not enough to rebuild Ukraine, but it will be a decent start. https://en.wikipedia.org/wiki/Confiscation_of_Russian_centra...
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At this point, Trump could hoist the russian flag at the white house and republicans would still turn a blind eye.
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https://en.m.wikipedia.org/wiki/Mercantilism
lol when I saw him hold up his piece of cardboard I thought, “yeah that’s definitely random numbers he invented 2 hours ago”
Does this mean that software worldwide gets a boon since:
1. It’s not affected by these tariffs 2. It wasn’t used as a basis for the calculation
It seems more likely that the EU will retaliate by taxing (or prohibiting) US services.
The Eu will take care of that by slapping taxes/tariffs or regulations, and the rest of the world will also do the same. Play stupid games, win stupid prizes.
Here's the official source for the calculation: [0].
Also, there are some hints this might be from a LLM [1].
And an official statement that it's about trade imbalances and not reciproc tarrifs [2].
And they ask the affected country to "not retaliate" [3].
IMHO Trump tries to lead the US like he managed his businesses. And here I'd like to refer to the three casinos he owned that are now insolvent [4].
[0] https://universeodon.com/@cryptadamist/114272481124239587
[1] https://universeodon.com/@henryk@chaos.social/11427313249281...
[2] https://ustr.gov/issue-areas/reciprocal-tariff-calculations
[3] https://edition.cnn.com/2025/04/02/business/liberation-day-t...
[4] https://www.nytimes.com/2016/06/12/nyregion/donald-trump-atl...
What’s the actual tariffs other countries are charging the US then?
I see how the tariff numbers may have been calculated. But why is it done that way? What is the rationale behind such a calculation? Is this a way to balance the existing trade deficits? How does it work?
Would appreciate you (or anybody else) shed some light on the economics of the thing.
The label "tariffs charged to the US" is just straight-up wrong, either due to incompetence or malice (likely to justify the high tariffs).
But basing the tariffs on import/export ratio makes sense if your goal is to be a net exporter with every country, as it discourages imports until that's the case. It's still somewhat arbitrary though; my guess is that the White House is pursuing that goal mostly for political, not economical reasons.
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You can see the report here: https://ustr.gov/issue-areas/reciprocal-tariff-calculations
Given that both elasticities were set to cancel each other, that's why you get a flat trade deficit/imports calculation.
This is, sadly, the way a freshman econ student would calculate tariffs.
If he used real numbers the tariffs would be so low that it wouldn't make any sense.
Suggestion that the admin is vibe governing: https://bsky.app/profile/amyhoy.bsky.social/post/3lluo7jmsss...
Thank you for posting this, the misinformation is clear as day. But lying is without consequences if people are dumb or lethargic enough, it seems.
This will get very interesting.
Interesting. While I think these tariffs are a bad idea, I'm not qualified to fully pass judgement. However, knowing Trump, when I saw the numbers I instantly suspected they would be wrong.
This won't bring home manufacturing but let's say that it will...
The US doesn't have the people to do the actual manufacturing. I saw a video recently explaining how sectors like the military, construction and the automotive industry each have 100K+ positions that they are unable to fill. A return to manufacturing adds to that shortage.
Apparently there's some 7 million young men of working age that are...missing in action. Self-isolated, gaming, addictions.
In construction, for every 5 people that retire, only 2 enter. And it's been like that for over 10 years. The people aren't there nor is the motivation.
I'm sure you'll have Apple investing in a mega plant where 50 educated people push some buttons though.
This is precisely the problem.
Plus, even assuming there existed lots of people to fill the gap, why would they sign up for manufacturing jobs? They pay like crap. Unions and worker rights have been gradually chipped away at for years and now they're straight up chainsawing them. Why work a monotonous job that pays at or just slightly above minimum wage, has skills that aren't really transferable should you decide to change careers, is rough on the body and doesn't even provide proper health care or sick days to rest, and employers will call you in during natural disasters with the threat of firing you otherwise and then leave you to literally die while pretending it's not their fault when you do die? [1]
It's companies and the government saying, "We want everything, and in exchange, we'll give you nothing. And you will be happy." No American sees their kid growing up and thinks, "I hope my child will one day work long hours at a factory." People in some countries do, and it's because those jobs are a step up from the current standard. Factory jobs in the US are, in many cases, a step down and that step keeps lowering. High tech/high skilled manufacturing can be an exception, but the bulk of the jobs they're hoping to bring back aren't that.
[1] https://www.npr.org/2024/11/02/g-s1-28731/hurricane-helene-t...
> Plus, even assuming there existed lots of people to fill the gap, why would they sign up for manufacturing jobs? They pay like crap.
Maybe that's just you talking from a position of relative privilege (e.g. as someone who's likely an extremely well-paid software engineer or some adjacent profession), and not really understanding other people's situation. Not everyone has a pick of the perfect career that ticks every box.
It's very well document that there are lots people bitter those manufacturing jobs got off-shored, and lots of communities that wish they'd reopen "the plant."
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> Why work a monotonous job that pays at or just slightly above minimum wage,
If you torpedo the economy so people have no other sources of income, raise the price of all goods, and cut of all social supports and programs, people will have no choice but to take jobs they would have turned their noises up at before.
Draining the swamp is winning!
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>They pay like crap.
Then raise the wages. Yes that means products get more expensive, but so be it. The economy will find a new equilibrium. White collar workers will see their purchasing power decrease, but factory workers will see it increase.
>No American sees their kid growing up and thinks, "I hope my child will one day work long hours at a factory."
Maybe its just me, but I think theres something seriously wrong with society if people have existential dread over the thought of having to produce the things they consume. If the production of it is so unethical, it shouldn't be consumed at all.
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Wow I guess that WEF quote was true but just within boundaries of USA.
> rough on the body and doesn't even provide proper health care or sick days to rest
That's why I'm bullish on human shaped drones controlled with full-body trackers. If you could do most physical jobs without being physically near the area you'd open them to more women (so widening the potential workforce) and improve on-the-job accidents statistics.
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I don't know that I agree with this. The US is too large a market to ignore, and this is effectively raising the profit margin for local production. Foreign companies will either move some portion of manufacturing to the US (for the domestic market), or cede the market completely, and I don't know that they're prepared to do that (well, maybe Chinese ones are). Factories have a long lead time, so even if this is abolished at the end of his term, they'll be locked in with sunk capital costs. The main reasons not to do this are a) abandoning the market, as mentioned, or b) you think you can hold out long enough until the political landscape changes.
If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages. Pay enough, and someone will do the job. This is especially true for low-skilled work. There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
And even if these jobs aren't in running these factories, they've still got to be built. Money is a powerful motivator, so I have no doubt they will. Companies will bleed because of this, but there are clear benefits for the US working class even if they're paying more. The gamble is obviously that the benefits outweigh the negatives of higher prices overall. Modern economics says no, but modern economics also believes in service-based economies, and that countries should only produce what they're good at, which, eventually, becomes a repudiation of the nation state. No country wants to buy bullets from an enemy, even if they're cheaper, and the web of infrastructure and industry necessary to maintain a defense industry mandates that at some point, you abandon the theory. Which is to say: I don't know, but I'm also skeptical that economists do.
> If the people aren't there, wages will rise until they show up. [...] There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
While this might be in a theoretical and pedantic way true, sometimes you do not have the economic context to provide those larger wages, so there will technically be no "shortage" - but just because the jobs themselves will disappear.
If you look at poor countries or regions, there is garbage, dirt and dilapidation everywhere. Clearly there is - in a practical way - a need for cleaners, but by your definition there is no "shortage" - because they cannot afford to pay anything for those jobs.
> effectively raising the profit margin for local production
This is the sad thing for US consumers.
If there is now a tariff on Product X that means instead of costing 100 it will now cost 125, I will guarantee you that the price for a locally produced competitor item will be 124.99 The local producers are not going to leave 25% profit on the table.
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No-one will move any manufacturing because people don't expect this to last long enough for it to make sense.
The congress can remove Trump's authority to determine tariffs at any point by declaring the crisis to be over. The Republicans have a knife-edge margin in the house and the most consistent two rules in American elections are that the party with the president loses some support in the midterms and that bad economic times means that the opposition party gains.
It would take years to move production, and next congress is 20 months away. There is no world in which this ends up good for the USA. Even if you believe that this is a situation where short-term pain leads to long-term gain, there is no way this will continue long enough for that gain to ever materialize.
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> If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages
I don't know about this in the US. Sure, we're not at full employment, but I don't know how factory jobs are going to change that. My impression is that there is already a deficit in labor willing to work hard for good pay (construction, trucking, etc.,) and tightening immigration policies will make this even worse.
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You say foreign companies will move manufacturing to the US or cede the market. You leave out the most likely option: everything will stay the same yet you pay more for your imports.
There probably isn't enough labour to onshore everything like you're implying.
The US currently consumes about half of its goods from domestic manufacturing. There are about 12 million people currently employed in manufacturing, and 7 million unemployed people. Matching the historical all-time low for unemployment rate would give around 4 million unemployed still.
> There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
I mean, by that logic there's never a shortage of any profession. But in practice, I've seen what happens with a shortage of cleaners in a popular tourist town (my wife used to run a cleaning business) - it becomes nearly impossible to hire cleaners because everyone's salary in the area is inflated and people would rather work at an easier job. You run into persistent performance issues with your remaining cleaners - they're dishonest, simply stop showing up to work without notice, etc. You can't hire anyone from outside the area because there's no housing available other than dingy, overpriced basements. Holes get blown in the budgets of schools, hospitals, etc. because they have to contend with cleaning rates that are effectively set by the competitive market for cleaning AirBnBs.
I heard a great story from a colleague that worked in fashion development in the UK. There's a big push for "Made in the UK" clothing and consumers associate it with quality, but the items are lower quality, because the UK lost its garment manufacturing skills 50+ years ago. Meanwhile Asia has gained those skills, so if you buy clothes from China they are likely higher quality than you'd get here and cheaper.
This is not always the case, Italy still makes high quality leather goods, Portugal is still making good shirts and trousers etc, but for the most part as economies have moved away from manufacturing into services they have lost the skills and to force manufacturing to happen there means accepting higher priced, lower quality products.
This has probably little to do with skill being lost, and more with how little one gets paid to do this kind of work. Skilled people can get jobs in other fields that earn a lot more.
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> The US doesn't have the people to do the actual manufacturing
The core issue is that, historically, experienced workers have passed down their knowledge to new generations, ensuring a steady accumulation of expertise. However, when factories close and seasoned workers retire or move to other fields without training successors, a vast amount of valuable knowledge is lost. Rebuilding this expertise is both difficult and time-consuming. Subsidies will be required to support local production - initially yielding lower-quality or significantly more expensive goods - until the Western world relearns how to manufacture at scale.
Furthermore, if you want to build something, you likely won’t do it by hand. You’ll need machines to automate the process or enable complex material operations. Rebuilding this capability from scratch will take time, as existing manufacturers lack the necessary capacity. Additionally, similar equipment is produced much more cheaply in China, creating another challenge that must be addressed. What’s likely to happen is that Chinese manufacturers will establish companies in the United States that replicate their production facilities elsewhere (e.g. mainland China). They’ll ship in parts, and final assembly will take place in the U.S. This approach allows them to bypass trade restrictions while maintaining cost advantages. I already know of several cases where this is happening.
A lot of that experience isn't needed though - automation replaced a large part of the expertise needs. I used to work at a factory, it produces as much as it ever did (though with a lot of modern innovations), but today only about 200 people work in it, compared to over 2000 in 1950. The CNC laser cutters replaced 70 people running saws with just 3.
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> They’ll ship in parts, and final assembly will take place in the U.S.
i thought new the tariffs also applied to parts (with a few exceptions)?
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No people, no supply chain, and no total lack of environmental regulations mean most manufacturing jobs are not coming back no matter what the tariffs are. It's not just one reason that the manufacturing jobs have left, but a conflation of reasons.
Unless… well, unless you eliminate the EPA, invade Canada and Greenland and take their raw materials, and make people so poor that they take up factory jobs again.
didnt you listen to the 70 year olds planning this? we're just going have the robots do it.
you know how people said putin was surrounded by an echo chamber and thats how he got stuck in ukraine? Thats the us now but with billionare VC's and 2nd tier 1980's NYC real estate developers. Look at their numbers and listen to them talk, they're genuinely not grounded in reality as whole group and theres no fixing that
> The US doesn't have the people to do the actual manufacturing.
A usual lack of high qualified low paid workers?
People in the US dont want to work 14 hour shifts for 50c a day for some reason.
No, this is the effect for the last 50 years' usual "I will have my high paid cushy job while some other country somewhere manufactures products for me, taking on all the negative effects. Only positive effects for me. Yes, you should use our currency and take part in our inflation. Or we'll invade you. We will print 6T USD[1] in 2 years and you need to absorb that along with us."
Thankfully, this is coming to an end soon. No tears anywhere.
I know a version of this is what happens in every human age, not singling anything out, but don't get onto the moral high ground of "I am just trying to ensure everyone is well paid".
[1] additionally, 80% of all US dollars added to the supply were added in the last 5 years.
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If that's really the case, then these tariffs are the cure.
If outsourcing labor overseas is cost prohibitive, wages will have to rise.
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This is basic economics that the administration refuses to understand.
Trade allows you to consume beyond your nation’s manpower and resource constraints.
And it’s even stupider when you’re putting tariffs on raw materials like Canadian lumber. So not only do we need to magically find millions of workers to work in these new factories we also need to find a bunch of lumberjacks and start cutting down our own trees? We’re at 4% unemployment, who’s going to do this work?
We literally don’t have the people to make this work.
Well they can always go back to child labor like Florida is planning to - https://www.cnn.com/2025/03/25/business/florida-child-labor-...
I recently listened to an episode of the Search Engine podcast where they showed how hard it is to manufacture something completely in the USA: https://www.searchengine.show/listen/search-engine-1/the-puz...
(Spoilers, the problem they had was that even when they found companies to manufacture their bbq scrubber, it was harder to find someone in the USA to make the parts that are used to make the parts.)
Simone Giertz said on her channel her company approached multiple factories in the US, EU and China about manufacturing a product. None of the US factories even replied.
Suppose you even find those workers. How are american products going to compete with cheaper chinese / european ones. People over there are used to much lower wages / purchasing power. You can look at Tesla vs BYD prices as an example
More likely the goal is for foreign companies to set up factories in the US for the domestic market. The US market is too big for most industries to ignore, and as they move manufacturing there, they skill up the US population.
Industries don't exist in isolation, and you need to be able to make simpler things in order to cultivate the know-how to make complex things. If China makes better phones, it won't be long until they make better drones. This is as much a strategic initiative as it is an economic one.
And BYD should be a wake up call that the US cannot compete in high value goods anymore.
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In real life, people are spending years looking for jobs making enough to barely survive. I should tell them about your video you saw, if only they know.
Eh. This always gets presented as a, "Why don't Millennial/Zoomer/Alpha men want to work?" Lack of training? Maybe. But I see that as more of a subset of the actual issue, which is two-fold: work conditions and compensation. So many jobs suck, and pay less than they should, and provide no real opportunity for growth. Let's break it down:
Jobs that suck: bad hours, bad bosses, bad processes that create inefficiency and stress.
Jobs that don't pay: can't afford a house, can't afford to date/get married/have children, can't establish a stable lifestyle .
Jobs that don't allow for growth: masters don't pass along their skills, managers don't promote (and, eventually, step aside), employers push employees out with stagnation and the hoarding of opportunities for nepo-hires or outsiders.
And why are we in this situation? Essentially, because someone likes the way things are. Managers and seniors don't want to change their work styles, even if those styles are dysfunctional. Employers don't want to pay. Older workers don't want to leave, or jeopardize their marketability by training juniors.
Every young worker can tell you about their experiences with older workers who promise to train and won't, managers who promise advancement and don't, having to be in the office at an ungodly hour or the warehouse or factory late into the night. And for what? Nothing of the American Dream, at least without putting up with the more ridiculous end of the job spectrum, or having been born into money, or having been lucky enough to rub shoulders with someone born into money.
It's Japan's hikikomori problem, transposed. Japanese authorities constantly blame the shut-ins, but outside observers recognize that the problem actually lies with the "functional" side of society, and its unwillingness to confront the way it alienates and produces perfectly reasonable, if dysfunctional, responses in these men (and women).
Agreed, the root of the problem is that America has relatively zero modern manufacturing infrastructure and manpower, especially compared to China. Those MAGA folks just don't know this. Offshoring happened not just because of cheaper price; China already had a much better environment even 20 years ago thanks to billions of people.
> sectors like the military, construction and the automotive industry each have 100K+ positions that they are unable to fill. A return to manufacturing adds to that shortage.
Feel free to offer higher wages than the previous stagnant wages.
If there was a real labor demand shortage wouldn't there be actual wage growth though ?
But if wages increase so does cost of manufacturing in the US, making US goods less competitive not more?
> The US doesn't have the people to do the actual manufacturing
I am willing to move anywhere in the US to do any manufacturing job if it means that I will be paid enough to afford a house with two bedrooms and basic living expenses. I have a bachelor's degree and have been unable to find such an arrangement. So where exactly are all of these unfilled jobs that you speak of? Are they unfilled because we don't have the people, or because they're trying to pay in peanuts? Unfilled because we don't have the people, or because HR departments are filtering away qualified resumes based on voodoo? This outlandish claim you're making that we don't want to work is offensive to a lot of people who are aware of their own existence and know that you're spouting bullshit to trick people into more wealth inequality.
Your 7 million young men aren't 'missing', you're just refusing to hire them. The jobs don't exist.
Good thing we're deporting so many people then.
Actually there are people who are ok to do physical jobs but they are getting deported now.
If this is true, why are US wages stagnating?
What's up with the corresponding 7 million young women of working age?
>Apparently there's some 7 million young men of working age that are...missing in action. Self-isolated, gaming, addictions.
And you never wondered why that is?
The only question is how to get them employed where our economy needs them. Honestly I've worked in Manufacturing and it is fucking gnarly. Clean factories don't exist. Many of the men I worked with had some sort of mild mental disorder tending towards aggression. Constantly short serviced machines and price gouging by any contractors involved. There is a lot to figure out and before you end up with a hospitable work environment. I'm doubtful tubby mcgamesalot is going to hold down a job stamping metal parts all day getting his lunch eaten or pissed in.
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Well, if I had to guess based on my own personal experience, it's easy to simply be... forgotten. Nobody asks you to do anything, and you don't have the will to do anything of your own accord because everything you want feels hopelessly out of reach.
Don't vaguepost. If you've got a point, state it.
No one will want to do lower income jobs while the cost of living is high and continues to rise. Wear and tear on the body is also not compensated, not to mention healthcare being expensive. Meanwhile, I do CRUD apps and work remotely 20/hours a week with no bodily harm (on the contrary, I have time to work out and make bad posts on HN)
No one in their right mind is going to choose manufacturing over what I have if they can do both, and most people could honestly learn to do CRUD apps. Even if my salary were to go down by 5-10% yoy due to people moving in, I'm still in a better position for the other reasons mentioned. I'd have to be below manufacturing and blue collar wages to get me to switch.
The only sensible explanation is that they're trying to force people to have to take these jobs by crashing the globalized parts of the economy because they are obviously better than starving and dying homeless.
All this assuming that Trump isn't just intentionally trying to destroy the country.
Can you blame the new generations for not wanting to work their asses off doing arduous manual labor, payed a minimum wage that is barely enough to afford a single room?
Republicans made work awful. I've heard some wanting to get rid of minimum wage too. Do you think this will help?
> Apparently there's some 7 million young men of working age that are...missing in action. Self-isolated, gaming, addictions.
perhaps we'll see something akin to "forced conscription", except for industrial work
> The US doesn't have the people to do the actual manufacturing ... I'm sure you'll have Apple investing in a mega plant where 50 educated people push some buttons though.
I feel like this could be used to steel-man the Trump administration's plan, though, should you want to. The best-case outcome here for America is it forces large capital investment in automated manufacturing facilities based in the US by making manufacturing that relies on cheap overseas labour expensive enough that the investment is worth it.
I'm doubtful, but, in the unlikely event it works like that, and this comes online in the next couple of years without causing a catastrophic wipeout in the mid-terms, Trump will look like a genius.
IMO it would have been much smarter to explicitly incentivize this with tax breaks and start with small tariffs that would ramp up a little bit each month, if it's the plan, and not just incoherent policy making.
[dead]
The best option would be to close the gap with immigration but alas...
Why is that the best option instead of raising wages until those jobs are attractive to domestic workers? There's this weird back and forth where people bemoan stagnating wages for the working class but at the same time cheer on importing labor that is willing to work for those stagnant wages.
In any other market, the balance of supply and demand is reflected in the price. But for the labor market the perpetual solution put forward seems to be juicing the supply side so that the price does not move up to a new equilibrium.
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Or just free trade. Like we had...
The US has recently loosened laws regarding child labor. It’s how other countries produce items cheaply, why not the US?
That El Salvador prison could also come in useful.
That was Florida. Child labor laws are mostly set by the states.
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I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities. These securities mature at varying intervals and require continuous "rolling" or refinancing to pay off old debt with new borrowing.
Significant rollovers are expected from April through September 2025, with additional short-term maturities due by June.
Higher interest rates significantly complicate US' ability to refinance. The cost of servicing this debt — paying interest rather than reducing principal — is already a major budget item, surpassing Medicare, approaching Defense and Social Security levels.
If rates don't come down soon it locks in higher costs for years. The country is at risk of a debt spiral.
How can rates come down? The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
Treasuries are considered safe during such crisis. Increased demand for Treasuries pushes their prices up and yields down, effectively lowering interest rates.
What are the flaws in this thinking?
The flaw I see is centered around this paragraph.
> How can rates come down? The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
Rising prices due to tariffs won't pressure the Fed to lower interest rates. It will increase inflation and worries of inflation, which will actually pressure the Fed to RAISE interest rates. A slowing economy won't stop inflation... We are likely entering into a period of "stagflation". The way out last time was very high interest rates and short term economic hardship.
Prices rising due to tariffs isn't "inflation" in any traditional sense. It's not driven by consumer demand, and therefore the logic for raising rates (i.e. slowing economic growth by reducing money in the market) doesn't apply.
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+1. In my relatively uninformed opinion what trump is doing is accelerating a kind of global arbitration in which the US is no longer the dominant economic power. We are going to have to share our toys. The “3rd world” is developing and it isn’t as easy to bully the globe into doing all our dirty work.
In my imagination, 50 years from now we will have a quality of life more similar to Central Europe: fine, but nothing special. Most people will live much more simply, rent smaller spaces, drive less ostentatious cars that they share. People will live with their families out of necessity and strawberries won’t be available in December.
The logic is very reductive. It's like: "the Fed's job is to cut a snake, so if they see a snake around their head they'll just close their eyes and cut both".
Raising rates does Absolutely Nothing to undo the tariffs or bringing the price down. Fed is not a blind machine.
Since people won't actually have more money to spend, you would expect it to lower the prices of other things like housing or travel. So there should be a negligible impact on inflation depending on the weighting.
This is flat out wrong. The Fed raises and lowers interest rates to stimulate or tamp down demand. Raising interest rates because prices rise while demand drops due to a trade war would accomplish nothing.
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Perhaps, we are mixing 2 things:
1) Economic/Monetary Inflation, which is an increase in the money supply in an economy driven by government or central bank ("print money").
2) Price Inflation, which is an increase in the general price level of goods and services that people typically notice at the groceries or gas and usually derives from monetary inflation, but can also be due to the new tariffs.
Is the Fed going to do the same confusion and use 2 to justify higher rates for longer?
I think they shouldn't unless they're being disingenuous and politically motivated (push just enough to make the entire Trump mandate an unending crisis until Democrats get back in power).
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> I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities. These securities mature at varying intervals and require continuous "rolling" or refinancing to pay off old debt with new borrowing.
No one is mentioning this because no one cares, least of all the guy who just signed massive tariffs.
What you're describing is the end result of 30-ish years of Republicans implementing "Read my lips: no new taxes" and this country refusing to have to a mature conversation about revenues. Also, over that period, wages remained stagnant, meaning more people look to the government for assistance, which then costs money in the form of deficit spending. The numerous expensive wars didn't help, either.
There's no good fix to this other than some serious revenue raising through taxes on people who can afford it. Of course, those people are of the opinion that they're entitled to net worths that measure as a significant portion of a trillion dollars, and will simply push the costs onto consumers in order to maintain share prices since that's what most of the net worth sits in.
You have to break those people of that idea. Talk of interest rates, Treasury securities, Federal Reserve policy, it's all just noise. The money going in must be a larger portion of the money going out, and significantly burdening the average American with more tax debt isn't going to solve the problem before causing social upheaval.
> I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities.
It's very hard to even assume that's a concern of the current US administration, based on not only the fundamentalist goal of radically cutting taxes and regulations, coupled with the fact that it's purposely pushing a recessive economic policy that defies any logic or reason.
The very least that you'd expect is a progressive tax policy that didn't excluded corporations and mega-rich. You're not seeing any of that.
Put clowns in charge and you'll get a circus.
Öküz saraya çıkınca kral olmaz. Ama saray ahır olur.
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The whining about how social security payouts was going to sink America while at the same time handing out tax cuts for corporations hints at a ideologically driven agenda.
Tariffs increase prices. This tends to cause a wage-price spiral, and indeed that's one of the stated objectives (increase US wages by onshoring manufacturing). The increase in prices and wages is inflation. This will cause the Treasury to raise rates to force contraction.
Now, so far rates have indeed spiked downwards, but not a huge amount: https://tradingeconomics.com/united-states/government-bond-y...
The next consideration is: what is the budget actually going to look like? Is it going to cut spending and leave taxes where they are, resulting in debt paid down, or is it going to be a huge tax giveaway to the top few % while increasing the deficit? (personally I'd bet on the latter)
Then the consideration: other players also get a move. What do the retaliatory tariffs look like? Does cutting off the ability of other countries to earn dollars negatively impact US exports?
Devaluing the dollar against other currencies will also force up rates by the arbitrage principle.
S&P down 4% so far today. Do we think that indicates the measures are good or bad for US industries?
I know there is a crowd that talks about debt alot and these are all legitimate concerns
However they could also raise taxes on capital gains and top end income brackets - which are at ludicrously low levels for folks of significant wealth - which would go a very long way here. Some estimates suggest it could put the US back in a surplus quite quickly
edit: I'm saying there is an argument for raising taxes. I don't think its off the table like some people suggest. I know it may not be popular with some but we could discuss the merits.
Cutting fundamental government services feels wrong too
The problem is that raising top end rates don't go far enough. It's a start, but we also need to raise the lower rates to solve the problem. That, or dramatically cut benefits.
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It's been argued a lot that such a move would cause a good portion of American billionaires to just pack up and move to another country. Rich people are mobile in a way that poor people are not.
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> What are the flaws in this thinking?
That the national debt matters.
A) The Fed & Treasury have the ability to buy back the securities at any time if they wanted, since they can basically poof the currency into existence. And t-bonds are as good as cash anyways, so that money is basically already in the economy.
B) The country's national debt is also our citizens' savings accounts. Every major company in the country (and the gov't itself) holds an absurd amount of t-bonds because its the best place to store billions of dollars for safe keeping. Paying off the debt means this capital needs to go somewhere. Should it go to China? The EU? Canada? American real estate?
The national debt is probably the most misunderstood concept in the country. It's denominated in USD, unlike other countries, whose debt is borrowed in currencies they don't control. And "paying off" the national debt risks capital flight and/or asset bubbles - both of which are detrimental to the economy.
The system we have in place is a good one.
Thought experiment: consider what would happen if the US Treasury decided interest rates are negative. That is, you pay $10,000 for a bond and receive back $9,900 after 10 years. What do you think this would do to the economy?
Now ratchet up that negative rate to 100%, that is, you pay $10k for a t-bond and eventually it's worth $0 after 10 years. That's pretty much what paying off the national debt would do (in fact, that's probably how the national debt would be paid off, if ordered to do so, the fed would purchase these bonds and the treasury would use the proceeds to buy existing bonds off the open market). It's two sides to the same coin, but instead of prohibiting the purchase of t-bonds, you just disincentivize it.
All I know about this issue is what you wrote above, but it sounds to me like the US taxpayer is paying interest on bonds so that bond holders can earn interest.
I think its perfectly reasonable for the taxpayer to say they would rather not pay interest on those loans. The bond holder could lend the money somebody else instead.
In fact, I think its really unfair that one generation of people can leave debt behind for future generations to pay with higher taxes.
Many critical flaws. Your getting lost confusing the forest for the trees.
For starters you are focusing on the % on the interest payments which is a line item. However when all of your allies stop buying your goods and services you run into bigger problems.
Bonus problem: If one of your internal metrics is that you want to have a trade deficit but nobody to sell to because you have created a hostile environment for trade.
Not all of your allies, EVERYBODY.
An economic crisis will reduce tax income though, reducing the ability of government to pay even if the interest is lower
If the goal of Putin is to destroy the US through illogical fiscal policies by means of using his Puppet, it all makes sense.
In the long term, yes. In the medium term, companies and people liquidating their assets and paying capital gains tax actually gives the state a windfall.
The flaw is that the USD is massively dropping because of the tarifs. This will push up interest rates on US bonds, because bond holders want compensation for the value loss of their bond.
> The flaw is that the USD is massively dropping because of the tarifs.
That's all but certain. Currently it's dropping, but long-term it might as well rise, as the demand for foreign currencies from US importers (and by extension consumers) will go down.
> This will push up interest rates on US bonds, because bond holders want compensation for the value loss of their bond.
How do existing bondholders get to demand anything? They may want compensation for a reduced market value, but nobody owes them that. Fluctuating market values are part of the deal of buying bonds.
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>Treasuries are considered safe during such crisis.
This isn’t a law of nature. The behavior the admin is displaying is exactly the type of thing that leads to your statement not being true anymore.
>The country is at risk of a debt spiral.
The US owes US dollars and can also issue US dollars. There are complications but it's not like you run up a credit card and can't pay.
Well the good news is that there are multiple plausible paths forward.
The bad news is that they're all terrible.
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Exactly. The Zimbabwe model
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Yes, but if they let get into a debt spiral, the only solution becomes devaluation of the dollar to the point of hyperinflation. Only then debt is reduced, but it would be terrible for everybody except a few.
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I don't see any way the actions we've already seen haven't moved up drastic action on the US debt by at least a decade. And it's only been a very-few months.
We were probably screwed when we cut taxes going into two crushingly-expensive wars, and certainly were when we cut taxes again, but now we're rushing toward crisis instead of trying to at least delay it.
A plan like that could backfire, as one of the primary things that the Fed looks at when setting interest rates is inflation. Increasing the costs of imports across the board will likely increase inflation, which would make a rate cut less likely.
But in general, I think this is too complicated. The simpler explanation for all this is the Executive branch is currently held by isolationist.
» The country is at risk of a debt spiral.
This is impossible by definition:
The U.S. dollar is the world's dominant reserve currency.
And as history shows, printing money is a super fantastic way to get out of debt spirals. [Narrator voice: No, it's not.]
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How about a higher income tax or 1% wealth tax?
Wealth tax is a nice idea but non-starter in implementation.
It works in real estate (property taxes are wealth taxes) because the land can’t move.
One way to tax the super rich is to tax loans against assets. They don’t sell assets to buy a yacht, but borrow against them to avoid paying taxes and keep future gains. Tax those loans as if they sold assets.
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> the United States needs to manage its massive national debt,
> The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
> What are the flaws in this thinking?
Flaw #1:
Massive treasury rollovers isn't new.
22% of all Treasuries have a duration of 1 year or less.
The only new thing is that rates have gone up.
Uncertainty is a short term solution to a long term problem.
Flaw #2:
Economic uncertainty and supply side shocks risks a recession.
Recessions usually increase national debt.
Flaw #3:
The right answer to reducing national debt is to ensure incomes exceed outgoings.
The current administration is so focused on extending trillion dollar tax cuts, no amount of tariffs or government efficiency is going to lower the national debt.
Flaw #4:
Treasuries only really go down during a recession.
Recessions are bad, not good.
If you think finding a tech job is hard now, or that your RSUs are hurting, wait until you see a serious recession.
it's true.. the S&P 500 declined ~57% from Oct 2007 to Mar 2009
The flaw is that it's like setting your house on fire because it's cold outside. It may well achieve your goal in the short term, but it won't last, and it's just going to make things much worse in the longer term.
I don't think it's helpful to reply to a specific, well-phrased question with a general analogy. Why is it like that?
It's like when the media would interview Robert de Niro on Trump, and all he would say is variants of "Well, he's an asshole!"
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One thing I am not sure about is how much reluctance foreign holders of US treasuries will have to buy more treasuries. My guess is both foreign government and commercial holdings will edge down quite a bit, even without any reciprocal activity. Just because they will have reduced US reserves, and in effect need for treasuries.
God knows what happens if reciprocal activity starts towards using another currency also for global trade.
> Increased demand for Treasuries pushes their prices up and yields down, effectively lowering interest rates.
> What are the flaws in this thinking?
Not sure why international investors would want to buy more t-bonds when the country issuing them is starting a trade war and their money could effectively be locked abroad.
The key, IMHO, is to maintain the status quo of the USD as the safe haven which also has the ability to destroy other safe havens. As long as the USD is the primary safe have the amount of debt is irrelevant.
The trade deficit is balanced by USD flows, which are ultimately reinvested with leverage into American capital markets.
In many ways the US trade deficit combined with the USD reserve currency status is thus what enables the high budget deficit in the first place.
this SHOULD be really obvious to those in charge, but I think is too subtle for them, or they're willfully ignoring it for the "trade deficit" narrative. I don't see how the end result is not a decline in the global role of the US and a whole bunch of pain for everybody as this all unwinds. All for the hubris of an old man...
If the Trump admin's goal were to reduce the national debt it would make way more sense to use fiscal policy (increase taxes) rather than some roundabout way to force the Fed's hand on monetary policy. The tariffs do basically function as a massive regressive tax increase in the form of a sales tax, but that comes with truly immense risks on the demand side of the economy. Guess what happens to tax revenue during a recession.
There likely won't be any tax revenue. https://finance.yahoo.com/news/trump-wants-eliminate-income-...
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Trump is already increasing taxes (tariff is a tax on consumption of imported goods). A recession is inevitable if you need interest rates to go down.
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> The cost of servicing this debt — paying interest rather than reducing principal — is already a major budget item, surpassing Medicare, approaching Defense and Social Security levels.
Military ("defense") expenditures are always understated. Over $180 billion in veteran's benefits were paid last year. This is not counted as military expenditures. Also the debt you talk about is to not only pay for the money sent to Israel and the Ukraine last year, but still for the adventures in Afghanistan, Iraq etc. That just becomes generic debt in the skewed analysis, alienated from its past military adventures. The military budget is higher than stated.
Trump is a wildcard, but I could see the US defaulting on its debt, probably in some way that focuses the default burden on foreign countries holding US debt with some relief for domestic holders. I would definitely not be holding it over the coming few years.
I agree with you. To just offer a counterpoint, I sometimes see quotes like this one:
or this one:
The line of reasoning seems to be
1) The government is special because it can go to extreme measures to repay loans if necessary (i.e., print more money or raise taxes)
2) The reliability of the government means that it can borrow at a low rate (say, 3%) and make investments that are worth far more than that (say, 10%).
Put those together, and the government's borrowing amounts to a net benefit to society.
This argument reminds me of the 'then a miracle occurs' comic [3]. It doesn't hold water because
1) The extreme measures are very harmful - they cause high inflation and hardship amongst taxpayers.
2) Even if we accept that government investment makes a good return (a highly questionable assertion), that return does not go to the government. If the government borrows money to build a new road, then there is no doubt some economic benefit, but the government does not receive that benefit, and they are on the hook for the repayment anyway. So government spending does represent a pure cost - not an "investment". And in any case, interest payments represent investment that can no longer happen.
I would also point out that back when we ran briefly ran a surplus in the late 1990s, economists were not exclaiming about how terrible this was, or how paying off the debt represented a missed opportunity or a catastophe in the making. Everyone agreed at that time that surpluses were good, and that paying down the debt was good. The current "this is fine" thinking smacks of economists who have a predisposition to accept and justify the status quo, whether it is objectively good or not.
So all of that is to say that I'm with you - government debt is bad. We are in danger of some combination of insolvency, default, or very high inflation. And once we enter that spiral it will be impossible to get out of it without permanent damage to the economy and the global standing of the US (such as it is).
[1] https://theweek.com/articles/618419/why-americas-gigantic-na...
[2] https://markets.businessinsider.com/news/bonds/us-debt-econo...
[3] https://duckduckgo.com/?q=Sidney+Harris+comic+miracle+occurs...
> I would also point out that back when we ran briefly ran a surplus in the late 1990s, economists were not exclaiming about how terrible this was, or how paying off the debt represented a missed opportunity or a catastophe in the making. Everyone agreed at that time that surpluses were good, and that paying down the debt was good. The current "this is fine" thinking smacks of economists who have a predisposition to accept and justify the status quo, whether it is objectively good or not.
Oh? I remember all the teeth mashing about all those funds who have to buy treasuries and now what are they gonna doooo! And how this is unprecedented and how are the markets going to reacccct! Numerous articles about that sort of thing in The Economist and various other outlets.
> but the government does not receive that benefit
Yes it does, through increased tax revenues due to the increased economic activity brought about by the road existing earlier than it would have if the government had to wait several years to save up the money to build that road.
Also, at least in the US, the government is nominally "We the People," so if the general population experiences increased economic activity, then the government is benefiting, as it exists (nominally) for the benefit of the people.
> What are the flaws in this thinking?
-> Treasuries are considered safe during such crisis.
Is that truly still the case? Does the world consider the US stable right now?
I am astonished at how effectively the administration has blown up every pillar upholding the US economy, short, medium, and long term. The damage done here is incalculable. In all of human history never has so much wealth been destroyed so quickly.
Doesn't anybody remember Liz Truss? She took only 45 days to almost sink the UK.
> I am astonished at how effectively the administration has blown up every pillar upholding the US economy, short, medium, and long term.
They are only 73 days In....
"France’s Macron Urges EU Companies to Pause US Investments" - https://www.bloomberg.com/news/articles/2025-04-03/france-s-...
This is just delusional. Everybody is looking for some reason that makes this less stupid than it looks, but there is none.
Intentionally causing a recession to lower the debt burden makes no sense, neither politically nor economically. Besides that the US is not some third world country that issues debt in a currency they have no sovereignty over.
I think what’s happening backstage in this magic show are desperate moves to recapitalize the country. Foreign and domestic investors are pledging to spend trillions, probably under duress. Stocks are being crashed to create a flight to treasuries. Dollars are partially anchored to crypto by so-called stable coins. Federal assets are getting dumped and operating costs cut.
Maybe we will get out of this without having to survive on cat food, but I’m not holding my breath.
Fed rate influences treasury rates, but it's not a direct impact. If creditors lose faith in our fiscal situation, rates will rise no matter what the Fed does.
Tax receipts drop during recessions, generally governments have to issue even -more- debt during them.
> Treasuries are considered safe during such crisis.
No. Not during such crisis. It's already visible in prices of traditional safe havens (those based on US credibility) that this crisis isn't like the others. They are dropping like flies. Only gold remains.
"If the fed won't lower the interest rate I'll tank the economy until they do!"
The F-35 jet will cost over $1.5 Trillion, doesn't work and won't be used
Cancel it and stop making everyone's daily life absolute hell by doubling the prices of groceries, car payments, etc. every month
National Debt is not a problem for a country that will be around for 1000+ years unless you know of something that is going to greatly shorten that.
There are nearly 1,000 BILLIONAIRES in the US, the debt is their problem, they can pay more taxes until it's down to a number you like.
