Comment by Panzer04
15 days ago
Retaliatory tariffs are just dumb. They're literally a tax on your own citizens.
The only reason to implement them is to protect local manufacturing, which is usually a bad thing in the long run (they just become less competitive)
Not retaliatory, reciprocal. Retaliatory tariffs are dumb. Reciprocal tariffs are the Nash equilibrium. Whether or not these particular tariffs are in fact reciprocal is something we could debate, though. At best they are a very crude approximation of reciprocal tariffs.
> Not retaliatory, reciprocal
Since we are diving into language semantics, these are _arbitrary_ tariffs that have been shat out via a "formula" which is being fed "how much stuff they sell us" as its input.
trump said "punish everyone who we spend more money with, barring our favourites" and they gave him a set of options. He chose the one he liked the best. No he didn't read any impact assessments, if they were made. He went by gut instinct.
Its just a punt. There is no greater game plan. its just a man making policy by vibe.
What makes them arbitrary? there is no really plan to test if they are going to work, or at what point they need to be adjusted. He will keep them until he sees something on twitter/truth social that makes him reconsider.
Yes, they are badly implemented, I agree. He is calling them reciprocal tariffs though, which implies he will lower them as they lower theirs. I don't think he's chosen a good way of estimating theirs, and so I don't think it's a particularly good policy, but reciprocal tariffs in principle are a good idea.
Even though his first pass crude approximation is stupid, it's really how other countries react, and how he reacts to them that will determine whether they behave like reciprocal tariffs or not.
There is a baked-in plan to test if they're going to work: they are formulaic, based on the trade deficit. Supposing that deficit falls, they will automaticlaly readjust downwards. I don't think the trade deficit (particularly restricted to goods, as they did it) is a good proxy for that, but it's also not completely untethered from reality.
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