Comment by keithxm23
7 days ago
> 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.
This is HN. Nobody here understands how "plastic crap from China" is what keeps poor people alive.
There are folks who earn $1000 per month who also occasionally want to buy a birthday gift for their nephew. I advise everyone to just occasionally go to a budget store and walk around looking at the customers.
interestingly though, unless it’s plastic clothes, anything made of plastic doesn’t fall into the needs category since you can’t eat it and it isn’t durable enough to make a house out of. so what cheap plastic brush is keeping people alive?
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The older I get the more I appreciate that those proverbs aren't just rhetorical.
I always assumed people would learn from history, because everyone knows that proverb. And yet now as I'm pushing 40 it seems more a warning, people will refuse to learn from history, and they will repeat it. So be as prepared as you can.
If you read more about the guy who initially came up with that quote, you'll find that he himself was a terrible example of "learning from history".
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Yeah, isn't this just regressive taxation?
How much all the imports are realistically going to be made in the US?
If the tariffs remained in effect for three decades, or more, there may have been incentive to move manufacturing back to the US; however, with the changing of the guard on the regular, most companies are just going to ignore it for 3.5 more years and hope that someone stops this from continuing.
Because, if you think about it, it took decades to get us to where we are today and it'll take decades to reverse, even logistically. This is a bunch of stupidity and meaningless saber rattling that will do nothing but hurt everyone except the extremely wealthy who can afford the additional taxation on the consumer side because the Republicans will further reduce the taxation on the income side.
> If the tariffs remained in effect for three decades, or more, there may have been incentive to move manufacturing back to the US;
I don't understand why people take this as a given.
Tariffs are a two-way street. What incentive does a company have to move a billion dollar facility to the USA when it will face reciprocal tariffs on any exported goods from the USA?
The calculus is pretty complicated. Economies of scale become a factor - is one large global factory more efficient than separate regional facilities? Also income disparities; Americans can more afford to pay a 25% premium on a good than most of the rest of the world can; so maybe you just make Americans pay more. Or, maybe you do both, have a world-wide facility and a American facility, but still charge Americans the tariff premium, and pocket the 25% as profit instead (steel producers model; also pickup trucks); this works well in conjunction with the USA's low business taxes.
Then there's "hacks" like shipping goods to a country that has lower tariffs with the USA, then using cheap local labor to do the bare minimum to have the goods considered to be produced there. There are some obvious good choices here, supposing the country's leadership is willing to play ball into the ninth inning.
So it's not a given that that long-term effects are increased domestic production. It's just as likely to be a siphon of prosperity and a impediment to wealth generation since it will be hard to start companies in the USA that export products.
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Wait 3.5 years? Look at the situation with Canada, you might just need to wait 3.5 days when he changes his mind and reverses the tariffs for some reason. The uncertainty must drive manufacturers nuts.
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> If the tariffs remained in effect for three decades, or more, there may have been incentive to move
In 3 decades, the US won't be the biggest market for most products - sooner if the harebrained economic decisions somehow persist.
Capital knows no borders, and American companies will "do the needful" to maximize profits wherever they may be found.
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Even if we did keep the tariffs long enough to reshore there's so many problems:
1) The resulting industries are only viable under the tariff regime so we have to keep it forever or until the production costs somehow equalize.
2) Who's going to work all these new jobs with the plan of reducing immigration drastically or practically eliminating it? We're only at 4.1% unemployment today. Are we supposed to baby boom our way to enough workers? While costs are jacked through the roof due to the tariffs?
The US has a very high standard of living as a whole. In order for it to compete with others, it must become "as poor" as others. You simply can't undermine your trading partners and not disrupt your privilege as the global reserve status.
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I think there's going to be a major reallocation of corporate contributions over to the other party so they can fix this in less than two years via impeachment.
"incentive to move manufacturing back to the US"
Only for the internal market. America will never again manufacture steel or cars for the rest of the world. The days of America being the factory of the world (which really only lasted a few decades) are forever gone.
> If the tariffs remained in effect for three decades, or more, there may have been incentive to move manufacturing back to the US;
That's the European Union, with no tariffs within the EU, moderately high tariffs at the EU border, and few policy shocks. The EU plugs along, with somewhat protected industries, moderately high prices, good quality, and some export business.
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Leaders from both parties in US government agree that global trade needs to be rebalanced behind closed doors; I have videos of Pelosi and Schumer supporting tariffs to balance trade deficits with China specifically. For all of the talk about “reserve currency” it doesn’t really seem like sitting back and doing nothing will prevent global trade in RMB, euro, or some BRICS currency, which is increasing every year. So if we’re going to get to that state eventually anyways, might as well start preparing for it now.