> The F-35 jet will cost over $1.5 Trillion, doesn't work and won't be used
Over 1,100 of them have been built so far and they seem to be working quite well.
The F-35 does work, and is deployed around the world right now including the middle east for the recent houthi operations.
National debt is absolutely a problem when interest payments crowd out the rest of your budget. Interest payments currently comprise about 17% of the budget, and this is set to grow. Those can only be paid with taxes or inflation, both of which hit joe taxpayer.
A progressive wealth tax starting at 2% on net worth from $50 million to $250 million and increasing to 8% for wealth over $10 billion is projected to raise $4.35 trillion over 10 years.
Seems like a great start to me.
Alas, I'll never understand people who make average wages defending billionaire wealth hoarding.
> doesn't work
I don't understand, they're being flown all over
>The F-35 jet will cost over $1.5 Trillion, doesn't work and won't be used
You've bought literal Russian propaganda hook, line, and sinker.
The F35 is an incredible piece of technology.
Do you remember infamous articles saying it couldn't dogfight? Not only were those stupid propaganda (you can't dogfight at 100km engagement ranges), all the people repeating them seemed to miss the comment by the older aircraft pilot that the radar assisted gunsight on their gen 4 fighter could not track the F35!, not even at knife fighting range. Go lookup how good gunnery was in WW2 if you want to understand how hilariously bad that is for gen 4 fighters.
The F35 is pricey to run, $40k an hour, but so was the F14, which is correctly understood to be a high tech masterpiece, a tech platform, and one of the best aircraft ever made.
We've already built 1000s of them, and they are already being used today. Israel's attack on Iran that showed just how impotent soviet era air defenses are was conducted with f35s.
"Israel used more than 100 aircraft, carrying fewer than 100 munitions, and with no aircraft getting within 100 miles of the target in the first wave, and that took down nearly the entirety of Iran's air-defense system,"
It's a very impressive machine, that everyone wants, and China is really rushing to build something competitive.
>There are nearly 1,000 BILLIONAIRES in the US, the debt is their problem, they can pay more taxes until it's down to a number you like.
150% correct. The USA is stupidly wealthy on the world stage. We don't have to play pretend poverty, if we would tax the people who have hoarded all that wealth.
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Everyone is quick to deride this move as stupid. I don’t disagree that there are downsides to the approach, but there is a set of very real national problems that this might address.
For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well? Increased foreign competition pulls down domestic wages; telling people that they should shut up and be okay with that because they can get cheaper goods isn’t palatable to a lot of people facing the negatives of globalization. Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
There really are structural challenges to onshoring production due to strength of the dollar due to its reserve currency status; our society as such is biased heavily toward importing goods rather than exporting goods. This is a real challenge that needs to be addressed as well.
Our national debt is not sustainable either. Either we pay it down some, or we inflate it away; these are the two ways it goes away, ignoring the option of a world-shattering default on the debt. Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
> Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
Wouldn't restoring the prior taxes to those with highest incomes, and adding a proper capital gains tax, address this directly? As I've started to accumulate small amounts of wealth I've realized, my capital gains are taxed lower than my income; when I sell my house, I get up to 500k of gains tax free. If I backdoor a Roth IRA, I get tax free gains there too. etc. Add additional taxes to investment properties, in the form of property taxes could be one approach as well - I personally know of one investor that owns at least 20 (SFH) properties for example. So I'd propose starting there, as it targets both the wealth gap as well as hits those who can most afford it directly.
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
If tariffs significantly reduce demand, or worse cause a recession, they will have the opposite effect. It would take time to sort out the full impact. But AFAIK, the tax cuts are proposed to be pushed through immediately, without firm corresponding spending reductions nor time to sort out the impact of the tariffs; similarly the tariffs are being implemented in what seems like a haphazard way, with everyone unsure of what they would / will be, how much, etc.
In general, I think if the plan were modest tax increases, esp. around capital gains policy and targeting SFH as investments, (very) modest tariffs, and well executed spending cuts, nobody would be in uproar. I will be pleasantly surprised if the current plan ends well, but it certainly feels as though only those steeped deeply in ideology are supportive of them at the present moment, and I think that is probably telling.
You can tax whoever you want as much as you want but the problem is the industries from the past are no longer in this country.
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It is absolutely wild to me that money gained from letting it sit is taxed less than money gained from working your ass off. A crime against the working class.
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Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer.
Also when talking about tariffs reducing demand and inflating prices, I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
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You need to enforce monopoly laws, and more important than individual tax rates, you need to get the tax base spread out correctly again.
1950: 25% tax revenue came from personal income. 25% from social security. 25% from businesses. 25% from excise taxes.
Today: 50% tax revenue from personal income. 35% from social security. 7% from business. 7% from excise taxes.
This problem is never understood.
No, tax increases will not create better jobs to backfill the ones moved overseas by globalization.
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If you believe in these tariffs then the major problem is how he enacted them. Businesses want certainty. It takes years to build factories. The next president could just wipe away these tariffs instantly. Hell, even the current one could. That does not give these companies the certainty they need to commit years of effort to building factories. If the goal is to spur domestic manufacturing then, at a minimum, he would get the tariffs enacted via a new law so they're more likely to stick for the long term.
This is the key point. Even if tariffs did everything Trump claims they will (they will not) no one is investing billions to build factories in America for tariffs that will not be there in a few years.
Turns out that governing based on the whims of the executive has downsides.
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Which is why they want to abolish term limits.
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Tarrifs are a tool that must be applied strategically. You typically announce tarrifs years in advance so business can shift their logistics and build out manufacturing where you want it. However a daily change in tariffs only creates a chaos that the economy cannot simply respond to fast enough.
A new steel mill won't magically appear in the middle of the US within a month.
> A new steel mill won't magically appear in the middle of the US within a month.
And yet, I'm sure Trump will show up at one to take credit for its existence within the next month or so.
> What about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
What about all of the domestic producers of finished goods who can now can not afford their materials and supplies? What about the domestic supplier of that finished goods producer who has their orders cut because the finished goods producer needs to cut production? What about the domestic consumer who'd like to buy those finished goods, but they can't afford it because prices over all have increased? What about the barber shop by the finished goods plant that has to shut down because the finished goods plant cut their workforce by 50%?
100+ years of studying tariffs have shown that they are effective when very narrowly targeted. Otherwise they almost never achieve their stated goal of actually increasing domestic production.
Should we tax goods from Mississippi to NY to save jobs in NYC? After all, wages in NYC are way higher than in MS. Trade with MS pulls down wages with NYC.
JD Vance had a nice speech about globalisation lately, he describes how globalisation made the rest of the world advanced and rich: https://x.com/OopsGuess/status/1902396228404674853
So if people were trying to make the world a better place congratulations they succeeded. JD Vance uses a bit different framing(!).
Anyway, back to your question, IMHO the problem in thinking here is that it implies that there must be "They" and "Us". You can't just get prosperous as a humanity, it needs to be a subgroup like "Americans" or "Germans" that do amazing things and they are very unsatisfied that Chinese and Indians got advanced and no longer do the shitty jobs. When they say globalism has failed us, they mean we thought that Vietnamese will keep making our shoes but now they are making cars too.
Essentially the core of the problem(or ideal) is nationalism and borders associated with it, preventing of people move around and pursue happiness.
A group of people like the generations of Americans who pioneered many technologies and sciences built a world, then other group of people(mostly their offsprings or people who caught up thanks to proximity to the ground zero) operated within that world and made some choices and transformed the world into something else. Now, they are unhappy with the current state and propose teaming up around something like religion/attitudes around genders etc. If you subscribe to the idea that people should team around these things and if you think that you won't be suffering that much and you don't care that some people might suffer a lot, then yes the current actions actually makes sense.
> is that it implies that there must be "They" and "Us". You can't just get prosperous as a humanity
This idea of humanity transcending our genetic (due to geographic proximity) tribal groups is a uniquely European one. Pretending we can abandon all tribalism and integrate the entire world into a European model is either immensely incompetent or intentionally malicious (I tend to think the latter). The current billionaire class profits immensely from all the diversity (both generic and ideological) in the west. It’s much easier to parasitically rule a divided people than a unified one. Nationalism is a defense against these parasites.
> needs to be a subgroup like "Americans" or "Germans" that do amazing things and they are very unsatisfied that Chinese and Indians got advanced
The issue isn’t other countries improving. The issue is the average America should not have a degraded quality of life (barring major natural disasters etc) so that our billionaires can be richer. A nationalist elite class would correctly say “no, we keep those jobs here because it benefits my countryman even if I’m going to make less money”. We do not have this and the wealth gap continues to increase.
> If you're subscribe the idea that people should team around these things and if you think that you won't be suffering that much and you don't care that some people might suffer a lot
Do you think parents should prioritize their children? Not saying this snidely - there’s no black and white lines here, but I think universalism can only be accomplished by taking care of our own and growing our tent, as opposed to diminishing our own to lift up others (who in many cases do not share our universalist sentiments).
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I agree with the goal. I disagree with the execution.
First, from the outside looking in, it appears these tariffs were implemented in an adhoc basis which disrupt supply chains potentially bankrupting companies and result in more layoffs in the short term.
Second, there should be a carve-out on tariff policy to respond to national security interests. e.g., if and when the US wants Ukraine to rebuild its fledgling export economy, the US should set the tariff on Ukraine's products to zero as it is in the US' interests that Ukraine is financially strong. Similarly, the US should use tariffs to protect industries it deems strategic such as manufacturing advanced computer chips.
In other words, instead of using a purely political process to set tariff policy, I would argue tariffs should be managed by an impartial semi-independent agency such as the Federal Reserve. The governors of such a tariff agency should be tasked with the goals of advancing long term US interests, economically, employment-wise, and national security interests.
The Trump administration set the Russia tariff to zero, and we do still import stuff from Russia in spite of all the sanctions and set the blanket ten percent rate on Ukraine as you write. Maybe this is simply the current administration's national security interest.
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> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
Good faith negotiations with our allies and trading partners that creates a balance of trade and reduces wealth inequality in the west. I'm not opposed to the actual ideas being floated, but the people doing are are completely unserious and it's being implemented in a stupid nonsense way.
> Good faith negotiations with our allies and trading partners that creates a balance of trade and reduces wealth inequality in the west.
We can look at a 50+ year history of every major U.S. trade partner increasing their protectionist policies, largely targeting the U.S., while the U.S. allowed trade deficits to balloon out of control. I don't see evidence that this "good faith" approach you speak of has any viability at all. The global economy can't say with a straight face that it has been a fair trade partner with the United States. For the past 50+ years the U.S. market has been open for business for all global producers, but the same has been far from true for pretty much every major U.S. trade partner. You can't even operate a company in China without 50% Chinese ownership, for example. The global stance on trade has all but made this an inevitable outcome.
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If it's fundamentally a jobs program, you can be a lot smarter about it than tariffs.
If companies couldn't compete before, they're now further disincentivized to compete, leaving the rest of us worse off and uncompetitive with the rest of the world.
Tariffs are just bad policy.
That's the part I just don't get about the pro tariff as reshoring manufacturing argument. That industry only makes sense and will only be profitable in a world where the tariffs are permanent. The Vietnamese textile factories aren't going to just disappear their exports will shift to other parts of the world and if the tariffs ever disappear they'll shift right back to the US. So you'll have a tiny fragile industry beholden to the government for its continued existence that makes an expensive product only for domestic consumption... Maybe that's the actual goal create a new raft of client industries and workers in that industry who'll support the administration because to not do it will destroy them simply by lifting or easing the tariffs.
As a software engineer dealing with bits and bytes all day, it's easy to lose sight of the hard and sharp parts of reality. My wife is a chemical engineer who actually goes into a factory and is constantly dealing with production issues in actually making soap, ice cream, chemicals flow (different factories over her career).
JD Vance had an interview somewhere (I think in the NYTimes?) where he claimed that national prosperity is downstream of military might which is downstream of industrial base. It made me stop and think, because that does line up with what I was taught about how the Allies won WW2, and the US beat the Soviets in the Cold War: we outproduced them. I'm not sure if this is "fighting the last war", though, since I imagine a lot of warfare going forward is going to be technological and with things like drones, etc.
It's just so easy to deal with our economic abstraction, of dollars flying around, and computer work, and services and so on, that I sometimes do wonder about your point here about the actual physical, production of goods, and how important that is. Can you have a long term, stable, healthy, successful country that doesn't (and can't) produce anything physical?
We clearly can still make some stuff. I have a great squat rack and barbell set from Rogue Fitness, which makes stuff here in the USA (captured in this beautiful advertisement video[0]), and it's awesome. But I also have a made-in-the-USA wood pellet smoker which is garbage, and which I kind of wish I had just bought from China.
All to say, yeah, I think there's the potential for there to be something along the lines of what you're saying. That said, the implementation is maybe not great. Even taking the Tesla Texas Gigafactory, which was built in warp speed (construction to first cars in about 1.5 years), that's only leaving 2 years before a potential next administration could roll back the tariffs if they wanted.
[0] https://www.youtube.com/watch?v=3aCMGqA6_XY
Agreed there are serious restructuring that needs to happen in the US.
That said this approach doesn't make a lot of sense. There are many ways to do this without antagonizing all of your allies which only helps out your enemies and ostracizes the U.S.
Loss of confidence in the greenback is deeply problematic for US power.
>For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
We could instead pay for re-education and training for these folks to find jobs that do align better with the global economy and bolster social safety nets to help with job loss.
Tariffs are no guarantee the jobs will come back either or even if some of the manufacturing does come back to the US, that it will employ people who need it most or in the same number. Manufacturing automation is quite sophisticated nowadays. Even if the manufacturing comes back to the US - which I don't think is going to happen en masse if at all - the employment prospects that you're suggesting in this line of reasoning won't come back with them, is what the evidence suggests.
>There really are structural challenges to onshoring production due to strength of the dollar due to its reserve currency status; our society as such is biased heavily toward importing goods rather than exporting goods. This is a real challenge that needs to be addressed as well.
Why? Why is onshoring production of non critical goods a benefit to the US as a whole over the long term? Why do we want to protect manufacturing interests at the expense of other interests? These questions haven't been addressed. Not to mention the pain tariffs are going to cause isn't being addressed either, we're simply told to 'grin and bear it', and for what are we doing that exactly? Whats the actual nuts and bolts plan here?
Everywhere I look at the argument for tariffs I come up short on legitimate answers to these questions
>Our national debt is not sustainable either. Either we pay it down some, or we inflate it away; these are the two ways it goes away, ignoring the option of a world-shattering default on the debt. Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
There's other ways to handle the national debt than put broad tariffs on all our trading partners - including allies who have actually been very generous about their trade terms and investments in the US, like Japan, the UK (really much of western Europe), Canada etc.
If we really want to strength the dollar, we could raise wealth taxes (like capital gains or instituting a land value tax for example) and moderate spending. Why are tariffs superior to this? Tariffs only hurt the poor and middle classes anyway, who can't simply fly out of the country for large purchases to avoid them.
I really want to read a good response to this comment. I have the same questions, and I’ll add one more thought.
Lots of people talk about how the US should be more like Europe. People say the average European has a better quality of life, etc. Well, Europe has tariffs…
So does the US??? Ex - we've been placing tariffs on solar/ev parts for many years now to drive investment in those industries (And this is hardly the only place we've done this).
Targeted tariffs to protect and strengthen specific industries are fine - especially if done slowly and while supporting those industries internally to make sure that they aren't disrupted, and that they can actually capitalize on the space provided by a tariff.
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This policy is not fucking that. It's just a backdoor tax on everyone, with zero planning and support internally to bring those industries back.
Simple terms for your simple comment:
A morbidly obese guy slowly exercising is great.
A morbidly obese guy getting dropped into a marathon with no prep is a recipe for a heart attack.
Europe has tariffs. Everywhere has tariffs. Europe doesn't have tariffs like this.
Europe has higher taxes. But, somehow, despite the inefficiencies of governments, this produces a happier populace who work less and vacation more.
Tarrifs can be useful in protecting your players in an new industry. In specific situations not using it like carpet bombing.
Thomas Sowell who is 94 has some wisdom to share: https://x.com/HooverInst/status/1907630250135273527?ref_src=...
Europe has tariffs pretty much in line with the US. The weighted average tariff for the EU is 2.7% and 2.2% for the US.
There's of course the opportunity to get those in line, but that requires negotiations.
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Progressive taxation, better public services, universal healthcare, free education for all
Doesn't the US already have the most progressive tax system in the world? If you want more public services the tax rate would need to increase at all levels but dramatically so at the middle to low end.
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If you really want to onshore production, you don't increase taxes on the import of raw materials, parts, and components, you only do so for finished goods. That isn't what this administration has done though. They say they want to increase domestic manufacturing, but their actions clearly prove that that is not their goal.
There are two different questions here: (1) is Trump's strategy a good one to accomplish his goals? and (2) what are other good ideas to do so?
Just because there aren't many ideas in bucket #2 doesn't mean you should do #1.
For a trivial example, consider steel and aluminum tariffs (Larry Summers gave this example on Bloomberg yesterday):
There are 60x more jobs in industries that rely on steel/aluminum inputs than there are in the US steel/aluminium producers. 60x!
Steel/aluminum tariffs increase the cost of inputs to the companies that employ those 60x more people; their businesses suffer; those jobs are more at risk.
Meanwhile, it will take a decade for steel/aluminum production to be fully done within the US, and even then it will be a higher cost (i.e. the reason the US imports a big share of aluminium from Canada is that Canada uses cheap hydro energy to produce it - something that the US can't do).
Through that decade, every single item that uses imported steel/aluminum as an input will be more expensive for average Americans.
So you risk 60x the jobs, for a slow and ultimately non-competitive local industry rebuild, and meanwhile average Americans pay higher costs.
Now multiply that across every category of good in the economy?
#1 is bad. I don't have a great idea for #2, but #1 is bad.
Look at it from Trump's perspective for a moment. The only tool he has is tariffs, and the people he's negotiating with are not just foreign governments but also Congress. Because he has this authority he can use it to try to bring any of those to the table and negotiate alternative approaches. Not saying that's what he's doing. Just saying that's a possibility.
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> very real national problems that this might address.
This is a dubious claim to begin with. If you believe that 'trade deficits are bad,' can you explain why? Post Covid, the US economy has emerged in significantly better shape than nearly every other country in the world, so I'm failing to see how these deficits are meaningful.
> Globalization has played a big role in creating the massive income inequality in our country
What is your source for this belief, especially when comparing globalization with other factors that cause inequality? From my understanding, the biggest recent contributors to a higher cost of living in the US are housing, health, and education. Health and education purely services-oriented, and housing is one-third a labor cost.
> our society as such is biased heavily toward importing goods rather than exporting goods
I think that's great. America exports services. We innovate to create new technology, are a leader in designing the things and systems that people want (think of our tech industry), and we delegate the work of manufacturing to others. That seems fine to me, and a function of having (relatively) open, free trade.
> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
At a high level, the problem is that free trade makes the pie bigger, but causes distribution/inequality problems. So generally speaking, the best measures are going to be those that improve inequality while minimizing the impact to the size of the pie. Raise taxes on the wealthy, increase spending on social programs to the non-wealthy, fund investments in programs that benefit everyone equally. (Public transit, libraries, healthcare, education, etc.)
Tariffs shrink the pie, and I'd heavily bet against those hurt by globalization being those who are able to grab a bigger slice under the current administration.
According to the Bureau of Labor statistics, there are 7 million unemployed in the U.S. currently.
I don't know how you expect these to cover for all the manufacturing you imply might come back to the U.S. with these tariffs, and that's assuming the space and the production means (factories, etc.) are here already. They aren't, and not for a couple years.
Combined to the fact that the U.S. is clearly sending a signal that coming there is dangerous now, especially for any other category than white males, and I don't see how you can even imagine that this situation is going to be working out.
There is a net outflow of US dollars, because we keep issuing new debt. The fix there is to stop issuing new debt, by fixing the budget. Sadly, no one seems to think this administration will do that.
Globalization is fine. Wages in this country are quite high overall. Inequality isn't caused by trade, it's caused by low taxes on rich people, weak unions, and weak labor regulation.
The terrible state of US production is a myth. The US is the second largest manufacturer in the world. The #1 spot is occupied by a country with over 4x our population. Manufacturing employment is down because our manufacturing productivity is really high. Yeah, we don't assemble smartphones or make plastic trinkets. We make cars and jetliners and computer chips.
If you want to address the national debt and inequality, the solution is to correct the power imbalance between employers and employees by strengthening labor regulations and unions, and to raise taxes, especially on high incomes, and especially on the super wealthy. Taxing people like Elon Musk down to a more manageable 10 or 11 figures of net worth won't do a lot for the nation's finances directly, but it will do a lot to curb their power and get the government to be more responsive to our interests instead of theirs.
(And no, tariffs are not a good way to do this, since they're regressive.)
Aren't "weak unions" caused by globalization? Unless the union is global, employers can always respond to stronger unions by pulling the off-shoring lever even more vigorously than they already do.
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Tax corporations and the wealthy since they receive the majority of the benefits. They benefit from a trained healthy workforce, social safety nets, infrastructure like roads and electricity and water. They benefit form the US dollar being the reserve currency for most of the world. I literally cannot list all the ways these two groups benefit in a real tangible outsized way than any other individual.
Trump wants to eliminate all federal taxes. That's NOT going to reduce the deficit. The current republican spending bill includes a 4.5T tax cut to the wealthy and businesses, while cutting only 2T in spending from entitlements WE PAY INTO SEPARATE FROM TAXES. I am entitled to the money that me and my employer pay into Social Security, it's an investment, not a tax.
Let's stop taking from working people who are quickly falling further and further into poverty and start taking from the people who literally own everything!
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> For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete
That misses the point on so many levels. First of all consider that this is a domestic problem too. What about all the businesses abandoning California for Texas because wages are so much lower to achieve an equivalent cost of living?
Cheaper goods produced elsewhere is not necessarily a security concern for the economy. Silicon produced only in Taiwan is a security concern for the US, for example, but rubber production isn't even though the US cannot produce natural rubber.
Finally, and most importantly, price depreciation of goods due to global options frees up American businesses and employees to seek more lucrative ventures as the market demands that would other not exist due to opportunity costs.
Do you honestly believe that there are significant numbers of US citizens lining up to take up low-margin manufacturing work as is currently done in China or elsewhere?
Chinese manufacturing workers live on a $25k/y income ($15k without adjusting for purchasing parity!). Do you beliefe that raising prices on goods by 30%ish is enough to make those jobs attractive to US citizens?
What sectors would you suggest primarily sourcing domestic manufacturing workers from, and would you agree that just doing that is going to lead to further cost increase for the average consumer?
In my view, the current tariff approach is a rather naive attempt at improving national self-sufficiency at the cost of the average citizen, and the administrations explicit statements and goals make this pretty clear-- shifting government income from taxes to tariffs is a very obvious losing move for the vast majority of people that spend most of their income.
US economy right now is heavily biased towards providing services and high-tech goods because that is the most valuable use of its citizens according to market dynamics. Managing the economy in a "I know better than the market way" certainly did not work out for the soviets...
Sometimes I feel that people construct elaborate theories of how Trumps policies will end up beneficial for the average citizen, despite clear, explicit descriptions of how that is not the goal and historical precedent of acting directly against working-class interests (i.e. raising estate tax exemptions above literal 1%er-thresholds).
So you are okay with exploiting people for labour, often in inhumane conditions just so you can buy some unnecessary junk for cheaper?
> US economy right now is heavily biased towards providing services and high-tech goods because that is the most valuable use of its citizens according to market dynamics
So basically geared for upper class / banking industry? US has some of the highest wealth inequality of the developed world.
But by far the most important aspect is military. Manufacturing capability is extremely important for military. US may be the most advanced, but a $10m rocket will not beat 10,000 $1000 drones.
https://www.nytimes.com/2008/01/05/business/worldbusiness/05... https://www.nytimes.com/2012/01/26/business/ieconomy-apples-... https://www.cbp.gov/newsroom/national-media-release/dhs-crac...
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I agree with you. The middle class is going to take all of the blunts. The rich people more or less are not impacted.
You can't look at this move as something in isolation. Trump has also completely flipped geopolitics on their head.
Here's other things he's done:
- Threatened Canada
- Threatened Greenland/Denmark
- Supported Russia (it's obvious)
- Told NATO allies export F-35s will be nerfed just in case we come into conflict
Americans are already very insular, I don't think you all realise just how much you've pissed off Europe and Canada (I live in both places throughout the year, family in both)...
American multinationals have benefited greatly from trade with other countries... Look around the world: iPhones and Apple products everywhere, Windows computers, Google dominates search, the USA is a top travel destination, American weapons are used by most allies, etc...
Right now in Canada and European countries we're talking about completely cutting out all US trade and travel. Like all of it. It won't be policy but the US has completely destroyed all goodwill and cultural influence it has across the "West".
Because of immense hatred of Russia, China is now the "lesser evil" and pretty much all developed countries will band together. And not only will countries move on from US hegemony, they'll accept any pain that comes with it because Russia is threatening Europe and the USA is threatening their neighbours. Without the geopolitical aspect, the US might have won this trade war. But no one is going to bow to the US to then get sold out and conquered by Russia...
One unintended benefit of this move might be reducing greenhouse gas emissions from global shipping ... if US consumers are consuming more US made products, the supply chain for those projects will have gotten significantly shorter in nautical miles.
I'm hesitant credit President Trump with this too soon though, after all, his motto is "drill drill drill", but It's going to be interesting to see what happens.
Emissions from shipping are about 3-5% of global greenhouse gases, and my understanding is that also includes all domestic shipping. Emissions from personal vehicles (not including freight trucks) is at something like 10%.
I don't have specific numbers for America on hand, but I'd be very surprised if Trump's administration broke even, let alone cause an overall reduction.
> what about the former domestic producers who could not compete,
Tariffs won't make them any better at their jobs. So the American customer can expect higher prices and lower quality of products and services.
> Everyone is quick to deride this move as stupid. I don’t disagree that there are downsides to the approach, but there is a set of very real national problems that this might address.
Because it is stupid. It's important to point out that this is stupid and not only doesn't help with problems that come with the benefits of globalization but makes it worse. How will a deep recession fox anything? Including debt(which is high but manageable under a sane government)
It's not the idea, it's how it was rolled out, how poorly it was communicated, how little sense the numbers mean.
This is a bunch of nonsense that is not driven by data and not even worth a response.
I am tired of people spitting BS just to defend Trump's inane policies and everyone else having to rederive modern economic trade theory in comments in order to counter it.
Physicists used to get a bunch of derision for thinking their high skills in analytical thinking in physics easily carried over to other fields, and now we have CS majors thinking the same.
Regardless I will do some of the countering:
> what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
We had a candidates that offered job re-training programs. Those candidates weren't selected and those jobs went away even as we tried to put up protectionist domestic policy.
> our society as such is biased heavily toward importing goods rather than exporting goods.
This is fine. Comparative advantages and all. We just need to produce the goods necessary for national security. It worked out well so far. Do we actually want to have other countries do the high value services and us doing the low value manufacturing???? Why are you justifying engaging in a trade war with Cambodia and Vietnam?
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
This is not backed by any data. Every single economic thinkthank worth a damn, including conservative ones, have detailed how it will raise the national debt.
I am tired of people saying ridiculous arguments just so they can stave off cognitive dissonance.
Tearing down our soft power and throwig out every trade deal we have carefully crafted since WWII is absolutely ridiculous.
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> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
The solution is clear, let the tax cuts expire, and increase the taxes on corporations. Make special tax incentives on real investment and innovation.
Make a special tax for the four individuals behind Trump at the inauguration, who own more health than 60% of the US population.
Stop allowing billionaires and corporations cheat the tax code to have lower effective rates than the majority of US citizens.
I am sure the 14 billionaires on Trump cabinet will be working on this right away... \s
Billionaire boys behaving badly! Let’s teach them a lesson! That will solve all the problems in the world! /s
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A blanket 10% minimum tariff is a great excuse for any local US manufacturing to increase their prices.
I used to live in a country with heavy tariffs, every time tariffs were raised the local producers increased prices to be just below the imports. Even after the tariffs were abolished the prices (on local and imports) never really lowered in any significant way.
That always seems to happen with this sort of protections. It's like when the government tries to incentivize people to buy electric cars by paying 25% of it (example from the climate bonus in Sweden, which was given for years), but what happens is that buyers actually end up paying just maybe 5% less as the car companies now can increase their prices and still sell the cars they produce while making more money.
That happened in New Zealand, where the govt. paid $5,000 for electric cars. When this subsidy expired, prices decreased by a few thousand.
If a consumer was willing to pay $20,000 for a car why would they sell it to them for less than $25,000 when the final bill to the consumer will be $20,000, with the govt. paying an extra $5,000.
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That this would happen is evident to everybody with a minimum knowledge of economics. It’s the same reason UBI won’t work because it would make prices skyrocket.
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This also happens when a certain price range gets different benefits.
For example lower mortgage rates if the house costs below $X. Now houses that could sell for far lower than $X actually list close to $X.
Well yeah, that's the point. Its so factories paying local wages can now compete with factories overseas where wages are much lower.
A laborer in a subsidized, low-productivity industry is one less worker available for a high-tech, high-productivity sector. With a finite workforce, misallocating labor like this inevitably hampers innovation and economic growth. The U.S. should focus on being a powerhouse of technology and innovation, not divert resources to low-value tasks like picking olives from trees.
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> every time tariffs were raised the local producers increased prices to be just below the imports.
That's literally how tariffs are supposed to work. I'm confused about what you thought should happen?
Local producers are supposed to raise prices so there is more money for worker pay or business reinvestment or both.
Or, you know, profits.
Capitalists only care about profits.
I live in a country where we have many protectionist tariffs and the locally produced goods are expensive and lower quality compared to imported goods which guarantees profits at the expense of consumers.
I don't understand why people still believe in this day and age that wages will ever increase despite data showing the opposite for literal decades.
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No, the foreigners pay the tariffs. Then that foreign money gets spent on childcare and other things Americans need and want.
How many times does Trump need to explain this to you?
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I also don't think it's enough to justify moving manufacturing to the US. The investments are to high, especially for something that might only last for four years. The US also doesn't have enough workers, so wages would increase.
Count on it. Especially after Trump (AKA we the taxpayers) gave the oligopolies and monopolies huge corporate tax handouts, for which they thanked us with massive price hikes and the current "inflation."
Oh, and of course there were Trump's tax hikes on middle-class Americans to boot.
What a mind-blowing betrayal and mess.
Yes that will invariably happen, barring price controls.
This is expected and normal? Demand for locally sourced goods will skyrocket which means prices should as well. What you are leaving out is that the US is well capitalized and those sky high prices will be a strong incentive for more competitors to join the market. With competition in place prices will eventually fall. Prices will likely never go back as low but at least our fellow countrymen will be employed, housed and hopeful instead of on the streets doing fentanyl.
People will starting fighting against more houses being built to protect their wealth even more than now. You'll be earning like $25/hr at the factory and all the single-family houses are 300k+ with significant interest. Assuming they never have a huge healthcare bill which also shows no signs of becoming affordable, if the factory jobs even offer decent benefits but my guess is they will all be high deductible plans.
So the US has been, more or less, the best place in the world to do business. Stocks historically soaring, yadda yadda yadda ... and somehow this guy sells the story that the US has been taking advantage of by all the other evil countries in the world. It does not, in any way, make sense. What a clown. A totalitorian clown unfortunately.
Would love to know what your country's tariffs are on the US.
You are downvoted but this never mentioned indeed. I have a hard time finding how much us Europeans pay in tariffs on stuff from China and the US.
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"This guy cracked the tariff formula: @orthonormalist
It’s simply the nation’s trade deficit with us divided by the nation’s exports to us.
Yes. Really.
Vietnam: Exports 136.6, Imports 13.1 Deficit = 123.5
123.5/136.6 = 90%"
https://x.com/Geiger_Capital/status/1907568233239949431
Taking Vietnam as an example, keep in mind that the trade deficit calculation only uses physical goods.
Vietnam exports low value physical goods to the US. The US sells high value non-physical services such as Microsoft office, ChatGPT, Netflix, Facebook ads, iOS Appstore fees, iCloud subscriptions, etc to Vietnam. Other services include engineering consultants, US tax auditors, US consulting companies, etc. None of these are factored into the formula.
So a country like Vietnam gets royally screwed by this formula. They are actually buying way more from the US than just the physical goods.
If you're Vietnam, it's very hard to "just take it" as suggested by Treasury Secretary Scott Bessent. The formula is flawed in the first place.
If we truly want fair, the formula should be based on total profit of the goods and services sold. Services have much higher margins than physical goods typically.
I am quite certain that none of that software revenue is recognized in the US. https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute
This is such an obvious fact and the fact that not more people see through this is insane to me.
The "trade deficit" is an arbitrary number unrepresentative for what the US makes the most money with.
That's true for most other places, including the EU. With services included, the trade imbalance is negligible. Source:
https://ec.europa.eu/commission/presscorner/detail/en/qanda_...
Some think AI helped with the formula
https://universeodon.com/@cryptadamist/114271484597938775
The tariffs might be a bad idea, but this accusation is ridiculous. For a simple methodology like this, it's trivial to prompt engineer a LLM to produce the same response. It doesn't mean that that's how the administration came up with the policy, any more than a LLM getting the same (correct) solution as a student on an assignment means the student used a LLM on that assignment.
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The takeaway from the X-poster being "it's good that they're using LLMs" is hilarious. Why praise the method if the end result is so bad?
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Holy cow! I had to check for myself: there are even more data points on trade balance for all countries at https://www.census.gov/foreign-trade/balance/index.html (whereas @orthonormalist used a partial list from wikipedia) and the percentages I calculate line up exactly with the Trump's full list of "Tariffs Charged to the USA" percentages (https://x.com/RapidResponse47/status/1907541343250878752) !!
Specifically they used 2024 trade balance figures. Example: take a random country, like Botswana, and the country's page at https://www.census.gov/foreign-trade/balance/c7930.html shows a 2024 trade balance of 104.3 (exports) and 405.1 (imports) so 1-104.3/405.1 = 0.74 which matches the "74%" "tariffs charged to the USA" claimed by Trump...
Rarely you get handed such blatant evidence that someone produced bullshit numbers and/or doesn't understand where the numbers come from !
Edit: someone said it doesn't work for Japan but it does. Every country I checked by hand matches the figures exactly... For Japan the figures are from https://www.census.gov/foreign-trade/balance/c5880.html and their 2024 trade balance is: 79,740.8 (exports) and 148,208.6 (imports) so 1-79740/148208 = 0.46 which matches the 46% "Tariffs charged to the USA " from the table shown by Trump...
thanks for the information. In light of this, it seems pretty silly: economy on a world scale isn't a line, it's more like a ring (country A has a deficit with country B, which has a deficit with country ... N which has a deficit with country A) at best. Isn't it like saying everyone should trade everything at the same price with everyone?
Can anyone else confirm this is true? I’m feeling a bit sceptical here.
Confirmed by the White House here: https://ustr.gov/issue-areas/reciprocal-tariff-calculations.
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...and every country USA has a positive trade with, will get slapped with the 10% tariff. Every country on the table Trump posted, that have received the 10% tariff, the US have a positive trade with.
No winners in this one.
Plenty of countries got excluded from this—Canada, Mexico, Belarus, Russia...
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Not saying I agree with it, but Trump has communicated that ideally these international companies would build factories in the US. There would be no point in doing that if not for some floor tariff.
I think a lot of people assume the economic consequences like these have not been understood by the WH. Although I don't like this administration I beg to differ: they know what's going to happen, and they expect the coming storm because they seek what follows.
They want to repudiate foreign held debt, or devalue it, by revaluation of the USD and they will wear what they think of as a one time economic shock to get their reset in a belief they can make it less like the Smoot-Hawley great depression because so many other economic levers exist now, including floating currency, MMT, and massive fintech.
Personally I think it's a mistake but hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care. Some amount of foreign trade will absorb the cost. Not all, not most. Not all prices in the US will rise and some substitution will happen although spinning up cheap labor factories again isn't going to happen in 2025. Maybe by 2027? Rust belt sewing shops and Walmart grade cheap goods production lines?
What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
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 will be equivalent to Brazilian tariffs in 1989 before opening the economy (31%, data from World Bank).
Now, Brazilian tariffs, which have one if the most closed economies, by weighted average, is 7%.
China, have 2.2%.
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.
So yeah, some people at best (if is not a robot doing the job) will have a job in a factory, but on what he will be able to spend with his wage won't make it worth even for this person.
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...
>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.
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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?
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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.
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This is also the start, other countries will retaliate and the current administration being the current administration will probably respond.
>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?
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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.
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.
People are also getting way too caught up in the math and numbers. They think WH calculated the percentages through incompetence but the 25% tariffs weren't based on anything very real either. The entire goal is not carefully calculated trade equality, it's mafia style intimidation to get some easy concessions as quickly as possible from everybody... before the economy crashes too hard. Spamming tariffs to see what sticks. The math is just a plausible justification for something they would have done anyway.
It's bully tactics.
For ex see Canada's fentynal importation issue, which was something invented to justify a natsec emergency legally. The numbers don't have to be real, just plausibly deniable.
Bingo. Occam's razor suggests that the WH is again simply trying to force good short-term deals using mobster tactics.
>They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
Devaluing dollar does not reduce debt measured in dollars. It only makes US debt less valuable to forefingers.
Devaluing dollar can work well only if foreign investments into US stop or reverse. "foreign investors at the end of last year owned 18% of U.S. stocks, according to Goldman Sachs" The trend has already reversed https://www.reuters.com/markets/us/foreign-demand-us-assets-... Killing foreign demand for US assets more permanently is possible but it means financial market crash.
What WILL happen is recession. Atlanta Fed GDPNow dropped from -2.8 to -3.7 percent in a week. https://www.atlantafed.org/cqer/research/gdpnow?date=2025-04...
https://www.nordea.com/en/news/mar-a-lago-accord-explained-a...
https://think.ing.com/articles/mar-a-lago-accord-10-question...
https://www.forbes.com/sites/eriksherman/2025/02/23/why-trum...
https://www.lowyinstitute.org/the-interpreter/unpacking-mar-...
I certainly don't understand enough of economics, but:
- If everything overnight costs 20% more for the American consumer, it equals 20% less disposable income and less purchasing power.
- US companies, even the few ones not directly affected by tariffs, are going to be hit by less demand, and that in the aggregate is going to affect the performance of all American companies.
- So, it makes sense to dump as much American stock (and perhaps other instruments) as rationally possible.
The rest of the world is also going to feel the shock, though at this point is unknowable to what extent, and it also depends on the policies governments outside USA enact. In Sweden for example, we react to imported USA inflation by increasing central bank rates and catapulting the country into recession, and I totally see that happening in the next few weeks. Even it does not, it is what the public expects, and already many may be reigning in on consumption and investment. And dumping American stocks like crazy.
Foreign countries like Japan and China own around $1.8T in US bonds. These are valued in dollars, like stocks.
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I thought the US gov is hoping that debt is relinquished as part of negotiations, is that not the case?
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If that is the plan, it's terrible. The majority of US debt is domestic.
https://usafacts.org/articles/which-countries-own-the-most-u...
Yes and no. As a headline "I reduced $7t of foreign debt" is pretty good. The plan appears to be to invite people to Mar a Lago and offer to trade the existing debt for new instruments out in the never-never.
Domestic debt might not be such a big deal? Who is coming to collect?
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Still fits within a populist agenda. Not a lot of sympathy for mutual funds and the wealthy holding treasury notes that get inflated away.
I'm not excited that 20% of federal revenue goes pay debt interest to some investors and stockholders. Especially when much of the original debt spending also went into the pockets of stockholders, sometimes the same ones.
Of course, the actual problem is lack of control and debt spending, not the fact that investors exist.
