It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency.
The flow of goods is balanced by a flow of US dollars to other countries, which are ultimately cycled back into the US financial system - enabling budget deficits and an abundance of capital to invest in high growth industries.
The flip side of this is that it also drives inequality - the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries.
The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
As such, this administration's policies are foolish, 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.
That is something that in the current American political climate seems a nearly impossible sell.
> 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.
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.
> The calculus is pretty complicated. Economies of scale become a factor - is one large global factory more efficient than separate regional facilities?
It's not about efficiency. Companies in the US only build and ship their products from the opposite side of the planet because over there they can abuse the local slave labor and pollute the environment in ways that would never be accepted in the US. Even when they could easily afford to by accepting less profit, they aren't going to move production to the US when it means they can't take advantage of those things.
> 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?
Access to the richest single market in the world ?
> Access to the richest single market in the world ?
How long do they stay the richest single market in the world if rest of the global world are producing and trading at greater efficiency while the US are facing large short term supply disruptions, higher costs and reciprocal trading tariffs on their exports?
If the US is planning on stopping the thing that made them OK in the first place, why do you think they would be OK after?
That’s also before you get into the fact that stopping immigration into the US doesn’t make those people disappear * , they’ll immigrate to other countries or stay home may very well cause some countries with a declining population to stop or reverse that trend
* Not en masse anyways, that’s come later as more of a final solution
Thats why I put "OK" in quotes. It remains to be seen if the immigration moves will kill the 'get out of jail free' card the US and few other countries have had. These trends don't change overnight so we have to wait and see. At this time though their population pyramid is pretty good compared to their rivals. It might take years of continued decline to finally destroy the good thing they had going. Meanwhile China had 20+ years to rectify their problems and now its too late.
It doesn’t remain to be seen, we know the fertility rate for America isn’t high enough to maintain replacement rates without immigration. Here’s one article but you can find many with google https://budgetmodel.wharton.upenn.edu/issues/2024/3/22/us-de...
The current admin is saying they are going to stop immigration. I don’t find it comforting or plausible if you’re telling me that we have to wait and see because they might fuck up one step of their plan and that’ll make the other steps less painful
How do you think economic turmoil is going to affect the birth rate in the US and how do you justify labelling a birth rate that's been below replacement for 18 years as "OK"?
>how do you justify labelling a birth rate that's been below replacement for 18 years as "OK"?
The US being a nation of immigrants has this unique selling point of attracting people to make up for their woes such as birth rate. Unless we see millions of citizens getting deported, the people "voluntarily" relocating don't move the needle in this metric.
We're already seeing the effects. Many people don't feel secure enough in their finances, or confident enough in the future they'd be bringing children into to have kids. As far as I can tell things will only get worse long before they even have a chance to get better.
I wonder if the baby boom depends on who wins the war. If people are happy about the outcome, their finances are improving, and they are full of hope for the future it'd be easy to start families. If people aren't happy with the outcome, if they are suffering, if they have to live under more restrictions or a worse economy I doubt as many people will be comfortable bringing children into the world.
I'm in that group. The thing is China already crossed that rubicon 20+ years ago. So the US only really needs to outlast China in this regard. It will create problems of its own and pro America people like Peter Zeihan argue that large generations create more large generations. Boomers -> Millenials -> Gen Alpha. I dont fully buy this though.
Their population pyramid looks good though compared to China:
I don't think quotes are the appropriate modifier to adjust for the damage from draconian and short-sighted immigration policy. Past tense use of the verb is probably more appropriate since countries are issuing do-not-travel warnings against the US (for the first time ever?). This administration is arrogant fools all the way down. I hope the messages sent by the electorate in 2026 and 2028 are loud enough and the brain drain is still reversible.
But that only works if you compare the US with other single countries. The EEA is similar to the US, China will be larger than the US, India will be larger than the US. Any of those combine and you loose by a factor of 2, etc
EEA, despite decades of EU efforts, is not a single market. China and India are nowhere near in terms of purchasing power or individual consumption and won't be for decades.