For all of the whining about the previous tariffs from the first Trump term, or the TCJA, neither were repealed when democrats had the opportunity, although there were small adjustments. That should really tell you all that you need to know.
It turns out that manufacturing jobs are better for supporting a family than service jobs, hollowing out our economy so there are far less good paying manufacturing jobs turned out to be a huge mistake, originally pushed by CFR, Cato, Brookings, etc. so the only people who are doing well are the rich, because the benefits of global trade accrue almost exclusively to them (although many CPI advocates will make the argument that you’re better off now because you can own a nice cell phone even though you can’t own a house)
The public BSing goes the other way too of course. Imagine getting worked up over classified stuff on a private email server and then letting your cabinet use signal and Gmail.
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Even if tariffs remained for decades reciprocal tariffs mean that no matter where you're located you pay a penalty when you buy manufacturing inputs and when you sell outputs.
Somewhat yes. But more precisely it is a reallocation from things we have the best comparative advantage to things where we have less comparative advantage. The main effect is to make almost everyone poorer.
> How much all the imports are realistically going to be made in the US?
For some of the hardest hit locations, very little. The US would have to invade and claim other countries to start producing, for instance, vanilla or coffee (the US essentially doesn't produce vanilla, and for coffee we grow less than a percent of what we consume). But Madagascar got hit with 47% tariffs.
That has an easy solution when you take into account the land he’s also demanding we acquire
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Even at this tariff rate, it's unlikely US manufacturing will compete on price with china, etc. So likely won't help US business, and will crush lower/middle class people. This is true, imo, even after whatever long ramp up period companies need to start manufacturing here.
Yes it is regressive taxation. It can't be judged in isolation without considering how that revenue will be spent. If that revenue went into massive public works and social programs the stimulus could increase consumer spending which in combinations with tariffs might possibly benefit US business and jobs (gut feeling, not an economist) though perhaps the overall economy might still suffer. Clearly that isn't the plan though.
If it funds tax cuts for the extremely wealthy then potentially its going to be a colossal shit show.
Meanwhile countries are raising barriers against US exports and those losses will need to be made up with increased domestic demand. It is a very brave experiment.
Look, this is basic economic theory. The kinds of taxes you levy alter primary behavior. You tax the things you don’t want and don’t tax the things you want. So looking at incidence of taxation (who pays the tax) isn’t enough. You need to look at how taxes alter economic incentives.
It is to be seen. Capitalists are the closest thing we have to rational economic agents. If there is a buck to be made in American manufacturing then that buck will be made.
My layman concern though is that these tariffs are not going to be stable enough to convince daddy warbucks to build a $10m factory.
By low-skilled workers do you mean the working class in general? If so it is my understanding that the overall goal is to help them at the same time as the privileged by shifting taxes at the same time as tariffs start to come down to create a re-balance of sorts in theory. Here [1] is a quick interview of Treasury Secretary Bessent by CNN Kaitlan Collins that I think covers this idea at least a little bit. I am curious to see how this plays out in practice. It's explained a little more in depth here [2] including how this was done in the past. I know videos are an unpopular medium on HN but I believe they are both worth the time to watch.
[1] - https://www.youtube.com/watch?v=i8WWvBEiFvE [video][10 mins][cnn interview]
[2] - https://www.youtube.com/watch?v=1ts5wJ6OfzA [video][24 mins]
How can a lack of tariffs AND the presence of tariffs both hurt low skill workers. Secondly why do all of these countries have tariffs if they are so bad for the economy.
Because tariffs can be applied on specific goods rather than the current blanket tariffs.
i.e. You could place a tariff on steel to ensure local manufactures use American steel while placing a tariff that includes cocoa does not necessarily mean American chocolate producers can buy more from American cocoa producers so it only injures the local chocolate producers (and downstream consumers) without protecting or improving another local industry.
You could still argue that the steel tariff is not a net positive but at least the positives and negatives of tariffs are arguable.
To your second question three (inexhaustive) possible reasons are that the industry has large political sway, or it's part of a plan to stop the quick collapse of an industry while the economy develops other industries, or it's a defense against the artificial short term lowering of external prices (i.e. foreign government subsidies either to grow an industry in their country or to destroy the industry in other countries).
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.
If companies could hike up their prices and still get consumers to pay them they'd already have done it. In fact, companies are constantly increasing prices as high as they possibly can up to the point where sales suffer.
They've taken advantage of recent events to prevent customers from feeling too ripped off though. When covid happened there were legit supply chain issues but even once they let up, and there were warehouse shortages because companies had so much unsold inventory, the companies continued to artificially restrict supply and blame the pandemic for higher prices.