People say that public debt doesn't matter because it domestic, but the recipients and payers are different. It doesn't cancel out when I'm responsible for paying taxes and Vanguard or JPMorgan get the debt interest.
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Given everything recent I’d say competence in the WH is a stretch
The prez is literally holding up placards where half the numbers on it are mislabelled and they rest of the numbers are that mislabelled/misunderstood number divided by half
That sounds like garden variety incompetence to me not 5D chess
There is a low cunning at work though - Trump now runs the largest military in the world and the largest economy and if the only way he can impress other people is to use that power he will use it to try to beat them into submission. Chaos at this point is his friend as he attempts to stay in power as long as possible, so expect trade wars, war, domestic chaos and forcing others to show loyalty to him personally and pay him off as the biggest bully in the room. He sees this in very simple terms. So no there is not a high intelligence at work but he is not without agency and cunning. He has operated this way all his life due to inherited money and got away with it.
And damn the consequences for everyone else, including the people who elected him, he doesn’t consider that in his calculations, which is what makes them so confusing for those who think he is playing by normal rules of politics or business.
The bring manufacturing back to the US never made sense to be numbers wise.
Thing A is currently manufactured in China | Vietnam | whatever lower cost country and sold for $x today. Slap on 50% tariffs so now it costs $1.5x. That provides an incentive to produce thing A locally sure.
But if you can already produce thing A locally for $x, you wouldn't have offshored the production in the first place. Maybe producing thing A locally will cost less than $1.5x, but it'll still be more than $x. So cost still end up increasing.
Am I missing something?
I think the long game answer is clear: Trump wants an old fashioned World War with China before 2027 and needs production back in the States.
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The missing piece is not all costs are passed on to consumers.
Company absorb costs all the time. If you think cutting your price by 10% will boost sales by 20%, you do it because total profit is higher even though per unit profit is lower.
And the reverse is true - companies might increase prices and accept lower volume.
Not to mention not all items are interchangeable. Is a car made in Mexico worth the same as the same model made in Germany?
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Two typical scenarios that we know from the past in industries like cars for example.
Corp one has two factories one smaller one in the us one bigger one in the eu. They will now shift more of the production to the us from eu to avoid tariffs.
Corp two only has a factory in the eu. They will now build another factory in the us to be able to avoid tariffs and keep selling their goods at competitive prices.
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That’s may be true. But why does Vietnam have such high tariffs? They should be competitive based on their lower costs right? So it’s simple: Vietnam can eliminate tariffs on imports and the U.S. would eliminate tariffs as well.
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> I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
Clearly they will "secure the vote". Massive voter disenfranchisement is already taking place, it will go to the next level.
The one thing I hope Americans think about is to believe in democracy, and discuss with others on the other side of the aisle. Really, most have voted the way they did for real, valid reasons. And recognizing them is the path to heal your country. Only through understanding will democracy prevail.
Do not spiral into dividing your own country. That is the real goal of authoritarian regimes.
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Elon proved this with the Wisconsin Supreme Court vote.
He will likely dangle hundreds of millions in front of voters across the US to buy their vote without any repercussions.
And then make that money back through the insider dealings that prioritise SpaceX et al.
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How massive?
> What's the plan for that?
The answer to this is pretty simple, although American Exceptionalism makes it hard to see for many Americans. For every other country, most could see pretty clearly that they'll not plan on holding free elections going forward.
"Personally I think it's a mistake but hot takes "they have no idea what's coming" are I believe naive."
They slapped 10pct tariffs on the Heard and McDonald islands. Literally uninhabited islands in Antarctica.
The defending theory for that is that it doesn't allow for loopholes by trading through tax exempt countries.
It's certainly an interesting strategy. Let's see how it plays out.
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Why don’t you look up how they came up with those tariff numbers and come back and tell us that this is some sophisticated economics at play here.
I didn't say this is sophisticated.
I said they expect the outcomes people are complaining about. They've workshopped this, and are aware how this is playing out. I would be very surprised if there is a significant leak of "we didn't expect this" anytime soon.
Trump believes in tariffs, I don't.
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> they know what's going to happen, and they expect the coming storm because they seek what follows
If they do they’re lying. The mechanism by which tariffs restore production is by raising prices. That makes it more lucrative to invest in serving that market. If producers have to absorb the tariff, they won’t boost production and the tariff is just a corporate tax increase.
> to repudiate foreign held debt, or devalue it, by revaluation of the USD
That’s called inflation!
My personal opinion is less complicated: they're pulling the economic levers they have in a way that they can use to enrich the top 0.1% even more. The richest of the rich got very wealthy during COVID (economic fallout, buying up lots of stocks at a discount then the biggest stock market bull run we've ever seen) and they want to make it happen again.
I am amazed at how many people are still imputing intelligence to Donald Trump. Him winning the presidency again after everything is less about him being some deep mastermind and more an exposure of the issues with America that have been there building for decades now.
The difference between Trump 1 and Trump 2 is that all the "establishment" R politicians who were "corrupt" or "deep state" but willing to work with him could at least steer the ship in the first term. Those people are gone and all who remain are ideologues and yes-men. Trying to find logic in the madness strikes me as someone going through the stages of grief near death, trying to find sense in a senseless, uncaring world. Take occam's razor, no one is steering the ship at the white house right now.
> a lot of people assume the economic consequences like these have not been understood by the WH
I think you're making the same mistake a lot of observers are making: you're looking at this from an economic perspective, and think those decisions were taken on an economic basis. But that is likely not the case.
The Trumpist movement is entirely focused on political aims: re-establishing old hierarchies of power inside the country, and entrenching them for good. The important work is the slashing and burning of welfare and safeguards for lower and middle classes, putting minorities "back in their place", and entrenching the wealthy into positions of absolute dominance. Everything else is a distraction, to keep newspeople busy and the population focused on recreating an idealized, "Happy Days" 1950 society. Enemies will be created to make you hate, this or that policy will be picked up or dropped just to keep you arguing, and meanwhile the important work is made irreversible. Once you destroy what was built over a century, it will take decades to rebuild them, and meanwhile the New Normal will take root and become impossibly hard to remove.
Fascism and nazism did not move from economic principles - they picked up what they needed as they went, opportunistically, because their main aims were fundamentally political. The Trump II administration works in the same way: the priority is political dominance to achieve political aims at societal level, everything else is tangential and opportunistic.
> hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care
I think they know, they care and decided that it is a reasonable way forward given very limited (trade and budget deficit) options. Otherwise I think you are spot on.
To spitball some ideas on your midterm comment (again, agree to it). One possibility is they see it as an unavoidable loss, plan on using veto to maintain course set during the first 2 years (which is why they rush) and hope to be in the updraft phase by the November 2028 elections. Maybe.
This seems likely, but I cannot figure out why they are not trying to pass more legislation in the first 2 years if they're fairly sure they're going to lose the midterms.
The only conclusion that can be drawn from their public actions is that they believe they can more or less enforce all their policies by executive order and that they're very sure they will be keeping the executive in 2028.
If they piss off enough people impeachment is back on the table. They might not last until the 2028 election.
I don't think its about devaluing the currency to pay back debt at all. I believe it's about a fundamental vision of an autark USA, decoupled from any international obligations, whether its NATO, WHO or WTO and focused purely on producing and selling domestically whilst having a "beautiful ocean on each side".
I believe that's an unrealistic vision, not least since America's debt means it cannot afford significant shrinkage of its global market or a loss of its status as reserve currency, but I believe autarkie is the goal none the less.
> and they expect the coming storm because they seek what follows.
Well, a lot of economists, including one Nobel Prize winner (Paul Krugman) have commented on this being a bad idea for the economy...
On the off chance that those people who are supposed to know what they are talking about are all wrong and haven't thought about it being some genius diversion tactics -- it's generally still a pretty bad idea for a government to effectively ask everyone to "tough it out" and "just trust me bro".
It's really disappointing that people are actually trying to theorize this as some kind of genius plan. It doesn't take a genius to figure out the amount of irreparable damage they have already done to regular folks is unacceptable (uh... I'm sure some nutters out there think that DOGE is keeping track of all the damages they have done and will pay everyone once their genius plans have worked out).
That kind of logic really amazes me.
paul krugman isnt useful example because he is a liberal democrat and people will try to say thats why he said its stupid. even though hes right and it is stupid. plenty of conservative economists are basically saying wtf Bro to these tarrifs. Sadly that will also probably not help but it has more of a chance to do something
> they know what's going to happen, and they expect the coming storm because they seek what follows.
I agree that that's their understanding. I'd argue that in reality they don't, they can't. International relations are a very complex system. And there is no precedent of an empire wilfully dismantling its periphery.
I really don't enjoy the whole "may you live in interesting times" thingy
> They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
Given how dependent usa is on foreign debt, that sounds crazy to me.
If they accomplish that sort of thing, they wont be able to borrow at favourable rates anymore. That seems incredibly bad for usa. Am i missing something on how severe that would be?
IIRC they are trying to pay off their debt since they are on a brink of default. They don't want to borrow anymore.
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> They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
I don't understand, who's holding that "foreign held debt"? foreign countries I suppose, so which countries do you have in mind?
For one, it's not China, which holds a large amount of US treasury bonds (so basically, China is a lender of USD). So the revaluation of USD would work great for China: one, the value of the China-held USD bonds increases, and second, the price of Chinese exports decreases in USD terms.
So help me understand, what's the plan with the revaluation of USD?
That runs against basic financial reality. The treasuries are the basis of all U.S. liquidity. Owning commercial papers or stocks doesn't help as companies own treasuries. Putting deposits in banks won't help either because banks hold treasuries.
You've read up on the purported "Mar a lago" accord model? The idea is to threaten a repudiated debt, or agree to convert to long term non interest earning debt alternatives which can't be traded.
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Of course there are people who know. But not the decision maker. I notice the use of collective pronouns, but there is only one person driving this. Everyone else is riding the tiger.
Not sure why, despite long and consistent experience, that people keep thinking he’s anyone but exactly who he appears to be. There’s no grand plan, calculated risk, or 4D-chess. The clown is just putting on a performance, based on his immediate feelings, and the immediate reaction of the crowd. There’s nothing else there.
Foreign held debt is less than 30% of outstanding, and less than that is sovereign-owned, so I don't think devaluing or attempting to restructure foreign debt via "century bonds" will have much effect on US debt obligations.
I seriously doubt this administration understands any of this. I agree that they don't care, but I don't think they know what's going to happen. No one does.
I think this is what's going on:
https://youtu.be/cmTeg0B9tH8?si=yhIAg45FCBUW40mI
Japan Joins CHINA To Strike Back On U.S. Trade Punishments!
https://www.youtube.com/watch?v=ZOz4UgTW5-0
I recommend reading the summary of the video if you don't have time.
In my opinion you are giving the US government far too much credit. Trump has through his usage of social media created a weapon that he can strike at anyone that stands in his way. With all branches under Republican control there's simply no one left who can stand up to him without having his political career destroyed. We've seen this story unfold so many times in countries around the world - Turkey would be one recent example where the misguided policies of Erdogan have left the country with record inflation rates for years.
> I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
They tried to steal an election already - it's pretty easy to understand why they are making decisions as if they don't have to worry about elections anymore
This does not, at all, contribute to the discussion.
> What amazes me is the timing
If it didn't hit midterms it would hit the next presidential race. You gotta pick your poison. I guess they decided it's better to just get it over with.
Trump told you, I don't know why you still wonder what's the plan: https://www.reuters.com/world/us/trump-tells-christians-they...
As a professional armchair economist, I would call it a power off rather than a reset.
It took over a hundred years for countries to once again have economic trust with France again when they went hard on tariffs in the 1600s causing war.
Who in their right mind would negotiate with a man known to rip up existing agreements on a whim?!
I have a feeling that this will knock the United States down a peg economically to the point where we look back on Liberation Day as America’s Brexit
Brexit is going to look like a minor bump compared to this. Even the stupid deal the UK negotiated didn’t try and seal the borders to imports.
Bretton Woods would like to have a chat with you.
This was a macro argument assuming a benevolent intention. However if we look purely at self interests the main thrust is to increase revenue on paper to cut taxes. At the same time raise debt ceiling. And when the tarifs proof unsustainable then well, we are in happy deficit spending land with no fault on the drivers side.
> Rust belt sewing shops and Walmart grade cheap goods production lines?
Are we really going to see this happening in 2 years? I'm not sure about this. The cost of Mexican/South Asian factories are still a lot lower than US.
We absolutely will not, especially given the administration's demonstrated lack of willpower.
What you will see is many promises of massive investment, conspicuously scheduled to break ground around 2028ish.
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> the midterms will hit
The plan may be that there are no more elections, or that the only people who are allowed to vote are identified MAGA supporters. Does this seem impossible? Everything Trump has done would have been considered impossible only a couple of months ago.
What Trump reveals is the utter apathy of Americans. They're sheep in lions' clothing, not the other way around.
> "they have no idea what's coming" are I believe naive.
There could be someone who understands this. But this someone never shows their face in public, or provides any rationale for the policies beyond the nonsense like "reciprocal tariffs" or similar nonsense. I mean the literal board with tariff percentages that was held up had numbers that made NO sense, to anyone! Yet there are no critical questions?
It's beginning to feel like a conspiracy theory. That behind the obvious idiots who are the faces of the policies, are some other, less inept people who are pulling the strings. But who would this be?
> they expect the coming storm because they seek what follows.
If there are elections in 2026 and 2030 then what follows is a blue wave in the midterms and millions of disappointed voters who had their 401k's gutted, saw prices of most goods increase 10%+ in 2 years, saw little to no tax cuts, lost their jobs if they worked for the government, and lost their social security.
So I asked this question back when the wiki page for exorbitant privilege[0], the term used to refer to the US’ status, was posted. I was provided with a few links of people who do seem to understand[1]. The Hudson Bay capital piece was probably the most interesting[2].
0: https://en.wikipedia.org/wiki/Exorbitant_privilege?wprov=sft... 1: https://news.ycombinator.com/item?id=43529614 2: https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
> Maybe by 2027?
Why on earth would you spend millions and billions of dollars on investing into a ROI-10-year factory, when a cheeseburger overdose or, heaven forbid, the Dems winning another election will take that investment and turn it straight into the toilet?
Not to mention that you'll be locked out of the world's markets, thanks to reciprocal tariffs.
they understand first order effects, but second or higher orders are seldom predictable in this matters. So the risk is huge. This massive shock will reveal hidden frailties.
> What's the plan for that?
Trump ran on a campaign that voting is a pain and you won't have to do it again if he wins. Since then he's maintained that third term is the plan. Doesn't really matter how upset the voting population is if you're going to ignore their votes.
Foreign debt is held in US treasuries, surely they know that? Trump can decide that treasuries can no longer be redeemed, but foreigners only hold 20% of them, so…he would have to somehow make them selectively redeemable, and anyways, there would go the USA’s credit, unless you mean other countries can bribe Trump with treasuries to bring down their tariff? They could also depreciate the USD reducing its debt in real terms but that will most definitely cause hyper inflation along with tariffs.
They have no plan, not even a concept of a plan. Trump is just hoping that he can get lucky with a good outcome, but that is really improbable. This is a huge opportunity for China though if they make deals with everyone else to the exclusion of the USA.
Even the idea of moving production back the USA is misguided, we are already at low unemployment, and haven’t made enough investments in automation like the Chinese are doing ATM. I doubt China will let us import that tech to setup our own factories quickly without worrying about who will work them.
They might be smart about it like you said, but they might also just be stupid. And the theory that they are smart about it is based on a whole bunch more assumptions...
This sounds like typical NYT sane-washing. After the Signal fiasco I've lost all confidence this administration is secretly super competent but just refuses to let any of us see it. There is no big plan here. This is just an old man surrounded by too many yes-men.
There is also a camp of ideologues that don’t care if they implode the economy if they get to LARP the TV version of the 1950s. Imploding the economy might even make it easier to sell traditionalist politics.
This is, as they say, “sanewashing”. Trump is doing this out of a mix of spite and a view of trade as a zero sum game. He may be advised into a path to try to pivot this into a “win” by large scale debt restructuring, but that is not the overarching motive.
Fully agreed. Tariffs are one thing that Trump has always been clear about. He likes them, he sees them as beneficial and now that he has no brakes in this administration he is finally going to try and put them in place.
There is no 4D chess.
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I had hoped that this kind of "Trump is actually playing 4d chess, you just don't understand" argument would be dismissed after seeing him through the first term, but apparently not.
This is a good take, but I think I can answer your question about the midterms. This is timed specifically for them. The drop we're seeing in markets right now isn't a pricing in of the tariffs, per se (at least, not yet), it's a pricing in of policy uncertainty that is going to lead to a near-term drop in investment.
However, because they are doing it so early, they will have time to recalibrate and bake in exemptions until the market / inflation is happy. Up to and including backing off of the policy entirely, if that ends up being necessary. As a political strategy, it is perfectly timed to allow Trump to "save the economy" from his own policies. This is true imo independently of what you may think about the policy as policy.
When it comes to the policy as such, recipirocal tariffs, conceptually, are designed to incentivize the overall global reduction in tariffs. So, as a headline, implementing "reciprocal tariffs" is actually favorable to free trade. However, there are some important details that they have fucked up, such as identifying tariffs with trade deficits in general, and in particular identifying them with trade deficits in goods only. That is really the component of the policy that doesn't make sense, and it is important.
Most likely, they will recalibrate and/or provide a lot of exemptions, particularly as the midterms approach. As a political tactic, I think it will work out fairly well, if they respond to the feedback appropriately - that's the big question though, and that uncertainty is the most significant reason for the market drop.
So my pessimism they can't "heal" this in time is the weak bit, if there are multiple levers they can tweak leading into the midterms to say "it's morning in america"
I say pessimism but in case it's not clear I'd prefer a democrat victory, both in the immediate past and in the coming midterms.
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> the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
There won't be any elections. We will stick with Trumpism. We will be our own best friends, Morty. The outside world will be our enemy. We will do great things Morty, we will do the greatest things. A Trump administration for a 100 years. A Trump administration forever. Over and over. Running around, the Trump administration forever.
You have seen nothing yet. Next he will want a mineral deal with each country to pay back the money they stole from the USA in the past. "Primate Behavior Reference 21": https://youtu.be/GhxqIITtTtU
We even have aspiring leadership in Australia who see this as a win win and have proposed offering JV in uranium, lithium and rare earths. Murdoch press backs the idea, even when criticism of Trump is overt they always go to "we need him more than they need us" because of 50+ years of Defense posture which assumes we're insured by US forces.
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Always keep in mind that Blackrock manages the retirement/social insurance funds of a lot of countries. If the USD crashes, they will, too.
The aftermath will probably be complete isolation of the US, because no country will want to trade with them. And the administration is fine with that, because they're not interested in keeping the status quo of democracy alive.
More influence for them, less influence from outside. That's how oligarchs think and act.
If they hold the midterms...
Is this a thought held by any serious person? The only major country to indefinitely postpone an election recently has been Ukraine. This idea that the midterms wouldn’t be held is tin foil nonsense.
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Of course they don't know. Should be obvious by now.
They are not experts in the field. But loyalists for a trump autocracy
That all sounds fine except that the admin have no intention of keeping these tariffs, rendering your point kind of moot. Trump will enact/retract these tariffs multiple times over just the next month, and few to none of them will still be this high in three months. Since we are just speculating here - what is probably going on is that Trump has some very bad ideas and no one is allowed to contradict him. I'm sure there are people around him that know better, but he really is this simple minded. To your point about midterms, I'm sure his Project 2025 handlers are beside themselves that he's doing this, but there is little they can do to stop him.
> What amazes me is the timing: the midterms will hit while the bottom is still chugging along.
I think Trump is getting unpopular actions out of the way quickly, perhaps planning to announce an income tax reduction later to save the midterm elections.
I have followed writings of the many in this administration, seen their interviews etc. Anyone who thinks there is a "5D chess", "the plan" etc. is purely drinking cope here.
> cheap labor factories again isn't going to happen in 2025
It is not going to happen ever unless we plan to move people from better paying jobs in McDonalds and WellsFargo to China styled factories or we allow much higher immigration levels from South America.
Trump admin and his advisors genuinely believe that tariffs are good, that they will create factories and jobs within USA and enable white families to raise families on a single income. They think rest of the world's existence is a mistake, they hate Europe, China, India and South America. They don't know much about Africa and admire Russia.
They didn't learn from the last time, when U.S. soybean farmers got screwed (the first time) and other countries established alternate supply chains that of course didn't involve the U.S. at all.
As the USA makes itself a trade pariah and other countries forge new relationships amongst themselves, we're permanently devalued. The world will (continue to) move on without a backward-looking, unreliable, sad, and obnoxious USA.
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I have never caught even the slightest whiff of Trump knowing what he's doing on any topic. I'm genuinely not trying to be glib either, this is a sincere observation. When has he publicly or privately intimated that he understands how tariffs or trade work? Or energy or immigration or infrastructure or technology? His public persona gives facile and misleading explanations that are ostensibly just politicking, but every tidbit of leaked insider accounts or hot mics or unguarded moments don't show anything more than the same persona.
> When has he publicly or privately intimated that he understands how tariffs or trade work?
He has a Bachelor's Degree in Economics.
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This tariff plan isn't Trumps. He co-opted Robert Lighthizer last time round, He was a trade negotiator, who believes strongly in protectionism.
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Trump 2 is as far from Trump 1 as Trump 1 was from W. Bush.
And now W looks like a respectable statesman by comparison. And by comparison, he is.
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Trump makes Clinton look like a gentleman and Bush Jr. look like a scholar.
They literally took trade deficit %s and represented them as tariffs levied by those countries.
> . I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
given that they've done most of the things they accuse others of, I wouldn't be surprised if they win by 110%.
Probably the plan for that is to do massive gaslighting on social media and find someone to blame for the hardship. Leveraging emotions (especially the aggressive ones) may be an effective way to keep support of the base.
I really wish I was more optimistic and share your position that voters are driven by self-interest. I hope you're right though.
There may have been a hint of strategy at one time. But the sheer level of gross incompetence coming from every side of this administration does not really lead one to believe that "global 4d chess trade war" is within the actual abilities of this administration to grasp.
Trump wasted his inheritance and has been several times in bankruptcies - and not "I took risks" bankrupt, more "I f*cked up" and "I lied" bankruptcies.
Why do you think we are naive and you aren't?
>> hot takes "they have no idea what's coming" are I believe naive
While I agree they probably have some idea what will happen, don't forget that these same people added a journalist to a group chat where they planned a military attack. They fired a bunch of critical people and then didn't know how to get in touch with them to try and rehire them. Assuming they're total idiots isn't much of a stretch.
> ... they know what's going to happen
While we cannot predict the future, it's moving faster. The world system is under immense stress. Complexity at this scale increases the chance of black swans and unpredictable outcomes. Many powerful actors are reacting simultaneously in divergent directions, which can reshape the trajectory altogether. We are vulnerable to cascading surprises.
By the time the midterms come along I doubt there will be many people left who want the job of fixing up this mess. So they will likely get to keep it.
I tend to agree with you that they know. However the signal leeks showed me that they are not just playing stupid in public - it seems that they are like that for real.
Even the best economists can't predict economy results from "small" actions.
With global ones like this - they are absolutely oblivious what will happen.
Personally I think that their bet is - it will hurt US, but it will devastate EU and hurt China more than US. EU is fragile economically and political instability will follow if its economy crashes. Especially if US pushes OPEC to jack up the prices.
>What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
tax cut financed by the tariffs? Will buy/mislead a lot of voters when those checks would get sent mid next year.
Especially those voters who couldn't notice that all those countries having tariffs (and VAT) are worse economically than US in major part because US didn't until now have much tariffs to speak of.
The 2nd paragraph is 100% accurate.
"The king is walking around naked; surely he's got a great reason for that. And his advisors wouldn't let him do it if there wasn't a deeper purpose!"
This explanation doesn’t make sense because dollar denominated debt doesn’t change with devaluation.
What is the more likely explanation is all the countries with trade surpluses will feel the pain long before the US and agree to much better terms than before.
The PM of Canada had already indicated progress is being made on their trade deal.
The US already had pretty favourable trade deals with most of the world. The trade deficit wasn’t because of tariff barriers to US goods overseas.
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bit of an 11 dimensional chess answer. Senator Chris Murphy has a much better explanation, which is simply this is Trump's way of holding private industry hostage [1]. The tariffs will be incrementally removed as various private industries give him loyalty pledges just as he is doing with large law firms and universities. that's it! so simple.
[1] https://bsky.app/profile/chrismurphyct.bsky.social/post/3llu...
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Rich people are typically insulated from economic downturns, especially ones they cause, by their ability to shift investments and asset allocations to mitigate and/or profit from changing tides.
Furthermore, Trump has never bought his own groceries, pumped his own gas, or interviewed for a job so retail prices and layoffs are abstractions "for plebs". Plus, he's reaching the end of his life so he doesn't have very much proverbial skin in the game since his motivations revolve almost exclusively around himself.
I hold a more pessimistic view of the cause and I do agree with your argument that they do know the consequences. But they don't care for another reason.
The plutocracy has fully captured the government and now seeks its ultimate goal: complete transfer of all tax burden to the 99%. For this end they cut the government spending, wrecking the democracy and they impose tariffs to generate fake temporary revenues, so they can argue that the huge tax cut (dwarfing all that came before) is economically sound and fully justified.
This will wreck the global economy and with the coming bad times (wars, famine, extreme migration) nobody will have the presence or the governmental weight to rein in these few rich man.
It looks too complex, IMO. As someone living in Trump's beloved country (Russia), I'd say you should ask, "Cui prodest?" If some oligarchs (currently called billionaires, but we'll see) surrounding Trump benefit financially from these tariffs, then the plan isn't about state debt—it's about their personal wealth.
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From the people in my life who talked about their preference for this administration, the economy was the core reason I heard. Specifically interest rates, but ignoring that that’s the federal reserve and the president has no impact on that.
Whatever - all that said, I can’t imagine this leads to an economic boom or anything near it by the midterms. Are the republicans going to lose midterms if the economy is shit? I’m not sure, but I can’t imagine this works out well. I’m no economist though, so what do I know.
If we have something closely enough representing a "free and fair election", there's zero chance Republicans hold the House of Representatives in the mid-terms. But they'll still have the Executive branch, the Senate, and a frighteningly strong hold on the Judicial branch.
Though it seems clear and likely that any means of voter suppression that can be used against areas and demographics that traditionally lean strongly Democrat will be utilized, with a lot less checks and balances than have existed in the past.
> If we have something closely enough representing a "free and fair election"
Make you wonder, doesn't it..
It's insane, because all those people have now backpedaled and no longer bring up the economy as their primary concern.
Also insane because all of this was so predictable. Trump couldn't stop talking about tariffs throughout all of 2024. It was obvious that he was going to do this, and obvious that it would tank the economy.
People don't like saying that they were wrong. Otherwise, we would have a world peace and prosperity.
A lot of people rather change their beliefs than ever admit they’ve been wrong.
> It's insane, because all those people have now backpedaled and no longer bring up the economy as their primary concern.
Give it time. They will.
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Hey, at least they were not alone. "Economy/cost of living" consistently polled as the number one issue for Trump voters.
It's fascism, reasoning with people won't work. The economy was the problem because Biden was in power. Now it's fine because trump is "doing what is needed and we all need to pay higher prices".
> “The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”
Edit: poor formatting on mobile.
The “Liberation Day” tariffs aren’t random—they’re step one in a broader strategy called the Mar-a-Lago Accord (yes, named after Trump’s resort). Here’s the playbook from Stephen Miran’s framework and what’s likely next:
The Mar-a-Lago Accord Framework
1. Tariffs as Leverage
• Example: The “reciprocal” tariffs target countries with trade surpluses (China, EU) to pressure concessions.
2. Currency Realignment
4. Sovereign Wealth Fund
Where “Liberation Day” Fits?
—> You are here | Step 1 <—
The 10% baseline tariff + “reciprocal” rates (up to 50%) kickstart Miran’s plan by:
What’s Next (If the Playbook Holds)?
1. The ̶C̶l̶o̶n̶e̶ Currency Wars
Expect Trump to accuse China/EU of “currency manipulation” to justify further dollar interventions.
2. Debt Shakeup
Pressure foreign Treasury holders (like Japan) to swap debt for century bonds. If they refuse? More tariffs.
3. Sector-Specific Tariffs
Pharma, lumber, and tech tariffs are likely next to “protect” U.S. industries.
4. Retaliation Escalation
Allies like Canada/EU will counter with tariffs, risking global recession.
The Perils Lying Ahead (Miran’s paper admits risks)
Miran’s paper admits risks:
Bottom line: “Liberation Day” is phase one of a high-risk plan. Success depends on whether trading partners blink first.
"The Road goes ever on and on, Down from the door where it began. Now far ahead the Road has gone, And I must follow, if I can." - Tolkien
https://smithcapitalinvestors.com/wp-content/uploads/2025/03...
A possible retaliation by the EU could be to not enforce US intellectual property rights in the EU anymore. Or we could start taxing cloud companies, who, until now, have not paid taxes in the EU for profits that they generate in the EU.
This is exactly what I was thinking. Is not the US export far higher than import if they take into account the software and other IT services they sell? I would expect other countires to tarrif that.
That would work of we had viable alternatives (on par with the US offers or as an easy migration). But we don’t really, so if the EU also adds tariffs than we’ll have the same issues the US is going to have. Meaning higher prices for the same offer since we’ll have no other choice but to stick with the US IT offer.
Like other comments said, this could work only if this was long term and everybody bites the bullet until they have a good local alternative to foreign offers with high tariffs. And the chances of having a lower offer as the one you were importing are really high. So, everybody is betting on short term.
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I don't think the current US administration understand the EU.
There are some things where I have my doubts about the current actions of the European countries, like rearmament. Will that be dropped the minute a new US administration enters? What the EU does well, like really well, is trade and bureaucracy. It is, in my mind one of the few areas where the EU can absolutely run circles around the US, while managing to protect and isolate itself from the worst fallout. We've already seen this with the current EU tariffs, they are extremely precise and targets Republican votes at almost no cost to EU consumers. I think that will continue, rather than imposing broad tariffs, the EU will target things Trump care about specifically.
I have a pet theory on why that is. In EU to become a Brussels career bureaucrat you need to be able to speak a couple of languages fluently. This serves as a kind of a filter. Whatever they are, dumb they most certainly are not. To a lesser extent this applies to European politicians too.
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0% chance of this happening, but I like the idea.
Why not? Multiple politicians have already mentioned IP as a possible method of retaliation. Also, the goal is to hurt Trump, his voters and his allies. Tech Bro's are Trumps allies nowadays.
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The DMA is already a tax on US tech companies specifically, given it is enforced exclusively against US tech.
Hence the retaliatory tariffs. The backdoor taxes through 'laws' (that are NEVER enforced against EU companies -- Spotify got a DMA carve-out).
The EU has already been doing that with "fines".
The fines were for breaking EU laws. Don’t break EU law, don’t get fined. It’s quite straightforward
When americans are angry, they tend to spread that frustration with a shovel on everyone.
My country as been hot by 29% tariffs.. I can't say what we did to upset americans, given that we do not compete with any american industry in any substantial way, bu we are bearing the wrath of the wounded american blue collar worker regardless.
I wonder what the net effect of tariffs will be in an year, americans are so used to cheap imports, especially all those shien/aliexpress/temu stuff.
In the culture of the contemporary American right, cruelty is a sign of strength and mercy (or even just empathy) is seen as weakness.
bingo.
Your country didn't do anything. America is being run by a madman, quite simply. This isn't reflective of Americans broadly. The people who voted for Trump wanted cheaper prices, now Trump is making everything more expensive.
The next month is going to be very interesting. The business community is going to put huge pressure on Republican representatives to undo this, and Trump's own supporters will revolt once they see the new prices reflected at Wal-Mart.
I don't know how it's going to play out, but this isn't the end. It's just the beginning.
I wouldn't count out Trump sending out "tariff profit" checks (with his face of course) to all Americans. If he gives everyone a $2000-5000 check (undoubably paid for by borrowings not real tariff income) then he'll get a pass for at least a few months.
That's a human trait and not really an American one, though I am definitely not an apologist for American-specific problems
Pakistan has 58% tariffs on the US.
That’s using the bizarre trade deficit/total imports formula put forward by the administration.
I’m curious what Pakistan actually imposes on US imports as a policy.
No, they don't.
Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs? In my home country VAT is ultimately charged the end-customer and this happens regardless of the origin of the goods. How can this be a seen as a tariff?
Besides, isn't the "Use tax" most(?) American states have more or less equivalent in function?
Others pointed out that the tariff rate they are pointing to is actually just calculated based on trade imbalance. So the logic is that they have a number they want to get to and are throwing around terms that their constituents don't understand to make it sound reasonable
VAT is not a tariff, no one reasonable thinks it's a tariff but the US doesn't use the term VAT so enough people won't second guess it if trump says it's an tax on american goods
VAT is effectively a tariff though, because it disincentivizes import/trade with the US (and other foreign countries). Since the US has no VAT, it's leading to unfair competition.
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Well, they are saying, EU market is harder to operate in (because everyone pays VAT) than the US market (no VAT, also lower regulatory barriers it seems), and also EU firms have a "home advantage" benefit, for example the regulation is written for their benefit.
So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit.
Additionally, US car tariff used to be 2.5%, whereas EUs is 10%. The imbalance is short in justification, though across the board, EU and US charge each other similar tariff amounts altogether, so there are other areas where the US charges more.
Whether that justifies broad brush enormous tariffs in everything, and whether US does the same in other industries (defence for example) is an exercise I leave for the trader.
> EU market is harder to operate in (because everyone pays VAT)
Surely it's not exactly rocket-science to handle VAT...
Explain how it's an disadvantage for an US exporter compared to a domestic company... Give an example instead of handwaving. I'm willing to admit I don't understand all the details, but you wont convince me using this vague statement: "harder to operate in (because everyone pays VAT)" ...
If the US adjusted selected tariffs to protect selected industries the outcry wouldn't be the same, so I'm not very interested in specific examples where the US have a lower tariff than the "counterpart".
> So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit.
It's completely without merit. Do you really think US regulation isn't written for the benefit of US companies? It is!
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> Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs?
There is no logic. VAT isn’t tariffs and is not discriminatory. In the same way as trade imbalance is not theft. It’s just Trump trying to find reasons to complain and present the US as a victim.
The only logic is that since the USA doesn’t have a VAT system, there is no way to do export VAT rebates.
> Export VAT rebates mean to refund the VAT paid in various domestic production stages to exporters. The purpose is to ensure that the prices of exported products are free of taxes in order to maintain a level playing field for international markets.
So that can’t exist at all for American exporters, since the USA doesn’t use VAT, their goods are taxed at a higher rate (as far as the exporters are concerned). It’s confusing, but Trump could have just asked for negotiations to get rid of this distortion.
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A tariff is a tax specifically on foreign goods. It is an artificial barrier to trade used to make domestic products more competitive. VAT is a tax applied to all products equally, so it isn't a trade barrier. You might be able to construe a convoluted argument that it is easier for domestic companies to work through domestic regulation, but that's pretty weak.
The US seems to have simply taken the value of the trade deficit with a country, divided it by total imports from that country, and used that as the tariff percentage. So in their logic, wherever there is a trade imbalance, this must be explained by barriers to trade. So in a sense this is also a repudiation of the core hypothesis of global free trade as an ideology: That, if countries trade freely with one another, they can specialise on certain production and a virtuous cycle makes everyone richer. In Trump's ideology, trade is a zero sum game, and having a trade deficit means that you are losing.
For context - here is one of Trump's posts which mention VAT: https://truthsocial.com/@realDonaldTrump/posts/1140091752662...
No details provided.
European VAT makes it difficult for American companies to compete in Europe. US has no VAT, making it easier for European companies to compete in America...
Combined with the fact that the US is the de-facto largest benefactor of NATO, Ukraine, UN, etc... then the US is getting shafted by the EU and Trump is correct in seeking ways to mitigate that.
Applying this economical pressure on the EU is a valid strategy, IMHO.
This doesn't make any sense.
European companies pay VAT in Europe. American companies pay VAT in Europe. European companies do not pay VAT in US. American companies do not pay VAT in US.
Where is the unfair competition?
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Can you explain how it make it difficult?
Ie. Give an example of how the system is an disadvantage for en American exporter or an advantage to an European exporter
No, you are simply incorrect, a VAT system does not make it harder for US companies to compete. It's explained well here: https://www.economicforces.xyz/p/stop-saying-a-value-added-t...
For those who don't follow the link, here's an extract from the article explaining the core situation:
Imagine a car that costs $30,000 to produce before tax. Now compare four scenarios:
1) BMW sells the car in Germany (domestic sale): Germany’s VAT (let’s say 20% for simplicity) is added on the final sale. The German consumer pays 20% VAT, i.e., an extra $6,000, for a total price of $36,000. BMW forwards that $6,000 to the German government as VAT.
2) BMW exports the car to the U.S.: Since the car is exported, BMW does not charge German VAT. Any VAT BMW paid on parts or inputs is refunded by the German tax authority. The U.S. buyer pays the $30,000 price, and since the U.S. has no federal VAT, there’s no equivalent federal tax on that sale. (A state sales tax might apply at the point of sale, but we’ll come back to that.) The key point: the German government collects no VAT on an item consumed in the U.S.. This makes complete sense because that car’s being enjoyed by an American buyer, not a German resident.
3) GM sells the car in the U.S. (domestic sale): The U.S. has no VAT, so the American consumer pays $30,000 (ignoring any state sales tax). No federal consumption tax is collected. (In states with a sales tax, the consumer might pay, say, 7% extra to the state government, but again, the federal treatment is no tax.)
4) GM exports the car to Germany: When the car arrives in Germany, it faces the same 20% VAT as any car sold in Germany. So a German customer buying the American-made car pays $30,000 + $6,000 VAT = $36,000. That $6,000 goes to the German government. From GM’s perspective, it doesn’t owe U.S. tax on that export sale (since the U.S. doesn’t tax exports of goods), but its product will bear German VAT when consumed in Germany.
What outcome do we have here? In Germany, both the BMW and the GM car cost the same $36,000 after tax, and the German government collects VAT on both. In the U.S., both cars cost $30,000 before any state sales taxes, and the U.S. government collects no federal consumption tax on either. Each country taxes consumption within its borders—no matter where the product came from—and does not tax consumption outside its borders. This is precisely the goal of destination-based taxation: neutrality. Consumers in each country face the same tax on a given product, whether it’s domestically produced or imported. And neither country’s producers carry their home consumption tax as a “ball and chain” when they go compete in foreign markets.
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There is no logic to it. It's just the US going insane and Americans nodding along.
https://taxpolicy.org.uk/2025/04/02/no-vat-isnt-a-tariff-but...
https://iccwbo.org/news-publications/news/are-value-added-ta...
https://www.cnbc.com/2025/03/31/as-trump-reciprocal-tariffs-...
etc, etc.
The only reasonable reply as a consumer and/or cloud-service purchaser: Economic wide-scale boycott of the US.
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US formally don't have VAT, when most other developed countries have.
As I know, US states few decades spent on talks about implement VAT, but have not achieved agreement yet.
For equivalent, most US states have trade tax, could be returned with set of rules. So, on some abstract level it could be considered as far equivalent of VAT, which is also could be returned with set of rules.
VAT has nothing to do with this.
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The De Minimis loophole is highly significant with FOUR Million packages per day (What ???). The clause to address this loophole needs to be stated more accurately - It should be clearly defined to be higher or lower of 30 % of the value of shipment under $800 OR $25 per shipment and not either. If either then the De Minimis loophole will be continue to be used at $25 per shipment. Source : https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...
