[HN Gopher] Why Do Domestic Prices Rise with Tarriffs?
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Why Do Domestic Prices Rise with Tarriffs?
Author : paulpauper
Score : 84 points
Date : 2025-04-06 14:45 UTC (8 hours ago)
(HTM) web link (marginalrevolution.com)
(TXT) w3m dump (marginalrevolution.com)
| esafak wrote:
| Since he jokingly hypes it up, is his _Modern Principles of
| Economics_ good?
| bombela wrote:
| Is it recursive?
|
| Presumably the same effect applies if it were tariff between
| towns, then counties, then states, and finally countries.
|
| Then what, we are missing interstellar trades to lower the prices
| on earth?
| marcosdumay wrote:
| Yes.
|
| Too bad interstellar trade will probably never be economically
| viable. But it would lower prices, yes.
| erehweb wrote:
| See also Krugman's paper on the theory of interstellar trade
| https://www.princeton.edu/~pkrugman/interstellar.pdf
| HideousKojima wrote:
| Ah yes, Paul "Inflation has slowed down (but not reversed) if
| you ignore all the things people actually need to live"
| Krugman. That man is a dishonest, partisan hack and if he
| said the sky was blue I'd go outside to make sure:
|
| https://x.com/paulkrugman/status/1712494317024026761
| thfuran wrote:
| The smaller the polity, the less practical it is to produce
| everything. Most towns aren't going to be growing wine grapes
| or olives at all, so tariffs would just raise local prices and
| lower imports rather than shifting local production. But they
| could also induce people to drive to the next town over for
| shopping.
| JSR_FDED wrote:
| Tariffs only make sense to protect a fledgling domestic industry
| which is already receiving investment. Even then, does anyone
| think that for instance US car makers will suddenly be
| competitive globally?
| ChocolateGod wrote:
| Europeans don't tend to buy American cars because they're too
| big for smaller older roads and are inefficient (Europe has no
| domestic petroleum source, so fuel prices are much higher and
| volatile).
|
| Tarrifs aren't going to change that.
| n3storm wrote:
| "Smaller older roads" XD
|
| We don't live every family in a house miles away from work,
| schools and friends. Many of us live in cities, within flats,
| with lines of metro or bus close by. Our children go walking
| to schools. Roads are fine and maintained so regular vehicles
| can be used instead of 4x4, bikes are respected. Roads have
| sidewalks to walk.
| poincaredisk wrote:
| Have you ever been in the US? The roads there are _huge_.
| Road lanes are huge. Cars are huge. Crossroads are huge.
| Parking spots are extremely large. European roads are fine,
| but they are way more narrow and tuned for smaller
| vehicles. It 's easier to drive with a smaller car (or
| "normal sized" for you).
|
| Also in Europe in the west we have narrow or paved
| historical roads, and in the east we have many poor quality
| roads. In both cases smaller (non-huge) car is beneficial.
| n3storm wrote:
| They are huge indeed. But is not the reason we don't buy
| USA cars. In the countryside yes, for years, because they
| are useful. Transport tools, materials, dogs...
|
| Cities center are transitioning to no-cars, so paved
| historical roads is not an issue.
|
| Europe is quite a mix also, maybe is an issue in your
| area, not in Spain.
| rstuart4133 wrote:
| I think the point @n3storm is making isn't about the size
| of the roads. It's far more radical than that. They are
| saying European city's haven't just ditched SUV's - they
| have ditched cars.
|
| If you come from somewhere like the USA, Canada or
| Australia, it's hard to imagine that's even possible.
| Actually, it isn't possible in the suburbia's those
| countries have built to house their people. But it turns
| out it is not just possible if build your cities
| differently, it's better in some ways. It costs less
| because there are no cars, you waste far less time in
| commute, and its healthier because people get more
| exercise (they use their legs to move around).
|
| "They have ditched cars" is an exaggeration of course. A
| lot of them still have cars. But most days, they won't
| use it. Daily commutes are done on foot, or bike. Long
| distance commutes have a public transport leg. It's hard
| to get your head around unless you live there for a few
| weeks.
| kubb wrote:
| There's no point in explaining that. A lot of them have
| never been outside the country and maybe Canada. Even if
| they can afford to go somewhere they don't have the time.
| They can only imagine the world outside as a version of
| what they know. And everywhere they went hasn't been very
| different from what they have at home. They won't be able
| to imagine it.
| Aloisius wrote:
| You're assuming a lot given HN's American demographic
| isn't exactly reflective of the general population.
|
| Even among the American general populace, most have
| traveled to a country besides Canada.
| ChocolateGod wrote:
| When I say "old", I am referring to that the layout/route
| was thought of centuries ago, long before the invention of
| the car or anything remotely close.
|
| e.g. London.
| mananaysiempre wrote:
| London is somewhat unusual in that its streets are
| actually rather wide for a European city, due to urban
| planning regulations enacted after the Great Fire and
| (until recently) the willingness of its inhabintants to
| demolish historical buildings. Paris, Vienna, or Prague,
| for example, are generally much denser, not to mention
| genuinely medieval cities like Girona.
| n3storm wrote:
| London is not a representation of Europe, nor Madrid.
| Even Paris is completely differente. Germany was full
| rebuild after war. So, is Europe is a mix, but roads are
| not the reason to not buy tractors, is utility. Tractors
| are for country work.
| lucianbr wrote:
| The roads _are_ smaller and older. It 's just that that
| isn't a bad thing.
|
| And it is a bad thing for cars. It's just not a bad thing
| for people, because good alternatives to cars exist.
| loudmax wrote:
| Ironically, the one American car company that was interesting
| to Europeans was Tesla.
|
| European governments may be reluctant to put a tariff on
| Tesla because of Elon Musk's political association with the
| Trump government. This is literally how fascism works, and
| appeasing the bully is distasteful, but that's realpolitik.
| It will be up to European consumers to reject Tesla because
| the brand is now toxic.
| jajko wrote:
| I keep asking 2 colleagues how their nazi car is, suffice
| to say they are not very happy and ashamed of owning it
| now. Of course both have semi-mandatory stickers with 'I
| bought this car before elon turned nazi' but that's a bit
| bullshit... he was utter piece of shit way before he
| entered government with his salutes. Very effective manager
| with a good nose on hiring actually brilliant technical
| people, but that's about it with his positives.
|
| Horrible parent, horrible boss, racist spoiled nepo kid out
| of touch with reality with gigantic ego, who grew up in
| apartheid and evidently took not so good lessons from it...
| I could go on, it was out there for all who cared to look.
| Most didn't due to his stellar successes.
| bryanlarsen wrote:
| I imagine that being a poor Dad with a gigantic ego is
| pretty common amongst CEO's. Sure there were troubling
| signs but there were also signs of Musk working for the
| better good, like pulling out of Trump's advisory council
| in 2017 to protest pulling out of the Paris accord. It
| was obvious the guy was weird and a little unhinged, but
| many of my interesting friends are weird and a little
| unhinged. Buying a Tesla before 2024 was an unequivocally
| "left" statement.
| meekaaku wrote:
| I think US and other non-european companies can and do make
| cars targeted to EU market that complies with local laws and
| customer preference. They can make the cars smaller to fit
| road/lanes/parking spaces, just like they put the steering
| wheel on the right for UK.
|
| Infact Tesla is (or was) best selling car in Norway and UK
| too.
