Comment by lumb63

> 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.

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.

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.

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.

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.

> 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.

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.

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

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...

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…

Progressive taxation, better public services, universal healthcare, free education for all

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.

> 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.

> 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)

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.)

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.

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.

It's not the idea, it's how it was rolled out, how poorly it was communicated, how little sense the numbers mean.

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).

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.

Tax the billionaires and the behemoth corporations.

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.

[dead]

> 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