Find it comical that Trump's support of tariffs has turned every Leftist nitwit into a Cato Institute level free-trade advocate. Same people have never met a tax or crony deal that they didn't support, but now that Trump agrees with them, they take the opposite track.
About 90% of it is the Left not getting cut it on the cronyism that tariffs enable. I am not convinced that Trump's tariffs are well advised, but neither are EU tariffs or Canadian tariffs.
The point Trump is attempting to make is that tariff policy has two economic pieces to it: one is consumption and the other is production. We treat a lot of our policy as if only the consumption side matters, and that makes everyone "wealthier."
Well, yes, we all consume to some extent, but when other countries refuse to buy our products or make them expensive with their own tariffs, we are only getting the benefit of one side of the equation. Our production gets poorer and less competitive, and a lot of that built up goodwill and expertise is lost over time, when we should be building it.
Yes, I understand that if we can't compete on a product we are better off buying it elsewhere, but we are not getting the other side of the equation, and that dramatically reduces the value of free trade.
As you pointed out, we hope he is trying to level the playing field, and his assumption is that because everyone wants access to our market, we should be able to command at least better terms. I think this is largely accurate.
The other interesting thing about this is that I think he is saying that whatever GDP is lost from tariffs, we will replace by reducing income taxes. There's a lot of merit to that, because that's exactly how the American economy was structured prior to the income tax.
You are an advocate of eliminating the income tax, and my guess is that this is a big possibility to get there. So while I am partial the classical economics argument on free trade, I also see the bigger picture and am supportive.
It's all kind of fascinating, because we haven't seen this kind of disruption/change in well over a hundred years. He is unwinding the progressive economic model going all the way back to Wilson.
Good piece. I like 'free trade' as well but there is no such thing in today's world. Trump is using them to change behavior and they are paid by the country where the first point of sale is. A toaster made in China sells here for $15 is probably costed at $4 in China. The producer has a choice to tack on 25%($1) or eat it to avoid price increases downstream.
From 2018 to early 2021 steel and aluminum were tariffed and prices went down ~24%. Deflation occurred across the board in that timeframe largely due to deregulation and hydrocarbon energy development, but tariffs helped as well.
France refused to do something(I can't remember the detail) and Trump threatened to tariff their wine and they promptly backed down.
China: Now that they have a US Govt sponsored monopoly on everything what will the costs do? They will not go down...
It pisses me off to no end that our 'elites' and business class leaders sold this country out for their 'cost reduction' bonuses and it starts with YOU GW Bush and your cementing of China's MFN status! Your entire family and the republican party has been enamored with the Chinese communists since the 60's.
I work for a highly profitable American OEM and our core competency is machining complex designs and the Chinese still cannot compete with us.
Thanks for all your hard work staying in the forefront of machining. We really don't understand the importance. But be careful. Let Nortel be your warning. There is no such thing as free or fair trade with the CCP. Thanks W, and thanks for the Iraq war that started the dominos of mass immigration to tumble. We're still suffering from that as well as MFN.
We openly admit it is inefficient, we're just saying that efficiency isn't the only thing. Sometimes the sum of all the other considerations outweighs pure efficiency.
I completely understand why any country would not want to become reliant on foreign food if they don't have to. For example. You can import avocados and pineapples but still want to insure that your basic caloric needs are met domestically.
I think, with the benefit of hindsight, Germany is now realizing that becoming nearly completely reliant on Russia for their natural gas had consequences beyond pure efficiency. And in the big picture, now that their supply line is severed, was it really more efficient after all?
I remember when German diplomats, during Trump's first term, were laughing at him as he warned them about Russia and dependence on Russia for energy and the interviews with their government leaders and the condescending arrogance that they showed at the time, has come right back in their faces.
It would be interesting to see a list of the highest tariffed industries, as the averages, even trade-weighted, aren’t as high as I had imagined for China, Germany and the U.K. …South Korea is a surprise.
I understand tariffs to protect certain national supply interests - the keys are 1) to be frugal in which items are designated "national interest" AND 2) to not enact adjacent prohibitions to that national interest. I think of shipbuilding and the Jones act.
I fear far too many products will be granted the "national interest" exception. Key questions include: does the U.S. have access to IP AND how quickly could manufacturing be scaled up. Few will argue that boots are vital to military interest/performance. But do we need to protect domestic production during peacetime - or do we believe that scaling could happen quickly?
I should have added, I am not necessarily persuaded to be PRO tariffs because of this argument but I see the point.
Find it comical that Trump's support of tariffs has turned every Leftist nitwit into a Cato Institute level free-trade advocate. Same people have never met a tax or crony deal that they didn't support, but now that Trump agrees with them, they take the opposite track.