| stop50 wrote:
| Have you never heard of the north sea oil fields? Norway
| funded its pension fonds with it and a few other states use
| the oil from there.
| Gud wrote:
| Europe has domestic petroleum production.
| CPLX wrote:
| They already are.
|
| In addition it's precisely because of tariffs (of which there
| have been many on cars and SUVs long before all this) that we
| have tons and tons of foreign brands actually building cars in
| the US.
| chrisandchris wrote:
| I think that doesn't answer the question parent asked.
|
| Do European car makers build in the US? Yes. Is that going to
| change? I don't think so.
|
| Do US cars sell good in Europe? No. Is that going to change?
| I don't think so too.
| CPLX wrote:
| Have you been to Europe? There are American cars
| everywhere, though yes they don't sell as well there as
| European cars do here.
|
| > Europeans don't tend to buy American cars because...
|
| Wait until you realize that the EU tariff on American cars
| has been 4x the US tariff in EU cars for awhile.
| gls2ro wrote:
| > Wait until you realize that the EU tariff on American
| cars has been 4x the US tariff in EU cars for awhile.
|
| Can you share the specifics of this lets say end of 2024?
|
| I could find for example: EU has 10% on cars from US
| while US has 2.5% in general and 25% on pickup trucks.
| Important to note in USA the pickup trucks market is the
| biggest one vs mid size being the biggest one in EU.
|
| When looking at it it seems to me that both entities
| wants to protect their biggest markets: EU with only 10%
| protecting midsize and USA with 25% their pickup trucks.
| xorcist wrote:
| > Wait until you realize that the EU tariff on American
| cars has been 4x the US tariff in EU cars for awhile.
|
| That's a simplification beyond what's truthful. Import
| taxes are different on different types of cars, both in
| the EU and the US. There's certainly some type of car
| where the above is true, maybe some type of gas guzzling
| pickup truck or something, but over the total amount of
| sold cars it is not. Trade-weighted differences simply
| aren't that great, which is not a coincidence because a)
| both the US and the EU are developed economies which are
| likely to benefit from free trade, b) taxation works in
| nudging the market what to buy which evens out the
| differences further, and c) we have had trade agreements
| where this was an explicit goal.
| chrisandchris wrote:
| I actually live in the heart of it. Yes, there are US
| cars here but maybe 1 out of 10 is American in my local
| and wider area. People tend to buy German, Swedish or
| French cars here.
|
| > Wait until you realize [...]
|
| Well, I won't buy am american car (maybe a smaller ford,
| but not the typical US car) because where I live you
| won't bring them into most parking lots, and for sure not
| in parking building. Especially in cities many of them
| are narrow even with typical EU cars.
| CPLX wrote:
| You have cause and effect backwards. Cars aren't some
| static thing that you grow on trees and sell, where like
| American trees grow bigger cars.
|
| The question you should be asking is why American
| manufacturers don't target the EU market more
| aggressively and make cars that fit the formats Europeans
| buy.
|
| It's not the only reason but an absolutely crucial factor
| is that EU states protect their domestic auto industry
| via tariffs and industrial policies/subsidies.
| rsynnott wrote:
| In practice, the only significant American brands in
| Europe are Ford and Tesla. Ford has long designed cars
| specifically for the European markets (their big sellers
| are very different in Europe and in the US, and many of
| their European big-hitters are not even available in the
| US), and Tesla, of course, isn't doing so great these
| days.
|
| (GM also used to have a couple of European brands, but
| again they were rather different to GM's big US sellers.)
| sightbroke wrote:
| Ironically I believe I've seen that U.S. EV manufacturing has
| already started to slow down & projects being cancelled.
|
| Edit: relevant links
|
| https://archive.ph/J1wSt
|
| https://apnews.com/article/trump-tariffs-electric-vehicles-a...
| justahuman74 wrote:
| I'm not in EVs, but I'm already seeing a "don't import
| anything to the US if you can avoid it" message at work.
|
| Datacenter space in Canada is now suddenly very appealing,
| you can put machines there directly from Asia without paying
| tarrifs, but still get good network latency into the US
| darreninthenet wrote:
| The Great Cheeto will be demanding network latency tariffs
| next
| aiaisabsicjbd wrote:
| Tariffs make sense to protect industry critical to the
| independence of a country. Imagine how different the Ukraine
| war would look if the EU wasn't dependent on Russian (or US)
| energy.
|
| Yes, profits and growth may not be optimal. But it's like
| complaining your 401k isn't doing as well as it could since
| you're paying for healthy food and a gym membership.
|
| That being said the manner trump is implementing these tariffs
| is ridiculous. They should be slow, meticulous, and announced
| far ahead of time. These seem optimized for chaos and are
| likely aimed at political goals (see TikTok and China already)
| or simply crashing the market (wouldn't be the first time
| Bessent has profited off a financial crash).
| _heimdall wrote:
| > They should be slow, meticulous, and announced far ahead of
| time.
|
| The main lesson they learned from Trump's first term was that
| they were better off making big changes and fixing what they
| broke later. Moving slowly seemed to make it too easy for
| "the machine" to stop them as it were.
|
| I don't say this as the right lesson to have learned or a
| good approach, just an observation.
| SpicyLemonZest wrote:
| I just think this is an unreasonably charitable way to
| frame the observation. "The machine" identified, in Trump's
| first term, that many of the policies he wanted to
| implement would be bad for the country or would violate the
| law. It's true that moving more quickly and chaotically
| provides fewer opportunities for people to identify and
| mitigate the problems in advance - but that's not _good_ ,
| even for someone who wants big changes, unless you view
| causing problems in and of itself as a good thing. (In that
| vein, I should note that Trump shared a video last week
| from a guy saying he intentionally crashed the stock
| market.)
| _heimdall wrote:
| Yeah that's totally reasonable. People tend to get so
| emotionally and politically charged today with anything
| that mentions Trump that I tried there to just comment on
| their lesson learned regardless of my opinion on it. I
| could definitely see that coming across as too charitable
| jajko wrote:
| OK so he and his cronies intentionally crash global
| economy to buy cheaply. How come absolutely nobody stands
| to them?
|
| If he would be dictator in 3rd world country, half of his
| military or personal guard would want to kill him. Then
| you have lone lunatics or just very motivated people with
| a good rifle and scope and skill to actually use it for a
| precise 1km shot. I bet he already pissed off few
| thousands of those since he very intentionally harms USA
| as a country and its citizens. Yes millions in gun
| community, nra etc would eat their shoes before thinking
| negatively of him, but that's not whole armed community
| in USA.
| rsynnott wrote:
| A _targeted_ tariff (for instance, a tariff specifically on
| gas and oil) might arguably make sense there; a blanket
| tariff absolutely would not.
| energy123 wrote:
| Tariffs will make them less competitive, mainly because the
| inputs are also being tariffed whereas international
| competitors can buy tariff-free inputs. These blanket tariffs
| will destroy any potential for internationally competitive
| manufacturing.
| _heimdall wrote:
| Is anyone expecting tariffs to improve global competitive
| advantage?
|
| Tariffs may work towards an isolationist goal of producing and
| consuming our own goods. Tariffs are an attempt to unwind
| globalization though and disconnect our markets from the rest
| of the world.
|
| Whether it makes us more competitive globally is really a non-
| goal. It could happen if our resources, labor, and
| manufacturing costs are lower than other countries but that's
| extremely complex to predict even if you wanted to try.
