← Back to context

Comment by cmurf

8 days ago

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.

11 comments

cmurf

Reply
tnt128  8 days ago

Why in 4 years they will go away? Is that assuming the new administration will reverse course? It’s my understanding that generally country don’t lower tariffs voluntarily. They are usually bargaining chips.

  • sunflowerfly  8 days ago

    We have tried this before about 100 years ago. Supply chains and economies were not nearly as interconnected as they are now. Read the history of the Smoot–Hawley Tariff Act.

  • Aurornis  8 days ago

    > It’s my understanding that generally country don’t lower tariffs voluntarily. They are usually bargaining chips.

    Tariffs are a tax. Tax on us, the people buying goods.

    It's a massive tax increase. People are slowly waking up to that fact.

    Rolling back the tariffs is giving everyone a tax cut. Well, tax cut back to baseline of what everyone expected.

    As people realize that they are the ones paying the tariffs, this is going to be very unpopular.

  • cmurf  8 days ago

    Tariffs may not even last 4 months. Trump demanded Powell reduce interest rates, the FRB declined. The might be Trump's way of forcing the Fed to reduce interest rates, by inducing a recession with massive inflation. And then Trump takes the tariffs away once the Fed gives him what he wants.

    FRB won't reduce interest rates if there's inflation alone. They'd only reduce interest rates if the economy also slows down into recession territory.

    That's the short term view.

    In the long term view, they are the biggest tax increase in the history of the country, therefore they are potentially the biggest tax decrease in the history of the country. Political fodder, even for a corpse.