The whole table doesn't make sense. We (NL/EU) don't charge the US 39% to import . Apparently orange guy (not the Dutch) doesn't understand VAT rates.
Car? max 4.5 + 21% VAT = 25%. But it simply doesn't matter bc we don't want their cars.. Except for thee Dodge RAM, which can be converted to a tax efficient company car (crazy)..
What amazes me even more is that Elon doesn't seems to understand it either.
They calculate (export-import)/import also they try to hide it behind complicated formulas
https://universeodon.com/@cryptadamist/114272487006550281
On top of that they excluded services and only recognize goods for the calculation.
The thing is that Europeans wanted the Tesla cars. They fit perfectly into the Europeans identity - had Tesla kept on and kept the Tesla cars competitive without any political interference, then that could have been great car exports from the US to the EU.
They wanted it because at the launch until 2018 it was basically free because of all the tax incentives. You got the following benefits (Netherlands):
The 85K car resulted in 90K deductibles in the first year.
The 85K car, including everything was cheaper to drive / own than a FREE car.
Almost all of that stopped in 2022, and what do you know? People stopped buying. THIS is politics. Setting policies which drive behavior.
The government "decides" what you will want to buy / drive / etc.
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Tesla built a factory in Germany to produce their cars.
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Seems he is using trade deficit percentages in his chart instead of tariff percentages ... :/
> Except for thee Dodge RAM, which can be converted to a tax efficient company car (crazy)
You can no longer do that since 1st of Jan 2025. The BPM discount for company cars was removed.
Thank god, I'm so tired of seeing those things parked around Amsterdam when the original loophole was for farmers :eye roll:
But then by the same logic isn't income tax a tariff.
Brave of you to assume that comrade muskov understands anything.
> But it simply doesn't matter bc we don't want their cars..
But is that cause or effect?
As found elsewhere on this thread, the rate is based on trade deficit. Trump believes that having a negative trade balance with a country means that they're cheating somehow, as opposed to meaning that you just buy a lot of manufactured or raw goods for them.
And no, that does not make any sense, and you're not missing anything. He believes this because he's a fucking idiot. He's aggressively racist, comically petty and thin-skinned, and overtly authoritarian, and as far as I can tell actively wants to permanently destroy American science and civil society out of spite, but he's also really, really, really dumb. In this case, he's managed to combine his powers to take a goal that's born out of racism and xenophobia and then implement it in the most idiotic way possible, and somehow the result is even worse than the sum of its components.
It doesn't make sense because you didn't read the original board. It clearly states 'including trade barriers'. You're attacking a strawman.
Countries, including the EU, like to have 'low tariffs' and then have sneaky backdoor taxes or outright bans on US goods through things like milk quotas (Canada), 'biosecurity' (Australia) or EU courts issuing spurious fines on US companies (based on vague laws that only get enforced against US companies, like DMA).
It doesn't make sense because it is not a table of tariffs (including or excluding trade barriers) at all.
It is a table of the current trade deficit against each country as a ratio.
I think you might be granting the administration too much benefit of the doubt. They aren't based on "tariffs + trade barriers", they're just based on trade deficit alone.
https://x.com/JamesSurowiecki/status/1907559189234196942
https://archive.ph/kRkRh
> milk quotas (Canada)
You mean the milk quota on imports that (a) trump negotiated and (b) the us has never hit?
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VAT is not a "sneaky backdoor tax", it's imposed on all goods, regardless of where they're produced or imported from.
DMA (and similarly, GDPR) are enforced in EU countries just as much. It's just that the US tends to have more gigantic tech companies that do shady things with user data. Apparently the US doesn't care, but the EU actually does, and so it enforces its laws.
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VAT isn't a trade barrier.
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Comments like this make me wonder why some Americans think they should be able to move on every other country “like a bitch”.
In some places, dollar is not god. Important, but not god.
And here I thought brexit would keep the top spot as act of self harm
Actually this is one time when Brexit is paying off. We get 10% tariffs, the EU gets 20%.
EU has signed up to lucrative trade deals with Canada and Mexico since Brexit and has many more similar ones with other Asian countries. International trade is complicated and it is very much something the EU specialises in.
You get a 10% tariff when you run a deficit with the US. EU gets a 20% tariff on a 40% surplus. You win!
Not really, if the whole world sinks into an economic depression then the percentages won’t matter much. What will matter is the starting position and whether the country’s economy has enough headroom to ride it out.
It doesn’t. Because of Brexit.
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Yep. This is like brexit but ten times worse.
Everything is bigger in America.
I believe this from the White House contains the only semi official numbers:
https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr....
That has 10% across the board starting April 5th, then unspecified rates for the “worst offenders” starting April 9th.
I say “semi official” because it’s not official until US Customs and Border Patrol publishes the rates. So far I don’t think they’ve done that. Their announcements page here doesn’t have anything:
https://www.cbp.gov/newsroom/announcements
Yes Trump has a history of announcing shocks and then quietly back-peddling etc. But the numbers come from the big placard he holds up. There are pics of his announcement holding his rate card in article if you scroll down.
Yeah, I’ve seen the boards he was holding up, but the fact that those numbers are not on the whitehouse.gov page and that they’ll be implemented a few days later makes me think they’re not final yet. Plus we don’t know if they’re in addition to or replace the existing China tariffs, for example.
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Here's something I want to understand: In 1930 the Smoot-Hawley Tariff Act was passed by congress - an act of legislation. Nearly 100 years later we have the president unilaterally picking any tariff numbers he wants. What happened?
He invoked the International Emergency Economic Powers Act (IEEPA), which gives him the ability to levy tariffs in an “emergency”. There is no actual emergency, of course, but Congress does not have the political will to stop him.
Congress could stop this tomorrow if they wanted. They ceded all control to the executive. [Republican] Congress is hoping to claim credit for anything good that happens, but scapegoat Trump when things crash.
As I understand: Congress gave the president the power to add tariffs in some "exceptional" cases. Trump claims this is an exceptional case.
We'll see if Congress or the courts do something about it.
The exemptions...
>Some goods will not be subject to the Reciprocal Tariff. These include: (1) articles subject to 50 USC 1702(b); (2) steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and lumber articles; (4) all articles that may become subject to future Section 232 tariffs; (5) bullion; and (6) energy and other certain minerals that are not available in the United States.
Exempting chips alone doesn't make sense. Does Intel have to pay 20% on ASML lithography machines or more on Japanese ones? Meanwhile TSMC can fab chips in Taiwan and export to the US without tariffs.
I thought the tariff goal was also to fix the issue with Pharmaceuticals where the R&D happened in the US, the company then “exported” the IP to the EU factories, and now import the drugs back. This results in a US tax rate of 0%.
The EU probably does not have a trade surplus with the US, but rather a trade deficit.
https://www-gmexconsulting-com.translate.goog/cms/de/dunkle-...
I was thinking the same. IT is a huge business, the best kind of business right now, the pinnacle of human technology at this point in time. America is the world leader in development, and "exports" of IT. You can't really tariff software, as it's some kind of IP.
On the other hand, much of the "digital infrastructure" is free and open. Perhaps if rival powers put enough effort into sanctioning US effective sales in IT, however that may work, America could lose it all.
> You can't really tariff software, as it's some kind of IP.
The bureaucrats in Brussels will easily find a way to do it.
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EU has a surplus on physical goods, and a deficit on services.
With regards to goods, the EU exports more than it imports from the US, but we do import more services from the US, which can likely be taxed in retaliation.
Yes, but only because iPhones, Dell computers, HP printers are shipped from China and not the US. Yet the majority of profits from these trades are accrued in US companies or offshore tax shelters owned by them.
So what's going to happen is:
- each country will impose equivalent taxes on the import of US goods - this is not only expected, but the norm under international trade law. - with the rest of the world, still having free trade agreements between them, will start trading around the US, the US won't be able to compete
The value of the US$ will likely drop by the value of the tariffs. If everyone starts trading around the US we'll probably lose the US$ as a standard currency to trade in, maybe switching to yuan or euros, the US$ is buoyed by it being the currency everyone uses, that's going to drive it even lower.
Not just goods, US tech sector will be taxed and tariffed into non-existence.
>each country will impose equivalent taxes on the import of US goods
Many of these countries already have tariffs on U.S. goods. The EU has a 25% tariff on US agricultural, chemical, and some manufactured products.
That's precisely the point right? Devalue the dollar when so you can pay off your debt with a higher value asset.
If the US$ drop 30%, the deficit magically dropped 30% when calculated in something else....
Which is like burning all the houses (including your own) so you can use your houses to buy other people's houses cheap.
This only works if you have superior manufacturing infra. To some extent the FAANGs export tech. But if FAANG is a tiny thing compared to say Toyota.
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But the US$ is kept artificially high because it's used as a reserve currency for things like oil/etc - this is IMHO the main reason why the US is in this position, it wont let its currency float down leaving exporters screwed (but cheap imports for the masses). Just increasing the cost of imports but not making export prices higher (lower in fact because other countries will be raising tariffs against the US)
It's very much a case of "you can't have your cake and eat it too" fix an artificially high US$ and you can force everyone to trade in it for oil, but as a side effect you screw your exporters
That's like burning your house down to cook a steak.
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Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense.
Devaluing the dollar and subsidizing production in the US makes far more sense.
But I’m not an economist or anything.
America got richer and outgrew the phase where tons of factory jobs made sense. It seems pretty clear to me that well-paying manufacturing job in developed countries were the product of a particular moment in time where poorer countries couldn't do it yet. Now they can. It was never going to last.
I live in NJ and people often make a lot of noise every time there's a report of people moving out of NJ because of high taxes and high housing costs (yet NJ's overall population has increased).
To me, it makes sense: NJ is a place where you live to make a high salary (proximity to NYC and Philadelphia) and raise a family (very good public school systems as a result of those high taxes). When you no longer have a need for those circumstances, you move.
Likewise, the US is not a great place for certain types of manufacturing because the labor and raw material supply chain simply isn't there. Why not focus on the things that we are good at instead?
It was never going to last if the US allowed for very low cost imports from those countries. This is literally one of the largest points of tariffs - protecting domestic manufacturing. We could have had high tariffs the whole time and offshoring would have been much less pronounced. I'm not saying that would have been a net positive, but to say it would never last is only true under certain circumstances.
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> Americans have been hurt for 50 years
Can you please explain a bit more about this 'hurt'?
My understanding is that a significant majority of sources of US 'hurt' are internal and there has been ample opportunity to vote at least some of it away, but the votes keep going in the direction of making it worse.
The worst thing about it is that the situation has essentially been perpetrated on the citizens of the US by those with power and influence for the simple human weakness of greed. Unfortunately they've got the power and resources to effectively do large scale "convincing".
> Americans have been hurt for 50 years
No they haven't. They've benefitted from it.
Because now most Americans don't slave away in unsafe factories 7 days/week for dollars an hour.
The error is assuming that Americans are homogenous. Wealthy ones benefited tremendously by reducing their production costs while the less fortunate were put into international labour productivity competition.
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> They've benefitted from it.
They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice.
> Because now most Americans don't slave away in unsafe factories 7 days/week for dollars an hour.
Now they're collecting disability in their unsafe neighborhoods, getting morbidly obese while their substance abusing kids play vidya games in the basement into their 30s.
Yes, it's really like that. People want their factories and incomes back. I don't claim that anything happening here is going to deliver that, but that's the pitch they're voting for. To their credit, at least they're pursuing that in lieu of some UBI ideocracy made of fantasy money.
As for you: it's fine to point out all the ways they may be misguided and/or misled, but unless you have an alternative that doesn't amount to expecting everyone to somehow earn an advanced degree, and then discover it's next to worthless (even before "AI",) your really not contributing much. So what do you have?
Anything?
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I've met a lot of people in St. Louis working various factory jobs. Making different kinds of specialized equipment, food products. I think they get paid $25+ an hour starting out. A fair amount seem like tedious jobs.
There's around 12.8 million people in the US working in manufacturing.
Yeah … talk to someone who worked in the 50s and 60s in Detroit.
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> No they haven't. They've benefitted from it.
some benefit. many have been in a state of perpetual poverty/welfare, but we don't see those in the official stats because the rich are so rich here it skews numbers
How about steel mill jobs paying $35/hr?
Saying Americans haven’t been hurt they’ve benefited applies to white collar workers only - no change to jobs and cheaper goods.
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Now they're safely home, unemployed.
> Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense.
Yeah, some tariffs aren't a bad idea. But this plan? Just stupid, without any thought or strategy behind it.
The tariffs should be used more strategically to reorganize supply chains, not these blanket tariffs of low cost and high cost places. And probably ratchet them up slowly, to give time for production to move, instead of a big bang of putting them up everywhere.
So tariff China and Mexico, not Canada and Germany.
Devaluing the dollar makes paying national debt more expensive
No it makes it cheaper because the US is in a unique position of issuing debt in its own currency.
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I can't say it any better than Randy Newman:
The end of an empire // Is messy at best
And this empire's ending // Like all the rest
Like the Spanish Armada // Adrift on the sea
We're adrift in the land of the brave // And the home of the free
https://www.youtube.com/watch?v=E0EAwSpTcM4
I'm an American. I've generally benefited from the system here (which speaks to my privilege, of which I'm aware). I don't want to wade into political battles, but I'm genuinely concerned for my future and the future of my children from an economic standpoint, based on where things seem to be going.
I am considering options on the spectrum with ends like:
* Staying here, because this is where I was born and raised and I've felt like the country has generally taken care of me - and hey, it can't stay bad forever, right?
* Leaving to another country, because I am feeling less and less like the country's leadership care about building a society or economy that tries to take care of its people and creates incentives to innovate.
This isn't because of just the last few months; I view the last few months as big symptoms of something more systemic that's been building up. I am also not looking to jump ship quickly because things "temporarily got hard."
On the flip side, I'm also feeling incredibly jaded these days: how could it be much better anywhere else?
Are there places out in the world where my wife and I could take our experience (mine being a strong career in tech, my wife's being a strong nursing career) and put it to use elsewhere where I could hope for a good standard of living, more stability in government leadership, and incentives similar to the economic system I grew up in, where our children could thrive and build a life?
I'm not pulling any triggers quickly or easily... I'm just trying to gather some data and different perspectives, even those that might challenge my own. Maybe an answer is "stop reading news."
edit: formatting
I'm not American so this is a newb question, would moving to a saner state help ?
If you want to relocate to another country focus on the "pull factors" of that place, rather than the "push factors."
I moved to Sweden because my wife and I felt that was the best place to start a family. I'm on parental leave and cherish every moment I get to spend with my kid.
We would have made the move no matter what was happening in the US. Well, unless there was a major cultural shift and a generous grant of child care benefits equivalent to SWE.
If it continues on the current trajectory, literally all the OECD countries will offer a better life than the US. In every meaningful measure they already do
Thank you, good information.
I've traveled a bit to some of the other OECD countries and haven't felt any disparities in comfort and such while traveling, but traveling and building a life and career are two very different things.
If I may: I would sit this out for a little while.
Moving with another partner to another country is a huge undertaking.
Now, if this was in the back of your mind before, that’s another story.
Heard. The thought of moving to another country is, honestly, scary, like starting over, figuring out how to live and build from from 0 again.
It's not just my partner, but also my kids I'm concerned about. The idea of moving my whole family to another country feels overwhelming, but it's a sacrifice I'm willing to make if it means my children can have a chance at a good life, versus what I'm starting to fear they'll experience here.
I appreciate the reminder of patience.
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Yeah, go gentrify the locals in some lower-cost-of-living country. You sure 'deserve' it because for some reason you have a 'right' to just immigrate there and buy their housing and sh*t from under their feet.
What motivates such a rude answer? The parent is genuinely exposing a personal question. Nothing in his post suggests that he would go gentrify a low COL place.
I appreciate your frustration, dumbledoren. Your comment speaks to perspectives I could expect to face in another country - thank you.
I can only say my personal intent isn't that. I live a simple life. My family has a small, old home. We garden, grow our own food, and are respectful to our environment.
I prioritize supporting small, local businesses.
I wouldn't want to parachute into another country acting as though I Know Better™ and bringing my "American sensibilities" to another country.
If I were to leave the US, I see myself entering another country, hat in hand, knowing fully I'm not better or special, and it's my job to adapt and to respect the culture and country.
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So, it already starts affecting stuff. I and 10 other recent hires were cut today because our next round is in jeopardy. That startup is in sales and hiring area, so it senses recession much sooner than other industries, but there's that.
If anyone is interested, you can find the US's assessment of the tariffs imposed on the US by other countries here: https://ustr.gov/sites/default/files/files/Press/Reports/202...
EG:
"The UK has duties on approximately 5,000 tariff lines, including on certain agricultural products, ceramics, chemicals, bioethanol, and vehicles. Tariffs on some products such as bananas, raw cane sugar, and apparel, which tend not to be import sensitive for the UK, are maintained to provide for preferential access for imports from certain developing countries into the UK compared to the MFN rate. The UK has some high tariffs that affect U.S. exports, such as rates of up to 25.0 percent for some fish and seafood products, 10.0 percent for trucks, 10.0 percent for passenger vehicles, and up to 6.5 percent for certain mineral or chemical fertilizers"
The idea that a giant regressive tax, which these are, will help the lower or middle class or do anything but kill demand and destroy jobs is madness.
It also won't help the debt because even though we might collect some money in the short term, the long term solution is we need to grow our way out and these policies are recessionary.
The goal of the world now is to specifically target red swing states with counter tariffs so that the democrats will win the midterms, pass legislation to prevent the president from being able to unilaterally impose tariffs in the future and thus put a swift end to the golden age.
Pass legislation? That will be vetoed or ignored?
Liberation day indeed... when Canada/Australia/Europe/South Korea/Japan are now the enemy I'm not sure there are any more friends left.
Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports. I think more and more we see lots of evidence they don't know what they're doing.
> Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports.
Note that the White House has both (1) officially denied this, (2) provided the formula they assert was used as support for that denial; but the formula is exactly what they are denying but with two additional globally-constant elasticity factors in the divisor, however, those elasticity factors are 4 and 0.25, so...
Wow I really just read a .gov website trying to obscure a formula by multiplying 0.25 by 4.
I'm stunned.
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."
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for reference, the Deputy White House Press Secretary's tweet (providing evidence of (2): https://x.com/KushDesai47/status/1907618136444067901
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I've seen people use "sanewashing" to refer to the type of comment you're replying to, there's no sane explanation but people try to come up with one because the world doesn't make sense otherwise
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'Excuse me, we used Greek symbols to calculate this! Checkmate, libs!'
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wait seriously? can you provide a source? That is some serious denial of reality by the administration
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To give further evidence that they don't know what they're doing, it's easy to generate this tariff plan using a fairly simple LLM prompt that gives back that same ratio:
https://bsky.app/profile/amyhoy.bsky.social/post/3lluo7jmsss...
If anyone needed any more evidence that they don't know what they're doing, what I find interesting is that the various French overseas territories that are part of the EU are tariffed at different rates than the rest of the EU (treating those as separate countries is traditional for any US company, which is sometimes a headache when you want to order something).
Réunion is at 37%, which isn't a problem because any company in Reunion could just use an address on mainland France, but there's more: Guadeloupe, Martinique and French Guiana are tariffed at 10%.
Does that make an easy loophole for any EU company wishing to export things to the US at a 10% tariff?
If these published rates actually going to be enforced this way, it seems like the whole EU has a very easy way to use the 10% rate.
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That might explain this then:
> Trump Tariffs Hit Antarctic Islands Inhabited by Zero Humans and Many Penguins
https://www.wired.com/story/trump-tariffs-antarctic-islands-...
LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.
This is cosmic-level hilarious.
Jesus Christ.
Who needs more evidence?
I watched the man with my own eyes as he seriously floated the idea of injecting disinfectants to treat Covid-19. That was five years ago. His mental faculties have not improved since then.
The Drinking Bleach hoax: https://americandebunk.com/2024/07/01/the-drinking-bleach-ho...
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It's even worse, into the calculation they only counted goods, not services (where the US typically runs a large trade surplus).
I was wondering if this was the case.
Yes. These are College Freshman Essay economics, where you know just enough to declare it's time to go bold and are still stupid enough to believe it will work.
It's not that there's no strategy, it's that it was designed by reckless amateurs who haven't done the reading, haven't consulted with anyone that understands all the trade-offs, and have an uncapped appetite for risk.
The TV version works out perfectly, since the writers control the ending.
It's not: in the formula they posted, phi is the "passthrough from tariffs to import prices". That's where the country's own tariffs are factored in. Or am I reading this wrong?
> Parameter Selection
> ... The price elasticity of import demand, ε, was set at 4.
> ... The elasticity of import prices with respect to tariffs, φ, is 0.25. ...
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You're reading it wrong because it's nonsense
None of the values are related to their names in any way
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What about Australia? We’re in surplus. Is 10% just the minimum?
Yup.
Have you considered the possibility that they know perfectly well what they're doing and they're just lying about it? Lutnick, the commerce secretary, has been CEO of Cantor Fitzgerald for over 2 decades. The treasury secretary has a similarly stellar resume. There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.
Trump personally may or may not understand it (I think he does) but his political superpower is his willingness to stand up in public and say complete bullshit knowing that it's bullshit, knowing that some people are fools who will uncritically believe the bullshit, and other people are cynics who who will nod along with the bullshit either to make money out of the rubes or because they think it serves a strategic purpose.
You can waste years wondering which side of Hanlon's razor someone is on, but it's important to remember that obsessing over such dilemmas can lead to paralysis. Just like there are a lot of street hustles and cons that depend on confusing/misleading the mark before tricking or mugging them out of their money, there are a lot of political gambits that depend on inducing analysis-paralysis in opponents. Manufacturing dilemmas is also a key element in military strategy.
My advice is to stop worrying about whether these people are such fools that you owe them some sort of empathy and an effort to save them from themselves, or you will end up like Charlie Brown having the football pulled way by Lucy yet again. It is OK to cut them off and treat them as bad actors, for the same reason you should often round off quantitative values instead of obsessing over precision.
Let’s not forget Congress could assert its authority over tariffs at any time. This isn’t just the executive branch unilaterally creating the biggest, most regressive tax hike in our lifetimes, it’s a coordinated GOP operation.
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Yes, it's never a good idea to underestimate the intelligence or agency of the enemy.
But in this case: what is the game plan? What are they trying to achieve? Is it simply chaos, so that they can rule in perpetuity?
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>Have you considered the possibility that they know perfectly well what they're doing and they're just lying about it?
Politicians are just pretending to be dumb? Why?
>There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.
I don't think most people deny that these are capable individuals. The problem is - I think the people in Trump's inner circle now are sycophants first. They know what Trump is doing is destructive, but they are just choose to be yes men. Remember, this isn't Trump's first go-around, and the majority of people who stood up to Trump the first time (Pence, Barr, Perry, Price, Rex Tillerson) are gone.
Funny enough wikipedia has an article[1] about this that is so large that it has many sub articles. Ultimately, I can't trust that his appointments are exercising any sort of discernment because a large number of his 2016 appointees were fired for doing so.
In short, Fitzgerald could be a genius, but all signs point to him being a yes-man that would rather sink the ship than stand up to Trump.
[1] https://en.wikipedia.org/wiki/List_of_dismissals_and_resigna...
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>Lutnick, the commerce secretary, has been CEO of Cantor Fitzgerald for over 2 decades.
Lutnick clearly has zero actual influence in this administration. He's a barking dog sent to do TV soundbites, and his explanations are often full-bore nonsensical or completely contradictory to his prior explanations. Foreign officials (such as Canada) have repeatedly come out of meetings with Lutnick almost...assuaged....as if Lutnick is saying "he isn't really going to do this...there's no way", because even Lutnick doesn't realize just how stubborn Trump is about his outrageously stupid ways. These guys keep trying to pretend this is all some masterful negotiating strategy by the Art of the Deal master.
And based upon 100% of Trump's history in government, it won't be long before Lutnick and Bessent are out of this admin, both will be "RINOs" attacked by the MAGA cult, and they'll both be telling the tale of how outrageously stupid Donald Trump is. Like closing on 100% of Trump's administration in the first term.
Just look at the lead up to these tariffs. The day before Trump was still "deciding". This is something that a team of expert economists should have worked on for months, probably to conclude that free and liberal trade is what made the US the richest large country on Earth, but instead it was something that everyone had to sit around and wait for Trump to pull something out of his ass.
Trump has openly and widely talked about tariffs replacing income tax for years. This administration is clearly one where no one ever can counter any harebrained idea from Trump -- and they're all incredibly stupid ideas from that incredibly stupid man -- so whatever nonsensical takes he has they have to all try to make talking points around and create some post facto rationalizations. It is the most dangerous administration in human history, and the American voter looked at this traitorous, constitution-shredding, law-breaking imbecile and said "more please!"
There is no 4D chess happening here[1]. There isn't even checkers happening. No masterful long term negotiating strategy. It's just a fumbling moron (rapist, charity-stealing imbecile) that is doing the most nonsensical way to deal with a deficit rather than, you know, raising taxes. And to be clear the US deficit is untenable and needs to be dealt with, and the head in the sand approach by successive governments is not reasonable, but combining DOGE's ham-fisted stupidity with Trump's economic destruction and the deficit is likely going to be much, much worse. The US is on the fast track to insolvency.
"But China....next war....China!"
Trump started this whole thing by attacking allies. By dissolving alliances and trying to economically harm its closest friends. Precisely the opposite of expectations if the US were seriously trying to counter China.
[1] Aside from corruption. Tariffs are the foundation of corruption because everyone has to come, hat in hand, begging for exemptions. There is going to be a line to the White House of manufacturers and importers, from Apple to military contractors, begging for special waivers. Which they'll get if they grease the right palms, as this is the most blatantly corrupt administration in US history. He's selling pardons in the open, and operating a literal protection racket, and this is just...an ordinary day now.
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Does the exact percentage of the tariffs matter? I suspect it doesn't - these look like approximate numbers to obtain concessions, and a complex formula doesn't really help anything.
Far as I can tell, the ideal would have been to simply double incoming tariffs, but that would be infeasibly large. This was a way to generate a plausible smaller number that can be increased later on an individual basis depending on how the country responds.
So I'm guessing it's not important to tariff the penguins of Antarctic Island?
Penguins are a myth. They are all too identical. Clearly cgi.
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I think the Trump Crime family shorted the market last week and made millions today and this week
Now control the SEC so the privileged won't get investigated for insider trading.
That's how you devolve into a 3rd world country by the way. I've lived in 3rd world countries and seen this over and over again. That's why 3rd world country stock markets don't go up - because locals and international investors have a distrust in them. Locals know insider trading is rampant.
Once this kind of corruption is accepted in society, everyone will need corruption in order to stay ahead.
I hope you’re right as I’m betting on the short as well. Made a crap load on TSLQ a while back.
I went from a low risk investor to betting on US doing stupid stuff and stated making real money. Cognitive dissonance investment I think.
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Elon Musk directly benefits from this also, so...
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[flagged]
Many people including doctors and health professionals apply restrictions to their diet including avoiding complex carbs or proteins, or reducing their salt or sugar intake while talking about balance diets. No complaints.
But when I decide to reduce all foods by at least 10%, lower my protein and carbs by 25%, pledge I'll remove at least 30% of metals from my diet and will be doing a 4 day fast twice a week in order to become an olympic level athlete by next year, people say I don't know what I'm doing!
How can people possibly be against nuanced thoughtful dieting yet be against my sudden do it all at once approach? It's totally inconsistent, what idiots everyone else is.
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Here in the EU, you'd generally just pay VAT of imports. And to be clear, we pay the same VAT on internal goods.
To make it convenient for consumers, large foreign platforms would automatically handle VAT at point of sale, reducing friction and thereby pushing more import.
Some specific things had tariffs - e.g., nuclear reactors, and chinese electric cars - but it was by no means the norm, and I don't think citizens liked this. The Chinese car tariff in particular feels like German automotive lobbying, stifling competition. Tesla, pre-DOGE, also showed that we would have an unsatiable hunger for import of competitive cars, it's just that an F150 isn't a competitive car in EU.
Now, because if the trade war, we end up with blanket retaliatory tariffs and a strong push for buying local products, killing imports, that just wasn't there before. US and China was already in a trade war, so I guess that was the current state of affairs there.
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Well because they are applying them in a blanket fashion with no warning basically everywhere.
Tarrifs are a tool. They have both positive and negative consequences. It seems like the manner they are being applied are just random and will get most of the negative consequences with very little of the positive.
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Why? Because the US is smarter than the others. By having open trade, we've benefited greatly. Now you could argue that other countries have benefited more, and that made me true but the benefits of free trade are that the pie keeps growing. So other countries getting a bigger slice is not shrinking our slice.
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For what it's worth, I bought a $2000 robotic hand from US a year ago, and paid about €400 in VAT and €32 (so like 2%) in import duties / tariffs.
Obviously VAT isn't a "trade barrier", if anything it's a "consumption barrier" and it's the same for every business that EU citizens give money to (i.e. if I bought a robot hand that cost $2000 to make from an EU company, I'd likewise be paying €400 VAT on top of that).
It would help if people answer than downvote. Both these kind of questions and economic answers are getting buried.
My understanding so far based on buried comments is: other countries have tariffs on individual products they're historically good at manufacturing and they want to retain it. e.g. Milk in the Nordics, Cars in Japan and EU, Bikes in India, etc.
keyword: "selective to retain"
US is applying it across the board blindly, not to retain something that's existing, but what appears to be a blind hope of starting everything from scratch.
Buried comments say "strategy" is lacking, because these tariffs also apply on the very raw materials needed to start from scratch. The policy does not intelligently select and separate items by their current or future use to the US industry.
There is a prediction that this blunt hammer will not yield to a more productive situation, in couple of years it would only have to be quietly rolled back and strategic thinking would have to be re-applied.
The counter-counter argument is, maybe a real strategy is being worked upon, and this blunt hammer is just a leverage tool. But so far there are no concrete signals of strategic thinking, so it's currently perceived as "let's keep turning one knob after another". The lack of accompanying software updates, calculations, projections, personnel planning, etc all contribute to the notion that there is no strategy.
And at this point, it devolves into emotion and personality, which is better to stay away from.
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The United States maintains the world's most powerful corporations and attracts exceptional talent, yet appears to be hastening toward what some consider an inevitable conflict—one that exists largely in political rhetoric rather than reality. Setting an ambitious four-year timeline to rebuild manufacturing capabilities seems impractical. More concerning is how this approach risks dismantling the global governance system that took generations to establish, while alienating allies who could be valuable partners rather than burdens. The potential costs of such a strategy are immense, explaining why many observers question whether there's a coherent strategy behind these actions.
> What's amazing me is the lack of consistent thinking by the commenters here.
I feel your "consistency" is based on a facile model where big percentages correspond to badness and that's everything.
An analogy:
1. Roommate Trump who falsely claims you're in a common-law marriage: "You're running a trade-deficit with your grocery store, so every time you buy groceries from them I'm going to punish you by taking 25% of the cost. If you don't like it, you should work there part-time to reduce the deficit. You're about equal in paying friends for food versus them paying you for food, but they need you more than you need them, so to make you hustle I'm still taking 15% from any money that goes out. Finally, you have an extreme trade-surplus with your regular employer because they just send you checks, hurray!... That'll be 10%, because reasons."
2. Critics: "That idiot is insane. That's not how any of this works. Find a divorce lawyer ASAP."
3. You: "You guys aren't consistent thinkers! I mean, why aren't you complaining about how Mrs. Johnson adds a 100% cost onto Mr. Johnson's purchases of cigarettes, as a way to get him to quit? 100% is a much bigger number, so obviously Mrs. Johnson's the real villain here, and you don't seem to care!"
____________
If you're so certain Trump has a coherent and non-dumb strategy, please describe how it's supposed to work and why you expect the results to be good things.
Well, why only consider just goods and not consider services? US is mostly exporting services while other countries are exporting goods.
Why not consider US prints dollars which are used for global trade? That means other countries are subsidizing US inflation and US economy.
Why not consider the massive investments other countries have made in the US economy when buying shares, bonds, securities?
What if they impose tarrifs on US financial and IT services? What if Amazon cloud and Netflix start costing 30% more?
What if they quit using dollars for trade?
What if they start selling US stock and securities? What if they start selling US dollars?
>Many other countries, including EU members and China, already apply tariffs and non-tariff barriers far in excess of what the US is applying now.
>So why no complaints about them?
Because that's not true.
> Many other countries, including EU members and China, already apply tariffs and non-tariff barriers far in excess of what the US is applying now.
Source?
Can you provide an example, especially for the EU?
From what I read, the average tariff applied by the EU is under 1%. Other comments say Trump has just divided imports by exports to calculate his tariff rates.
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>Many other countries, including EU members and China, already apply tariffs and non-tariff barriers far in excess of what the US is applying now.
This has been persistently claimed but I have yet to see evidence on this. In most cases it's including VAT which doesn't make sense since local manufacturers pay that as well.
If the US doesn't apply non tariff barriers and the EU, for example, does, why us the EU flooded by Chinese cars and smartphones and the US isn't?
It's not really inconsistent as as far as I'm aware the US is the only country in the world with a universal baseline tariff on all imports. Other countries have tariffs that seek to protect certain industries and balance this with trade agreements that cover other goods or certain countries.
For example Japan wants to protect its farmers so has tariffs on rice. But that is not a simple tariff on all rice imports. There are various rules and a tariff free allowance. The largest importer of tariff free rice to Japan is the US.
I think there's a few things wrong with Trump's go to of tariffs as weapons:
- America seems to want total freedom to trade on its terms, not as partners. E.g. expecting countries to import American goods that do no satisfy customer demand or local laws.
- Trump's unpredictability will mean that companies will be hesitant to make large investments if they think the policy will change on a whim. US policy is largely controlled by a single, unpredictable, vindictive and fragile ego. That's not a good environment to build a stable and healthy company.
- The hyperbole such as calling international trade raping & pillaging. This is voluntary trade we're talking about.
- The main issue is that it's not solving the real problems of the average American. Globalization has big issues, it's kept some countries in poverty and contributed to declining living standards especially in western manufacturing. However it is just one factor amongst many that are causing hardship for small town America. A reversing of globalisation does not solve massive wealth inequality, it does not intrinsically solve low wages or abandoned factory towns. At the same time that Trump installs tariffs he's making it easier for the wealthy to concentrate ownership of assets, increase inequality, reduce employment laws and erase social protections. 14 billionaires with elite projection are not working to benefit the average American, they're working to benefit their own average.
This is just a stray thought of mine - but I feel like the US might go down a very dangerous path - I think to avoid retaliatory tariffs, US companies, such as NVIDIA might decide to create foreign subsidiaries, and license the technology to them - after all the tariffs don't apply if Europe does business with a Taiwanese subsidiary.
But this will expose them to a technology exfiltration scheme and/or hostile takeover in the vein of what happened to ARM China.
Am I reading too much into this?
They already wouldn't be subject to this tariff if they bought directly from Taiwan. Tariffs only happen when goods cross the border so unless Nvidia's logistics required them to ship into the US to get goods to Europe they shouldn't be affected by the tariffs directly.
Genuine questions: why are they calling it “reciprocal”? Is the US just matching the tariffs set by the other countries?
Also, this announcement has wiped out any plans of buying tech products this year, plus a holiday to the US and Canada later in the year. Good thing too, as the entire globe is probably staring down the barrel of a recession.
Someone calculated the formula used. They divided the trade deficit of each country by total trade of each country and assumed that was all a tariff.
So for example Indonesia and the US traded $28 billion. The US has a 17.9 billion trade deficit with Indonesia. 17.9/28 =0.639, or 64%, which is assumed to be all caused by tariffs. So they divide by two and impose 32%.
Anyway no the US isn't matching tariffs they're dramatically exceeding them.
Thanks for pointing this out. As a follow up, if the US has a trade surplus, they seem to just slap 10% in both columns.
That's a bit of a messed up way to calculate things.
I also think the US deficits are hugely overstated because much of what the US produces is intellectual capital rather than physical goods and the profits are made to appear in foreign subsidiaries for tax reasons. Like if I buy Microsoft stuff in the UK, Microsoft make out it was made in Ireland for tax purposes, but really the value is created in and owned by the US. The US company both wrote the software and owns Microsoft Ireland. So much of the perceived unfairness Trump is having a go at isn't real.
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It's like the blaming in a playground fight; who started first? For context: https://nitter.net/KushDesai47/status/1907618136444067901
It's just spin. The new duties are purely punitive.
Because when the blowback comes, people will be looking to cast blame for starting this whole trade war, and when that time comes Trump will point to the word "reciprocal" and say "we didn't start this, we were only reciprocating".
> Is the US just matching the tariffs set by the other countries?
No. Trump claims that the new tariffs are a 50% discount on what those countries tariff US goods at. (Even if that's questionable - is VAT a tariff?)
If he's correct, or anywhere close, this is a "tough love" strategy to force negotiations. We'll see how it goes. It also plays to his base - why should we tariff any less than they do us? And they have a point, it's the principle of the thing.
> If he's correct
He's not.
According to [1], the White House claims Vietnam has a 90% tariff rate.
According to [2], 90.4% is the ratio of Vietnam's trade deficit with the US -- they have a deficit of $123.5B on $136.6B of exports.
The same math holds true for other countries, e.g. Japan's claimed 46% tariff rate is their deficit of $68.5B on $148.2B of exports. The EU's claimed 39% tariff rate is their deficit of $235.6B on $605.8B of exports.
Who knows, maaaaybe it just so happens that these countries magically have tariff rates that match the ratio of their trade deficits.
Or maybe, the reason Vietnam doesn't buy a lot of US stuff is because they're poor. The reason they sell the US a bunch of stuff is because their labour is cheap to Americans. (They do have tariffs, but they're nowhere near 90%: [3].)
America's government is not trustworthy. Assuming that what they say is truthful is a poor use of time.
[1]: https://x.com/WhiteHouse/status/1907533090559324204/photo/1
[2]: https://ustr.gov/countries-regions/southeast-asia-pacific/vi...
[3]: https://www.investmentmonitor.ai/news/vietnam-gives-us-tax-b...
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It's so quaint to me that people actually believe his rhetoric. How long do you think people will put up with high prices before they turn on him?
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> If he's correct
Trump is not in the business of being _correct_, or indeed caring about correctness as a concept.
And no, these are, obviously, not the actual tariffs, don’t be silly.
Are those in addition to existing tariffs?
And there are a lot more countries in that list, South Korea and Taiwan are going to really hurt for electronics. And I assume Vietnam, Cambodia, Bangladesh and other countries will hurt for other good that are made cheaply there.
> And I assume Vietnam, Cambodia, Bangladesh and other countries will hurt for other good that are made cheaply there
Vietnam and Bangladesh would hurt American consumers (clothes). Cambodia not really.
Silver lining, Brazil and Colombia (edit: and the rest of Latin America) are kept at baseline, and Philippines is now the lowest tariff developing Asian economy.
We'll probably see a significant amount of capital returning to Philippines (who saw de-industrialization when South Korea signed their FTA with Vietnam).
> Are those in addition to existing tariffs?
Yes (Edit: not sure now, I'm hearing some say they include the 2017 tariff regime of flat 10% - smh shows how this was just a political ploy that answers for such a critical question are mixed)
(Edit 2: was right initially - thanks u/inverted_flag)
So 54% on China, and this might not be the end of it as countries will retaliate and Trump might increase them even further.
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> Yes (Edit: not sure now, I'm hearing some say they include the 2017 tariff regime of flat 10% - smh shows how this was just a political ploy that answers for such a critical question are mixed)
https://xcancel.com/EamonJavers/status/1907540655871521264#m
I'm a freelance selling software services. Some of my customers are in the US. Am I affected? These tariff don't impact software, right?
Different countries have different tariff. Is there room for arbitration? In which a 3rd party business from a country with low tariff would buy a product in one of the countries with high tariff and export that to the US, taking a small cut.