| aaomidi wrote:
| Yep I think this is really the important point.
|
| Free trade has its own set of negative consequences. Namely
| that it's good for owners of the means of production but not
| for the workers.
|
| What's interesting to me is that tech is effectively the last
| "American made manufacturing", and the relative lack of
| outsourcing (compared to other forms of manufacturing) has
| kept tech workers powerful.
|
| The same logic of h1b workers weakening the American citizen
| tech worker, applies to free trade.
| _heimdall wrote:
| > tech is effectively the last "American made
| manufacturing"
|
| Its at least the largest industry manufacturing here, I'd
| expect.
|
| I have friends that work in manufacturing in the US though,
| it does happen.
|
| One, for example, runs a family business making steel
| buildings and storm shelters. They use American made steel
| if I'm not mistaken, I'm less certain about other inputs
| like the paint or equipment used (certainly the welders,
| heavy equipment, etc are foreign).
|
| Another works in the automotive industry. Parts come in
| from overseas and we largely just assemble vehicles here
| today, but I'm not so sure how different that is from
| software.
|
| I write code on foreign hardware that runs in someone
| else's server farm also running foreign hardware.
|
| Hell, when Microsoft was still shipping software on CDs you
| may have noticed a little fine print mentioning the
| Caribbean island on which the disc was technically
| manufactured. US employees designed the software, but for
| tax purposes the manufacturing technically happened
| offshore.
|
| Software is a huge industry, but it is still heavily
| dependent on globalization.
| Aloisius wrote:
| _> Hell, when Microsoft was still shipping software on
| CDs you may have noticed a little fine print mentioning
| the Caribbean island on which the disc was technically
| manufactured._
|
| I don't recall this at all. What software was it?
|
| Going through my box of ancient software, they all either
| say made in the US either on the CD/DVD or on the
| packaging, except for a copy of Office 97 and Office 2007
| which says made in Puerto Rico (which is the US).
|
| They certainly had CDs pressed in other countries for
| foreign markets. I imagine some foreign made laptops
| might have come with CD/DVDs pressed in those countries.
| _heimdall wrote:
| Office was the example I had in mind. The discs sold in
| the US were printed outside the US, they weren't only for
| foreign markets.
|
| I don't recall if Windows discs were printed outside the
| US, though I do believe binaries were compiled and signed
| outside the US.
| Aloisius wrote:
| Are you certain the island in the Caribbean you were
| thinking of wasn't Puerto Rico? I can't imagine what
| other island you'd make them on.
|
| All six versions of Office I have seemed to be made in
| the US. They're all retail copies however.
| _heimdall wrote:
| Puerto Rico sounds right, and if you still have a
| physical office disc with that on it that totally makes
| sense.
| JKCalhoun wrote:
| > Tariffs may work towards an isolationist goal of producing
| and consuming our own goods.
|
| At this point I'm not even sure that is true. I think instead
| we'll just see the "cost of doing business" passed along to
| us consumers.
| _heimdall wrote:
| Oh I think that must be the case. We've spent decades
| profiting by externalizing many of the costs of our
| consumption onto other parts of the world. Isolationism
| means we now how to deal with those costs or change our
| consumption.
| chgs wrote:
| Trunk whines that American cars aren't bought in. Europe.
| Americans cars are "big as bars", a "compact" is larger than my
| "big car", let alone the small one. Their trucks literally
| won't fit down the road.
| tim333 wrote:
| Also many Fords and Teslas are bought there.
| analog31 wrote:
| I'm not going to quibble with you on this, because I think
| you're right, but I can think of a secondary use. A country
| with weak governance could use tariffs to raise money because
| it's easy to manage at the point of entry, rather than
| requiring more sophisticated systems such as income or property
| value reporting.
|
| This could explain why, for instance, poor countries use
| tariffs on goods that have no chance of building a local
| industry.
| xorcist wrote:
| This is also why some economists like them, they're hard to
| cheat on. Know what's even harder to cheat on and has much
| less long term impact on the economy? Sales tax. A federal
| sales tax would have been preferable to the import tax. But
| there are probably other political concerns at stake here.
| rsynnott wrote:
| They can also make sense where you largely have primary
| industry (that is, extractive; mining and forestry and so on).
| There's a reason that pretty much all high-tariff countries are
| low-income developing countries; it _does_ make more sense
| there.
| browningstreet wrote:
| I unfollowed Marginal Revolution when Tyler joined The Free Press
| this week. I'd already been pretty skeptical about the content on
| MR because there was very little rigor in the discourse and there
| are, apparently, no limits or constraints to what economists
| think they're qualified to comment on, particularly when
| economics isn't even invoked in the discussion.
|
| I don't go to my doctor for a discussion on urban planning. And
| if I do.. not at their medical office.
|
| It's a blog. Not a practice of economics, this one article
| notwithstanding.
|
| And it isn't even by Cowen.
|
| EDIT: The comment section on MR is pretty awful too.
| simonsarris wrote:
| Alex Tabarrok has co-authored Marginal Revolution with Tyler
| Cowen for a decade.
| davidw wrote:
| Alex is a better straight up libertarian-ish guy. Tyler has
| been on this "but ... what if this CONTRARIAN thing....?" for
| a long time and I am done with it. I may not agree with Alex
| on this that or the other thing, but it doesn't feel like
| he's trying to show off how clever he is all the time.
| arthurofbabylon wrote:
| I bet doctors have many compelling thoughts about urban
| planning. If they were enthusiastic, I'd curiously listen to
| what they have to say.
|
| (It is the intersection between domains where wisdom and
| innovation shine.)
| browningstreet wrote:
| Sure, but that wasn't the essence of my take. Everyone can
| have opinions on things, but if the doctor said, "As a
| doctor..." and then just talked about urban planning, I'd be
| suspect. "As a human..." would be different.
| throwoutway wrote:
| We need a cross-cutting examination of how bad 'economics' is
| as a science, outside of a narrow defined set of measurable
| parameters
| fullshark wrote:
| https://aeon.co/essays/how-economists-rode-maths-to-
| become-o... (4 April 2016)
| davidw wrote:
| Economics is a great way of looking at the world as long as
| you acknowledge its limitations. I think you're conflating
| _an economist_ with economics. Economists are human with all
| that entails.
| ReflectedImage wrote:
| Absolutely terrible.
|
| The foundations of economics are built on school boy style
| maths errors.
|
| They have famous "paradoxes" and results that are just bad
| maths.
|
| It's a ridiculous joke of a research field.
| azinman2 wrote:
| If you're going to dismiss an entire field, you could at
| least point to specifics that are widely held tenants.
| cmurf wrote:
| And then there's this idiot talking about screws in iPhones. Is
| this even how iPhones are built? Piles of hidden screws?
|
| https://bsky.app/profile/atrupar.com/post/3lm5p4tdc6a2c
|
| So many screws that we should have human American workers
| installing screws in iPhones? And this is how we make American
| workers wealthier?
|
| They think we're stupid or they want us to be stupid. This
| isn't an economic policy. It's a way to reward fealty and
| punish disloyalty, to a specific person.
| cavisne wrote:
| "that kind of thing is going to come to America... and be
| automated". Pretty disingenuous cut on the quote there by the
| bluesky post.