Egg producers were busted colluding to inflate prices far higher than normal using the excuse of "bird flu" even as the largest supplier of eggs in the nation wasn't impacted at all by it (that's less of an excuse this time around though) and "inflation" is the new boogeyman companies are using to set expectations with consumers so that they can deflect blame for overcharging them, but even that only works for so long.
Nobody is going to pay $30 for a happymeal while their wages stagnate and their real earnings decline year after year.
Taxing the rich works just fine. We know it does because we used to actually do it. They'll spend billions trying to convince you that taking taxes from them is impossible and not worth trying tho. Why wouldn't they? That tactic has worked for them for a long time. Don't fall for it.
So tariffs are fine because it's a tax on big importers?
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> If companies could hike up their prices and still get consumers to pay them they'd already have done it. In fact, companies are constantly increasing prices as high as they possibly can up to the point where sales suffer.
Yes they do hike prices and yes maybe it reduces demand, but you can increase prices and blame the tariffs or the taxes. There is no ill will or conspiracy here. It is justified and lawful. I'd suggest the solution is to prevent price hikes due to tax increases. But is there a way of doing that?
> the companies continued to artificially restrict supply and blame the pandemic for higher prices.
> They'll spend billions trying to convince you that taking taxes from them is impossible and not worth trying tho.
Bunch of citations needed, I'm tired of copying and pasting.
> 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.
I never really understood this argument. The billionaires wealth is mostly in stock. In a crash like this their wealth goes down 10% like of all us. They can buy assets on the dip, but it will only regain that 10% they lost.
Surely you get that losing one dollar hurts much more when you have 100 compared to losing 1000 when you have 100 000?
Their wealth hasn't gone down at all. The crash isn't real. It was caused by the tariffs. They just need to hang onto the stocks they have until the value goes back up, which they will shortly after the tariffs are lifted. In the meantime they can buy up more of whatever they want at rock bottom prices.
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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?
Offhand, I'm unaware of where to even look to get an easy to digest version of 'where tax dollars go'. Would the GAO make such a report? Something for Congress otherwise? Would there be a classified and an public version?
Even better would be a tool that, E.G. with your IRS filing number, shows how much 'you' paid in, breaks down where that went, and shows how 'you' compare to other areas.
Such tools and reports would cost money, but making them is practically an audit anyway which is a good use of resources in a bureaucracy (part of the self-calibration system).
https://fiscaldata.treasury.gov/americas-finance-guide/feder...
What you seek is available and has been available for a very long time. Mathing out how your individual tax dollars map to these buckets is a fairly straightforward (IMO) exercise.
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Many civilized countries give you a receipt when you file your taxes that show exactly how your contribution was spent:
https://www.ato.gov.au/api/public/content/385a815c51944638a3...
Letting billionaires hoard all the money has gotten us to where we are today. It seems worse than government mismanaging the budget. Was that concern also there in the 50s and 60s when the wealthy was taxed at a substantial higher rate? I don't believe so. It all seems to point at the failure of trickled down economics of Reagan.
The us was the only industrialized economy to come out ww2 unscathed. We didn't have to compete for 2 decades. The end results of these policies was the stagnate 70s Reagan was a corrective. However, the policies of Regan only made sense in that context. Republicans became too found of cutting top end taxes when most of what could be gained already was in the 80s. There is no historical period to look at on how to deal with the consequences of integrating China with the rest of the world.
It's the elite wealth pump. Capital is a non-state entity but through corporations was granted person hood by states without a social contract. Trickle down economics was a complete scam and Richard Cantillon has the receipts for it.
Your answer is somewhat typical for Americans: because in my experience, Americans tend to think that all American developments are caused by domestic factors - governance, taxes, billionaires, whatever. Insular thinking, as if the rest of the world did not matter. Left or right, this is a fairly frequent pattern in the US.
But in the meantime, over a billion people elsewhere got out of poverty and built relatively developed economies. The US is no longer an automatic Nr 1 on the world scene by this fact alone. How precisely do you want to keep a massive edge over a billion hardworking East Asians who now have a lot of capital and know-how at their disposal?
Neither Musk nor Lenin can solve this. The US is simply in a relative decline.
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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.
Everything at Walmart is about to be 34% more expensive but you think the rich are hurt more than the poor?
Stock market went down a lot. And no, not everything at Walmart goes up 34%, food is not imported from China etc, most of the stuff poor people spend money on like home and food and used cars and services wont go up that much.
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Yes, in as much as it can be true for anything, because they make their money from poor people spending.
Edit: as a follow up, you can basically think of this as the "Monkeys Reject Unequal Pay" experiment as implemented by those who are averse to socialism. If you're already poor, tanking the economy hurts you less than it hurts those who are benefitting.