About 90% of it is the Left not getting cut it on the cronyism that tariffs enable. I am not convinced that Trump's tariffs are well advised, but neither are EU tariffs or Canadian tariffs.
"Find it comical that Trump's support of tariffs has turned every Leftist nitwit into a Cato Institute level free-trade advocate."
That made me laugh out loud!
Me too. They are for states rights all of a sudden to and rediscovered The Constitution
The point Trump is attempting to make is that tariff policy has two economic pieces to it: one is consumption and the other is production. We treat a lot of our policy as if only the consumption side matters, and that makes everyone "wealthier."
Well, yes, we all consume to some extent, but when other countries refuse to buy our products or make them expensive with their own tariffs, we are only getting the benefit of one side of the equation. Our production gets poorer and less competitive, and a lot of that built up goodwill and expertise is lost over time, when we should be building it.
Yes, I understand that if we can't compete on a product we are better off buying it elsewhere, but we are not getting the other side of the equation, and that dramatically reduces the value of free trade.
As you pointed out, we hope he is trying to level the playing field, and his assumption is that because everyone wants access to our market, we should be able to command at least better terms. I think this is largely accurate.
The other interesting thing about this is that I think he is saying that whatever GDP is lost from tariffs, we will replace by reducing income taxes. There's a lot of merit to that, because that's exactly how the American economy was structured prior to the income tax.
You are an advocate of eliminating the income tax, and my guess is that this is a big possibility to get there. So while I am partial the classical economics argument on free trade, I also see the bigger picture and am supportive.
It's all kind of fascinating, because we haven't seen this kind of disruption/change in well over a hundred years. He is unwinding the progressive economic model going all the way back to Wilson.
Good piece. I like 'free trade' as well but there is no such thing in today's world. Trump is using them to change behavior and they are paid by the country where the first point of sale is. A toaster made in China sells here for $15 is probably costed at $4 in China. The producer has a choice to tack on 25%($1) or eat it to avoid price increases downstream.
From 2018 to early 2021 steel and aluminum were tariffed and prices went down ~24%. Deflation occurred across the board in that timeframe largely due to deregulation and hydrocarbon energy development, but tariffs helped as well.
France refused to do something(I can't remember the detail) and Trump threatened to tariff their wine and they promptly backed down.
China: Now that they have a US Govt sponsored monopoly on everything what will the costs do? They will not go down...
It pisses me off to no end that our 'elites' and business class leaders sold this country out for their 'cost reduction' bonuses and it starts with YOU GW Bush and your cementing of China's MFN status! Your entire family and the republican party has been enamored with the Chinese communists since the 60's.
I work for a highly profitable American OEM and our core competency is machining complex designs and the Chinese still cannot compete with us.
Thanks for all your hard work staying in the forefront of machining. We really don't understand the importance. But be careful. Let Nortel be your warning. There is no such thing as free or fair trade with the CCP. Thanks W, and thanks for the Iraq war that started the dominos of mass immigration to tumble. We're still suffering from that as well as MFN.
I think protecting strategic industries is fine.
We openly admit it is inefficient, we're just saying that efficiency isn't the only thing. Sometimes the sum of all the other considerations outweighs pure efficiency.
I completely understand why any country would not want to become reliant on foreign food if they don't have to. For example. You can import avocados and pineapples but still want to insure that your basic caloric needs are met domestically.
I think, with the benefit of hindsight, Germany is now realizing that becoming nearly completely reliant on Russia for their natural gas had consequences beyond pure efficiency. And in the big picture, now that their supply line is severed, was it really more efficient after all?
I remember when German diplomats, during Trump's first term, were laughing at him as he warned them about Russia and dependence on Russia for energy and the interviews with their government leaders and the condescending arrogance that they showed at the time, has come right back in their faces.
It would be interesting to see a list of the highest tariffed industries, as the averages, even trade-weighted, aren’t as high as I had imagined for China, Germany and the U.K. …South Korea is a surprise.
100% agree with every word you wrote. Tariffs are a tool. Use the right one for the purpose.
I understand tariffs to protect certain national supply interests - the keys are 1) to be frugal in which items are designated "national interest" AND 2) to not enact adjacent prohibitions to that national interest. I think of shipbuilding and the Jones act.
I fear far too many products will be granted the "national interest" exception. Key questions include: does the U.S. have access to IP AND how quickly could manufacturing be scaled up. Few will argue that boots are vital to military interest/performance. But do we need to protect domestic production during peacetime - or do we believe that scaling could happen quickly?
"FREE TRADE"? C'mon man.
I look forward to your evolution tariff wise.
Tariffs are a great political strategy but a lousy economic one.
Very informative as usual Jeff!
A good article from a few months ago https://open.substack.com/pub/noahpinion/p/why-america-fell-behind-in-drones