| SpicyLemonZest wrote:
| I'm not gonna tell you Lutnick is _smart_ , but did you watch
| the clip or just read Rupar's quote? He's clearly saying that
| electronics manufacturers are leaning on low-wage foreign
| labor as a crutch to avoid the cost of investing in more
| innovative automated assembly strategies.
| kashunstva wrote:
| > particularly when economics isn't even invoked in the
| discussion...
|
| I think the Professor Cowen fancies himself in the way of the
| "public intellectual," so that he takes the liberty to write on
| a range of topics outside the domain of his academic focus. He
| does seem extraordinarily well-read; and in many topics he
| writes about, I have no way of judging his contribution to
| those fields. While I occasionally read MR, it strikes me as
| quite technocratic in the way that most libertarian writing is;
| and this sort of socioeconomic analysis detached from human
| values of empathy and concern for the wellbeing of the
| collective isn't appealing to me personally. But I'm sure it
| fills an important niche.
| pydry wrote:
| He is part of the Koch network:
| https://en.wikipedia.org/wiki/Mercatus_Center
|
| Their money is probably a large reason his content gets well
| promoted.
|
| The Kochs got into politics in the 1980s because of a series
| of fights with the EPA whom they thought were getting in the
| way of their chemical company's right to pollute. If you've
| ever heard a morality play written about hairdresser
| licensing and why it means Regulation is Bad - that was them,
| and it leaks on to hacker news sometimes. E.g.
|
| https://news.ycombinator.com/item?id=42982578
|
| https://news.ycombinator.com/item?id=31765644
|
| https://news.ycombinator.com/item?id=31382755
|
| https://news.ycombinator.com/item?id=18798111
|
| They also really like using their money to bludgeon American
| economics departments into teaching economics the way they
| "like" it: http://bridgeproject.com/research/koch-impacts-
| florida/koch-...
| mjevans wrote:
| Any additional cost on top of the 'natural' costs involved with
| producing a result raises prices.
|
| Additional costs that direct resources to a government are a form
| of a tax, this includes direct taxes at the point of sale, and it
| should also include taxes incurred for traversing an arbitrary
| interface (tariff or toll).
|
| Any form of tax on goods / services proportionately effects those
| who spend more of their income on those goods / services more.
| Tariffs on not-luxury goods are regressive taxes on the poor and
| middle class.
| fire_lake wrote:
| This is too simple. Prices float somewhere between cost to
| produce and value to consumers.
|
| You can't raise prices beyond value or no one will buy it.
|
| You can't lower prices below costs (for too long) or you go out
| of business.
|
| Competition pushes prices down towards costs.
|
| Therefore businesses are always looking for markets with
| barriers so they can rise prices to value.
|
| Tariffs typically raise costs for all producers, but this only
| _inevitably_ leads to price increases when competition has
| driven prices down to near costs.
|
| Unfortunately many staple grocery products fall into this
| category.
| Angostura wrote:
| > You can't raise prices beyond value or no one will buy it.
|
| Arguably, that's precisely the aim of some of these tariffs.
| Price the foreign imports out of the market
| Jtsummers wrote:
| Which could work if there were domestic alternatives or the
| capacity to produce domestic alternatives. The US lacks the
| apparel manufacturing capacity to takeover from the
| countries being hit with the current very high tariffs. We
| also lack the environmental factors to take over growing
| (ignoring the years needed to get started) coffee and
| vanilla and many other agricultural products.
| c22 wrote:
| But isn't value subject to drift (inflation) and couldn't we
| inevitably expect such drift while raising costs across the
| board?
| Jtsummers wrote:
| Value and price aren't the same thing. Inflation is a
| change in price, not necessarily a change in value of the
| things being purchased. This is why when you examine how
| much something has changed in price you should compare real
| versus nominal changes.
|
| If you bought your home for $100k in 2000 and sold it today
| for about $185k, you would be selling it for the same real
| amount despite the nominal change in price. Its value has
| not changed in real terms. If you sold the home for $300k,
| that would exceed the increase from inflation alone and
| indicate an increase in value (either improvements you've
| made, the local area has become more desirable, or
| reflecting scarcity of homes in general).
|
| Or look at your own salary. If your salary is just keeping
| up with inflation, your employer does not see any increase
| in value from you over the years. If your salary is
| dropping relative to inflation, you are, arguably, losing
| value. If your salary increases faster than inflation,
| you're increasing in value. (Of course there can also be a
| lag, the 8% inflation in 2022 may result in depressed
| salaries for 1-2 years before they catch up. Watch the
| trend over a longer period of time.)
| xvedejas wrote:
| The supply and demand curves are not straight lines. There is
| not one unit price that consumers value a good at, that's why
| the marginal price that a consumer will pay depends on the
| quantity produced. The first most eager buyers would pay a
| higher price than the rest of the buyers you can find at
| higher quantities produced (but a lower price).
|
| Tariffs eat into consumer surplus and producer surplus not
| just by raising prices, but also thereby reducing quantity. I
| think the only times you'd see no effect on consumer surplus
| via a tax are when the consumers are always going to pay a
| fixed amount regardless of quantity they can get (perhaps in
| some budget-constrained scenario), or if the amount of the
| thing that can be produced is fixed regardless of price;
| neither of these scenarios describes consumer goods.
| eek2121 wrote:
| Your argument assumes there is meaningful competition to
| begin with.
|
| In the case of groceries, a few big companies ultimately
| control nearly all of it. They know you "need" groceries, so
| they will happily pass along the increased cost. What are you
| going to do, stop buying food?
| rsynnott wrote:
| Well, also, in the case of groceries, margins are typically
| very low, due to competition. Large supermarket chains tend
| to have profit margins in the low single digits; over 5%
| would be unusual. There's just very little room to absorb
| cost increases without raising price.
| chgs wrote:
| Obviously it's a tax increase on working people to fund even
| more tax cuts for the already insanely wealthy, allowing them
| to buy up even more assets.
|
| Even if you have a $10m portfolio you'll be next, once they've
| drained the $100k and $1m lot.
| jrs235 wrote:
| And folks who argue the situation harms the billionaires
| typically are thinking about it in dollar valuations as
| opposed to percentage of all wealth owned. If their
| portfolios shrink on paper to be only worth a tenth as much
| tomorrow (but everything dropped that same paper value
| amount) but their purchasing power goes up and are able to
| buy a larger percentage of all wealth, they are coming out
| ahead. As #47 said, only the weak (poor) will fail...
| deanmoriarty wrote:
| > Even if you have a $10m portfolio you'll be next, once
| they've drained the $100k and $1m lot.
|
| What does this mean, in practical examples? Just trying to
| understand your point.
| fatherzine wrote:
| First, prices per se are irrelevant. The ratio of labor price
| to goods&services price is relevant.
|
| Second, the labor / goods&services price ratio itself is
| irrelevant, as measured in the short term. What is relevant is
| the long term outlook of this ratio. See eg the Dutch Disease.
|
| Third, even the long term labor / goods&services price ratio is
| irrelevant. Not everything in this world is, or should be,
| reducible to simplistic financial value.
|
| One way to approach the underlying intuition is in terms of
| homeostasis, at nation state level.
| wholinator2 wrote:
| I'm confused, are you asking we close our eyes and only
| operate on internal bias? Where does the world matter if no
| single metric is relevant? Regardless of number metrics, what
| do you think matters? I think a family that can no longer
| afford a laptop for their child's education matters. I think
| 10,000 or 100,000 such families matter a lot. How do we tell
| that story? What options have we but the numbers?