Services aren't traditionally part of tariffs; tariffs apply only to physical stuff moving across borders.
That being said: I work in a services-oriented business right now "exporting" services to the U.S. and the leadership of that company is seemingly getting very worried, trying to diversify their customer base out of the U.S.
If, in the cycle of retaliatory action, they run out of ammunition with tariffs on stuff, who knows what other crazy ideas will come to the surface: Tariffs on services do come to mind, maybe restrictions around recognition/enforcement of foreign-owned intellectual property,...
Tariffs on services are much harder to enforce. There's point of entry so it's harder to check.
However, some countries have a withholding tax for services provided by foreign companies. The client is responsible for withholding the amount from any payment and paying the government. And banks play a role in the enforcement if needed.
So it can be done !
Tariffs are on goods. Unless you're physically shipping software across the border it shouldn't affect you.
You mean arbitrage, and yes, that definitely happens as a result of tariffs.
Upon import you have to declare the country of origin of the good. That's what is being tariffed and makes your arbitrage idea essentially fraud.
Usually this is happening where you import "parts" and the final assembly "the product" is "made in" and sold as "product xyx". Then the origin country of the parts do not matter.
I don’t buy the blanket statement that the consumer always pays the tariff. It depends on what alternative companies have. If a company can purchase the same clothing from Chinese, Vietnamese, or Mexican vendors, a tax on China only could make the Chinese vendors lower the price or risk losing the business.
However, a blanket tax on every country, regardless of available alternatives, would leave businesses with fewer options and make it more likely that the cost is passed on to consumers.
For taxes to work in raising money, they have to be paid. So, if the goal is to make revenue from the taxes, then raising costs is expected?
If the goal is to incentivize alternatives, then the tax has to be such that it raises the price above the gap there now. So, even if you do drive people to an alternative source, the new price will be higher than the old. (Unless the thought is that people were choosing to not buy the cheaper source to begin with?)
I suppose you can argue that some suppliers have such a margin that the tax could be an effort to get them to cut into that? I have not seen evidence that that is the case?
> If a company can purchase the same clothing from Chinese, Vietnamese, or Mexican vendors, a tax on China only could make the Chinese vendors lower the price or risk losing the business.
This example implies producers are already in competition with one another, so it's unlikely that any of them can lower the price much. On the other hand, if some producers leave the market due to the tariffs, then there's less competition overall and the other producers can charge more.
> This example implies producers are already in competition with one another, so it's unlikely that any of them can lower the price much.
Non sequitor. Differing production conditions between countries would result in differing profit margins.
The objective reality of the situation is that there is a transaction between a buyer and a seller. That transaction is what pays the tariff, VAT, property transfer tax or whatever vampirical suckage by whatevername.
Both transacting counterparties are robbed.
How that is distributed between them is a matter of which has more alternatives. E.g. if the seller has lots of prospective buyers, most of whom are not subject to the tax, then the market price they demand is not sensitive to the rare buyer who does pay the tax.
If a big fraction of the seller's prospective buyers face a tax, then it makes their product or service look more expensive to a good chunk of the market, which exerts downward pressure on the price. The downward pressure on the price means that the seller effectively pays some of the tax, through lost revenue.
So, the transaction pays the tax as such, but how much of it is distributed between buyer and seller depends on the degree of influence of the tax on the price point.
The concept you are describing here is "tax incidence" [1].
Tariffs are taxes.
I'm sure lots of hours will be spent researching the incidences of these across many industries.
As you note, one major factor is the presence of substitutes, but there are several others.
1. https://en.m.wikipedia.org/wiki/Tax_incidence
This is true, but the amount of production in China dwarfs everyone else, and definitely what America can bring up anytime soon, so two consequences:
A. Tariff for Chinese goods will be reflected in consumer prices pretty much directly.
B. Domestic suppliers if the same goods have very limited capacity, giving them the pricing power to raise their prices by the tariff amount, and take it as extra profit.
Take for example cars. We will see American cars go up by the same amount as imports as long as they are oversubscribed on capacity.
Of course! That definitive statement is rhetoric.
The payer of a tariff is decided by the relative elasticity of supply and elasticity of demand.
Sometimes the seller will eat it. Sometimes they buyer will eat it. Sometimes the product wont get made or sold.
Most goods in US directly or indirectly relies on importing. So practically, I think it just mean US introduced VAT.
Except VAT and Sales Tax is typically applied regardless of where the item / service originated from.
It also doesn't apply potentially several layers down.
That's not to mention things like reverse charge for B2B etc.
In other words, not similar at all!
Except it seems like the president has more control over tariffs.
Taxes are approved by congress, so this was surprising to me. Does the president essentially has full reign to tariff whoever they want (for whatever reason) until the end of their term?
Maybe this is less about economic independence and more about grabbing whatever power is within reach. If domestic taxes were up to the president and tariffs were up to congress, would we see exactly the same situation with domestic taxes?
Not quite the same.
An item sold for $1000 say would pay $100 at 10% VAT. The items in the supply chain all charge VAT and reclaim VAT they spent. I think usually this terminates at the import (maybe?)
Well, when you put it that way... it doesn't seem that bad at all.
Maybe the real innovation here is the political manouvering of coming up with a new, desperately-needed government revenue stream.
The lion is not killed by other beasts but by the worms inside.
Factories are not coming back to the USA in large number, for a lot of reasons, at least not until full automation + tariffs makes them economical. But the biggest reason is that what's going to happen is that the average joe is going to suffer a bit, then will vote against these policies in the next election, and that's only 3.5 years away. If it takes a year to build a factory -- and frankly these tariffs could be adjusted again or removed in a few months -- and then they're likely to be fully removed in 3.5 years, I'm just not sure it makes sense to invest in a factory.
Optimistic to assume that the US will have voting in 3.5 years.
My suspicion is that Trump will declare a national emergency and suspend elections at the mid-term if it looks like the Republicans will lose seats in the House.
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Want to bet that Trump's argument for a third term hinges on the US being in a recession/depression and needing him to see the economy through the struggles?
This doesn't come as a surprise as we all know it's going to come.
My question is, how does the US prepare to re-industrialize itself? Is the tariff good enough to provide incentives so that factories start to appear domestically? I fear this might not be the case.
The US never lost manufacturing. It just automated it. Those people who know how to run a factory still exist.
However there is no getting around it taking years to setup a factory (less if you can import the assembly line back from China). So nobody sane will start a new one in the next year based on these tariffs - odds are too high that in 2 years the democrats take over congress (the house not flipping would be a shock: typically the out of power party gains a few seats in non-presidential elections and only a few seats need to flip. The senate is somewhat unlikely, but the loss of the house would have ripple effects there).
Even ignoring the above, any few factory would be highly automated. There won't be thousands of new no college required jobs created in any new factory. It will be maybe 100 (probably less), with a bunch more engineering degree required.
The De Minimis loophole is highly significant with 4 Million packages per day (What ?). The clause to address this loophole needs to be stated more accurately - It should clearly define it to be higher / lower of 30 % of value of shipment under $800 or $25 per shipment and not either
Source :https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr....
This is absolutely shocking. As these tariffs are reflective of trade deficits this administration is taxing the cheapest sources of goods for the American economy in proportion of volume.
This is economic handbrake territory. It will impact every industry that imports goods (as well as many raw materials and components) and will devestate many, if not all SMEs who rely on importing goods to sell to local customers. Fashion retail in particular and drop shippers will have to raise their prices considerably.
While I imagine the ideas behind these tariffs have some sense of justification, the numbers simply don't add up. Manufacturing clothing in the US simply isn't viable at the sorts of scales for mass consumption. For example, you can pick up Levis at Walmart for around $25 that have been manufactured abroad. The Levi Vintage run, which are made within the US, have prices starting at $150. So all this will do is force people will less money to spend an extra ~50% (or $12.5 in this case) on their jeans, as this will still be cheaper than $150. Obviously to entirely succeed at the supposed aim would to create a world where all jeans cost $150 and this would simply mean that most people would not be able to afford jeans.
So has anyone an idea how those tariffs would affect software sales? Say I'm a German guy selling a license for my software to someone in the US. Will this fall under tariffs, too. Or are software licenses somehow exempt? Asking for a friend(me).
My opinion. (Also as a German guy doing a similar thing).
On the first order no. The tariffs just announced are only on goods and are collected at the ports when you physically import them.
On the second and third order. What I think will happen is that the EU will mostly retaliate against US services. And then trump might counter retaliate against EU services. So I would start looking for customers outside the US.
It won’t unless you’re shipping an item to the USA.
I think the eu should look into taxes on u.s. services, instead of tariffs on products. Taxing AWS/Azure/etc +25% would do a lot in getting similar services in the eu expanded.
Out of curiosity, would you still need to pay the full tariff, if the cost of an item that was shifted to a token/smart contract, that only enabled a right to purchase, but reduce the device cost to like a dollar or shipping.
It’d be pretty cool if someone derived a legal smart contract solution. One could argue that, the tech enabled products are two things a digital service, and a manufactured product. Those costs could be potentially be seperated.
Then again, I know nothing ^_^
As a preview of our future, it's now a good time to review the decline of standard of living that occurred when Great Britain lost the privilege of having the World's reserve currency, the Pound Sterling.
My estimate is we're in for a 75% haircut to our personal standard of living as the US Dollar loses it's place, and we actually have to pay for everything we want in hard currency or real goods. Trump killed the golden Goose, and threw it into a wood chipper.
Yep what many people overlook is that this deficient just means the rest of the world is financing the US overconsumption. And the only reason they are happy to do it is because they are happy to hold USD and are happy to invest in the US economy.
Tariffs are a tax on consumer goods. They will also be counterproductive to economic growth.
This is basically the Kim Jong-Un approach to foreign policy:
Kim: threaten a nuclear war, see if people will pay you to stop
Trump: threaten to crash the world economy, see if other countries will pay to stop you
He doesn't care that this will shrink the global economy, or even, at least in the short term, the US economy. If other countries submit in order to negotiate tariffs down then he has his "win" politically, if not then he has someone to blame.
Three things:
1. On the face of it, this looks horrible. I won't rehash the many arguments against it here, though. This page is already chock-full of those arguments.
2. Robot labor could make ultra-low-cost manufacturing possible in the US, to the point that many things become cheaper to make locally than to ship from abroad, tariffs or or no tariffs.
3. If any major country/region negotiates lower tariffs by fully opening its market to US products, every other country/region will be forced to do the same, expanding free trade everywhere.
> If any major country/region reacts by negotiating lower tariffs in exchange for a full opening of its market to US products
Would any country trust the US in a negotiation?
Probably only to the extent the US actually does what it has agreed to do.
>Robot labor could make ultra-low-cost manufacturing possible in the US, to the point that many things become cheaper to make locally than to ship from abroad, tariffs or or no tariffs.
That's not a solution to anything though. All it does is ensure your money goes to Mr. I-own-the-robots instead of to Foxcon's Mr I-own-the-people
That doesn't bring back any jobs
The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we make.
If you no longer want the trade deficit that means payments of fealty by those who trade in dollars, which countries aren't likely to tolerate, or abandoning the USD as a global reserve currency, which would be disastrous, truly disastrous. Our debts would suddenly become existential because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy. I don't think many truly understand just how disastrous it will be.
This isn't America's liberation day. This is Russia's and China's liberation day. While America was once able to check their power, America is no longer in a position to do so, we will barely be in a position to satisfy our own military's logistics requirements.
This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies. It is not only a de facto soft blockade of American trade, but it is an attack on the mechanics of American hegemony. Politicians already ask for money instead of votes or actions. That means if foreign governments spend money, they can elect their preferred candidates. America's own government was a result of french support. We institute regime change in other counties, and I see no reason to believe we are immune.
If trade stops occurring in US Dollar, which is a consequence of the stated goal of our current ruling regime, that would be the coup de grace on this country's hegemony. It is the definitive end to it, and the birth of Chinese hegemony.
Ray Dalio's Principles for Dealing with the Changing World Order feels prescient: https://www.youtube.com/watch?v=xguam0TKMw8
What still baffles me is how people act like this was some kind of thoughtful decision.
When you put someone incompetent in charge of a country, a company, or a sports team, collapse is inevitable, no exceptions. We’ve seen it play out over and over again because of stupid choices only driven by ego.
Now it’s the US’s turn
For extra sauce on the "they're barely even thinking about this" cake someone figured out where those crazy "Tariff Charged" numbers were coming from, they're taking the trade deficit and dividing by the total imports from that country.
https://imgur.com/a/jBTiz7T
edit: The White House deputy press secretary posted their formula and it is just trade_deficit/2*total_imports per country just dressed up with a lot of fancy language to make it seem smarter but the two extra terms are constants.
https://x.com/KushDesai47/status/1907618136444067901
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It’s been our turn for a hot minute. Republicans have been blowing up the status quo since Reagan, and the Democrats enforcing austerity since Clinton. American corporate leadership is excellent at hitting quarter-after-quarter KPIs for bonuses and share price growth, but there’s ample data it has all come at the expense of workers - increased precarity, decreased wages, increased costs of everything, as the country is plundered down to its core and sold off piecemeal.
Post-Carter United States (and South Korea, and Japan, and the UK, and much of the developed world in general) is a prime example of the follies of prioritizing numbers-on-a-spreadsheet growth in the short term, over a balanced and robust domestic economic engine that ensures a healthy, happy, stable populace that wants to have kids (since they have the money and time to be good parents).
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> What still baffles me is how people act like this was some kind of thoughtful decision.
I'm no economist, but I can see that there are second order effects that this addresses that other systems would lack.
1) Tit for tat on tariffs doesn't work because of other barriers to trade such as currency manipulation, subsidies, regulations, etc.
2) We've learned from games such as iterated prisoner's dilemma that strategies that succeed are ones that clearly communicate how they'll act and respond. A clear formula such as deficit/imports accomplished this. Countries know exactly what they must address in order to access US markets.
3) You can end up playing whack a mole with countries in that they can set up shop in other countries to bypass tariffs in their own country. By applying a consistent formula to all countries, you no longer have to play whack a mole.
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It seems thoughtful if you or your children or your friends are heavily invested in crypto and think removing the USD as the primary currency of trade is a good idea.
I know it's a Republican joke to blame evil meddling globalists for the US's problems but it sure seems like a bunch of people looking to ruin the US for their own global ambitions are running the show right now.
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Luckily the US has quite some momentum so it can be hoped the damage is limited before the next election so it can then be reverted.
This is what forced me vastly curtail my news consumption for the most part. I can only take so much breathless reporting about the "strategy" of the Trump administration, when it's plainly sheer incompetence with the winds of malice in the background. There is no actual plan to "make America great again", it's non-stop incompetent pandering to a base that just wants others to suffer.
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> What still baffles me is how people act like this was some kind of thoughtful decision
Maybe it's the "Why not inject disinfectant to beat covid" [1] for the economy. But this time nobody around him said no. (note: added around him)
[1] https://www.bbc.com/news/world-us-canada-52407177
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In this case it's much much worse than just incompetent. You're looking at someone who takes an evil delight it doing the opposite of what smart people say to do, and destroying stuff.
Plenty of us knew the outcome would be catastrophic. We were outvoted by the idiots.
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There’s been many people opposed to free trade for decades, on both sides like Pat Buchanan and Bernie Sanders. You can think those guys are incorrect in their analysis, but calling it “mindless” is just ridiculous.
This tariff regime is simply a “minimal viable product” aimed at the idea of reducing structural trade deficits.
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I'm really do appreciate all those on HN who comment either for or against these tariff measures by including cogent arguments and relevant facts. As against ...
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> What still baffles me is how people act like this was some kind of thoughtful decision.
I'm afraid it is. An unholy coalition of capitalist-anarchists and ultra-conservatives is the driving force behind it. They both want to reduce the influence of the government to a level as small as possible. That can only be done by dismantling the current federal government.
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> What still baffles me is how people act like this was some kind of thoughtful decision.
It is. This is being done as part of a plan, with full intent.
The clearest evidence of incompetence for all to see is Trump's cabinet from his first term. If they're actively speaking out against him, something is seriously wrong.
> Rex Tillerson on Trump: ‘Undisciplined,’ ‘doesn’t like to read' and tries to do illegal things
Sadly, people didn't vote for Trump so much as they voted for "anti-woke." Or: I am tired of being looked down on and this is my revenge.
I wonder how much more evidence American people need to see Trump for being a Russian asset and working against US interests.
We are in treason territory.
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> This is Russia's and China's liberation day
With the tariffs in Asia (Vietnam: 46%, Thailand: 36%, Cambodia: 49%) it feels like a good opportunity for China to increase their trade/influence in the region as well.
Sri Lankan here. They just slapped 44% on us (higher than on China). The country is just trying to recover from the economic crisis and the sovereign debt default of 2022, so we have very high import duties on certain items (e.g. vehicles) to discourage dollar outflow. Looks like the US just saw that as hostile and decided to strike back.
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> it feels like a good opportunity for China to increase their trade/influence in the region as well
influence for sure. But trade? Vietnam/Thailand/Cambodia already have ~40% of their imports from China and 5% or so from the US, I don't think this tariff can realistically increase trade between China and SEA countries much.
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The Chinese don't want to buy anything, except raw materials. Their idea of trade is to sell products to you, not buy anything from you.
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Not to mention 29% tariffs on Norfolk Island. Who hasn’t exported anything to the U.S. in years.
And a 10% tariff on the Macdonald Islands, which has a population of zero (not including the penguins).
Perhaps Trump thought he was taxing a fast food competitor?
Fun fact: these are all internal territories of Australia. Why they get separate tariffs is weird.
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To add to the comment: If you want to be the capital of an empire, you have to act like it—like Troy, Rome, or Constantinople—meaning you run deficits and play buyer of last resort. When you are no longer that, the empire has indeed collapsed.
Relate: https://www.washingtonpost.com/archive/opinions/1998/08/18/t...
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"The golden prize for America's enemies is to remove the US dollar as a global reserve currency."
I would argue that for this to become even remotely possible, America's list of enemies must not automatically become everyone else's enemies too.
that is to say: the USA's secondary statutes have to become ineffective.
To do this, the EU's blocking statutes (to ignore secondary sanctions) have to be effective. Right now Europe's own companies just ignore the statutes to keep their US trade.
To make the blocking statues effective, the EU's own research recommended fines/sanctions/bans/… on licences for foreign (read US) banks, and companies that ignore the statue and don't serve EU companies trading with sanctioned countries.
But to do that, the EU would need alternatives to American services.
Power and influence follow sovereignty.
€0,02
Europeans have a lot of alternatives to American services, including building out their own.
What Europeans truly lack is the ability to defend itself without the U.S. They have the technical know how and can build the manufacturing capacity but that will take a decade at least.
Also, European financing is just not as strong.
However, with the U.S. voluntarily walking away from its role as the center of the world, this may not be a problem for too long.
Tech is the easiest service to replace considering American tech workers by insisting on WFH have already largely eliminated the geographical advantages American tech used to have.
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The Chinese have alternatives to American services. Europeans could have too if we wanted.
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> Right now Europe's own companies just ignore the statutes to keep their US trade.
If it’s the trade keeping EU companies in line, isn’t the destruction of trade that these tariffs are intended to achieve precisely the kind of thing that will then prevent them from staying in line in the future?
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> Since trade is conducted largely in USD, that means other governments must purchase USD to trade.
This is just one facet of a broader point. When people talk about a "trade deficit" what they are really talking about is what's known in Economics as a "Current Account deficit". When discussing international trade and Balance of Payments, there are two accounts - Current Account (goods and services flow) and Capital Account (asset and liability flow). By definition, the two must net to zero. That's not an equation, it's an identity. If you have a Current Account deficit then you have an equivalent Capital Account surplus. It works in both directions. For example, foreign direct investment into another country in the form of a loan leads to a flow of funds into the country (Capital Account surplus) and then those funds are used to buy things (import) from the first country or other countries, leading to a Current Account deficit.
How does this impact consumables? The capital doesn't balance, it disappears but the money used for it still exists
I was just thinking about this and I'll bet you anything that Trump is 100% hung up on the word "deficit" and that's about it. If we said "net importer" or "goods taker" or something like that we would not be in this situation.
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I wonder which nations are truly "antifragile" to similar takeovers?
The U.S. seems especially vulnerable with its limiting two-party bias, among other factors.
I'd argue that the level of education of the general populace in (still) functioning democratic countries might be the prime mitigation factor.
Based on this, if I were placing bets on prediction markets, I'd wager that e.g. Finland would be among the last to succumb.
It's more likely to be related to culture and political structure than education is my guess. Unless, maybe, we want to use a different definition for education than just degree attainment. For example, Finland has lower attainment rates for bachelor degree equivalents than the US. This would seem to disprove your point.
The real issue is the two party split and urbanized distribution. The way the voting works and the structure of the houses means that once you reach about 85% urbanization the rural areas won't matter. We can see this at many state levels that mimic national political structure. We have multiple nations within our county, with the biggest divide probably being between urban and rural. So all you have you have to do is promise the rural group who feels they are increasingly marginalized a candidate who will look out for their interest. The specifics of those promises don't really matter because in the 2 party system it's us vs them more than actual policy positions. You will find a much bigger difference looking at the urbanization based metrics than you will at the roughly 10pt difference in who people with bachelor degrees voted for.
Edit: why disagree?
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Switzerland. Power is extremelly distributed between municipalities, cantons and, in the Federal Government, there are 7 equal ministers. The system is not only robust by definition, but encourage dialogue and citizens participation in politics at every level through popular vote, educating people during centuries.
Germany. The country was designed to be incredibly hard to takeover from the inside.
Central government is weak, even if AFD would takeover the chancellorship there are few measures that would immediately allow them to intervene in the federal states or „Länder“, much much less than in the US e.g. unless there is war there is no way to use the military to force compliance.
You would have to take over the country 17 times, and since the elections are not synchronised you would have to convince everybody all the time that this is good idea.
Individual German federal states could be taken over much easier, Thuringia probably will be the first in 2028.
The biggest weakness than is that the legal prosecution on German federal state level is under control of the executive and could be used to prosecute political adversaries. But if this goes to far the remaining parts of the country could vote to takeover the executive if there was a breach of the constitution.
Expanding on this, Vlad Vexler offers a broader framework here:
https://www.youtube.com/live/hgPGPZRQdaU?si=4W0z1vkk2bfnueJZ
His analysis complements the crucial discussions elsewhere in this thread about the economic details (reserve currency risks, the tariff math) and specific geopolitical impacts, by focusing on the political drivers; the nature of post-truth populism, underlying societal weaknesses, the challenge of maintaining civic coherence in the midst of it all, etc.
The allies tried to make Germany robust against this.
Doesn't matter how intelligent or educated or homogenous culturally the Finns are...if Russia were to decide to invade.
Domestic political antifragility means nothing if you're not anti-fragile in terms of the outside world.
It's called the anarchic global system for a reason. The only thing enforcing norms is power and the fear of it.
Antifragility would be the EU finally forming a real union. As someone living in Finland, I'm not holding my breath that happens in our lifetimes. If you take a sample of average, non-cosmopolitan Europeans, they can barely even communicate with each other in the same language. Let alone come to agreements on who's going to pay for each others bloated social welfare expectations.
The EU is the very definition of Fragility. While Finland has made far more rational decisions than its EU neighbors (having correctly prioritized energy security, military, and technology), it doesn't matter because size is more important.
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You can look at countries that have remained democratically stable for a long time. The UK and Switzerland come to mind. I live in the UK and we have an odd system that I used to consider a bit of a gimmick for the tourists to take photos of but appreciate more these days. Basically the fact that we have a king but with severely curtailed powers delegated to the elected folk makes it very hard for one of them to appoint themselves effectively king, especially as the military all swear allegiance to the actual king (or queen).
It's partly effective because they system wasn't really designed but evolved out of a lot of bloody power battles, going back to at least 1215 https://en.wikipedia.org/wiki/Magna_Carta
I used to think it was silly but if you look at rival European powers they had Russia with Stalin, Hitler in Germany, Napoleon in France, Franco in Spain, Mussolini in Italy etc. The UK is one of the very few which avoided having a dictator.
[Edit - I was kind of talking about the wrong thing - avoiding dictators rather than Trump types]
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It would also help to have a population without a deep-seated beef going back to the civil war. You arguably have two separate 'America's split down that historical line that might not ever see eye-to-eye and, just like the US itself has installed dictators or favourable governments by funding disruption abroad, it is open to be exploited the same way.
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To be fair this strategy will work if other countries cannot tolerate tariffs for long enough to come up with non-USD trade that is accepted by everyone. Which to be fair may take them a very long time.
If they fold and remove tariffs on the US (so the US can drop the tariffs on them) before coming to an agreement because the economical pressure of tariffs is too high, then this will result in the largest market expansion the United States has ever seen.
My point is: yes lots of negatives can happen, but let’s also look at what happens if it works out so we are intellectually honest about what’s going on here.
> If they fold and remove tariffs on the US
The issue with this is the "reciprocal" tariffs that were announced are not related in any way to tariffs imposed by other nations. According to the administration, they set the tariff rate for each country as (trade deficit / (imports * 2)). Obviously the country in question cannot undo this even by zeroing all tariffs with the US, because none of this is based on tariff rates.
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(so the US can drop the tariffs on them)
That would require other countries trusting the promises of the current administration, yes? How much credibility does the Orange One have on the world stage?
British tariffs come to a weighted value of 1.02%. That's what the US is worried about, 1.02%. Seriously.
> If they fold and remove tariffs on the US
Part of the problem is that Trumps's definition of tariffs doesn't make any sense. VAT isn't a tariff but according to Trump it is.
Does he seriously expect other nations to just get rid of VAT? Or somehow replace it overnight with some other system all just to appease the US? Because that's the only way you can lower 'tariffs' to zero.
It just won't happen and we'll be in a continual standoff until Trump concedes that trade barriers are not in fact a good thing for anyone. He'll never admit it, but it wouldn't surprise me at all if the illusion of a 'deal' is struck in order to save face and reverse this mess once it becomes clear it's not sustainable unless you want to shrink your economy and destroy others at the same time.
So much for making America great again. It looks like they're doing the exact opposite.
Looking forward to ”great” as in ”great recession”.
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Make America a great mess.
Good. Time for this idea to die finally.
Not surprising from someone who could bankrupt a casino
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Yes, but it's even worse than you think.
As these countries move away from the dollar, there becomes a glut of US dollars in the world, triggering inflation like we have never seen before. Ignoring the barriers to trade that the tariffs represent and what that will do with our productivity. Ignoring the additional cost of an uncertain market future (because all decisions are made from the gut and could change tomorrow). The massive stagflationary impact of foreign countries unloading the 75% of US dollars they hold would effectively kill them US economy. The tariffs wouldn't even matter because you effectively couldn't give US dollars away -- they'd be worthless internationally. No one that is not rich could afford to import anything.
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
I think it is misleading to speak in terms of enemies even if that plays to the fears of US isolationists. It is good rhetoric but I think it obscures the truth, There was a time when the stability and strength of the US made the dollar a good choice for friends and enemies alike. The world is changing and the current US administration is accelerating some of those changes. China is going to play an increasing role as the US turns inward but I doubt they will ever replace the US dollar as a reserve currency. The Euro is the second most held currency after the dollar and there are probably a few others ahead of China.
> Our debts would suddenly become existential because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy.
Can you elaborate on this? Every other country does not have the luxury of having its currency be the reserve currency but still manages to both inflate that currency when needed and import good just fine.
If America's reserve status goes, they will face the same constraints, except with way more debt and far less experience managing currency risk.
If India buys a widget off Brazil it will probably be paid in dollars. Therefore, people need to own dollars. Thus a demand for US debt. This lowers the potential interest rate. Other countries who's currency is not a need for people to buy, their debt is purchased by the attractiveness of its offering (i.e interest rate). If US dollar is no longer required than government bonds have to be attractive. Also, not all sovereign debt is issued in the home countries currency, which means that the printing press doesn't help. US debt is very large, interest repayment are close to military spending. Without the reserve currency that would get worse. Something like 68% of world holding is dollar 17% Euro, nothing else of note.
The other side is that as there is a demand for dollars. The value of the currency is higher than if it wasn't which increases the price of exports and reduce price of imports. Trump might want to weaken the dollar.
> Foreign countries buy US dollars so they can trade with other people
Who are those other people and why do they want to be paid in USD so badly instead of their own currency in which they presumably pay their employees and taxes? I never understood that.
In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? Way back in time, US Dollars were one to one based on gold in fort knox. Right? But no country has a gold reserve now. Most countries have a dollar reserve to back the paper money they print themselves. This is the main reason the dollar hasn't collapsed already.
[edit] someone who graduated college with an economics degree please come and correct the following vague and possibly totally wrong perceptions I have as a subject of the American empire /edit
The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve. Only the US gets away with having no actual reserve ...because a combination of military might and cultural strategic dominance has allowed it to BE the reserve for everyone else. This is why it somehow makes sense for America's economy to be based entirely on consumption rather than production.
OP is right. Whichever superpower controls the levers of global trade is the one that can sell debt and enforce the currency regime.
Some of us think that it's a lucky thing that it's been America, rather than a more authoritarian power, who had held that control for the past 80 years. Europe would not have recovered from WWII otherwise, and be living behind an iron curtain. Anyone who controls global trade after America is likely to be worse from a human rights perspective.
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Because you can easily and cheaply convert USD to any other currency, and because it is the usual currency for international trade you can use it to pay someone else.
Suppose a British company imports tea from Sri Lanka and Kenya, blends and packages it, and exports it to retail chains in multiple countries. If all the buyers pay in the same currency used to pay the suppliers the British company does not have to convert more to GBP than required to meet its costs (and profits!) so loses less on converting currency at all. The usual currency used for this is USD.
So rather than:
customers currencies -> GBP -> suppliers currencies
we have customers currencies -> USD -> suppliers currencies.
Edit: I have not explained very well in the bit immediately above. The point is that the British company will not need to convert the currency at all as they will be paid in USD and will pay in USD. In most countries you get better rates converting to USD, and its easier to hedge this way. Even more so if there is a longer supply chain as then you get
A's currency -> B's currency -> C's currency to D's currency
vs
A's currency -> USD -> D's currency.
There are a few wrinkles on this in that customers may already have USD accounts, and suppliers might keep some money in USD, but obviously customers will be paid by their customers in their own currency, and will pay their staff and most other costs in their own currency.
There are both hard and soft reasons for this.
Hard reason: Oil was traded in U.S. dollars. This was basically built off America’s status as the only open superpower and its military strength.
Soft reasons: U.S. political stability (yeah, it’s hard to understand that now after the past decade, but generally the U.S. has been extremely politically stable with Presidents largely maintaining their predecessors foreign policy even if they didn’t agree with them), US company culture which is much cleaner than the rest of the world (American companies are far less likely to bribe, for example), and strong financial institutions like the independent Fed and the publishing of reliable and open data.
Other currencies are not always great: for example, being under sanctions Russia sold oil to India for Indian rupees; then it found out that you cannot simply take rupees abroad or exchange and you need to invest them locally [1].
But I also wonder what's wrong with other currencies and why they are not used more often.
But of course, current US move will greatly help recent Russian efforts in persuading other countries to switch the trade from US-controlled dollars.
[1] https://www.asianews.it/news-en/Delhi-pays-for-Russian-oil-i...
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This is called the euro dollar (look it up, it had nothing to do with Europe).
In short: when two non us countries trade, eg., oil they settle on USD.
So for south Africa to buy oil from Kuwait, they need USD.
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That was the part of Bretton Woods agreement, 1944.
https://en.wikipedia.org/wiki/Bretton_Woods_Conference
Look up the petrodollar.
If I'm Romanian and my currency is leu (RON) and you're Mexican and your currency is pesos (MXN), you don't want my RON since you can't use it for anything except for imports from Romania and I don't want your MXN since I can only use it for imports from Mexico.
If we both agree on USD, I can go to any other country which wants USD (all of them) and buy whatever I want.
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God damn you nailed it. All the stupid wars for nothing. Rarely do I see anyone talk about these shenanigans as the mechanism to end the reserve status of the $ and the end for influence and affluence. It will breed a lot of resentment from some Americans thinking the world is against them. They could be used for war.
One thing I don’t understand here, genuine question: If, hypothetically, US manufacturing was to become so competitive that the trade deficit would go away, would that have the same disastrous effects for the US dollar as a trade/reserve currency? Or how would that work?
It's impossible for both things to be true. For the dollar to be the reserve currency countries need to accumulate dollars. They can't do that unless more dollars leave the US than come back.
The problem is that countries don't just take the dollars and sit on them. We're on the third iteration of solving this intractable problem:
Try 1 was gold. The US was running out of gold and Nixon had to end redemption of dollars for gold.
Try 2 was assets (think the Japanese buying everything in the 80s). That was unpopular and the Plaza Accords put an end to it with significant damage to the Japanese economy
Try 3 is government debt. But it's the same fundamental problem. The US isn't ever willingly going to give back assets for this debt. Everyone agrees with the polite fiction that the US will and so things are fine. But if they ever expect actual stuff for that debt it will all break down again.
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US manufacturing is better than it ever has been by all measures except number of people working in them. This means that there isn't much need for someone to get good at putting a nut on a bolt and other such mindless work that is skilled only in that with a lot of practice you can get really fast as doing it. People who don't want to spend a lot of years in school are thus not doing very well because there isn't much need for people who don't want to use their brain.
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It's typical Empire Hubris: thinking you can get away with anything because you are special.
Trump doesn't really know what he's doing. He surrounded himself with yes-men that know perfectly not to contradict him.
The global Dollar order was built to American advantage. Trump is dismantling it for no reason. If the dollar order crumbles, the US will discover it has much lower productivity.
There is no American exceptionalism: it's just Dollar exceptionalism. No Dollar, no exceptionalism.
I agree, losing reserve currency status would make American gdp / living standards to come way closer to Europe for the simple fact it won't be able to permanently increase its debt deficits. However its far from clear losing reserve status is going to happen, sure some countries will try to diversify but others are probably too tight inside the American umbrella (for defense for example).
But yeah, surprises can happen so interesting times.
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Have to say I disagree there. It was American exceptionalism first which then led to the dollar being popular.
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> He surrounded himself with yes-men that know perfectly not to contradict him.
Stephen Miran is believed by some to be the "mastermind" behind this. I'm not sure Trump has ever had a singular original idea.
Looks like he learned that from Putin, who also surrounded himself with yes-men which lead to him thinking he could take Ukraine in 3 days.
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> thinking you can get away with anything because you are special
Might have been the case some many years ago. Not anymore with many nations not all that far behind.
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Do you know how many taxes on many goods European Union has introduced? Was that "empire hubris" as well?
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"because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy."
You can't inflate your currency to payoff a debt that's due in in a different currency. As soon as you inflate your currency, the exchange rate changes.
The US issues debt in dollars and repays those debts in dollars. The purchasing power of dollars can change due to inflation. If you suddenly increase the global supply of dollars by 2x, dollars that existed prior to the increased supply will be able to purchase less.
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This comment is good, yet it also reflects a lot of what I dislike about political discourse online.
You've identified a potential severe negative consequence of a change or new policy, but you write as if this is a guaranteed logical corollary and there is no scenario where this consequence does not materialize. This creates an alarmist rather than genuine and analytical tone.
Describing tariffs as a "decapitation strike" feels hyperbolic and even perhaps conspiratorial. Saying this guarantees Chinese hegemony is exaggerated and ignores all the other equally (if not more) significant factors influencing both American and Chinese trajectories. Applying Dalio's broad thesis to tariffs specifically is a stretch -- tariffs may exacerbate tensions Dalio describes, but they aren't necessarily the coup de grace to hegemony.
Basically, you're highlighting real risks and issues, but packaging them in language that overstates their likelihood and doesn't take into account any other factors at play simultaneously. If your goal is to paint a doomsday picture of the future, this works well. If your goal is to understand the impact of tariffs on the world, there's too much emotion and speculation and not enough hard analytical work here.
Yeah, the whole "decapitation strike" talking point betrays a serious bias. It also implies something which no evidence is provided for. The idea that foreign actors got someone elected, then managed to get that person to implement a specific strategy that rapidly destroys the dollar as a reserve currency, all for the benefit of the foreign actor, is quite the stretch.
They don't need to hold USD long term to complete transactions. Transaction demand does not explain why the dollar is the global reserve currency.
Major question is then, what currency should be reserve?
Euro? - Nowhere near as stable as the dollar, and some quite shaky fundamentals and history? Yen? Pound? Swiss Franc?
I suspect Yuan will be unpalatable.
The Euro is already a reserve currency and makes up about 20% of worldwide reserves. Which is of course not as much as the dollar which is about 60%, but these numbers could of course shift.
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The new reserve currency won't be a single country's currency but a basket of currencies, where the ratio contribution of component currencies gets adjusted every once in a while.
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BRICS has been proposing a sort of basket mechanism. Bitcoin is not yet thickly enough capitalized. The historical standard was gold for 3000 years, and that's what backed the dollar until that was "temporarily suspended" in 01971. That's the default.
Perhaps we should dust off Keynes' Bancor proposal? :)
https://en.wikipedia.org/wiki/Bancor
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Bitcoin would be the most fair choice for a new reserve currency. It has equivalent properties as gold but is more practical to use, and there's no geographic inequality to mining it.
No government could benefit from manipulating it. How cool is that ?
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The Chinese yuan is not a viable reserve currency. Why? Because it's pegged to a basket of other currencies. It should really inflate in value but Chinese government policy is to undervalue it to aid exports. Exports are ~20% of China's economy. It would devastate the economy if the yuan was allowed to freely float, or at least float with the level of central bank management that other developed nations' fiat currencies have.
China has repeatedly tried to activate a consumption economy (like the US) but the Chinese just save and buy real estate, in part because there is no retirement benefits so they have to self-fund that.
So what currency? Currently, there is no viable alternative to the US dollar. It is backed by the largest economy in the world AND the US military.
You might find people who talk about BRICS like it's a real thing. It is not. It's just a group of randomly selected countries meant to sound nice (literally, South Africa is only there for the S sound) with no unified policy or currency.
It's not the euro either. Europe ultimately is still dependent on US defence and beholden to US foreign policy.
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IMF does have Speecial Drawing Rights that kind of, but not really, acts as a global currency
I’m past the point of thinking people are just being crazy or paranoid. Any baffling move this administration makes, I just ask myself: what would Russia want?
And without fail, it explains the unexplainable. This move is a prime example. This doesn’t help the billionaires in America, it doesn’t help ANYONE in America, but is sure is a massive bailout to a Russian economy that was on the verge of collapse.
I agree tariffs are harmful and counterproductive, even if they're applied by the other side. My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.
It is interesting to note that none of this panic applied when US trading partners imposed tariffs on US.
But if this is part of a larger shift in terms of funding the government, I would be somewhat open minded. For instance, if instead of taxing income, we had tariffs that play a role of basically a sales tax, I think that has some benefits. For one, I think tax policy should encourage productive work (income) as opposed to consumption (sales). So a shift from income to consumption taxes would be a positive development. You can make adjustments so that its progressive (i.e. tax credits to cover the first N dollars in consumption tax). The big problem is the geo-political effect less trade might have and the effect on the markets.
> My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.
The thing is that we don't. That 39% Trump claims Europe is levying on US goods? It doesn't exist. I've heard they include VAT in this which makes no sense because it applies to all goods including those made locally. That is not a trade tariff. It's just internal taxation.
However I've also heard they calculated it with the trade deficit (which in itself makes no sense, it's not a tariff) but in the case of the EU that makes even less sense as Trump always quotes the deficit on goods, but ignores the deficit on services (eg IT) which is highly in favour of the US.
Also when I hear people say "they don't buy American cars in Europe", we do have American brands like Ford and Tesla. Ford just sell smaller models designed for our market here. Those big SUVs and pickups are not suitable for our traffic or environment.
