Comment by griffzhowl
17 days ago
The problem is it's economically illiterate. Trade deficits aren't bad in themselves - they can be a sign that you're getting a good deal. Consider the case where a country with low wages exports raw materials to the US, and doesn't buy back as much from the US. This is the situation for lots of poorer countries who are exporting cheap raw materials to the US, and the US gains from these situations. Trump's policy simply makes all these raw materials more expensive.
Another way of reducing trade deficits would be to make Americans so poor that they can't afford to buy things from overseas. Eliminating trade deficits in itself isn't a rational economic goal.
Having said that, American manufacurers on average will likely benefit (though maybe not if their raw materials are too much more expensive), but this benefit will only come at the cost of American consumers, who are denied cheaper options from overseas by the tariffs
You’re calling Trump “economically illiterate,” but what you’re saying will happen is exactly the motivation of Trump’s policy. He just thinks it’s a good thing rather than a bad thing.
Trump’s bet is that the upsides will be borne disproportionately by his base, while the downsides will be borne disproportionately by Democrats’ laptop-class base. It’s not irrational to think that will be the result.
How will adding a tax to every single consumer good benefit his base?
Because the taxes will encourage shifting production to the U.S.
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Trump did decent in the rust belt. Many of them have lost their good paying manufacturing jobs. If, and this is a big if, we can bring back manufacturing in the US they can get their jobs back.
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I don't think it's his base that will benefit. More the owners of factories, mines, oil wells, etc.
Trump also thinks imports subtract from GDP.
> You’re calling Trump “economically illiterate,”
I mean he's gone bankrupt 6 times including managing to bankrupt a casino a business where on average people give you money to get less money in return... He also confuses simple economic terms like equating trade deficits with tariffs.
I was just talking last night about how ironically the things Trump is doing fall not to far from what Bernie bros have dreamed of. Heavy tariffs and no income tax is pretty much the conservative version of liberal hand outs.
What do they expect to happen if the heavy tariffs either move the manufacturing of those products to the US or make the imports expensive enough that consumers switch to domestic manufacturers?
That tanks the revenue from the tariffs, which would make them an ineffective replacement for income tax.