| fatherzine wrote:
| Long term median purchasing power, especially of essentials
| eg housing / food / energy / education, matters more to the
| health of a nation than the price of hitech on open global
| markets at a specific time instant. Furthermore, while the
| health and wealth of a nation are correlated, they are not
| the same. I wonder if there is a sensible way to prioritize
| health over wealth.
| neilwilson wrote:
| And the exchange rate is mentioned precisely zero times in that
| article, as is the current unused and underused labour in the
| economy. Instead it drops straight onto land which we can't make
| any more of.
|
| Do it again with a factory that puts on a double shift with the
| unemployed and see what happens.
|
| Do it again with the Chinese sovereign wealth funds, the likely
| source of mercantile intervention, offering 14 CNY per USD rather
| than the current 7.
|
| It's unlikely that any production will move. What's more likely
| to change is the quantity and location of financial savings. The
| distributional impact of that change is probably unknown.
| jillyboel wrote:
| lmao you think this is going to make the USD worth _more_? What
| are you smoking and can I have some?
| kgwgk wrote:
| https://www.reuters.com/markets/what-direction-will-trade-
| wa...
|
| > Beijing has previously said it won't go down the FX
| depreciation road, preferring to keep the yuan relatively
| "stable". But that was before Trump's self-styled "Liberation
| Day". Beijing's first response might be to try and negotiate
| with Washington to get the tariffs lowered. But if that
| fails, FX devaluation becomes a real option to offset the
| shock.
|
| They didn't take the negotiation route. We'll see what's
| next.
| leereeves wrote:
| Nations that sell products in the US have often sought to
| made their currency worth less vs the dollar, so their
| products are cheaper here. They might well do it again.
| kowabungalow wrote:
| The US will probably keep adjusting its tariffs to make
| sure it is the supposed cheat, so a better move is to give
| it as little real value as possible for your quota.
| tim333 wrote:
| >...the current unused and underused labour in the economy.
|
| Chamber of commerce says:
|
| >Understanding America's Labor Shortage
|
| >We hear every day from our member companies--of every size and
| industry, across nearly every state--that they're facing
| unprecedented challenges trying to find enough workers to fill
| open jobs. Right now, the latest data shows that we have 8
| million job openings in the U.S. but only 6.8 million
| unemployed workers.
| https://www.uschamber.com/workforce/understanding-americas-l...
|
| which doesn't look that promising.
| tlogan wrote:
| It is fascinating how the positions of the two major U.S.
| political parties have flipped on tariffs. Democrats, who
| historically supported protectionist trade measures, now oppose
| tariffs, while Republicans--once champions of free trade--have
| embraced them. Yes, party platforms evolve, but this kind of
| sudden reversal is still remarkable.
|
| What's even more bizarre is the mental gymnastics on both sides.
| Some argue that tariffs somehow benefit CEOs and the wealthy,
| even though stock market reactions consistently show that tariffs
| hurt corporate profits. Others on the right now frame tariffs as
| a fundamentally "Republican" principle, despite decades of GOP
| support for free markets and globalization.
|
| Here's my prediction: many CEOs and wealthy individuals will
| gravitate toward the Democratic Party. Why? Because tariffs
| reduce profits, and Trump's policies seem designed to benefit a
| narrow segment of the rich rather than the broader business
| class. Over the next 8 to 16 years, we may see the GOP fully
| reposition as the party of the working class, while Democrats
| become the party of the affluent elite.
|
| Personally, I've always favored genuine free trade, which is why
| I've leaned Republican. But now, I'm not so sure. I used to argue
| with my liberal friends that tariffs are essentially a regressive
| tax--they raise prices for everyone, especially hurting lower-
| income consumers. The counterargument, of course, is that tariffs
| could incentivize companies to bring production back to the U.S.
|
| But let's be honest: that's not happening. Tariffs raise prices,
| but they don't magically bring manufacturing back home. From my
| conservative perspective, companies should have the flexibility
| to offshore production--especially if they face pressure from
| unions or rising domestic costs.
| jagger27 wrote:
| > From my conservative perspective, companies should have the
| flexibility to offshore production
|
| This is a very (neo)liberal viewpoint. It's economic
| liberalism. There's nothing "conservative" about it at all.
| chgs wrote:
| The corn laws were interesting. They were tarrifs on food
| imports, supported by the land owners.
|
| > the repeal of the Corn Laws benefitted the bottom 90% of
| income earners in the United Kingdom economically, while
| causing income losses for the top 10% of income earners.
|
| Obviously it's not hard to see why the wealthiest like
| tarrifs.
| Aloisius wrote:
| American conservatives, until recently, espoused economic
| liberalism.
|
| It is considered "conservative" because it has been the
| status quo for a rather long period, and they advocated
| conserving it.
| dguest wrote:
| Here's a simple explanation for what is going on in the US. I'd
| love to know if people think this is sufficient.
|
| There are two types of taxes:
|
| - Domestic taxes are levied by congress
|
| - International tariffs are controlled by one person (the
| president)
|
| So if the president wants to control people via taxes, they use
| tariffs. By this theory it has nothing at all to do with
| financial policies or political parties: it's just another tool
| we've given the president and we shouldn't be surprised if it
| gets used. By the same theory, if the president had full
| control over domestic taxes we'd see exactly the same thing.
| readthenotes1 wrote:
| Tariffs were supposed to be approved by the Senate (Article 1
| section 8, Article 2 section 2), but Trump is using
| "emergency powers"
|
| With so much of American goods coming from China, it's kind
| of hard to see how the US could win a war with them without,
| for example, improved domestic production of bandages
|
| https://natlawreview.com/article/can-president-impose-
| tariff...
|
| https://www.globaltrademag.com/adhesive-bandage-import-in-
| un...
| dguest wrote:
| Very interesting, thanks!
|
| So the "emergency" is a possible war with China? But how
| does that justify taxing (for example) Canada, or Mexico
| (or Lesotho)?
| tokai wrote:
| He declares different "emergencies". Tarifs on Canada and
| Mexico used a fentanyl emergency. Now he has declared the
| trade deficit an emergency.
|
| "Today, President Donald J. Trump declared that foreign
| trade and economic practices have created a national
| emergency"
|
| https://www.whitehouse.gov/fact-sheets/2025/04/fact-
| sheet-pr...
| ceejayoz wrote:
| The emergency is "I wanna".
| foobarian wrote:
| > But let's be honest: that's not happening. Tariffs raise
| prices, but they don't magically bring manufacturing back home.
| From my conservative perspective, companies should have the
| flexibility to offshore production--especially if they face
| pressure from unions or rising domestic costs.
|
| I mean... in theory they would if the numbers work out i.e. if
| tariffs offset the additional labor/regulatory costs. The
| problem is they are hard to trust to stick around long enough
| for the capex to pay off.
| ceejayoz wrote:
| > Democrats, who historically supported protectionist trade
| measures, now oppose tariffs...
|
| _Targeted_ tarrifs. Not blanket ones on the entire planet
| (including, you know, the uninhabited island full of penguins).
| Hell, Biden kept some of Trump 's.