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Time to learn Mandarin
然后呢？
The only other currency that comes to mind for global trade is the Euro but even that seems impossible?
BTC
> It is the definitive end to it, and the birth of Chinese hegemony.
I think you’re spot on about the risks of the tariffs (I’m not really sure where I stand on them today), but your arguments don’t produce this conclusion. China is far more protective of its markets, nobody has or will have any interest in trading in any Chinese currency, and tariffs from not just the US but other nations will continue to exacerbate existing problems at home for China.
Companies like Temu came into existence because global pullback on purchasing Chinese manufactured goods is resulting in job losses, and instead of having factories go under the Chinese government would prefer to sell products that very quickly fall apart or are built extremely cheaply or with very poor environmental practices to at least get some money.
Further, while these tariffs seem questionable and everyone is piling on Trump (which is deserved, with prejudice, in my mind), let’s not pretend that the EU, Japan, and others are saints here. They do enact trade barriers to protect their own domestic industries as well. On the tech side for example there’s simply no argument that the EU is fining US tech companies just because they happened to enact policies and rules that the US companies break all the time. Some portion of that is a shakedown or a form of a trade restriction.
The narrative with the president is about us vs them. The problem here is the enemy is within.
The EU may be awful, Japan may be an unfair partner. But when you play with a handgun and shoot yourself in the foot, that’s on you.
This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies.
This was done by Trump, nobody else.
Like GP said - America's enemies.
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That's an over-simplified answer. There are many people who share in the blame. Him for doing it as a visible catalyst, everyone who voted for him, presidential advisers who recommended these disastrous policies, and those who sat idly by and let the country be destroyed without acting to prevent it, especially those with greater-than-ordinary power who failed to act.
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> Since trade is conducted largely in USD, that means other governments must purchase USD to trade.
But then they sell it back. What you’re describing is not a trade deficit. To produce trade deficits they need to actually trade with the US. Buying forex does not do that.
> If trade stops occurring in US Dollar, which is a consequence of the stated goal of our current ruling regime, that would be the coup de grace on this country's hegemony. It is the definitive end to it, and the birth of Chinese hegemony.
Nobody will use Chinese currency because it doesn’t float and it’s subject to tight capital controls. Nobody in their right mind would switch to that from outside of China.
You can argue that China could become a hegemony anyway, but that is because everyone wants to trade with them, not because they want to use their currency in 3rd party transactions.
Foreign countries buy USD through trade. Japan needs dollars for international trade so the US Treasury prints dollars and gives them to Japan and in return Japan gives the US Nintendo Switches or whatever. Those dollars go into the international trade system and some of those dollars will just circulate internationally indefinitely and won't ever make their way back to the US, hence the perpetual trade deficit. This is a great deal for the US because at the national level they effectively got those Nintendo Switches for free.
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People trade in USD because the US is the largest of large economies. Everyone trading in USD understands already that the US can manipulate its own currency. But they take a low-risk bet that it probably would have far less incentive or inclination to do so than an authoritarian state like China or a small economy like Argentina. Capital flows to the US because the dollar has been "safe"... it inflates, but predictably slower. The Chinese regime is more than capable of opening the illusion of free markets and making 50-year promises not to interfere with free trade and capital, tempting foreign investment, only to break those promises with an iron fist.
Regardless of the response from China, America is showing that it is irrationally willing to cede its incredible advantage for no decipherable reason beyond that some logarithmic curve of population idiocy has crossed the already absurd hockey stick of its own national wealth. It's a realtime lesson in the ancient rule dating back to the fertile crescent, that civilizations destroy themselves from within before they're conquered from without.
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Should be understood as buying dollars for goods.
Also us trade is not bilateral.
The usd that are exported from the US, is not used to buy gods from the US. They are used to buy gods from other countries.
I think you’re somewhat missing the point, which is that the collapse of the dollar as the reserve currency around the world will eventually lead to default of US debt, which has cascading consequences domestically and internationally. This is the direction the US is heading if it really continues to alienate its allies and try to “fix” its trade deficit.
However, the OP was wrong about the fact that China will become a hegemony, for reasons like you mention, and so what’s likely happening isn’t the change of hegemony, it’s the beginning of the end of the era of the American Empire and to a likely a multi polar world. It’s going to take another world war, in some form, to create enough of a vacuum to give us another superpower/hegemony like we have with the US currently.
Is not the US export higher if they take into account all the Software and software as service they sell?
was thinking the same thing. US is a giant in software.
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Does it follow that Yuan would replace USD? Could it be the EUR instead?
The RMB does not float. It would be virtually impossible. More likely: EUR will share the title (more than ever) with USD.
A big, resounding AMEN.
Something tells me that both China and Russia know all this and yet, the US administration is completely blind to it or are naively playing into their hands.
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> This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies
Decapitation Strike seems to be not a general principle that is applying here, but the title of a specific polemic against the Trump administration. Just mentioning for clarity, as it sounded like a general thing warned about in past times that's applicable here.
It makes sense why Trump's family is investing opportunity into crypto like "American Bitcoin" -- they want to separate themselves from the dollar.
I said before that Trump would be the Gorbachev of the USA, if he knows it or not. He is dismantling the system under the disguise of reforming it.
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
There you go... "Deutsche Bank says risk of a dollar confidence crisis" - https://www.reuters.com/markets/currencies/deutsche-bank-say...
When the history is written I think the Citizens United decision might be pegged as the end of the American republic. It allowed endless amounts of dark money including foreign money to pour into US elections.
In any case, I think we're seeing the beginning of the Chinese century.
1) Chicago-school interest groups successfully putting people on courts and in the legislature to all but completely eliminate anti-trust enforcement, starting in the '70s. TL;DR policy used to be that a company holding too much market share was per se bad for the country and that the government could act on it, the shift added more tests making it slower (so, also more expensive) and harder to successfully enforce anti-trust, so much so that we all but stopped doing it.
2) Failure to send Nixon to prison.
3) Loss of the Fairness Doctrine under Reagan.
4) Failure to send a whole list of Reagan's folks (and maybe Reagan) to prison over Iran-Contra and other misdeeds. And those same names keep popping up, making things worse for the '90s and '00s. This was a huge mistake.
5) The Democrats totally surrendering economics policy to a newly farther-right [edit: more accurately, a set of policies championed by a certain set of pro-capital right wing interests—we recently saw this totally overthrown by right-populist policy, when Trump took over the party in 2016, which was the most remarkable development in US party politics since the '80s] Republican view, in the '80s, and adopting basically the same policy. This set the stage for the current backlash, because this all-in neoliberal shit was never popular, but persisted because both parties supported it.
6) Loosened media reach ownership rules in the early '00s.
7) CU
8) Nobody at any point finding a way to dismantle the Heritage Foundation and Federalist Society (if you're wondering "how", it seems the NRA had been doing all sorts of illegal shenanigans for a loooong time—I'd be absolutely floored if these two don't have some big ol' skeletons hanging around)
9) We all watch a coup attempt live on TV (re-watch some of the news footage if your memory is fading, it remains shocking) and then the Biden administration dicked around during the six months or so when it might have been possible to go after the leaders of it.
10) The Internet putting intense pressure on the news media, leading to even more profit-focus than before (and see also the loss of various controls above) with nothing done to try to mitigate that.
11) Extreme centralization of control of the narrative online under a handful of platforms (and the narrative is "whatever gets us more eyeballs", see again #11) and nothing done to fix that.
> This is a decapitation strike [...] on America by our enemies.
From within. Make no mistake: whatever influence has been or is behind, this is entirely driven by USA citizens.
My long term wish is in 40 years, after civil wars/world war and rebuilding efforts, that we discover a better alternative to democracy; we have gone all in on it the past 200+ years and is utterly exploitable in the information age, as the populace gets less informed and more malleable to any malicious actor. It is a pretty fatal problem if the success of your government model depends on citizens not being total idiots.
My anarchist wish is that we figure out that large states have large benefits but also very large downsides. A country as big as many Western countries have simply no business existing, as they are unworkable. How is it realistic to have a functional government for 300 something millions souls and an area the size of the United States?
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I quite like the idea of our debts becoming real. Then we can’t live in the dishonest fantasy where we just print money and ignore debt anymore.
I assure you that the fantasy of this being a band-aid rip-off moment will turn sour when the sore becomes infected and you're living through a depression.
> This is Russia's and China's liberation day.
There's no reason to believe that Russia will not continue to be a declining, stumbling, brain-drained backwater hawking a nuclear arsenal over its current borders, Belarus, and The People's Freest and Greatestmost Republic of Donetsk-Luhansk.
There is a somewhat small chance Donetsk-Luhanks escape in the next 5-10 years. Let's see.
I believe that's Trump's plan. According to the Triffin Dilemma, the source of US budgetary deficits are due to the USD being the world's reserve currency. Once that's not the case, trade should rebalance to a healthy surplus.
> This is a decapitation strike on America by our enemies.
> if foreign governments spend money, they can elect their preferred candidates.
> We institute regime change in other counties, and I see no reason to believe we are immune.
Do we really need such conspiracy theories? There's a much more mundane explanation, which is well-documented:
"Trump’s Love for Tariffs Began in Japan’s ’80s Boom" https://www.nytimes.com/2019/05/15/us/politics/china-trade-d...
"Allies and historians say that his admiration of tariffs is one of his longest and most deeply held policy positions."
In the 1980s, Russia still had a state-run socialist economy, and China was just beginning to grow (albeit quickly) after its 1978 economic reforms. These countries did not purchase Donald Trump's policies.
If you're concerned about foreign influence and foreign money in American elections, you should be much more worried about Australian Rupert Murdoch, for example, who founded Fox News, or South African Elon Musk, who just spent a whopping $250 million to elect Donald Trump and is now personally dismantling the US government (although Musk's money didn't help in the local Wisconsin election), or Israel, which has had one of the most powerful and well-financed lobbies in Washington for decades.
The Pax Americana died during the first week of the Trump administration when he proceeded to turn on practically every single one of US' long standing allies and dissolve NATO for all intents and purposes. All the soft power disappeared right there.
Perhaps the world will be better for it in the end, but it's definitely a turning point. A new world order will emerge and America won't be at the helm.
I'd feel a lot better about it if more countries held values of free speech and democracy. If mainland China were like Taiwan, great. Unfortunately I fear those might just end up being viewed as instruments of America's decline.
I don’t get why it matters what currency people use - all currency is exchangeable, isn’t it? What does it matter if you buy something for dollars or pounds or euros or yen?
If I’m buying 1 barrel of oil for $100, does it matter whether I convert my USD into 150 of this currency or 50 of that currency, according to the current exchange rate, before I pay? I still get 1 barrel of oil, and the seller still received an equivalent to $100 in exchange?
>> Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we make.
This is called Triffin Dilemma- And in many lies at the core of the most basic question every power in history has faced.
That is- You can either be a Geo Economic Super power or a Geo political Super power, You can't be both at the same. You have to chose to be one. China seems to be chosing the former. USA chose to be the latter, but can't seem to be sure about its choices so far.
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD
I'm not convinced it works like that. When a foreign country buys something from another foreign country using USD, the seller country then receives that USD. The seller country then use those dollars do buy something else from a third country - unless they have imbalanced trade and keep accumulating the dollars, like China does. But, in general case, there's only a need for a limited number of USD in circulation to serve as "working capital" for all foreign exchange. There's no need to keep getting new dollars, as the old ones get recirculated.
It is not correct that an Asian business doing business with a Italian company first exchanges their currency to USD by selling the US goods then using that USD to complete the transaction.
I agree with you that the current situation in the world really benefits the US and the current policies seem to undermine that.
> It is not correct that an Asian business doing business with a Italian company first exchanges their currency to USD by selling the US goods then using that USD to complete the transaction.
The only way around that is the EUR. Otherwise, most countries have very little connections to one another. Even neighbors will trade with USD and settle in New York.
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> If trade stops occurring in US Dollar
If I understand Trump correctly he wants a weaker U.S dollar to make American exports more attractive. I'm not sure though he wants it to become THAT weak that its on longer the reserve currency. However, simply abandoning the Dollar will prove quite difficult for many countries because there is no clear alternative (the Euro perhaps but it has a tiny market share currently) and also I'm certain Trump will threaten to remove American military support from anyone who dumps the Dollar - so Europe will probably stay, Australia, Canada, Saudi and quite a few more.
It's not "dumping the dollar" that would be a concern. It's bumping US federal treasury bills (the US debt) which are mostly held by China, the UK, Luxembourg, and Canada. If the latter three just dump their T-bills in retaliation (and do nothing else) the dollar will bottom out. Also, the likely buyer is China. End result: China owns the US and the RMB becomes the new reserve currency.
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> and also I'm certain Trump will threaten to remove American military support from anyone who dumps the Dollar - so Europe will probably stay, Australia, Canada, Saudi and quite a few more.
Europe already has the mindset US military support is no longer a given. Europe is already re-arming. I wonder if additional threats by the Trump administration are going to make much of a difference. Even though it will take atleast half a decade to re-arm the main adversary, Russia, is currently in no shape to launch any kind of new offensive against a European country.
> I'm not sure though he wants it to become THAT weak that its on longer the reserve currency.
Intentions aside, with big moves like these the question will be how much control he has over what happens next.
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That's just economist flowery language for - If you're willing to work for less, more people would hire you.
The world disagrees with your assessment that this is going to be bad for the dollar. See recent movement of 10Y.
The entirety of this scheme, in its soft and hard power forms, was financed by the parasitic impoverishment of the US populace. Everything the commenters on this site complain about: Runaway inflation, unaffordable housing, extreme financialization, excessive military budget, enrichment of the top, unaffordable healthcare, unjustifiable wars, all of it has partial or total roots in the money printing, artificially low interest rates, colossal trade deficits, and military adventurism that underpin the global US dollar reserve scheme.
I think it apt to boil it down to a binary choice: Either we give up our global empire and allow the multipolar paradigm to emerge for the chance at domestic prosperity, or we grip the iron to the bitter end and force the entire country to become the dystopic open-air homeless cities of the west coast.
Why is it a binary choice? This is just reductive. The idea that we couldn't maintain American hegemony and return more of the benefits of it to the middle/lower classes seems silly.
This is about tearing down a system / world order that a lot of people are angry about, with little thought to how to replace it and make it work for the citizens. The global economy has changed, manufacturing capabilities in the west will never be competitive again for a wide variety of products, and those jobs are not ones that regular Americans want anyway. Just like they don't want the farming jobs that illegal immigrants are doing.
This vision to essentially return America to a idealized view of 1900 is in for a rude awakening.
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"The dystopic open-air homeless cities of the west coast"? Hyperbolic much?
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>The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Its also the golden prize for America's victims, it has to be said.
We can't keep propping up the USA as a moral position to aspire to, when that state continually gets away with mass murder and human rights violations beyond the scale of any other peer.
The USA is the worlds #1 funder of terrorism, and violator of international law on the subject of war.
So its not just about 'enemies'. Its really about victims.
I certainly wont disagree with the US not representing any moral heights especially now, however do you have sources for the US being particularly egregious in relation to its peers in its actions?
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Russia is the number one war criminal in the world. Of course now that Russia owns American leadership, we can partially blame them for American human rights abuses.
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A lot of people fundamentally misunderstand why trade happens in USD and what creates demand for USD.
For example, you hear people say that the US invaded Iraq because Iraq was threatening to denominate oil sales in the euro. This particular conspiracy theory used to be more popular ~20 years ago for obvious reasons. Even if true, it's absolutely no threat to the petrodollar. You could sell oil in euros and what would most sellers then do? Immediately convert those euros into USD.
Trade occurs in USD because there's demand for USD not the other way around.
What really underpins the USD is the US military and the US still being the largest economy. So the USD will remain the global reserve currency up until the US collapses and/or another power rises to displace it, which really means the same thing at this point. That might ultimately be China but it's not yet and the Chinese yuan is wholly unsuitable to be a global reserve currency currently.
> until the US collapses and/or another power rises to displace it, which really means the same thing at this point. That might ultimately be China but it's not yet
I imagine the Euro is a contender also even though the EU it's not one homogenous power.
> and the Chinese yuan is wholly unsuitable to be a global reserve currency currently.
Curious why you say this? I was considering holding some EUR and CNY in the event that one of those becomes a replacement for USD
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The Trump admin wants to devalue the dollar substantially, enact protectionism and maintain its reserve status. I can see them succeed with the latter two, but with these actions, the world has no choice but to move away from the USD as the reserve currency. It will take many years, but whatever replaces it certainly won't be to the US's advantage.
>The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
At this point, who is *not* America's enemy?
Maybe Russia, that's the only country which has not been slapped with tariffs. Apart from Russia, there are nuances. There are peaceful enemies like the EU, Canada, Australia etc. and there are threatening enemies like the Houthis or Iran.
You should read the book lol
My take on all this is that everyone seems focused on the U.S. dollar’s dominance, the empire, trade deficits, and exchange rates. And sure, there’s some validity to that, but the real issue, or really the real goal, is getting people back to work.
You might not see it, and maybe I don’t fully see it either, but as office workers, bureaucrats, and technologists staring at screens all day, we’ve lost sight of the fact that America no longer produces like it used to. Yes, there are still people out there working with their hands, feeding the country, and running small industries. But broadly speaking, the U.S. relies heavily on other countries for complex manufacturing — for actual building. Shipbuilding is just one obvious example. A lot of critical industries have withered to the point where they can't even meet domestic demand, let alone compete globally. Meanwhile, other countries are pushing forward in tech, producing better, more efficient, more productive products — and pulling ahead.
It’s not happening all at once. It’s a slow decay. Generational knowledge industrial skills, trades, machinists are all fading. And when those go, the backbone of resilience and self-sufficiency starts to collapse. A nation that can’t produce can’t stand. Export power becomes a dream.
And I think part of the issue is that we’ve become lazy. People don’t want to work anymore — they want things handed to them. Entitlements, bonuses, luxury homes, multiple cars, the works. But someone has to build all that. Someone has to maintain the food supply. Someone has to assemble the vehicles. Someone has to keep production alive. Yes, technology can help fill gaps, and we’ve done amazing things — and still do — but America’s edge in tech? That’s slipping away. China has surpassed the U.S. in key areas of advanced technologies, auto manufacturing, aerospace, and absolutely obliterating in shipbuilding. U.S. industry? Ashes in many places.
So what’s the answer? Unfortunately, hardship. Nobody likes to say it, but raising prices and tightening the belt forces people to make hard choices. And when that happens, the jobs that matter won’t be office jobs or desk jobs — they’ll be builders, machinists, welders, factory workers. Producers. And those jobs will start commanding the wages. People who’ve been unemployed or living on subsidies will be pushed — or pulled — back into that kind of work. Slowly, painfully, maybe, but steadily. And maybe, just maybe, we’ll rebuild that base. Maybe industry will return. Maybe factories and production will grow again.
That’s the end goal here; even if we don’t like how it’s being done. Even if it’s painful. Even if it doesn’t work the way it’s intended. Because maybe we’re not as strong as we think we are. Maybe we fail. It’s happened before — look at the USSR collapse. It was a fake economy built on fake production and apathy. They endured 20 years of hardship, and they’re still trying to catch up.
So yeah, that’s where I think we’re headed. Is Trump the guy to do it? He’s doing it. Someone had to. Is it the right way? I don’t know. Is it going to work? No clue. Will we succeed? Who knows. Or maybe we just keep punting the problem further down the road; business as usual — until it breaks completely.
But either way, the path forward is either a slow crumble followed by a rebuild, or a brutal reset with the hope of rebuilding something stronger on the other side.
That’s just my two cents.
Not one single job was moved offshore by a foreign country. Every single one was moved offshore by an American business looking to reduce costs and increase the quarterly bottom line.
Now they're run out of jobs to move offshore and they're looking to the government for the next handout. This time, it's by adding a new tax on Americans on what they buy from overseas.
The people to blame for the economic problems are rich Americans, and the solution is to increase taxes on poor Americans, but the story is that the problem is foreign devils and the solution is to make them pay. The misdirection is working and the magic trick is successful.
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"A nation that can’t produce [physical goods] can’t stand."
Based on what evidence?
"And I think part of the issue is that we’ve become lazy. People don’t want to work anymore"
Americans work more hours per week than a majority of countries. Low-paying factory jobs are off-shored because they're low-paying.
"So what’s the answer? Unfortunately, hardship."
You probably should do more research on the subject, and successful onshoring regimes that have been implemented by other countries. If you, for e.g., determine that America needs to produce a certain quantity of semi-conductors to insulate from various natsec risks, there are ways to tackle that problem and usually they don't involve hoping an onshore industry magically appears because you've haphazardly shivved trade across the board.
> And I think part of the issue is that we’ve become lazy. People don’t want to work anymore — they want things handed to them. Entitlements, bonuses, luxury homes, multiple cars, the works. But someone has to build all that. Someone has to maintain the food supply. Someone has to assemble the vehicles. Someone has to keep production alive. Yes, technology can help fill gaps, and we’ve done amazing things — and still do — but America’s edge in tech? That’s slipping away. China has surpassed the U.S. in key areas of advanced technologies, auto manufacturing, aerospace, and absolutely obliterating in shipbuilding. U.S. industry? Ashes in many places.
It has nothing to do with "people being lazy" and everything to do with poorly-run companies combined with globalization.
This started in the 70s/80s with American auto manufacturers. The Japanese cars were much more fuel efficient and a much more robust build. The line worker wasn't responsible for that, management is.
Then the global free trade / NAFTA in the 90s. Ross Perot was as popular as he was, because a big segment of the US population saw this coming.
That all seems built on some romantic notion that a job making physical objects ("working with their hands") is fundamentally better than a job providing a service ("staring at screens"). But it's not obvious there is a lot of factual support for the idea, either on the level of individual jobs or the economy as a whole. You could certainly use protectionist barriers or subsidies to try to force industries like ship building back to the US, but would the US really be economically better off overall if you did so?
That said, it's really irrelevant since Trump's current approach isn't looking to support specific industries or outcomes, it's just across the board tariffs on everything. We're not just going to have to build our own ships or cars, but grow our own coffee and bananas. Targeted, strategic tariffs and subsidies on the industries we want to support could be arguable, but this is not that.
The US can use internal policies to support the industries and skills you mentioned. Tariffs as implemented, and greatly damaging longstanding relationships with allies, will have the opposite effect. The existing lead in services will be lost, consumption will drop, and the increase in production of goods due to tariffs won't offset it. I would recommend you read the outcome of the Smoot Hawley tariffs.
I hate this mindset that Americans are lazy, they are usually some of the hardest working people in the globe. The wealthy are greedy, and wealth and power continue to concentrate at the top while infrastructure, working conditions and public services crumble. I don't fault anyone for not wanting to contribute to that, quite the opposite. I don't see how the jobs you mentioned are going to start commanding better wages when everyone has to rush to do them because there are no more options.
Yes... and no. Having own currency as a global reserve currency has its disadvantages too. For instance it keeps value of the currency high, what makes whole USA production noncompetitive. USA exports two things: internet services (all those Googles, Facebooks, etc.) and military equipment.
The problem is that internet services are making rich small group of people (owners, software engineers), military production is a niche, so there is a big group of people who lose jobs, are on low paying positions, as being, say, a car factory worker, does not bring enough money. Those people voted Trump, so Trump is trying to solve their issue by bringing back production back to USA, and the way to do this is twofold: make USD weaker and make foreign goods more expensive.
All this was not a problem till early '00, when USA didn't have much competition (basically Western Europe and Japan), but the times has changed and USA is seeing that. BTW this is not a Trump thing, Obama, Biden administrations were also noticing that and taking actions, like (in)famous Obama reset with Russia to be able to expand trade over there. "Pivot" to Asia - failed Biden project of Indo-Pacific, that was supposed to convince Vietnam and others to follow USA job regulations, what would make their products more expensive. Surprisingly, they told Biden to go away...
Another thing is that for years USA was in a sense donating European industry, for instance taxes on European cars in USA were 2%, while taxes on American cars in Europe (that is European Union) were 10%. Trump puts this to an end.
>Another thing is that for years USA was in a sense donating European industry,
Sure and Europe is not at all donating to US arms industry or to US tech sector? Europe is pretty liberal about letting US dominate those domains inside the EU, without opposing that. Plus in geopolitics it simply follows the US, that's sort of been the deal.
Seems like this US leadership thinks it can both have its cake and eat it.
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> For instance it keeps value of the currency high, what makes whole USA production noncompetitive.
But devaluation of the currency will hurt people who have savings in this currency, and cause higher inflation, right? On the other hand, paying back loans and mortgages becomes much easier.
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You conveniently omitted the 25% tax on European light trucks and SUVs in the US. Which is the biggest car market segment.
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It is a self inflicted damage. Do not blame anybody else that Trump and the people that chose him. Good luck Americans.
There is no American hegemony in this current day and age. Probably dead like 15 years ago.
Say what you well regarding Trump, he understands this.
Trump is a smart man to spot problems, but he surely didn't know how to do it in a way that doesn't lead to self harm. He crazes for a bombastic firework that demands for all and any attention.
The US version of capitalistic economy has driven its internal inequality to the point the political system can no longer sustain it, while in the meantime, doesn't have an established social safe net, as major European countries have. So the populace elected Trump to root it up.
It is absurd, it is ridiculous, but deep down it is logical. Weird and dangerous time ahead.
I can't imagine any person having listened to Trump even once would in good faith claim he is a smart man
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This is why I don't get why my EU people are attacking Trump - he singlehandedly gave Europe political capital to rebuild itself as an independent player on the international stage. He created an environment where tighter EU integration might take precedence over petty interest squabbles. For example in what other scenario would Germany making massive investments in military be politically acceptable ? Even talking about military on EU level ?
Framing this as purely a win for China and Russia is very partisan, this has potential for all non-US countries to get away from under US thumb long term and at least for that we should be grateful to mr. Trump, from his foreign policy it seems like he is not interested in those games as he views them a net loss for US.
And the Greenland situation is showing us exactly what happens when you position yourself as leech on US military/NATO.
I don't think anyone has a problem with europe being a more independent player, it becoming a necessity is what people are upset about. I'd rather have germany make massive investments in infrastructure and health reform than its military.
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>This is why I don't get why my EU people are attacking Trump - he singlehandedly gave Europe political capital to rebuild itself as an independent player on the international stage.
What a completely baffling statement. It's like saying the left arm should be grateful that the right arm cut itself off of the body because now the left arm has to strengthen itself. Sabotaging the alliance system that has prevailed since World War II leaving both Europe and the United States more dangerously exposed and compromising the safety of our shared democratic values that were once the bedrock of our alliance.
It's so obviously catastrophic that I can't fathom how someone would try to portray this as a win other than out of an appetite for a JV debate team sophistry. Europe is banding together not out of positive diplomatic achievements, but in the same sense that they would band together if a meteor is headed toward Earth and you're asking us to thank the meteor.
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Some say many EU politicians are compromised by Russia and China...
I know squabbling is the norm for European countries but I feel there are some recent big own goals. Crazy how we can't get our crap together in such times. (Crazy opinion: UK needs to be in the EU again to be the grown up in the trio of UK, France and Germany)
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Because they would prefer functional pro democratic world rather then constant struggle for domination with fascists from Russia and USA at the same time. EU people don't want to become poorer or suffer, not even to "own the USA".
Europeans you talk about see Russia as a threat. They are not fascists themselves, so Germany having to arm itself more because Russia just got new ally is not a good news.
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Because it's a bit like someone telling you that they're going to burn your house down so you can claim on the insurance and you'll be better off.
It might be technically true in some circumstances, but I still don't want some jackass burning my house down thanks, I like my house. That's why I live there.
Because the EU does NOT want Germany to arm, remember what happened the last couple of times ?
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The real traitor is Biden who handed the presidency to Trump and only cared about covering himself and his family asses. I think that was the point where you realize the democrats have just given up and did their part of selling the country. Some people must be now moving Bitcoin, Gold and other valuables out of the country before the big unveiling kinda like what happened with the soviet union.
I have made a post about this after the election that got flagged: https://goldprice.org/
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Why is the reserve dollar good for Americans? Arguments in favor of reserve currency status make the U.S. economy seem utterly fake. It’s as if the world is paying us to maintain borders frozen in 1945.
It stops them from having to address their national debt, has allowed for incredible spending and the arguably pushed humanity forward with the wonderful inventions. Without it, it will be interesting to see how the future unfolds.
> Ray Dalio's Principles for Dealing with the Changing World Order feels prescient
Maybe Dalio is right, but a lot of his data was sketchy [1].
My personal theory is that Dalio somehow benefits from saying nice things about the Chinese regime.
[1]: https://youtu.be/s1iv0q_SW3E
What most people don’t see is that we are basically under “shadow austerity” to correct for the not so hyperinflation we saw post COVID.
It is a combination of post WW2 Britain (China is the US in that analogy) - this helps to explain the Canada and Greenland issue; and Volcker era stagflation economics. It will not get any better in the short term, but there is likely to be substantial growth in the long term as a result.
What that means is the fed likely won’t reduce rates, and it may reduce its rate decrease to 1 this year, if even that. It is entirely possible the rate doesn’t come down at all.
Expect Layoffs to come, as the fed doesn’t seem to care about unemployment as its target is on inflation. Many zirp era businesses and funds will fail. Less cereal and eggs for the same dollar.
I am really hoping we don’t start to de-anchor from 2% inflation as a result of all this. I wonder how various US infrastructure projects can and will be financed. Reduction in entitlements. Possibly some type of mandate to hold treasuries.
Are we surprised? If anyone watched the presidential debates VP Kamala Harris told us about this.
From September 2024:
"What Goldman Sachs has said is that Donald Trump's plan would make the economy worse. Mine would strengthen the economy. What the Wharton School has said is Donald Trump's plan would actually explode the deficit. Sixteen Nobel laureates have described his economic plan as something that would increase inflation and by the middle of next year would invite a recession."
Emphasis on that last line:
btw the US Congress can stop this anytime they want.
Inheriting a strong economy beating all expectations that was just about to end its fight with inflation and burning it all away in a pump and dump crypto scheme fashion, while doing nothing (or even working to expand) unprecedented wealth inequality. Good luck, going to need it. The world reserve currency status is faltering, and so will the benefits it allowed US economy.
The economy has not been 'strong' since at least 2019.
CPI is a joke that just subs out everything when it gets more expensive. Oh food is only up 3%, let's ignore we were pricing beef and eggs and now we're subbing in chicken and tofu.
Inflation has been borderline runaway from 2019-2024. Just ask anyone who isn't rich.
That's the part where "unprecedented wealth inequality" comes in. By most metrics, 2024 was an excellent year and the US was far ahead other developed countries [0] in growth, labor market, consumer spending, net household wealth, and much more; the fundamentals were solid and no figures could point to a major economic downturn at that point, certainly not in a predictable manner. In 2025 the 90th percentile accounts for over half all consumer spending, the median household hasn't reaped the same benefits high-income, high-spending ones have. There is no indication this will change, and may get worse with the current and proposed policies.
0. https://www.ft.com/content/1201f834-6407-4bb5-ac9d-18496ec29...
> just about to end its fight with inflation
Inflation will decline only when the deficit declines.
If there is a deficit at all. Looking at the monetary flows it seems most of the deficit outflows where just flowing back into the US through the stock market.
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The US economy was not strong in 2024. Cost of living was literally the most important election issue, and it is what decided the election undoubtedly.
It's partially because elites said 'the economy is great! look at my stocks!' while consumer goods had increased in price by 100% or more in only 4 years.
Agree with everything you wrote.
It’s almost like Trump and his administration are trying to purposely hurt America.
I don’t want to be melodramatic, but if Russia had a ultra long-term plan to hurt America, it might look like this.
Here we go.
My dumb ass invested money in usa stocks when trump got elected because trump is pro business, right ? Should have invested in Asia, today china is the usa from 40 year ago.
It doesn’t matter where you invested. Everyone’s taking a haircut.
Not EU weapons manufacturing and defence industry.
China would be very risky. Trump in his previous term declared a trade war with china, and there is every reason to think he would again. China is also make geopolitical moves that give a significant chance of war in SE asia. I wouldn't invest there.
Now investing in Brazil or something might make sense.
Notably none of Russia, Belorussia or North Korea.
Really starting to look like the US senior leadership is compromised
Yeah cause those are already sanctioned...
All of those already have heavy sanctions. Additional tariffs do nothing since it's already effectively illegal to do business with them.
There are several billions in trade with Russia. Higher than Ukraine currently, and Ukraine got a 10% tarrif.
Time for the EU to float the idea of the PetroEuro.
Side concern: how impactful must the tarrifs be to make a noticable dent in global trend, and a noticable dent on climate change ?
(I mean, it would not be noticed by the USA anymore, since they're not into that whole "science" stuff, but I heard that Europeans have learned how to make a couple satellites on the side.)
The way I see it, it is more like a very-high initial negotiation position. From here on, each country will be dealt with individually. You accept our terms and get 5% discount on tariff ! Every country has a set of red lines. Fewer the red lines better they will be placed in one-to-one "trade agreements".
EDIT: Someone from white-house explicitly declined tariff to be a negotiation. Next few days will be interesting.
Maybe if the US would clean up their production to what people actually want to buy it would help.
EU does not just randomly target US products. No EU company would be allowed to sell food with the same processes (GMO, prohibited additives, medication traces, ...)
The US is just running into these restrictions more than others because of their (lack of) health and safety standards being at odds with other markets.
So, if the tarrifs lead to the world actually being able to buy something produced in the US with the dollars they were forced to accept, something real besides war equipment and (stale) IP bits, the problem would sort itself.
At least the EU has discovered 'sovereignty', after ignoring it to the hilt for the last 55 years. Ringing up the concept even a year ago was at best met with a shrug and more often with a 'conspiracy theory' label. Sadly I don't even think they mean it, but I would be pleasantly surprised.
Damn it was hard looking at my portfolio today... I hope thing's change in the long run though
By chance could it be that US is still angry at those British tea tariffs?
Am I wrong to intuit that tariffs against everyone is less bad than tariffs against a few, because now the rest of the world has even more potentially willing replacement trade partners?
Trump really thinks America is in the 1950's. He thinks people want to work at factories doing manual labor. He doesn't understand that we DON'T want to work at factories. Americans like our plush corporate office jobs building intellectual property. We aren't oxen doing physical labor.
And we designed it that way. We pay thousands of dollars to each citizen in our public schools to teach them calculus, literature, world history, and science, so that they DON'T work at factories doing manual labor like we were oxen. We're supposed to be doing more valuable jobs in intellectual property and services.
It's going to be hard lesson to be learned by Trump and his working class supporters when the inflation hits them because our economy doesn't have any workers that want to work at factories, but it'll have to be a lesson they learn the hard way.
The correct economy is to let people do labor they're best at. If a foreigner can make a shirt cheaper than an American can, LET THEM. Our economy is already taken by the people that design the shirts.
We have plenty of workers that want that kind of work, we're just deporting a good chunk of them.
We have less than zero workers who want to do the physical labor of factory jobs for prices paid to workers in places like China and Vietnam.
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Yes. Outsource the manufacturing. We have important intellectual work to do like optimizing ad sales.
Hey now, we're also using AI to automate debt collection phone calls.
He has repeatedly invoked the 1890s actually. Big fan of McKinley.
> It's going to be hard lesson to be learned by Trump and his working class supporters
They won’t learn any lessons.
The impacts will be felt years from now, when the Democrat are in power, and… you know the rest.
Well, the unfortunate beauty of touching the incredibly hot stove of Tariffs is that the pain is immediate and obvious. So assuming that these tariffs go through as is, we'll immediately launch into one of the worst recessions we've seen with price increases unlike anything Americans are used to.
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Pretty sure the broadcast plan as been to make more Americans oxen for the cart…
These tariffs are a disaster, but this is is quite a neoliberal take. So if we aren't the oxen, who is? Vietnam? And that's morally acceptable?
Yes. They - or other poor countries - are. And it's their responsibility to grow their citizenry in a neoliberal world. Economics doesn't care about liberal concern tools.
China eliminated poverty through neoliberalism. The rest of the world can, too. This is the benefit of neoliberalism: it lifts the world out of poverty through free trade and self-selected efficiency.
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I agree with this. People seem to forget that factories and other manual labor positions were hard to fill. No one wanted to do them anymore in America. I don’t remember the timing, but there were articles about the whole situation. Well, those jobs went to other countries.
Bush Jr. was all about outsourcing to India and other countries. The India population were thrilled to take office gigs for Microsoft and Google and any other tech company.
The whole “put me to work” in middle-America doesn’t exist anymore. They don’t want to do that type of work.
I do think a missed opportunity is not increasing defense manufacturing in the US. That could mean a lot of jobs and skill-based jobs. NASA is another failed opportunity where it could be a huge skill and labor opportunity for America. I remember the thousands of workers on the shuttle program being devastated. I’m not saying we need another shuttle program, but the next evolution of NASA, aerospace, and defense would be great for jobs and America.
We have no one left thinking about the long-term big picture for America - and we now have a president trying to destroy America. Any current politicians are focused on just staying in power, more so than they ever have.
I think Bill Clinton was the last president to focus on America.
Even Obama failed to deliver to the American people. He was too focused on drone strikes.
> I do think a missed opportunity is not increasing defense manufacturing in the US.
They are trying to. But zero chance EU capitulates on this:
https://www.reuters.com/world/us-officials-object-european-p...
> Even Obama failed to deliver to the American people. He was too focused on drone strikes.
I agree how Obama continued Bush's "war on terror" was a disappointment, but to state that as the reason for his relatively limited accomplishments is profoundly unserious. The Mitch McConnell's strategy was to do anything Obama did for no other reason than to make him look bad, because McConnell realised that Obama had the potential to be the most consequential president since FDR, with broad public support.
They used every trick in the book to hold up votes, to not schedule votes, voting against popular policy they themselves supported just a few years ago out of principle, etc.
I don't know how anyone could have forgotten this; the Republican party was not serious good faith participant in the democratic process long before Trump came along.
Obama was completely blocked by Republicans. That is when they started to oppose anything accross the aisle on principle.
Looking forward to the retaliatory tariffs, which seems to be only language this administration understands.
I guess it will eventually be the year of FOSS software, I am only waiting for the administration going back to export restrictions in software as well.
I guess we Europeans have to get our stuff from elsewhere than a nation hostile to the world with an insane unpredictable leader. China may also be authoritarian, but at least they are stable.
The coolest thing to read are american takes that are like "hey this might be benefiting us for that obscure reason", totally ignoring the fact that you betrayed your allies. Land of fhe free my ass. The only ideology the US has is nihilistic greed paired with hyperindividualsm and transactionalism to the point where Americans think if someone else is getting a thing you are hurting.
If the US was a kid it wouldn't invite others over because it wants to eat the birthday cake alone. And then it shits on all the cakes at the bakery because it wants to be the only kid eating cakes. If that is the American idea of how to lead a great life the rest of the world is better of without it.
> totally ignoring the fact that you betrayed your allies
The US is following the example of its mentor, the UK. Perfidious Albion allied with the Germans and Russians to fight the French (Napoleonic Wars), then allied with the French and Russians to fight the Germans (WW1 & WW2), then allied with the French and Germans to counter the Russians (Cold War). Great powers don't have permanent friends, nor do they have permanent enemies, they only have permanent interests. Europeans were simply naive[0], thinking they were the equals of the world's hyperpower for some reason, just because our post-WW2 dealings were executed with substantially more carrot than stick. It's just normalcy bias. Somehow Europe didn't think they would ever end up like the South Vietnamese, the Hmong, the Kurds (against Saddam, in 1991[1]), the Afghans, the Kurds again (against the Turks[2]), and now the Ukrainians. Some argue there is more than a bit of latent racism involved, not expecting the White People Countries to be abused by the Empire the same way Brown People Countries are.[3]
> If the US was a kid it wouldn't invite others over because it wants to eat the birthday cake alone.