| megaman821 wrote:
| Maybe I missed it, but your not seeing a lot of Bernie/AOC
| push-back on these tariffs. While I am sure that hate the way
| Trump goes about implementing these tariffs they don't seem
| opposed, to even large, tariffs on principle.
| ceejayoz wrote:
| You absolutely missed it.
|
| AOC: https://thehill.com/homenews/house/5108287-donald-
| trump-alex...
|
| > "To 'punish' Colombia, Trump is about to make every
| American pay even more for coffee," the New York Democrat
| said on the social platform X. "Remember: _WE_ pay the
| tariffs, not Colombia," she added. "Trump is all about
| making inflation WORSE for working class Americans, not
| better. He's lining the pockets of himself and the
| billionaire class."
|
| Bernie: https://x.com/SenSanders/status/1908221908954263821
|
| > Our trade policies should benefit American workers, not
| just corporate CEOs. That includes targeted tariffs to stop
| corporations from outsourcing American jobs & factories. We
| do not need a blanket, arbitrary sales tax that will raise
| prices on products that Americans need.
| megaman821 wrote:
| Thanks for the links. I don't think there is as much
| daylight between Bernie's targeted tariffs and Trump's
| blanket then negotiate exceptions tariffs though. I guess
| we will see. Or Congress could decide it wants to do its
| job again and stops delegating its authority to the
| Executive.
| ceejayoz wrote:
| > I don't think there is as much daylight between
| Bernie's targeted tariffs and Trump's blanket then
| negotiate exceptions tariffs though.
|
| The fact that you thought Bernie and AOC were quietly
| supportive of his tarrifs perhaps indicates the value of
| this opinion.
|
| Tarrif rates have been steadily dropping to near-zero,
| since the 1930s, under both political parties. We're now
| returning to a rate not reached in over a century.
| https://www.statista.com/chart/34236/average-effective-
| tarif...
| megaman821 wrote:
| Sorry I insulted your heros. Bernie is for tariffs in his
| own words. AOCs comment was from months ago. Grow up with
| your childish insults.
| ceejayoz wrote:
| > Bernie is for tariffs in his own words.
|
| If you read only half of them, sure. I'm for jailing
| _some_ people, but if you say you're gonna jail
| _everyone_ we disagree, yes?
|
| > AOCs comment was from months ago.
|
| Thats during Trump's current and second term, during
| which he promised these tariffs as a campaign issue.
| Pretending her comments aren't related is getting a bit
| desperate now.
| ljhsiung wrote:
| If you favor genuine free trade, how do you view the
| protectionist measures that Reagan put on Japanese car imports
| in the 80s?
| tlogan wrote:
| I disagree with that measure -- that was a sell out in order
| to get votes in Detroit.
|
| That said, it's true that a selective reading of his
| statements and legislative actions could be used to support
| almost any position.
|
| But here's something worth considering from a broader policy
| perspective:
|
| Ronald Reagan cited three prominent 19th-century champions of
| free trade as his heroes: Richard Cobden and John Bright,
| founders of England's Anti-Corn Law League, and Frederic
| Bastiat, a renowned French economic writer. Reagan
| specifically praised Cobden and Bright for their efforts to
| eliminate tariffs on imported grain in the 1840s.
|
| Throughout his presidency, Reagan consistently expressed
| support for free trade. In his July 1981 "Statement on U.S.
| Trade Policy," he pledged to reduce government-imposed
| barriers on international trade and investment.
|
| One of his strongest affirmations came during a January 1988
| speech in Cleveland, where he framed America's trade deficit
| as a sign of economic strength. On several occasions--often
| in response to protectionist moves by congressional Democrats
| --Reagan reiterated his free-trade stance. For instance, he
| vowed to veto the House trade bill if it included a
| restrictive amendment sponsored by Representative Richard
| Gephardt (D-Mo.).
| vitus wrote:
| > Democrats, who historically supported protectionist trade
| measures, now oppose tariffs
|
| Can you provide a source for this one? On the front of free
| trade, NAFTA comes to mind where there was some support and
| some oppositions within both parties. And of course there was
| TPP which Obama was championing (to no avail -- every major
| presidential candidate in 2016 opposed it).
|
| Is this a reference to the chicken tax during the LBJ era?
| Nixon had also placed a 10% global tariff on all dutiable
| imports when we got off the gold standard, so I don't see it as
| being obviously a single-party issue.
|
| And of course, Smoot-Hawley was a heavily partisan bill
| championed by the Republican side of the house. The Republican
| fascination with tariffs goes all the way back to at least 1861
| with the Morill Tariff (and even further back if you consider
| their predecessors in the Whig party).
| tlogan wrote:
| Honestly, I was under impression Democrats were for tariffs
| :-) I guess I was unnecessarily worried that Democrats love
| tariffs. It is the other way around now.
|
| I do remember this speech by Bernie Sanders:
| https://www.youtube.com/watch?v=RzpmhBEA9Ok
| dgacmu wrote:
| I don't think many Democrats have been arguing for blanket
| tariffs for some time. It kind of seemed like there was a
| bipartisan consensus for the use of some combination of tariffs
| and stimulus to ensure there was domestic manufacturing
| capability for critical industries... at least until trump.
| Nobody in their right mind has been calling for a return to
| domestic t-shirt manufacturing, but there are national security
| and competitiveness reasons to think about semiconductors. And
| that's what the chips act did, and at 64-33 that's about as
| bipartisan as things get these days.
| Aloisius wrote:
| _> Yes, party platforms evolve, but this kind of sudden
| reversal is still remarkable._
|
| I don't think there's been a Democratic platform that's
| advocated increasing tariffs or trade barriers in living
| memory.
|
| Most have outright called for free trade, though in recent
| years also "fair" trade which meant trying to push for worker
| protection/environmental/etc laws and end foreign subsidies and
| barriers onto other countries to level the playing field rather
| than increasing trade barriers.
|
| There is a more protectionist wing of the Democratic party that
| has advocated for increasing trade barriers (or in some cases,
| ceasing trading altogether), but despite sometimes being quite
| loud, they've never had a majority.
|
| It was the American left that were anti-globalization, like
| with the protests WTO conference in 1999. Their flip has
| been... weird.
| readthenotes1 wrote:
| If tariffs are so bad, why do most countries have them? Why would
| reciprocality be discouraged if they're not (tho that's not what
| Trump ended up doing)?
| throw0101d wrote:
| > _If tariffs are so bad, why do most countries have them?_
|
| The average global tariff rate is 2.6%:
|
| *
| https://en.wikipedia.org/wiki/List_of_countries_by_tariff_ra...
|
| Most countries have an average / mean tariff rate of <10% per
| the World Bank and WTO. Further, most countries probably have
| zero tariffs on most products, with higher ones for specific
| reasons:
|
| * https://www.noahpinion.blog/p/when-are-tariffs-good
|
| Tariffs have been falling for decades:
|
| * https://www.pewresearch.org/short-reads/2018/03/22/u-s-
| tarif...
| readthenotes1 wrote:
| The wiki link is kinda interesting. The first column is
| irrelevant, the last column exempts food and energy and still
| raises the question (based on the first column) of what the
| actual trade would be if there were no tariffs.
|
| Certainly for the first column it may be true that if the
| tariffs are so high on some products that there are going to
| be no imports and the "weighted actual" will be close to 0.
|
| I'm not going to the last column since it ignores two
| important categories.
| eximius wrote:
| Tariffs make things less globally economically efficient.
| Sometimes that is the goal for specific industries. Economic
| efficiency is not the ultimate goal.
|
| But no other country has blanket tariffs on so many other
| countries.
| davidw wrote:
| Most countries have some small tariffs on this that or the
| other thing. Not massive tariffs on a huge range of goods.
|
| A bit of salt on your steak might be good, but if you emptied
| the entire salt shaker on it, it would be gross.
| stefan_ wrote:
| Remember when this administration says another country has put
| a "tariff" on the US what they mean is there is a negative
| trade balance with that country (as pretty much there must be
| with the USD being the currency of choice).
|
| They then decide based on trade balance to enact an actual,
| unilateral tariff.
| kgwgk wrote:
| > If tariffs are so bad, why do most countries have them?
|
| Do they?
|
| https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS
|
| I guess Trump wants to convert the US into a Central African
| country - a transoceanic banana Republic.
| energy123 wrote:
| Because they have local industry interest groups that control
| their politicians which screws over their own country. They'd
| mostly be better off without those tariffs.
|
| Here's a hot tip: if you see a country like North Korea, don't
| ask why they're doing what they're doing on the assumption that
| it's good. Move in the opposite direction.
| toast0 wrote:
| Tariffs aren't necessarily bad. They can be a pretty effective
| tool to support local industries, or otherwise discourage
| imports. Or as a retalitory tool to negotiate with.
|
| But blanket tariffs against the whole world seems unhinged.
| Many of the products and materials we import have no domestic
| sources or limited domestic sourced that are not expandable.
| The us won't be able to grow domestic coffee to meet the
| domestic demand. Tariffing coffee import is just going to make
| morning routines slightly more expensive for many americans.
|
| There was a lot less pushback for specific industry tariffs or
| specific country tariffs during the last Trump administration.
| Steel tariffs and the trade war with China weren't necessarily
| liked by all, especially in the specifics, but tariff all the
| imports is terrible.
| munchler wrote:
| > Expanding production without increasing costs is difficult
|
| What about economies of scale, though? If you can triple
| production while only doubling your cost, the unit price should
| drop.
| cbg0 wrote:
| Only if there's competition.
| logankeenan wrote:
| I believe they are referring to marginal costs. Yes, with
| economies of scale can become cheaper to produce, but they
| still require capital to reach that scale.
|
| https://en.m.wikipedia.org/wiki/Marginal_cost
| jabl wrote:
| If anything, economies of scale are a powerful argument for
| free trade.
|
| Say, we can have a single company in Taiwan running insanely
| capital intensive chip factories making chips for the entire
| world.
|
| One downside of this being resiliency; what happens to the
| global electronics supply chain if China one day decides to
| invade Taiwan? Something not taken into account in typical
| economic models.
|
| For similar reasons developed countries still try to have
| things like domestic agriculture, despite that being a low
| value add industry where poorer countries might have a large
| comparative advantage in a hypothetical free trade scenario.
| quantum_state wrote:
| The people who voted for Trump need to think again ... they will
| end up being the suckers of all of the Trump policies...
| Herring wrote:
| The racism overrides everything with these people. The red
| states have had the worst outcomes for generations but they
| still vote Republican like lemmings solely because of it. Trump
| just has to mention "trans" and they switch off their brains.
| badc0ffee wrote:
| They switch off their brains?
| Herring wrote:
| See: How Tribalism Overrules Reason, and Makes Risky Times
| More Dangerous
|
| https://bigthink.com/articles/how-tribalism-overrules-
| reason...
| Cornbilly wrote:
| It's just anti-intellectualism and fear across the board. And
| that's been the GOP MO for a long time now.
|
| Convince people that the colleges are full of crazy liberals
| and you should go into the trades instead.
|
| Now that you're in the trades, don't join a union. Unions are
| bad (unless it's the police union).
|
| Don't look now but the Mexicans are coming for your job. The
| trans/gay people are coming for your children. Nevermind that
| the GOP is openly corrupt and has a pervert in the White
| House.
|
| Think back to the aftermath of 9/11 and the Bush Admin's
| constant fear campaign that successfully pushed the US into
| two wars.
| Herring wrote:
| If you're not being targeted, like from a distance, it
| looks like "anti-intellectualism and fear". He's just
| running "distractions", or "scapegoating" Mexicans or
| something. It's easy to minimize it. Up close though, if
| you're the one actually being targeted, there's a bit more
| urgency. It's more like an abusive/controlling
| relationship. How many lives were destroyed or otherwise
| ruined by Bush's useless wars in the Middle East?
|
| Now imagine if Bush had instead built out a massive train
| network, like China did with close to the same amount of
| money.
| mindslight wrote:
| "Why Do Prices Rise with a National Sales Tax?"
|
| This post is assuming that a sizeable domestic industry _still
| exists_ , and also that demand is relatively elastic. This is
| sensible for wine and maybe sugar, but not for the myriad of
| equipment and supplies it would actually take to create new
| factories. If the goal is to paralyze and destroy the country,
| the high import taxes that Trump is pushing are a great way. That
| people continue to "4D chess" this buffoon "for the cause"
| continues to astound me.
| TaurenHunter wrote:
| Like so many other articles about this, it just scratches the
| surface and ignores completely that:
|
| 1) tariffs are a negotiation tool
|
| 2) one goal is to devalue the dollar so to encourage
| manufacturing/production in the US (learn what happened after the
| Plaza Accord)
|
| 3) another goal is to have allies (European countries) to
| contribute more to the collective defense
|
| 4) exclude hostile powers (such as China) and prevent them from
| abusing the free(er) economic sphere
|
| Of course there are risks to that strategy:
|
| 1) tariffs are inflationary
|
| 2) central banks selling their US Treasuries to devalue the
| dollar would push up US interest rates
|
| 3) the dollar devaluation itself is inflationary
|
| 4) retaliatory tariffs
|
| There are other policies to mitigate those risks. But the rabbit
| hole is already too deep and too many are not interested in
| learning but just yell that Trump sucks and vandalize
| Cybertrucks.
| JKCalhoun wrote:
| I thought you were making a point but then your last sentence
| kind of shuttered everything that preceded.
| SpicyLemonZest wrote:
| It ignores your points completely because they aren't true. The
| White House has explicitly, consistently, and in great detail
| said that the tariffs are not a negotiation tactic but a
| targeted measure aiming to reduce bilateral trade deficits. The
| idea that the tariffs are really about something else or might
| be removed in return for something else is, as far as I can
| tell, invented from whole cloth by cross-pressured Trump
| supporters who believe strongly in free trade but can't admit
| they don't support one of his policies.
| hiq wrote:
| I'd accept the negotiation angle if the tariffs had been only
| threats with clear demands to avoid them. Trump could have
| demanded that your 3) be fulfilled by June, otherwise tariffs
| would apply. Instead we get tariffs with quick retaliation e.g.
| from China, and I still see no negotiation in place.
|
| The problem in general is that we are all, the US Congress
| included, guessing what the goal is.
| TaurenHunter wrote:
| > The problem in general is that we are all, the US Congress
| included, guessing what the goal is.
|
| I was guessing too until I took the time to investigate and
| found there is a method to the madness.
|
| Now, did you really expect negotiation with China? Do you
| think that was the intention? You gotta think critically
| rather than just lazily or emotionally assume everything was
| a failure.