This is why I often state that Woodrow Wilson is the worst President in American history. Besides shackling us with both the Federal Reserve Banking System and Federal Income Tax, he dragged us into Europe's internecine bloodshed and normalized that interventionism despite Americans largely being comfortable with sticking to our own hemisphere. In 1913, the US already had the world's largest GDP, with a GDP per capita roughly equal to Imperial Germany and about 75% of the UK's (assuming Copilot isn't lying to me on this data). Imports were only 4% of GDP compared to 15% in 2023. I think the wealthy elite who are siding with Trump are charting a plan to return the US to the same kind of domestically-focused economy, but we don't have the sort of natural resources nor human capital to ensure a decent quality of life on a short timeframe (or perhaps even a longer one) given the "shock treatment" that they are implementing.
[0] https://www.youtube.com/watch?v=Eh1zmDi0qN0
[1] https://en.wikipedia.org/wiki/1991_Iraqi_uprisings#U.S._radi...
[2] https://en.wikipedia.org/wiki/Operation_Claw_(2019%E2%80%932...
[3] https://www.aljazeera.com/opinions/2022/3/1/covering-ukraine...
> I think the wealthy elite who are siding with Trump are charting a plan to return the US to the same kind of domestically-focused economy
You're delusional, if you think there is any kind of plan going on here. Nobody knew any plan beyond "tariffs" and ideas about invasions coming out of thin air. The tariff numbers are a complete joke.
No, there is no grand scheme, hidden behind an act of absolute incompetence. It's just a short-term money/power grab for the already rich. An attempt to turn the world's "hyperpower" as you put it, into a second-world oligarchy. This may end up in total disaster, that is, a thirld-world oligarchy, if you look at China. But it's hard to actually look at China from the West.
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You might enjoy your Chinese overlords more then. Time will tell.
As if the things the US produces aren't predominantly made in China already. Cutting out the middleman can't hurt, especially if the middleman behaves like a mob boss.
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The admin's think is that any negative trade balance is 'exploiting' the US. Logically, the opposite would mean US is exploiting others. So the only 'proper' balance is zero, which requires managed trade. An obvious impossibility in this age. There are ways to rebalance, they require time and patience and thought (the latter seems most lacking).
Trump is going for a 1-2 punch. First tariffs and then tax cuts to soften the blow of price increases. It also puts republicans in a choke hold to force the tax cut legislation through, because the fallout of tariffs with no tax cuts would be a death knell for the party.
Maybe in a sim city game this would balance out, but it's a tall order for a real world scenario. Prepare for a bumpy road ahead.
> It also puts republicans in a choke hold to force the tax cut legislation through, because the fallout of tariffs with no tax cuts would be a death knell for the party.
I mean, they could vote down the "emergency" Trump is using in order to obtain the authority to enact these tariffs instead, and that would be so much less work. But of course they won't go against their Dear Leader.
omg do you think elon started playing simcity recently, trying out all these ridiculous things, and now he's advising donald to do same in the real world, because he's convinced it'll work based on the simcity experience?
It’s all a grift for the wealthy anyway. He doesn’t care about the hurting 50k a year worker. Low income MAGA voters are just fodder for Trump to enrich himself and the wealthy around him.
US says there was an imbalance in trade, and that is true only if we look at goods. If we look at services, I think the picture changes.
What if the EU and rest of the world starts adding taxes to financial and IT services provided by the US? What if Amazon cloud and Netflix start costing 20% more?
And let's not forget US is printing dollars which are being used for worldwide trade and the rest of the world subsidies their inflation and their economy through that.
Let's not forget US exported the 2008 crysis and most of the world payed for that.
I don't think US will like if the rest of the world stops using US dollars, stops using US financial services and stops investing in US economy by buying shares, bonds, securities.
Interesting what happens to tech valuation. A large part depends on global reach, 'infinite' scaling and a winner takes all probability.
Did the "de minimus" exemption on small packages from China go away, and are all those now going to have to go through customs clearance?
What will happen is the same as when my govt. added GST (sales tax) on all imports with no de minimus exception [1], the overseas retailers will agree to add it on at checkout so their packages will sail through customs.
From a practical perspective I can’t see any other way.
Closing the “GST loophole” as they called it didn’t help New Zealand retailers, but did increase tax revenue and raise prices for consumers.
[1] There is an exception if the retailer does less than a certain dollar figure of exports in total to New Zealand.
I wonder how long it takes until this trade war moves to the digital stage. It wouldn't be surprising to see that software license fees start increasing if this tit-for-tat continues for much longer
and it’s all thanks to a16z and co
I'm European. While it's pretty childish to paint the US and the EU as two human being with a "relationship" it's of course pretty jarring to see a country that has for my entire life been the undisputed cultural hegemony simply check out of the world stage and suddenly treat everyone on "their" side (culturally, politically and economically) like an enemy, or at the very least an abuser.
I'm not an economist, but I don't think you have to be one to realize that kicking the entire global economy right between the legs will lead to a recession -- just look at the supply chain issues that echoed for years after Covid, and the massive "quantitative easing" that had to be done to avoid a recession.
The abandonment of trade partnerships I could live with, I'll make it through a recession and every country is free to elect their own politicians and make their own fiscal policies, dumb as they may be; I don't get my "feelings hurt" by Americans wanting to bring back manufacturing jobs -- although I have issues understanding the reasoning.
What worries, and actually saddens me, is the complete doing away with of values, that I do think have existed in the past. The US has never been a beacon of exemplary behavior, and I understand that "nations have no friends, only interests" -- one needs to look no further than the US treatment of the Kurds for an example of this -- but it's unbelievable to me how so many Americans can not see the American self-interest in making Russia pay for what they've done in Ukraine.
Russia has been the main antagonist of the US for the entire post-ww2 era. It's a totalitarian state and an obvious enemy to the US. Invading Ukraine was a massive mistake, and all the richest country in the world had to do to basically risk-free damage their biggest antagonist, was to keep pressing a dollar-button together with the EU. No boots on the ground, no Iraq- or Afghanistan scale disaster, just military and economic support for a country that could end up being an extremely close ally. There is literally zero chance Russia could win a war of attrition with this dynamic. Instead, it's like the Soviet union in the 70s would have given away Cuba for free and instead threatened to invade North Korea.
In the end, I think what makes me uncomfortable is that I truly do not understand what it is that the average American (or voter) wants, because the actions of the US on the international stage makes no sense to me, yet so many Americans seem to cheer it on.
Most Americans just don’t care that much about international affairs.
Quality of life has been going down for most Americans over the past few decades. It's harder to buy a house, raise a family, etc. on a modest income. Increasing cost of goods has outpaced wage increases but there are probably other factors at play too.
Americans lived in a world where all you needed was a decent job and you could have a good life - defined by what I said above. That's not the case anymore and they're upset about it - they're looking for someone or something to blame.
The republican party chose to blame immigrants and the democrats chose to blame lack of DEI. This fractured the citizens into two camps who can seemingly find no middle ground anymore.
Meanwhile, the wealth gap continues to increase and the middle class is shrinking. But neither political party can run on a platform of reducing spending AND higher taxes on wealth. They'd lose their funding sources - so they're stuck with immigrants and DEI.
Meanwhile, Trump sees an opportunity to extract wealth from the working class by reducing government spending and diverting those savings to corporations and the wealthy. Moderate Americans feel a bit powerless given how quickly our long standing legal and government structures seem to be deteriorating.
I was told the average voter wanted cheaper goods (especially eggs). One candidate lied and said you'd get that day 1 (like someone running for class president who promises free ice cream at recess every day), the other was realistic and used coherent words to describe their policy.
Our loss.
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> I truly do not understand what it is that the average American (or voter) wants,
there's no such thing as an average American voter
My take on this is the right wing media re-defined the word “woke” to create an enemy, and take the propaganda to full blast to convince the average idiot that “woke” is the ultimate threat to society, and nothing else matters. Add to that the vicious religious practices and the false prophets who financially benefits from the brainwashed, to make it harder to question the new paradigm. That’s what the average american/voter was told to “want”: destroying woke by all means. What “woke” actually means, and the fact the definition is so vague (meaningless?) is the true weapon.
#1 Per our Constitution, USA has minoritarian rule baked in.
There's many anti-democratic choke points: Electoral College for POTUS, Supreme Court, US Senate, gerrymandering effect on US House, long history of systemic disenfranchisement, etc. aka Vetocracy per Francis Fukuyama.
#2 ~6m Biden voters stayed home in 2024.
There's a sizeable cohort of infrequent voters and a huge cohort of non-voters who self disenfranchise. Due to nihilism (voting doesn't matter), both parties are the same, low motivation, whatever.
#3 Like most everywhere else, our information ecology is broken, fragmented.
The audience for "traditional" media's news is tiny, compared to social media. The Dems focus on "traditional" whereas GOP have successfully embraced "social". So for all the billions spent every presidential election (political advertising), most voters don't ever hear from Democrats.
Therefore, US voters are mostly unable to correlate policy positions with politic parties. So mass politics really comes down to marketing and vibes.
#4 Addressing these "legitamacy" issues (government by consent of the governed) is wicked hard when one of our two political parties has been utterly opposed to democracy and effective governance for decades.
https://shwin.co/blog/why-i-dont-discuss-politics-with-frien...
Is there going to be a hearing into the stock transactions of any the cabinet related to this news? Seems to me like some people could make some significant money on information like this.
How can companies, importers and ports even implement these tariffs so quickly?
Do these tariffs go into effect immediately?
Trump must be a Russian asset. There can be no other explanation. To weaken NATO, remove U.S. dominance by withdrawing forces from bases worldwide, abandon maritime security, weaken the dollar, and implement hostile economic policies that maintain the dollar as the world’s currency, it seems that the final step of “America First” is to make the dollar the sole currency used only in the United States.
He's a psychopath. But I'm willing to compromise.
He's a mentally ill Russian agent.
So now that the impacted countries will respond with tariffs, are there any chance they might include tariffs on digital services like AWS and Azure, or will they only target physical goods that cross the border?
I don't know how these things usually work in the best cases, and it seems like we're living in exceptionally stupid ones right now.
Foreign countries will probably start taxing Google/Facebook ads if not outright banning US tech companies from operating. When that happens, watch the whitehouse roll back everything
Or escalate? Roll back defense guarantees.
I don't know how I feel about this overall. But I do want to recount something from my childhood.
I'm American. I grew up in the rural Midwest. The truth is that much of this country is a depressing shell of its former self. The town I grew up in is all but dead -- about 12,000 people still live there, though. The nearest big city, previously a hub of manufacturing innovation, has been on a steady decline for decades. Since the 70s, more and more powerful drugs have been flooding into the broad geographic region, decimating entire communities and creating generational cycles of poverty and addiction. It's an absolutely brutal combination that has totally killed almost all innovation and output in huge swathes of this country. Candidly, even if you brought back manufacturing to the area, the local population is so dependent on drugs that you'd struggle to even find workers today.
Today's drugs are so powerful that addicts would rather live in total poverty with drugs daily than have a high-paying job without drugs. Every small business owner in these regions knows this, but the true scope and severity of the problem can otherwise be hard to fully notice and appreciate. It's not possible to operate a small business in these regions without encountering the drug problem on a regular basis.
Do I think tariffs are going to fix this? Honestly, probably not, for the simple reason that Trump is old and won't be here much longer even if he tries to install himself as a dictator. The winning strategy for much of the world is to likely wait this out to some degree -- best case scenario for others is that this will just get reversed or significantly mitigated in 3.5 years, which is the blink of an eye on global timescales.
Nonetheless, my heart goes out to the incredible loss this country has experienced over the last few decades. It's truly heartbreaking and devastating that we've sold out so much of the country for short-term profits to such a degree that we can probably never break out of the cycle without severe pain and sacrifice.
I see the drug problem in my midwest city too, it's literally on my doorstep on occasion.
The country is also not struggling with high unemployment or stagnant wage growth.
Multiple things can be true at once. Tariffs are a solution to an imagined problem.
And fwiw - reshoring has been happening already, through congressional action (CHIPS, IRA), rather than presidential decree, and was doning so without wrecking the economy.
The reshoring efforts you're talking about will not come remotely close to restoring what was lost and what could have been. We're so far behind outside of software and finance it's almost unfathomable. To grasp the full cost that has been paid, you need to imagine a scenario like all of NYC, Seattle, Austin, Denver, Silicon Valley, San Francisco, etc., just don't exist at all. That kind of scale is what we've lost out on -- not in software, of course, but in most other industries.
Fly-over country should have been the site of the greatest industrial and manufacturing innovation the world has ever seen. We threw away one of the greatest opportunities in history to juice stocks for a couple decades.
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I think that’s part of what I find so frustrating about this. There’s an alternate history where we’d have a national effort to invest in domestic industry, especially outside of a few areas which are doing well, but that just wouldn’t look anything like this.
A good example I saw was living in New Haven years back, where they were struggling to build businesses around the Yale community. There’s a ton of unused industrial area, especially as you go east, but they didn’t have the right combination of funding environment, local workforce, and infrastructure so in practice everyone went to NYC or Boston, or SF, and the state of Connecticut kept losing out.
Fixing that would be huge, but tariffs won’t do it unless you also invest in those other things and also something like antitrust protection so the key decisions aren’t made by a handful of gigantic companies.
The lack of longevity to these tariffs is part of the problem with them. Why would anyone invest in a factory when everyone knows these tariffs are likely going to be short lived, making any capex wasted. Capital is going to try to wait this out. It's short term pain and long term pain.
The problem isn't not enough money. It's not enough distribution of money. Income inequality in the US is at 1929 levels.
I understand the emotion, but emotion alone will not get us out of this. Here is a very similar post from someone much like you:
https://news.ycombinator.com/item?id=43565630
It makes a lot of good counterpoints.
This theme of "small town USA" is dying everywhere, even here in Upstate New York. Drugs and lack of opportunity has a chokehold on everywhere in America.
Real problem is budget deficit not trade deficit. Trade deficit matters to countries who can't control the supply of dollar.
The country that prints dollars doesn't have this to worry about.
Main problem is budget deficit and the huge pile of debt.
Here's the brilliant formula they used to determine those tariffs by the way:
https://xcancel.com/orthonormalist/status/190754526581875103...
https://xcancel.com/corsaren/status/1907554824180105343
It's trade deficit divided by total exports divided by 2
This feels fairly close to Idiocracy (2006).
One thing we know for sure Trump will never back down or admit he’s wrong. So how to invest in this 4 year regime to survive or even thrive?
This article has more information, such as
> The 10% rate would be collected starting Saturday and the higher rates would be collected beginning April 9.
https://apnews.com/article/trump-tariffs-liberation-day-2a03...
So many people around the world have been hurt by the terrorist US government. This lessening legitimacy will hopefully provide them some sort of justice.
And as tech guys we always wonder if the world is a better place with AI Agents taking over. My guess is that even gpt-3 would have come up with a better solution than this.
I'm wondering how this protectionist trend will impact overseas hires. Will US companies continue to hire talent remotely outside of their borders? Will they be incentivized to only hire in the US?
More businesses will be incentivised to locate in the US, to avoid tariffs, but they'll still be incentivised to hire from outside the US due to cheaper labour (there's no tariff on wages).
> there's no tariff on wages
It is _really_ difficult to pay wages to internationals (As most people involved in remote work know).
Usually you need to setup a subsidiary in the country you want to hire in - or convince the "employee" to be a contractor.
In the end this is not "wages" that move over borders - but services. And these can indeed be tarrifed.
Thank you, nonvoters.
Trump is very popular among low-information citizens. If you corralled more of them into voting, he would have won by more. Call me an elitist, but at this point we'd be much better off if ignorant people stopped voting.
The only people who matter in an election are the voters so I'm always perplexed so many feel comfortable blaming non voters for the problems voters made.
This non voter shaming is quickly eroded as soon as you ask voters if non voting is an issue. They will report it that is is a huge problem. Then ask what candidates or parties support mandatory voting and you'll get crickets.
That's because it has nothing do with tackling the perceived problem of non voters and all to do with virtue signalling that you vote.
what is stopping everybody from exporting to the one guy that knuckles under completely and circumvent the circus?
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The US Administration is dead. America is occupied by creatures that simply want to destroy the current world order, sow chaos, and profit from that by means of power and utter hate and disrespect for ordinary people, who live from paycheck to paycheck. Keep advancing AI, so they wouldn't need to employ humans to kill other humans.
White collar jobs will be destroyed by AI/AGI. But the US workforce consists of a large portion of white collar workers.
To replace the coming destruction of white collar jobs, manufacturing and industry jobs must be brought back, along with new resource collection initiatives (e.g. mining). They will be needed anyhow to build robots, drones, and other machines to compete with China and India, technologically and militarily.
Globalization will be effectively dead, remaining trust in the petrodollar will be destroyed, therefore so will Pax Americana. Expect more wars.
There have been rapid recent advances in robotics, both classical industrial robotics (advanced by rapid iteration with digital twins and simulation environments like Omniverse), and humanoid robotics (pushed forwards by Boston Dynamics, Figure and a lot of other recent entrants). So if we really do achieve AGI that would take over white collar jobs, manufacturing jobs will likely too be taken over very soon thereafter.
In your scenario white collar jobs will be destroyed globally.
So effectively you would be paying people to work in manufacturing even though it's no longer necessary.
You may as well pay a basic income instead.
Would be good to know -
Who are the people coming up with these specific rates?
How are they modeling this system?
I am certain they didn't use any liberal math or science or history to arrive at these numbers. It's all just made up by incompetent yes men.
It's trade deficit divided by total exports divided by 2.
According to the BBC reporting, it appears that for each country he's charging 50% of the tariff they place on US goods coming into those countries, or a baseline of 10% for some countries like the UK.
(sorry, this is a BBC live news ticker link):
https://www.bbc.com/news/live/c1dr7vy39eet?post=asset%3A3a34...
And a picture of the chart they had showing the per-country tariffs:
https://www.bbc.com/news/live/c1dr7vy39eet?post=asset%3A7f78...
its not tariffs
Trump took the trade surplus the US has with those countries and calcuated the percentage from that.
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what would happen to US??? I mean you cant ignore US market right now
so is this enough that factory gonna comeback on US soil??
Let's imagine they do come back. Let's say you have a toaster factory in Vietnam, which allows the US company to produce low-cost toasters for about $100. The factory workers earn $1 per hour. Now, due to the tariffs, a toaster will cost $146. And you say, "Okay, they just need to move their factory to the US and then the problem will be solved - no more tariffs. " Fine. Do you really think a US worker will work for $1 per hour? Even if you automate 80% of the factory, you still won't offset the 46% tariff. You will never get a toaster priced at $100. More likely, it will be $300.
I like to ask, "What would a Russian agent do to try to dethrone the USA as a global power?"
* remove support from historic trading partners
* break up NATO and similar military alliances
* convince the world to distrust USD as default reserve currency
* specifically make it harder to trade with China who makes a lot of our junk
* remove a lot of the federal government workforce from their positions
* convince those involved in Ukraine to back out so that the mineral-rich regions in the east can be appropriated
* destroy the image of "democracy" and "free speech" by flaunting legal processes and crushing dissent
I could list and think of more, but these are most illustrative IMO.
Man the stock market today was a slaughter house.
Unfortunately in America they choose a dictator for 4 years with a parlement made up of puppets so it is what it is.
I encourage everyone to contact their reps and demand a bill be advanced to return tariff authority to the Congress.
There are enough GOP reps opposed to tariffs to get a discharge petition.
Are they more opposed to tariffs than they are in support of their king Trump?
I'm betting the number of Republicans in Congress who will oppose Trump is in the single digits at this point.
I would bet that most of these tarrifs won't exist in <6 months. This reeks negotiation tactics from Trump.
He's been playing this game for 2 months now with Canada and Mexico, and so far he's loosing. US & business are loosing even more.
Keeping this kind of tarrifs, would be absolutely moronic even by Trump standards. That would be economic and financial suicide for the US.
This is not a game. Others will not take it as a game, and will retaliate. You can only play the bully for so long before others start treating you as a bully, and stop backing down, even after you have backed down -- as they never know when you are bluffing.
Doesn’t matter if they’re gone in 6 months. The damage is done, businesses will see the United States as too unstable and unreliable to plan long term goals in. We will pay the penalty for decades. Even if you get a new administration, that administration can be gone in another 4 years.
Oh on that we agree - the damage to US reputation and reliability is already done and it will take decades or a world war to repair it.
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No tariffs on Russia, interestingly enough.
All actions by this administration point to Trump working in cahoots with Putin, which we were told was "a hoax".
The White House dressing down of Zelensky, and this week Russias investment chief in the US, and just scads of obvious daily reminders that Trump has no bad words for his pal. Odd.
Tariffs on our friends and allies while he speaks of dropping sanctions on Russia and meanwhile levies no tariffs upon goods from Russia, zero. Odd.
Countries like North Korea and Russia are already covered by sanctions
There are secondary tariffs on those countries who buy from Russia and Venezuela or Iran. i.e. if you buy oil from Venezuela, then your export of clothing will invite 25% tarrifs.
Are the two mutually exclusive? Because using the same formula they apply to other countries, Russia would have tariffs as high as 84%. (I confess to using an LLM to get me the data.)
for starters, countries will sell to the UK , which will resell to the US at the lowest tarriff rate. Great for the UK, but stupid.
I try to sympathize with trump's deglobalization agenda but it is probably exactly what it seems to be : a colossal stupidity.
Just shipping goods through the UK does not make them UK-origin. They have to have a "substantial transformation".
Do you have a reference for this? If they’re requiring substantial transformation, how is this assessed and enforced?
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"Johnnie Walker Champagne"
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In that example, the UK would soon run a trade surplus, and presumably the US would increase their tariff.
As someone interested in "curious discussion", what are some of the positives we can take away from this? Is this a new standard for economic policy?
Autarky is just bad economic policy because comparative advantage is too powerful. Nobody benefits from this. The US loses and everyone else loses. The US loses the most however, both economically and in soft power.
This isn't even the China model. Slapping tariffs on raw inputs guarantees that US industry cannot compete internationally. This is more like the North Korean model.
While there are positives to targeted industrial policy, there are no positives to autarky.
> The US loses the most however, both economically and in soft power.
Yes. It loses most because 10-20% of world trade is for value added in the USA. The one exception is the USA of course, because their percentage is 100%. So USA is 100% effected, the rest of the world is 10-20% effected as they continue to happily trade with each other without tariffs.
I dunno about everywhere else, but in Australia the effects are already noticeable. Trade with the USA is dropping, and trade with Canada is growing.
> This isn't even the China model
It's 1400-1840 China model
https://en.wikipedia.org/wiki/Isolationism#China
Buying American stocks and companies is about to be a lot cheaper.
It may reduce consumerism in the US and therefore be beneficial to the environment.
Well it's positive for various countries that benefit from an end to US dominance over the world. :p
So for the US itself? The theory would be that the tariffs will increase US manufacturing sector. But the cold hard truth is that it isn't the 1830s anymore and last time tariffs were tried happened to line up exactly with the Great Depression.
Even an competent administration would have great difficulty making tariffs to restore manufacturing work in the US, if that is even at all possible. It fails because other countries just put the same tariffs back on the US.
So with the Trump's administration some kinda of serious economy meltdown is almost certainly the result.
It is possible for things to simply be foolish. Insisting on balance is not the same thing as curious discussion.
I can't think of any positives.
Trump is saying the positives are the it will force companies to build stuff in the US, thus increasing our domestic manufacturing and increasing jobs. I don't see that happening in a significant way, but who knows?
But if that does happen, then the huge amount of revenue that Trump thinks is going to come to the government's coffers won't happen, and that revenue is meant to offset some of the tax breaks for the wealthy, so we're kinda screwed either way.
The Hawk-Dove game is a wise framework to consider. When both are Hawks, both get harmed. When one is a Hawk and the other a Dove, the Dove gets hurt, and the Hawk laughs. I hope both can be Doves, bringing tariffs to zero and making all great again.
These guys are untrustworthy liars. I assume there are thousands, possibly tens of thousands of carve outs for the tariffs, based on bribing the POTUS or approved affiliates.
we've spent the last 50 years basing our currency in foreign manufacturing, seems like a good way to tank the dollar to me
Mistake in headline: tge article says 54% rate on China. 34 looks like a typo.
Apparently it is 34% on top of current 20%, bringing it to a total of 54%.
But who knows with these guys.
Current tariffs for China are 45% because the original 25% tariffs from Trump I never went away and the 20% from Trump II are in addition. Source: have two containers en route from China at the moment, will be paying 45% on them.
I am not an economist but I see two things 1) usa has a huge debt, 2) this feels a lot like VAT applied on a federal level, without calling it VAT. Ok "VAT on imports". Why not.
Obviously this is being sold as a trading surplus BS, etc, but if you look at EU, the surplus is ridiculously low when you consider goods and services (something like 50B).
I don't think it's the worst idea ever, I just dislike the useless hatred that this guy is spreading around and all the idiots believing him. But hey if he hadn't done it, people would have said he is a socialist :)
There has been a lot of speculation about why this is being done, given that even a young child could understand that a grocery store is not taking advantage of you when you exchange your money for goods. Some say that it doesn't need an explanation, because the President has so much power that caprice and a little bad advice from a cabinet member is all it takes. That is not a complete picture, though, because power in the US is spread out enough that while only the President needs a reason to do something, many others must have a reason to allow it.
Here's one idea for a "why are his supporters allowing this," sort of explanation. In the US, educated professionals hold way more importance than the global average, due to the US's status as an exporter of services. They tend to vote for liberal (in the European sense) policies, whether Republican or Democrat.
If you wanted to destroy liberalism in the United States, you would have to drastically reduce the importance of higher education and professional labor. This can be done by placing very high taxes on the import of goods and base resources, so that young people who would have become engineers have to become miners, loggers and machinists instead. While I do not think this is true (blue-collar workers do not live up to the ultraright's "noble savage" sort of fantasy about their preferences and are actually just like anyone else... but if you're an elite you don't know that firsthand), it sounds plausible that enough of the people who are important for a season might believe it, and support it as a plan to remake American culture, not in their image, but in the image of a fantasy they share.
This works together with the strategic need to decouple from trade with a country before invading them, dramatically increasing the number of opportunities for self-aggrandizement through the threatening of war, high-stakes diplomacy, negotiations over individual prices... which also offer some respite for elected officials who would otherwise take an unending beating in the news over consumer data.
how long before we start seing this reflecting in prices?
Naive question of a foreigner: I see a lot of approval on the youtube comments to Trump's liberation day speech and over at twitter. Now the consensus on HN is diametrically opposed. My question: why do some people think that this is a good idea? Why is there such a huge rift in US society and how do you plan to bridge this gap?
This anecdotal, but I feel like YouTube applies a positive sentiment filter to its all of its comments. Somehow on most videos I watch never see anything critical at the top of the comment section.
Can this be an arbitrage opportunity?
One thing I don't understand. US is much bigger than most countries. Why would a country the size of Belgium (~12M people) needs to import as much as it export from the US in order not to have tariffs > 10%?
You could flip this around. Why would a country the size of Belgium need to export as much as it imports from the US?
Not sure I'm following. Isn't that supply and demand?
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It’s a good time to enroll in grad school and get an economics phd.
So no soft landing anymore
Wild
My understandings reading some comments. 1. Prices will increase 2. US will need to manufacture things and they will need a lots of workers. There will be shortage of workers because factory pays minimal wages. 3. Factories will have to offer higher amount of salary that will increase price
Ultimately prices increases for everything and working class will suffer more.
Don't forget that you first have to build the factories and somehow resuscitate the knowledge that died a few generations ago. A factory isn't just a big warehouse full of low skilled people, you need machines we don't have anymore, processes we lost, &c.
All of which sounds ok until you factor in timelines. In takes years to spin up new factories and supply chains.
Choking the existing options when replacements are years away is a guaranteed way to ensure economic carnage
More likely that prices will go up and wages will stay the same.
Factories take a long time to build and businesses know that Trump is erratic and therefore have no idea how long these tariffs will be in place for. So opening a totally new and otherwise unneeded factory is a big risk. (Some companies have made recent announcements about opening factories in the US but largely these factories were planned to meet existing marker needs, just not yet decided where they would be.)
The price of a product will only go down when the majority of demand can be met by tariff free means. Until then a US company will sell a product at the same price as the imported, tariffed product because that's what they do. Same happened during the recent inflationary spike. Businesses put prices up more than their costs went up as they had an excuse.
Large businesses hate putting up wages and the level of desperation in the US is such that there is a large pool of people to fill low paying factory jobs. The post-pandemic wage increases were noticeable for the opposition to them and that was a very short 12-18 month spike, with wage growth now back to normal.
Yes, either way, the working class, indeed the median American, suffer.
It's a scheme for the top-top to once again, not pay for anything because they pass the cost along. The W2 class gets to redistribute amongst themselves.
Nasdaq composite is down 5.6% at the time of writing this comment.
I honestly think Trump is doing this just to enrich himself and his friends. Stock market crashes always end up transfering wealth from the poor to the rich.
cui bono? It is clear that the american taxpayer is not profiting from this but neither seem the billionaires. So who does?
Those that are long Gold
Are we gone flag this one too? Or just all the articles chronicling certain crypto invested tech billionaires pushing in this direction?
The attempts to force a mineral deal on to Ukraine, and also the attempts to get hold of Greenland, start to make sense if you assume that the Trump administration is preparing for a permanent global trade war. Higher costs for mineral imports would hurt the US economy the most.
Number one rule of combat is that you need a very good homegrown industrial base. In order to be great country it needs to be combat-ready. If you apply that lens, what Trump is doing will start making sense. He is trying to revert globalisation and free trade in order to make the USA manufacturing superpower again. Not sure whether this will be successful or not, as China already has an order of magnitude advantage in manufacturing.
Complete tariff list - https://cdn.xcancel.com/pic/orig/3B0CC9EA63B82/media%2FGnjqy...
What happened to Canada?
At the moment, the automotive tariffs still stand and go into effect ... tonight? tomorrow?
Looks like they got cold feet on a blanket Canadian tariff.
But the whole process is so chaotic and subject to mood swings that I expect more holes and carve-outs than a block of PDO emmentaler.
Canada already has a customized tariff.
They responded with a middle finger plus a boycott and the message was received loud and clear ?
You obviously don't put tariffs on your own states /s
An interesting observation is that the tariffs are half of what the other country is charging. Does that mean this was a common strategy across the board? Or was strategic importance of goods considered?
>the tariffs are half of what the other country is charging
And that figure is questionable. Read "including currency manipulation and trade barriers". This is the same presidency that believes the "EU was made to screw USA over", and accused them, Japan and practically every other major economy of manipulating their own currency to harm US. It's improbable that rate has any basis in reality, but surely a detailed breakdown of how they came to that number will be published.. not.
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There’s a 0% chance other countries were charging tariffs across the board on US goods at the rates claimed.
The EU simply doesn’t charge 40% rates on the bulk of US goods. Let alone the random countries that all somehow have 10% tariff rates in the US.
It's even wild to consider that countries like Ecuador are taking advantage of the US. An absolutely absurd idea.
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The numbers are not accurate.
Yeah, no, those numbers in the left column are not correct.
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Trump is going at this with a big ask. I anticipate that these percentage numbers will settle much lower in the end.
Meanwhile the options level upgrade I asked e*trade for at 8am (before the 4pm announcement) so I can buy puts is still pending at 8am the following day.
TIL one should configure brokerage accounts well in advance of events.
I like the idea of tariffs but only if followed with income tax cuts.
How did the value added tax (which is paid by all companies including domestic ones) become the same as import duty?
The only way that you can make that tariffs charged to the USA is the level Trump claims (ie. 39% in the EU) is if you include VAT.
He has talked about VAT, but in terms of how they ended up with those numbers, people noticed that the claimed rates don't have anything to do with the actual tariff/VAT/etc. rates, they're just based on the relative size of the US trade deficit with each country.
The gloss will be "this way captures all the various unfair things they're doing to us that are the cause of all these trade deficits" but that's just, well, gloss.
Some of the workers won't understand that EU companies also have to pay the same VAT in the EU, so they think it's correct reasoning.
People keep making the mistake of thinking that there is any sort of logical consistency to Trump policies.
Trump has had a thing for tariffs for like 40 years now.
People keep making the mistake of thinking there is no logical consistency to Trump policies.
He has an agenda.
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Maybe that applying VAT to imports is done asymmetrically? If, for example, I'm a US citizen importing a european widget, will federal and state sales tax be applied on import?
If they're not, then this might be why they're considered thus.
Not really, because the point of tariffs is that they apply only to imported goods, creating a preference for local ones. If VAT is applied equally to imported and local goods it's not a tariff, it's a tax that consumers pay in any case.
Uhh... Whether you're a citizen isn't a factor. There's no federal sales tax, although these tariffs act as an import tax that will increase the wholesale costs. And state sales taxes don't apply to imports or wholesale transactions, they are retail tax (or also often a use tax if a sales tax wasn't previously imposed).
VAT is not only a retail sales tax, it'll apply anytime the widget is somehow modified (value is added).
VAT is not paid by companies. It is paid by consumers and collected by companies. The US have the sales tax, which is similar.
It absolutely does not make sense to count VAT as a "tariff". I am sure they know it.
No, VAT is actually paid by companies (and also consumers of course), it's one of the subtle differences between VAT and sales tax.
The "thought experiment" you can make is the case of something not ending up being sold. In a VAT regime the manufacturer will have already paid the VAT on the inputs but since the customer hasn't paid the VAT on the finished product the manufacturer won't get their money back on the VAT they already paid (there might be other tax rebates or write offs, but that's a different matter)
In a sales tax regime the tax is only paid by the final consumer so if the manufacturer doesn't sell the product they are not out for any additional tax
Still doesn't change that neither of those are a tariff by any definition
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My company pays VAT surplus to government every quarter since the VAT we collect on our products and services is higher then the VAT we pay for our purchases. How are we not paying it?
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Not if you include trade barriers like the DMA, a law which is used to milk US technology companies through vague court rulings with arbitrary fines.
The EU is the undisputed king of vague laws that are applied principally to competitors with arbitrary fines.
How do you implement GDPR? Don't ask us, but if you violate it watch out!
How do you comply with DMA? Don't ask us, but if you violate it watch out!
Can't we sue the President or something? What if he made it like 200% to really try to fuck the country over?
I have a doubt for some years about the US, but never really got good info on it (maybe because it’s a silly doubt).
So, when I sell something to the USA (on eBay) for instance. It doesn’t pay VAT automatically. Do Americans pay VAT when it’s delivered?
But, when an American buys something locally, they do pay VAT, correctly?
We used to not pay anything for stuff, for instance I bought items that were dropped shipped from China under a certain value but that has ended. https://www.wsj.com/livecoverage/trump-tariffs-trade-war-sto... Sales taxes are on a state by state basis and online companies are required to collect it from the buyer and forward/report it to the state. Local purchases all have sales tax paid to state governments, some to city in urban areas. Some food items are exempt. A state can choose to not have a sales tax but most do IIRC. There is no federal sales tax. Until these tariffs which are essentially taxes.
Walton family, owners of Walmart, run the company by exploiting the labor force and social safety nets like welfare. Walmart is the largest company with the most employees on some sort of welfare. Tax payers are propping up their stock. This allows them to retain more of the profits versus sharing them and removing their employees from the welfare system. None of their listed actions have to do anything with globalization to retain their wealth.
Taxing the wealth and redistributing helps. Saw this in the 1950-1960s with building of new infrastructure to replace the aging or expand the supply to offset the demand. Using the money to pay for new training so lost jobs can be replaced where jobs are needed helps too. Even the simple act of ending starvation in children increases their intellect for the next generation and helps support the future. This method will never be perfect. These are band-aid solutions that have actual results.
Reality is that the inequality is a social problem masquerading as an economic problem. Society has moved to from respecting empathy and humanity to respecting greed and power. People mind set is anchored to, “That person is quite wealthy so they should be smart and some god must love them for it.” Reality is that person exploited a labor force to maximize their wealth. They are not more intelligent nor does some god like them better. Look at how many rich people fell for Elizabeth Holmes’s blood testing scam while a person that actually studies blood understands parts per millions in looking for test markers. A vial of blood or more is needed versus a drop.
Want to fix the system? Start looking at the wealthy with disgust and damnation. Demonize them for being the driving force in economic inequality. Move back to honoring and respecting empathy and humanity. Real intelligent people have empty. It lets them be placed in the shoes of others when they will never can experience it themselves.
I would also caption the wealth gab in the USA as modern day segregation. The world happiness index shows that equalizing the rich and poor creates a better sociality. Respecting the wealth and demonizing the poor is the complete inverse of a better society and maximizes soar.
PS. Why do people think bulling trade partners will be beneficial? Say you are store owner or product producer and you keep trying to bully me to by your products. I will not and go the competition, even with higher costs or deem the product or service not worth it. I already started boycotting USA bourbon manufacturers with their arrogant and bully statements during the Tariff Wars.
Do good, demonize extreme wealth. Irony is so many GOOD Christians even ignore Jesus’s statement on this matter with pretending Matthew 19:24 doesn’t exist.
I honestly didn't expect that Americans would simply... choose to be poor.
The US particularly has an extremely large population of men (10s of millions) who don't work. Who knows if they'd be doing "low skill" manufacturing if somebody was around to hire them. But if you actually wanted this to work you would have started by subsidizing american raw materials.
Why is there a focus on men not working? I have seen it in at least 3 comments in this thread.
Latest bls stats show men unemployment at 4.2% and women unemployment at 4.1%
https://www.bls.gov/web/empsit/cpseea10.htm
You have to go back more years to see the trendline. BLS has a different chart showing the male participation rate dropping while female participation rate has remained fairly constant over the past decade.[1]
By my rough estimation that's ~7M men unaccounted for by simply not participating in the 'traditional' labour force. Keep in mind that it could also 'simply' be that a lot of those unaccounted men are working but in ways that the government(s) at different levels are unable to reliably track.
There have been some articles and attention picking up on this trend over the past few years.[2]
[1] https://www.bls.gov/charts/employment-situation/civilian-lab...
[2] https://www.nationalaffairs.com/publications/detail/educatio...
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I believe the miscommunication here is that "total people not working" and "total unemployment" represent different subsets of the population. That is to say, there are people who are not working who aren't looking to work and aren't categorized as part of unemployment.
Civilization has always operated on the idea that men must work for it to function properly. When less people willingly work it can be detrimental for future welfare. The way that unemployment is interpreted by the public now is not very accurate. The gig economy has grown massively since 2020, which counts towards labor statistics, but its arguable to say if they should. The number of small or local owned businesses have grown substantially since 2020 - but is that because of a surplus of opportunity or people looking for ways to make additional money? The quality of the labor matters.
Tesla in Berlin employs 12,000 workers and can produce 5000 cars a week.
The US will need a lot of factories to employ 10s of millions of workers.I also imagine new factories will employ less workers due to increased automation.
I'm interested to see how this plays out.
This isn't the 1950s, factories are mostly automated: https://www.youtube.com/watch?v=blW-Fa4a10g
That's the whole reason we went all in with tech and automation
There are around 200m working age americans. So 100m working age american men. You are claiming that 20% of working age american men (at least) are playing video games all day (I assume that being in school or raising children or whatever is acceptable activity)? Where are you getting these numbers?
disastrous
I am not a specialist; but isn't that the most "green" policy ever ? I mean:
- Tariffs will increase the price of virtually everything -> By law of supply and demand; global trade and production will decrease, leading to less CO2 production
- This effect will be stronger for stuff coming from far away (little for Canda / Mexico; more for EU; huge for China). So companies will have a tendency to rely on local producer (even at a higher price). This again will lower transoceanic shipping. Other countries will probably retaliate so this effect will go both for inbound and outbound shipping. Again; less CO2 production
- More money for the government. There more stuff you buy, the more tariffs you pay, so rich pay more than poors. Which again is what green parties are looking for.
I might be very wrong about this; I am not a Trump supporter in any way - and to be honest I ma not a fan of green parties either - but my initial reaction is that if we look at the conclusion of the policies; the results are looking to align quite well. Of course the surrounding storytelling is extremely different; which puzzles me a bit.
Yes.
If you're into green policies, then tariffs are aligned with what you'd probably want, at least on some level. Though it's more complicated and by no means a slam dunk. One could say that producing things locally in more places is less efficient (lower economies of scale, etc.) which might result in more overhead per item, which might outweigh the extra transportation, etc. General assumption is that an unconstrained free market arrangement encourages system optimizing itself. But then there's a question what is it optimizing itself for, and that's definitely not ecological impact.
A change like that in a global economy has tons of non-linear effects, many of which it need to play over time, etc. Some changes are more easy to predict confidently, many not so much. But barely anyone argues from first principles, and its typically just tribal screeching on both sides.
There's a lot of speculation that the Switch 2 would be atleast hundred dollars less without this nonsense. The Japan exclusive version of the Switch 2 seems to support this, with it's restrictions that insulate Japan, support the notion that English actually isn't needed in Japan (nor any other languages), by releasing a version of the Switch 2 that is far cheaper but only allows you to play games in Japanese.
I think it is a mistake to approach this policy as if it is about other states. One sign that it is not is that it seems to be based on a crude, almost simplistic calculation, something like trade deficit divided by exports, with a ten percent blanket tariff on states with trade surplus or no trade.
Applying the same policy against everyone indicates it's not about them, it's about the usian 'us'. Another way to look at it might be as sanctions, but instead of applying them on another state, applying them at home. And sanctions are usually a means to influence oligarchs and industrialists in a state, which probably means this is a policy directed at those groups in the US.
Why would you want to hurt US industrialists and oligarchs? Because then you can ease their pain in exchange for their loyalty. This is the logic behind castles in Europe. It's a place where the king decides the taxes, taxing illoyal barons or whatever more than loyal ones, and if they militantly disagree, shut the door and have them expend their resources on a hopefully futile siege and then be weakened anyway. Similar policy was common in colonial settings too, if the colony was uppity, tax them harshly.
The world is changing fast anyway, the liberalist hegemony wasn't going to extend far into the future for many reasons, like climate change and the general rise of autocracy worldwide. Having guarantees of loyalty and stability from the state apparatus at home when the world order inevitably crumbles while burning some bridges that would likely fall apart anyway, instead of wasting resources keeping up a charade defending some 'status quo', has a kind of logic too it.
Just like Trump said, he could shoot someone on the street and the bootlickers here would still justify it.
This thread is all you need to know that PG types are ok with losing 10-50% of their equity's value as long as they can play tribal politic games.
PG is on X every day pretty much going "Why is trump doing this? There must be a reason!"
The media has been perpetuating that that tariffs are borne by consumers. This is partially the case, but not entirely: US dairy in Canada is not 3 x the price of Canadian dairy despite the 200% + tariff.
Bad example. Most dairy imports from US -> Canada are not subject to the tariffs.
This video goes over the details of the thresholds and how those dairy tariffs work: https://www.youtube.com/watch?v=0lURdVBCBo8
In short, nobody is paying 200% tariffs.
Admittedly without knowing much about our dairy industry and supply management, isn't this flawed logic? If a 200% import tariff means Canadian dairy can also be sold at a higher cost, then it's still the consumers bearing the cost--they are being denied access to cheaper dairy altogether.
It really also depends on how a product is imported. Is dairy imported into Canada as a ready to sell retail product, or as bulk 'raw material' for local companies to turn into consumer products. In the latter case the tariff is less significant to the final price since most of the price the end user sees are local markups rather than the cost of the raw ingredient.
> The media has been perpetuating that that tariffs are borne by consumers
They’ve not done that enough. The title is literally “34% tarriffs on China”. Heh, not __on__ China but 34% import tax on products which come indirectly or directly from China, imported by $country residents or companies.
"Reduces trillions of foreign debt, also causes double that in inflation"
You'd think that experts before this time would have considered this already, and rejected it.
Every single move by Trump towards the world economy has always been a bad one. Too bad to be mistakes.
They're not listening to the experts, and it's intentional.
Vietnam and Israel already agreed to remove tariffs on USA imports. Thailand is opening negotiations today.
It’s simple - remove import duty from USA goods and the USA will remove tariffs. Reciprocal trade.
Russia defeated the UK with Brexit.
Russia defeated the US with Trump's policies.
Where's the internal opposition?
Since the Nixon admin ended the dollar standard the world has basically been pumping the US economy in so many ways, enabling US imperialism.
1)Dollar standard guarantees countries will absorb US budget costs, since they all have to have dollars they have to accept their money devaluing as the US creates artificial inflation.
2)People buying the US stock market due to no fears of free trade, now why would a Chinese or citizens of certain other countries EVER risk buying US stocks? the trade has become so flimsy if even possible anymore, this is a cold war 2.0 at full scale, 54% tariffs on China are not a joke, that almost kills trade entirely, it wouldn't surprise me if China cut relations at some point now or if it keeps getting worse.
The real reason for this tariffs is a very Thucydides trap moment, ALL these tariffs were primarily targeted to China and countries that could potentially be a "threat" again if China were to "fall" economically, example: Japan, SK, India.
Oligarchs are for it because they want to eventually privatize the stock market and go back into a weird pseudo aristocracy, where they control the most powerful corporations in the world, just like back in the 1800s. (notice how Elon keeps SpaceX, Neuralink and others private?) Since the 90s unlike the rest of the world the stock market has halved in size in the US and the trend will keep going until only a couple individuals control the US economy.
This whole plan however has a flaw, it assume China won't eventually pass the US technology wise, but in the event that it happens, what then? will you not trade with China then? if that happens then you become basically North Korea where you are isolated from the latest technology, as the gap grows you get further and further behind in your standard of living. If that scenario happens it would be catastrophic for the US.
The blue collar workers are fine with enduring a bit more pain for a few months or even years as this pans out. Specifically if the investment classes (who will be most harmed) suffer more. Long term goals are other countries lower their tariffs with the US, more US manufacturing, a temporarily devalued US dollar to more easily pay down the national debt, and a renegotiation of the terms by which the US provides military protection to other nations. People who already had little if anything to lose not being able to buy cheap foreign goods they weren't going to purchase anyways for a chance to see if this works out, while seeing the tech bros, academics, and investment bankers squirm, rage, and seethe? Though I'll get down voted into oblivion, the unmitigated despair and outrage on display in these comments just make my smile that much wider.
If there's one upside to Trump, it's that he might turn a lot of left-wingers into passionate free traders. Who would have thought.
Americans would want to have high value-added activities done in the USA, and low value-added activities done abroad. Tariffs are being marketed as trying to achieve that goal.
The five strategic areas/sectors identified as a priority for repatriating activity into the USA are pharmaceuticals, forestry, steel/aluminum, automobiles, and semiconductors.
How is forestry a high value added activity? Are we including furniture manufacturing, or maybe residential housing construction in that sector?
Are we including all of the byproducts of steel and aluminum in the steel/aluminum strategic area? I assume it's not just the raw materials?
Is software included as part of the semiconductor sector?
The bull case for the USA is 1. Reshoring actually happens 2. Other countries actually drop their tariffs/trade barriers 3. A new golden age of Pax Americana/free trade ensues, with Americans exporting their high value manufactured goods worldwide
The bear case for the USA is 1. Republicans get hammered in the midterms 2. Entire world raises tariffs against the USA 3. American factories close en masse 4. USA dollar is devalued and reserve currency status is threatened
Historically, the pattern seems to be: 1. Acquire global empire 2. Promote free trade inside that empire, benefiting high-value added domestic activities and limiting high-value added activities in areas outside the core of the empire 3. Run out of money due to the costs of fighting wars to maintain the empire 4. Military power declines 5. Through one or more wars, another power takes over
Proponents of tariffs argue that Trump is trying to take us back from Step 3 - run out of money to Step 2 - promote free trade. In order to understand this thinking, it's important to understand that your empire's colonies aren't supposed to be allowed to promote their own industries and limit free trade by enacting duties on your own high value exports. To enforce free trade, you then fight wars, you can send gunboats (Opium Wars) or invade (Gulf War). But you can't invade and fight everyone, and rising powers protect their own industries through various measures as they build up.
But power is most powerful when it's not used. The threat of action is much more powerful than the actual action. That's why I'm more than surprised and not too happy that tariffs on a large scale have actually gone forward. Ideally, the threat of tariffs would be used to actually cause other countries to drop their tariffs, and free trade ensues. I'm not sure about historical examples of this working for getting other countries to drop their tariffs. You could certainly try suppress the growth of other countries, I'm not sure how well that works in a global marketplace scenario.
The flip side of that is that if you threaten for too long and never actually do anything you may lose some credibility. But I don't think anyone is arguing that the Americans are gaining credibility by enacting tariffs. It's a big world, and unless Americans have the power to influence their trading partners not to trade with others, then everyone can just trade with each other instead of trading with the Americans.
Pushing Vietnam into Chinas arms I see. Oh America.
Matches the expectation analysts have had from December 2024 [0]
"In the baseline scenario, we assume that the US will raise its effective WATR against Chinese goods by a total of 20 percentage points over 2025-27. We expect the effective tariff rate on China to rise by 5-10 percentage points in 2025, owing to the imposition of tariffs related to fentanyl smuggling disputes. Mr Trump will further phase in tariffs from late 2025 with a wider range of excuses and policy tools, eventually bringing the effective WATR facing Chinese exports to about 30% by 2027."
[0] - https://www.eiu.com/n/the-impact-of-us-tariffs-on-china-thre...
For China maybe, I doubt any serious analysts were expecting this high of tariffs on most other countries, like Mexico, the UK, and Canada.
The methodology of counting non-price barriers on certain goods then applying it across the board on all goods as tariffs is bonkers. Doubtlessly they aren’t including all the non-price tariffs the US imposes on other countries either.
I’m extremely skeptical the EU has effective tariff rates of 40% on all US goods, and furthermore skeptical that if so the US doesn’t have countervailing effective tariff rates at the same rate.
It is not a conspiracy anymore. Problem - Reaction - Solution. Start a war in the middle of Europe and Gaza. Tariffs. Recession - Panic - Digital ID, Social scoring, CDBC, Digital dollar, AI governance, tech feudalism. That's all folks. :)
Just leaving this here from 2023...
"In America, estimates say that Chinese suppliers make up 70-80 percent of Walmart’s merchandise" - https://retailwire.com/discussion/walmarts-open-call-continu...
Walmart has been trying to strong arm China into eating the cost of tariffs.
https://www.bloomberg.com/news/articles/2025-04-02/walmart-k... | https://archive.today/Q5CNc
"Hey China, pay the tariffs or we'll go to another country."
"You mean the countries with tariffs even higher than ours? Best of luck."
Walmart is a drain on communities anyways, aren't their employees on food stamps at some ridiculously high rate?
It’s not like mom and pop stores are equipped to source things locally any better than Walmart. They would also be relying on the same imports from abroad, but would not have the bargaining power that Walmart has.
I’d rather buy from Walmart than Amazon. At least Walmart pays local taxes and has some level of quality assurance on their merchandise.
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> aren't their employees on food stamps at some ridiculously high rate?
Welfare like food stamps is a subsidy /against/ Walmart, not for it. You are supporting the employees by paying for their food, which means they can negotiate for higher wages, which means Walmart pays them more.
An example of the other kind would be literal wage subsidies, which are sometimes paid so companies will hire mentally disabled people.
I'm taking bets, do you think the tariffs will:
1. be rescinded/paused in [0,2) days;
2. be rescinded/paused in [2,4) days;
3. be rescinded/paused in [4,7] days;
4. not be rescinded/paused.
3.5) rescinded/paused [30-61) days. There will be some bluster, and then announcements with the large trading partners like Japan, South Korea, etc., that some new deals have been struck.
that some new deals have been struck.
I believe that was the plan all along. He's just doing it aggressively with tariffs.
5. All of the above.
If Paul Graham is calling out conservatives for being driven stuff other than data, then you know people are losing it lol.
Usually on here you see a bunch of apologia for when republicans do inane economic policy and I am not seeing that bs on here for once...
Guess Trump really wasn't the crypto, AI, chips, wtv you wanna say president lmao. But nah all the naysayers just had TDS.
Guess Wall St and others are going to have to re-learn that sound policy beats vibes.
I guess I didn’t want to buy any new tech anyways.
Thanks Tim Apple.
Can always vacation somewhere you can pickup gear and bring it back with you. Not customs advice.
This is how a lot of people around the world live their lives. Dubai wisely provides this as a service to surrounding countries, to their great enrichment.
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If you bring back goods worth more than $800 it has to be declared and a duty paid.
Judging from the changes (currently paused) to the de minimus shipping rules (also formerly $800) I’d expect the threshold to be lowered substantially. Possibly arbitrarily while I’m on a trip and have already bought the goods.
The risk being if detained by DHS for who knows how long is not worth saving $400 on a MacBook personally.
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As long as it is less than $10000 in value. It is an interesting point though, if tourism outside the country will increase just for shopping.
Well, US has a "beautiful ocean" around which makes this plan a little costly.
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25% on South Korea, 32% on Taiwan, 36% on Thailand, 46% on Vietnam
What a massive and moronic blow to our soft power.
>25% on South Korea, 32% on Taiwan, 36% on Thailand, 46% on Vietnam
Harley Davidson moved some of its production to Thailand in 2018 to avoid a 31% tariff the EU had on US manufactured motorcycles, announced in 2024 it was moving more production there, and prior to today had plans to sell the Thailand produced bikes back into the US, as the US had a 0% tariff on bikes. Not surprisingly Thailand has a 60% tariff on imported motorcycles.
This tariff jumping is real. I guess we will see how it works out for the US.
Just think how many companies moved production from China to Vietnam to avoid China tariffs, and now tariffs on Vietnam are larger than on China.
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This underscores the difficulty companies have trying to navigate through this. Even if Trump doesn't change his mind tomorrow, as he's liable to, he's only around for another four years and for most companies that's not enough time to justify a supply chain overhaul.
What's the actual strategy behind the current US administration slapping tariffs on everything? Feels like they're handing them out like Halloween candy. Is there a long game here, or is it just managed chaos and alienating trade partners for short term optics?
They claim that they are "reciprocal" tariffs, and their chart shows them at exactly half the tariffs they claim are imposed by the target or 10%, whichever is higher. But it is suspicious that the column on their infographic showing the foreign tariffs has fine print indicating that includes other non-tariff things that you can't easily calculated as a neat rate the way tariffs are. And, some people running the numbers have determined that the quoted foreign "tariff" amounts are consistently the US trade deficit in goods with the target country divided by that country's exports to the US, with a minimum of 10%.
So, despite being labelled "tariffs", the actual basis for calculating the "reciprocal tariffs" has nothing to do with tariffs.
A rebirth of mercantilism. Peter Navarro is a huge fan of it, and in his heterodox fever dreams, laments that most of the world abandoned it several centuries ago. In his mind, a net surplus of currency is every bit as important as having a strong military. People like Lighthizer have drunk the coloured sugar-water.
Here is what they say anyway:
https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...
https://www.whitehouse.gov/presidential-actions/2025/04/regu...
https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-pr...
People like Navarro believes a non-trivial amount of manufacturing can be coaxed back to the US from China and Vietnam.
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https://www.ft.com/content/fba87dd3-514a-41c2-b2b9-ea597ffbd...
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
The TLDR is Miran sold to Trump US can Plaza Accord everyone, devalue USD to reindustrialize US, draw down US debt/commitments, keep exorbitant privelege... all by slapping tariffs (Trump's fav hammer) to scare countries into signing (converting) existing US commitments to "century bonds" in US favour while tying them to US orbit for foreseeable future. Is US strong enough to coerce others to sign on? IMO doesn't matter, this seems like plan specifically tailered to Trump preferences and ego, so as long as Trump thinks so Miran gets the job.
E: there is logic to the plan, logic that appeals to Trump -> US strength and monetary manipulation skills can force others to fall in line. And TBH countries have fallen in line in the past.
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I'm on the side of free trade and dont think there is a single policy. The strongest arguments I can think of are:
1) raise tax revenue in a way that partially falls on foreign nationals
2) reduce trade deficits and foreign purchasing of treasuries.
3) Increase relative power if other economies are damaged more than the US. There are situations where zero and negative sum strategies are optimal, like war, where it is better to have a larger % of a smaller overall pie.
4) stimulate demand for us labor
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Trump is using century-old misinformation about tariffs to raise tax revenue to pay for tax cuts on the wealthy. In reality, it's an added tax on all spending that accelerates inflation.
Tariffs are theoretically supposed to encourage domestic production, but rely on the false premise that all raw and intermediate materials can be sourced domestically at a cost below the import price. That has generally proven to not work unless tariffs are in the hundreds of percent. But at that level, import taxes tend to poison entire sectors due to supply lag instead of drive domestic economies.
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Category error to think there's a strategy. Trump doesn't even know what a tariff is. People try to project a strategy because it's probably too discomfiting to believe that the greatest superpower the world has ever known elected a complete nimrod king.
It's hard to have insight on what the US admin is thinking behind the public facing statements, however this might be of interest:
Why Trump’s tariffs are better than you think — and much worse
subscribe! https://www.crikey.com.au/2025/03/06/donald-trump-tariffs-im...
or read now, maybe subscribe later: https://archive.md/H46RG
Can we please stop acting like Trump and MAGA behave rationally?
[dead]
It's not just soft power. It is also economic power. Also, note that there is a baseline 10% on all countries.
Really curious on how it will blow-back on Americans. Because, make no mistakes, it will.
The cost to move these industries to the U.S. exceeds the cost of these tariffs. The market will pass the cost of what are import taxes to the American consumer, resulting in inflation.
True, the shareholders will take a pay cut too, because something less than 100% of American consumers will just suck it up without changing their behavior. But in aggregate, we will all save less.
If inflation takes off again, maybe eventually there's some monestizing of debt. But in less than 4 years these tariffs will go away, which is why companies won't spent billions of dollars investing in state side manufacturing that'll take maybe 5 years to plan and build. Therefore I'm not sold on the montizing debt motivation yet.
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It depends.. For some goods possible to just immediately raise prices, for others, business will try to compensate from another source.
As example, Daimler stated, they will cut cheapest models from export to US, so some segment will got less concurrent market, and probably prices will raise.
Probably, this is because Daimler have much higher profits on expensive models, so they could just lower profits on them. Other variant, also possible, expensive niches are more tolerant to price raise.
For small countries, tariff raise nearly guarantee prices rise, but US is big country, things are not so simple.
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But can't you feel the liberation?
The full list:
https://www.cnbc.com/2025/04/02/trump-reciprocal-tariffs-cou...
10% tariffs on the Heard Island and McDonald Islands which are uninhabited, and can be reached only by sea, which from Australia takes two weeks by vessel. And also 10% on Svalbard and Jan Mayen which is also uninhabited. That will teach them not to ripoff the USA!
Oh NO tariffs on Russia or Belarus. None.
Both Svalbard and Jan Mayen are inhabited. Jan Mayen only by about 35 people, though. Svalbard has both Norwegian and Russian settlements, but of course entirely too small to have impact on US trade.
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Those first two islands aren't even thought to have been visited by any human for many years!
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Can't hear you! USA. USA. USA.
Politically it's going to be just like how most everyone fell into line fervently supporting the Iraq War when the corpo media told them to. Then after the unavoidable truth finally seeped in, equivocation and rationalization from "I didn't really support it" to "we were misled". With a lot more visible economic pain, of course.
Then that anger from having been "tricked" will be used as raw energy to drive the next con, and so forth. A broken clock is at least right twice a day, but these low information voters will sabotage themselves every single time.
> but these low information voters will sabotage themselves every single time.
It is generally not cool to blame the voters. There was a ton of misinformation preceding the Iraq war as you point out, but even then there was a massive popular opposition to it. Hundreds of thousands protested against the war before the invasion in New York and Washington DC. Some polls showed that 5% of all Americans participated in a rally or a protest in the weeks leading up to and following the invasion. And despite that popular opposition, among politicians there was a bipartisan support and just a handful of MPs opposed to it. Meaning the public was never really given a choice. In short, the Iraq war was the fault of the politicians and the politicians alone, the voters came nowhere near it.
https://en.wikipedia.org/wiki/Protests_against_the_Iraq_War
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Effective total tariffs on China will be 54% effective 9 April. No way US does not go into recession...
And wait for the response from the trading partners...
Correction: average tariffs on China prior to today was 42% https://www.piie.com/research/piie-charts/2019/us-china-trad.... This means after today, average tariffs on China will be 76%.
China is already in a Great Depression, and this tariff hike guarantees China to be in 30+ years of economic depression.
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America's leading supply chains just went up in smoke. The fallout is going to be pretty funny from an international POV, methinks.
Might cause a global recession, though. And that might be less funny.
Don't worry, acoording to Trump this will generate billions and billions of dollars and America will be rich as it never has been before. /s
The more I think about Trumpian strategies the more I suspect that he got some friends together (or they came to him) and decided they'll short everything, then he'll do this for a while. He and those friends would be able to 'generate billions' that way, by legal insider trading (since we learned that anything he does "in an official capacity" is legal and he can pardon anyone who ever got caught).
Last term he did some tax on bauxite that had a similar effect of costing billions to a whole industry that processes or buys aluminum, but one of the few bauxite mines in the US, run by a Trump ally of some kind, made bank.
Yeah, billions and billions: https://youtu.be/u_aLESDql1U
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Please don't take this thread or any HN thread into even more of a political flamewar hell. It's not what this site is for, and destroys what it is for.
https://news.ycombinator.com/newsguidelines.html
Edit: it looks like your account has been using HN primarily for political battle. That's a line at which we ban accounts, regardless of what your politics are or aren't. See https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme... for past explanations.
If you'd please revert to using HN as intended, we'd appreciate it.
As a EU citizen, I think this voter ID argument is absolutely insane.
a) Republicans did the math and figured out that a lot of people who vote Democrat didn't have IDs. Old black people, in particular, were not likely to have IDs. Republicans also did stuff like accept fishing and hunting licenses for voting, but not university ID. None of this is a secret. A think-tank called ALEC came up with it. In-person voter fraud, the only kind of election rigging that voter ID laws prevent, is next to impossible in the US system and basically never occurs on more than a one-off basis.
b) A lot of those people who didn't have IDs have either gotten IDs or died off by now, so the Republican advantage of voter ID laws has faded.
c) Given (b), Republicans have moved on to other tactics like voter purges, shutting down registration offices and polling stations to create long lines in urban districts, gerrymandering, and limiting early voting and mail in voting. One of their favorite tactics is limiting early-voting mailboxes to one per precinct, whether that precinct has 1,000 voters or 1,000,000. You can guess which way the crowded urban precincts tend to vote.
The whole idea is just to put their thumb on the scale enough to discourage some small % of voters in the swing states that determine our president every four years. If you live in California, no one cares how you vote for President.
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As a French I used to think too, "what's the big deal", "it has never been an issue here". But that's because we are used to it and getting an ID is easy and almost automatic. Whereas in a country like the US, it means missing several days of work, driving potentially hundreds of kilometers, and their geographic segregation means it's easy to make getting an ID harder for black people than for whites.
As a European I also find insane elections are held on workdays (in France it is always on Sundays), that you may have to wait in line for hours to vote, that voting stations may be hours from where you live, etc.
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That's because you live someplace where the things described in the various links in this comment [1] do not happen or happen way less than they do in the US.
[1] https://news.ycombinator.com/item?id=42116609
You've fallen victim to GOP propaganda. They use 'Voter ID' as a reasonable sounding shorthand for a lot of policies that just make it harder to vote. The other responders highlighted many of them.
I don't, but we have a functioning citizen registration system; every voting eligible citizen gets sent a voting card when elections come up. That can only work if you're registered and have a known address. "Illegal aliens" don't have that, so they can't vote. Foreign nationals that are registered / stay here legally also don't get voting rights so they simply don't get the voting card mailed to them.
But also because of that registration, getting a kind of ID involves making an appointment at the county house, filling in a form and handing over a recent portrait photo. It's a bit of a hassle but nothing extreme.
If it makes you feel any better the UK Conservatives tried this under the "we have to stop voting fraud" excuse. Turns out it backfired because the oldies couldn't figure out the new requirements leading to this scandalous quote from pantomime villain Jacob Reese-Mogg:
> Parties that try and gerrymander end up finding that their clever scheme comes back to bite them, as dare I say we found by insisting on voter ID for elections.
> We found the people who didn't have ID were elderly and they by and large voted Conservative, so we made it hard for our own voters and we upset a system that worked perfectly well.
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It's a different culture, one which is not used to have and use a national ID, which is completely common in the EU (with the exception of Ireland perhaps?)
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https://x.com/yishan/status/1906592890845028405
This whole thread is gold. People just casually discussing why it is necessary for America to enslave the world AND it is beneficial for the world. The color revolutions were successful in other countries until the DeepState decided to bring that "social engineering technology" to home. Somehow people think they can contain such moral corruption just as plasma is contained using electromagnetic coils in fusion reactors.
Voter ID helps Democrats in 2025, it doesn't hurt them.
How do you figure?
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That Democrats have held both the white house and congress several times over the last decades, and didn't try to put in place some reasonable voter ID laws is really sick.
Basically the law they would need is "states can do whatever voter ID they want, if it's free and easy to get ID and 9X% of voters not just _can get it, but actually actually have it, otherwise they can't". Or they could have made a federal ID and ensured everyone gets it.
But Democrats always felt that even going ner voter id laws were a bit dangerous. It always rang like "voter suppression" to them (and in many ways it probably was). But they missed the chance to make it impossible for Republicans to abuse it as voter suppression - and here we are now, worrying that there will be voter ID laws despite many lacking ID. It's infuriating.
Why the idea of "we'll just make sure people have ID" is so unimaginable is just completely impossible to understand. It doesn't matter that there is no actual in-person voter fraud. Voter ID laws are a good thing anyway - if everyone actually has ID. It adds trust to the process and god knows the US needs a process where people actually believe it's secure, not just one that IS secure.
Does that matter as much as citizens united?
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On the scale of concern, voter ID is way down there. You've already had both "prosecute main political opponent" and "storm the legislature".
Voter ID is very common and sensible. The UK introduced it recently and while it did disenfranchise people this was not to the benefit of the party in power when the law was introduced.
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This historical period will be remembered by being a cause for legislation to introduce strict testing for mental illness in government positions. Ask any psychologist and it’s clear what it is, but they won’t say it publicly because of Goldwater “rule”. fact is they have the most dangerous and destructive mental illness known, and they captured the power exactly because of their disorderly mindset. Yet for months and years everyone is observing and discussing what people with a serious mental illness are doing when they are given highest post in power and unlimited money.
I don’t support tariffs at all, but calling these people mentally ill is the wrong approach.
They’re not mentally ill, they’re obsessed with power. It’s dangerous to conflate the two.
Malignant Narcissism
https://www.theguardian.com/us-news/2024/oct/24/trump-nyt-ad...
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Dementia
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This is the equivalent of the "mentally ill lone wolf" rationales given for American mass shootings.
What possible difference would a psychological test make when an pre-existing felony conviction is not enough to keep him from voting, but also to actually sit as head of state?
What is happening in America simply doesn't happen without broad-based, implicit, systemic support at all the important decision-making junctures. In 2017, several of the highest-profile executive orders were slapped down in court within days. In 2025, the government is not even pretending to abide by court rulings on their EOs, and are detaining people without charge and revoking their visas without due process.
> will be remembered by being a cause for legislation to introduce strict testing for mental illness
You’re making some bold statements about the ability of congress to pass legislation at all.
A medicalized psychiatric state is not the solution to the current lunacy. Just imagine the abuses it would lead to.
So which illness it is?
Malignant Narcissism
https://www.theguardian.com/us-news/2024/oct/24/trump-nyt-ad...
Greed? I dunno
Presumably psychopathy combined with narcissism
Nah.
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Do you have some required reading to share here? As I remember it, the body of knowledge on economy is that tarriffs are good for collecting revenue, but bad for economic growth.
What is the phase called? What is this amputation and what spreading is it stopping?
> Do you have some required reading to share here
Lenin's Imperialism
> but bad for economic growth
Yes, it is bad for economic growth, but this is not the tactic of protectionism. It is in the name that the purpose is to protect domestic production. It is done by forcing competition barriers on external producers
> What is the phase called?
Economic crisis / intense rivalry. US is economically threatened by the rise of China, it has been on the radar for many years. Things have reached a point where US can't just sit there and do nothing as China challenges the global status quo.
> What is this amputation and what spreading is it stopping?
The spreading is the slow but ongoing rise of Chinas economic power. The amputation is thr free-trade bariers
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You seem to be one of those people who thinks it's ok to tear things down that they don't like, regardless of who gets hurt.
I wish your type of thinking didn't exist. The world would be a much better place.
lately in conversations with people who have always openly hated the US hegemony and the "western system" (and I can myself see the many issues with that system) I see a certain glee at the current state of affairs, as if they are happy that finally the pain inflicted by "the west" on third-world countries is finally coming back to haunt the US and Europe. They don't seem to think two or three steps ahead, what is the alternative they are cheering for? A russian style oligarchy? A chinese style one party dictatorship?
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Broken systems should be fixed or replaced, is that the type of thinking you abhor?
If you prefer living in a broken system I guess you have a lot of options available. What we have been doing in America has utterly failed humanity, sounds like your making a lot of money off a failed state and don't want your income to be threatened. I wish your type of thinking didn't exist, the world would be a much better place.
> tariff on our closest allies
I saw that your president said:
> “We imported $3b of Australian beef last year alone… they won’t take any of our beef because they don’t want it to affect their farmers.”
Just FYI, the reason we don't import much beef is because we have about as many cows as we do people here :)
US Beef doesn't have the greatest reputation either, same as chicken.
If these products are labelled as being from the US I don't see anyone buying them unless they're dirt cheap.
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I've talked to several Iranians, they pretty much said that that's what happened to Iran. People tore it down because they were unhappy with their current government, but they didn't have a replacement. Authoritarians with false promises filled the void and created Iran as we know it today.
Sounds like the way things are going to me and it's what a lot of people are rooting for. I think America did a really good job of compartmentalizing the rich and the poor so the rich are completely unaware of what everyone else is dealing with.
Much like economies don't work like a household budget, they also don't work on "no pain no gain". Economic pain only causes bad things.
https://eml.berkeley.edu/~enakamura/papers/plucking.pdf
What are you on about? “A broken legal system”?
OP's comment sounds like a red herring to me - is it the "broken legal system" that still keeps Trump away of turning the US into a technocracy/autocracy?
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Just take it literally, the US legal system is utterly broken, as in it does not function. It's the reason we literally put black men in jail for Life over and over again for minor crimes, because we have a broken legal system, it's why in America whoever has the most money wins it's why all of our politicians are lawyers because the legal system is broken.
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Reminder for others: paste jwz.org urls into the address bar instead of clicking on the link. If you come in with an HN referer you get scrotum.
so sorry. I don't get that, I think my browser blocks referrer
Why haven't we questioned the asymmetric high tariffs imposed by the EU on America for decades?
The EU imposed a 10% tariff on US cars for decades while the US only imposed 2.5% on the EU. And this happened while the EU exerted a significant trade surplus against the US on automobiles.
I don't advocate trade wars, but I can understand the case for some rebalancing, given the historic context. Hopefully Trump will only use tariffs as a negotiating tool, and they will soon be lifted. He's a dealmaker.
Of course a lot of the vehicles that would be interesting to the US market are not classified as cars, but as (light) trucks, and have a 25% tariff applied (originally due to a minor tariff "war" in the 1960s around chicken exports). It's just wrong that the US until now has not questioned and acted upon foreign tariffs.
>The EU imposed a 10% tariff on US cars for decades while the US only imposed 2.5% on the EU.
Whose faults? Someone signed the deal, someone let the deal stand 'for decades'. Trump could have 'rebalanced' any disparities...er, 'nicely', and been annoyingly victorious. As it is, nah. Lost trust. Not visiting, either.
All the gigabrains trying to be economists ITT don't understand this is a political move for Trump's base. It is not about what is technically best or the most logical according to the academics. It is an emotional decision more than anything. It stems from the working class in America being given cheap crap from Asia that barely works in exchange for shipping the good jobs overseas to the lowest bidder.
The working class has enough TVs, iPhones, and toys. We want secure housing, good education, healthy food, and an opportunity for promotion in life. Those things can only come with good jobs that are accessible to the whole working class, not just the well educated who make up most of the service economy.
> We want secure housing, good education, healthy food, and an opportunity for promotion in life. Those things can only come with good jobs that are accessible to the whole working class, not just the well educated who make up most of the service economy.
What level of confidence do you have that the tariffs are a path to this outcome?
> We want secure housing, good education, healthy food, and an opportunity for promotion in life.
How come dismantling education, medical, various protective agencies and services will help with that?
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I understand the "and 10% on everyone else" part of the tariffs.
Do you think the media is too dumb to understand that, or are they just playing games when they point out a 10% tariff in someone who does not export to the US?
can't wait to read all the bad HN takes on this one
If we could manage the country using HN experts, we'd be incredibly prosperous. People here know so much more than the actual professionals in the government.
Only a few people pointed out the obvious. Trump aims to bring everyone to table to renegotiate global commerce. Every country's economic strategy today is to have positive trade with the US and that is unsustainable.
A risky tactic, but refreshing after decades of the old tired policies that brought us the collapse of parts of US manufacturing and so much pain during COVID due to a complete dependence on foreign suppliers for... Well, everything.
I don't know if this will work. But I know what we had before wasn't working. We'll see.
Why exactly wasn’t it working for US? The country with most wealth by like every measure? It’s not enough?
Well they were only getting one golden egg a day. If they cut the goose open they could get all the eggs in one go.
This is the most mind-blowing thing to me: a bunch of multi-hundred-billionaries all standing beside a billionaire that shits in a gold toilet and is in charge of the richest country on Earth angrily proclaiming that "Everyone is taking advantage of us!"
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> Trump aims to bring everyone to table to renegotiate global commerce.
Throwing the gauntlet in the dirt isn't how you achieve this type of diplomacy, as the world will just form new economical alliances with more predictable trade partners instead of wasting time trying to appease Donald Trump.
> A risky tactic, but refreshing after decades of the old tired policies that brought us the collapse of parts of US manufacturing and so much pain during COVID due to a complete dependence on foreign suppliers for... Well, everything.
By "policies" do you mean US corporations trying to make as much profit as possible by moving manufacturing to cheaper countries?
The result of tariffs, even if manufacturing for some products moves back to the US, will be higher prices for consumers even in the long run as you cannot produce things as cheaply as other countries. In a country where wages have not kept up with inflation the economic pain will keep mounting.
> I don't know if this will work. But I know what we had before wasn't working. We'll see.
Coupled with:
> People here know so much more than the actual professionals in the government.
Is funny to read; If you had those actual professionals in the government, they would be able to show you some serious predictions about how these moves will improve the economy and when you can expect the "golden age" to show up.
The pot calling the kettle black...
Current EU tariffs on US goods...
That's a bit misleading. Make no mistake, current US tariffs are UNIVERSAL. Not specific to e.g. chicken or automobiles or purebred horses. They cover absolutely everything. While you may see 38% or more tariff on chocolate, chocolate export to the EU from the US is hardly an important issue. And for dairy products, the tariff is a fixed euro amount per weight, not %.
https://ec.europa.eu/commission/presscorner/detail/en/qanda_...
https://trade.ec.europa.eu/access-to-markets/en/search?origi...
I wasn't touching the first two categories anyway, tariffs or no tariffs.
First one because I don't understand why i should risk a milk based product that has traveled for months across an ocean. Or even from another EU country, when I can buy stuff made in a 200 km radius around me.
Second one because afaik it's legal to call "chocolate" something that does not contain any actual cocoa in the US.
> Second one because afaik it's legal to call "chocolate" something that does not contain any actual cocoa in the US.
Well, no. It cannot be called "chocolate" if it is something that consumers would expect to be made from actual chocolate. However, it can contain the term "chocolate" if cocoa or another cacao product is the sole source of its chocolate flavor, and as long as consumers have a pre-established understanding that it is likely to not be made from chocolate. For example, people generally understand that chocolate cake is likely made with cocoa, not chocolate, and so it can be labeled "chocolate cake". If there is no such general understanding, the product must be labeled "chocolate flavored".
(See the US FDA CPG Sec 515.800, "Labeling of Products Purporting to be 'Chocolate' or 'Chocolate Flavored'")
Now if we could just get them to stop calling chocolate products with dairy in them "dark" (I'm looking at you, Hershey...)
Cheese is the obvious one here. I can get a variety of foreign cheeses even at my local big-box grocery. Much better options than most domestically produced cheese.
Irish/Finnish butter (Kerrygold/Finlandia) is also fairly popular here.
If properly refrigerated, milk can last for months especially if pasteurized.
You can also evaporate milk and it will last nearly forever unrefrigerated if kept dry
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Weren’t things like that 25% steel and aluminum tariff added in response to Trump’s earlier tariffs, and allowed to lapse in 2020?
https://eur-lex.europa.eu/eli/reg_impl/2018/886/oj/eng
https://www.gtlaw.com/en/insights/2025/3/eu-to-impose-tariff...
Careful: The rate mentioned for alcoholic beverages (and confectionery) may include Excise Duty. Excise Duty usually have the non-discriminatory aspect of VAT : they’re also applied on local production.
Trump thinks VAT is comparable to a tariff. VATs are not directly comparable to tariffs.
These are ex-VAT.
I'm sorry, but could you provide link, where stated, VATs applied to import?
- As I know, usually VAT deducted from exported goods, but I really don't know how VAT work with import - usually on import used tariffs.
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Interesting that people are downvoting heavily those information. If reality does not match our view of the World, well, let's ignore reality. The truth is that EU kept higher tariffs on US goods than the other way, Trump is changing that and there is an outcry, because it was Trump who did that. If that was Kamala, nobody would even notice.
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Please don't comment about the voting on comments. It never does any good, and it makes boring reading.
The next phase is likely geopolitical. Countries will begin negotiating directly with the U.S. administration to secure exemptions or reductions in tariffs. In effect, it’s the formation of a new American sphere of influence / empire.
To me it seems like Americans are currently actively dismantling their sphere of influence.
Exactly. The old is based on Cold War. The new sphere of influence will be probably quite different.
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Yup, who wants to get deeper in business with a party you cannot - in any case - trust?
This breakthrough in nuclear fusion energy is a significant milestone, but it's important to remember that practical, commercial-scale fusion power is still likely decades away. Nonetheless, this achievement validates the massive investments and brings us one step closer to a potentially transformative carbon-free energy source.
I'm surprised by how many concerns there are here related to how the tariff amounts were calculated.
It seems like they used a pretty simple algorithm to do it. Isn't that a good thing? Countries were treated the same and the tariff was decided primarily by the trade imbalance (with a minimum of 10%). Would we rather them use a combination of completely incomprehensible calculations and backroom deals?
Its open season for debating whether tariffs will work, or even what the underlying motivations are. Attacking the use of a simple algorithm across the board just feels lazy and either emotionally or politically charged.
It's both simple and stupid algorithm, though.
Why is it stupid? They claim to be concerned with trade imbalances, and that those imbalances are a problem. Using those trade imbalances to calculate a tariff seems reasonable, assuming the concerns are right.
If tariffs are to be imposed, I'd at least rather be able to see how they were calculated and know it was done the same for every country.
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