| jsnell wrote:
| All of your pro-tariff points are ludicrous in the context of
| what actually happened, and do not reflect reality.
|
| This is not some negotiation tactic. We know it's not a
| negotiation tactic, because: there are no stated goals for
| negotiations; there has been no attempt at negotiating; it
| would be impossible to negotiate with this many other countries
| at the same time; each target country feels only a little pain
| from the tariffs, US feels all of it, so US actually has the
| least leverage in any hypothetical negotiations. If this was
| about getting leverage for negotiations, it would be the
| stupidest imaginable way to go about it.
|
| Tariffs would also be a very peculiar way of trying to do
| currency manipulation, because the first order effects will
| have the opposite direction of what you suggest. Import tariffs
| to reduce imports, which decreases the supply of the currency,
| which means the currency will appreciate. The USD weakening in
| response to these tariffs is more about second order effects
| around political risk (they demonstrate that not only is the
| leadership unstable and incompetent, but it also has near-
| dictatorial powers with no functioning checks and balances
| remaining). This makes US assets less appealing, especially for
| foreigners, who seriously need to start pricing in the risk of
| asset seizures. This leads to capital outflows, weakening the
| currency. If you just wanted those second order effects, there
| would be much more direct and less damaging ways of achieving
| it.
|
| Your third point is just utterly irrelevant, because the
| tariffs do not further that goal. It's like saying that another
| goal is to turn the moon into cheese.
|
| And as for China, that explanation would have made sense if the
| tariffs were applied only on China. But they weren't. Clearly
| that was not the actual goal. In fact, by announcing tariffs on
| the entire world, your leadership achieved the opposite of
| driving the rest of the world to cooperate _more_ with China.
| (See the accelerated talks of a free trade agreement between
| China, Japan and Korea.)
|
| And these were the _best_ talking points you could find to
| defend the tariffs?
| bigbadfeline wrote:
| So, the goals are noble, the intentions are good, but the road
| to hell is the only realistic one?
|
| Retaliatory tariffs aren't a risk, they are the present
| reality, see the market performance on Friday when China
| announced them. The relative lack of exports isn't the disease,
| it's just a symptom. Hoping to revive the American economy by
| means of exports and "negotiations" is a pipe dream, the
| numbers aren't there.
|
| The stated policies and goals are meant to trigger and provoke,
| just like your post. They are designed for that purpose and no
| other. Trump may not be aware of it because he is in the
| business of sound bites and provocations which impair thinking.
| The real goals aren't hard to guess, they're printed on the
| price labels.
| TaurenHunter wrote:
| Why your username shows as green?
| bigbadfeline wrote:
| Oh, because I like that color :)
| TaurenHunter wrote:
| Me too. Very nice!
| jmyeet wrote:
| Tariffs are an additional sales tax.
|
| That's it. That's all you need to do to explain this to people.
| It's amazing to me how many have fallen for this ridiculous lie
| that the other country somehow pays the tariff AND there will be
| no increase in cost to the consumer.
|
| I used to think these lies were cynical, like how Mexico was
| going to pay for the border wall. But I'm not convinced now. I
| think there's a not-insgificant chance the president doesn't know
| this is how tariffs work. And that's terrifying. I would respect
| a cycnical lie way more.
|
| You buy $1000 in t-shirts from China. The government places a 30%
| import duty on them. The importer pays $300 to the government.
| Those t-shirts now cost you $1300. Whoever sells them retail will
| be charging up to 30% extra to recoup that. It blows my mind that
| this even requires explanation.
| relaxing wrote:
| The best explanation I've seen is that tariffs are a stick that
| can be used to enforce compliance with other policies, and
| selectively lifted when companies bend the knee.
| rsynnott wrote:
| That isn't really how they're supposed to work, and in a
| normally functioning country the state could expect to be
| sued by the injured parties (that is, the competitors of the
| specially favoured companies) if they tried it. Of course, in
| 2025 the US is hardly a normally functioning country, but
| it's also not clear that its court system is _totally_
| compromised, and any company who went along with this would
| certainly be taking a risk.
| throwaway657656 wrote:
| My small business produces a niche consumer electronic device.
| Anyone watching us operate would say that our product is Made in
| the USA. But the components of our product are sourced and pre-
| processed all over the world and our COGS just increased
| significantly due to tariffs.
|
| We now have to raise our prices, but our Made in China
| competitors have to increase theirs even more. That isn't a net
| benefit for us, given the product is "nice to have" and does not
| have an inelastic price.
|
| If my sales drop by 50% and the Chinese competitors drop by 75%,
| is that winning ? I am still in shock and denial by all this.
| After 11 years in business, this manufactured/avoidable crisis
| can't be what ends us.
| Jtsummers wrote:
| And it gets worse for you. That's primarily considering the US
| market. Your Chinese competitors aren't simultaneously being
| shut out of non-US markets (since this is a unilateral trade
| war, not the US + allies).
|
| Your US sales may drop 50% due to the change in price, and your
| Chinese competitor's US sales may drop by 75%, but their sales
| in other countries may not change at all. Meanwhile, your sales
| outside the US are going to drop because not only are your
| component costs going up driving your price up, you now face
| tariffs when selling in every other country in the world (if
| they choose to respond to the tariffs the US is levying on
| their goods).
| disgruntledphd2 wrote:
| Because of how China desperately needs exports, they'll
| almost certainly end up being tariffed by the EU, so just
| because this started in the US doesn't mean it's gonna stay
| there.
| SvenL wrote:
| I don't understand the argument why EU would tariff China
| just because they need export. Can you elaborate?
| yongjik wrote:
| You'd never guess from reading HN or Reddit, but I have to remind
| myself that not all who voted for Trump last year are MAGA.
|
| My understanding is that America has a lot of low-information
| voters. They don't watch debates. They share cat videos on
| Facebook. They certainly never comment on HN, they don't even
| know HN. On the election day, they think "The eggs are too damn
| expensive!" and vote accordingly.
|
| All the rhetorical offensives, counteroffensives, contortions,
| and motivated reasonings won't reach these people, when they go
| to the grocery and find everything getting more expensive.
|
| (Some of them might even have 401K and IRA. Yeah, I know, boomer
| stuff.)
|
| We'll see.
| rsynnott wrote:
| This is the most baffling thing about Trump's strategy to me.
| Trump is essentially asking people to embrace pain now in
| exchange for jam tomorrow. But there's no reason to think that
| the American public have any intention of embracing pain! Look
| how upset they got about eggs! This really all feels like it
| could very easily blow up in his face.
| cadamsdotcom wrote:
| Article assumes saturated resources and finite production
| capacity - neither of which are true when technology is added to
| the picture. What if, for example, tariffs incentivize technology
| development that allows hydroponic wine - making previously
| unviable land suddenly productive?
|
| Another counter-argument to the article: due to long-term
| reliance on trading partners for goods, production has likely
| been "turned down" for some goods/services to a point that
| there's less opportunity cost than this article posits. For
| example the widely-quoted stat that almost one-quarter of
| Americans are _functionally unemployed_ suggests trade has
| created new equilibria that leave capacity on the table.
| Especially when considering China's well known policy of making
| the RMB cheaper against the USD than if it were allowed to float.
|
| If tariffs have the potential to drive employment up by bringing
| latent capacity online (through investment & after a lead-time),
| you can see how people are okay with experimenting.
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