But we don’t have tariff regimes. That what a common market means. It doesn’t mean that you can sell the same product to everyone. It just means that you can move that product everywhere. And even the regulatory regime is overwhelmingly European (that’s why you get manuals in 20 languages)
>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.
25% margins are huge. Sounds like that margin is someone else's opportunity....which is exactly what the Administration hopes will happen.
There is an opportunity here: Cozy up to Trump, have him give you a ton of government money and spin up a company that will take those margins.
It is an interesting and somewhat macabre parlor game to play at a large gathering of one’s acquaintances: to speculate who in a showdown would go Nazi. By now, I think I know.
The answer to your conjecture is simple Darwinist capitalism.
By whatever mechanism, imports are now more expensive, leading to less demand. Demand for those products actually stays constant, but the demand for imports goes down.
Now we have a niche. If you can produce a good locally for less than the net cost of import, you have an entire continent ready to buy from you.
The reason this has historically gone the other way is labor costs. Factoring the entire global supply chain into your product, it makes much more sense to do the work in a country where work costs less. If the additional cost to import is less than the delta on labor, you've won capitalism or something.
Or, take another angle. If the US can no longer import vital goods, what do you think will happen? Will the goods magically stop being vital? Will we sit on our hands for several decades and wait for the problem to resolve?
Or does the market respond to a need and rearrange itself to provide as profitably as possible?
It seems insanely risky to attempt to fill a niche that only opened up because of these tariffs. If they’re removed, congrats you just spent a bunch of capital to make a factory that is suddenly no longer competitive.
>>Or, take another angle. If the US can no longer import vital goods, what do you think will happen? Will the goods magically stop being vital? Will we sit on our hands for several decades and wait for the problem to resolve?
No - consumers will just eat the cost like they did during COVID.
>> Or does the market respond to a need and rearrange itself to provide as profitably as possible?
rearranging itself will mean leaving the status quo, and passing the cost to consumers. Do you think companies are going to jump to spend millions of dollars and 1 year+ to build factories to work around something that might change in 6 months, or even 4 years ?
You are ignoring the 'Optimus' angle. Maybe Elon's stupid robot can actually do something and he has been whispering this into Trump's ear. That would take care of the labor cost issue. Lets see what happens.
Hahahaha. Wait. Are you serious? Elon has been promising all kinds of things AI that are "just around the corner" for at least a decade now. It's always in the next year or two. There is no chance they cracked autonomous robots with those puppet bots they were showing off not long ago.
Look at all the braindead moves this administration has already done and we aren't even 6 months in. Maybe they actually believe his stupid robot can actually solve their problems. All we can do is sit back and see what happens.
Those statements are offered as truism ( and they do sound true enough ),but are they anything more than a hopeful assertion? I won't go into too many details, but I think it is not exactly axiomatic. It may be have been 99% accurate in the post-world war new world order, but, needless to say, that has shifted.
We can argue over whether it is a temporary pit stop or a longer term change that is likely to remain its place, but 'capital knows no borders' has its place along other otherwise useful phrases such as 'bet you bottom dollar that tomorrow there'll be sun'. As in, sure, but it is more of an expression of our wants, not an if/then scenario.
> Those statements are offered as truism ( and they do sound true enough ),but are they anything more than a hopeful assertion?
For the US / Euro, yeah you can just digitally wire say $ 150 million no problem. You just can't physically fly out with a suitcase of $100 bills.
This is not true for something like China [1].
The counter-topic is usually Labor. You very much cannot just go to the US and work but you could from China invest in a US company. So Capital knows no borders while Labor does.
> I won't go into too many details, but I think it is not exactly axiomatic.
The Panama papers, the Double Irish sandwich, and the US government pressuring the EU not to tax American tech companies all say otherwise. More prosaically, the average non-resident, non-American has a much easier time registering a Delaware LLC than attempting to get an American work visa.
> It may be have been 99% accurate in the post-world war new world order, but, needless to say, that has shifted.
Trump has proposed a green-card-inspired "Gold Card" for rich Russians^w investors to skip the immigration queue. Lot's of countries have investor visa with fewer hoops to jump than work visa. I don't see this changing any time soon. If you have the capital, and hint that you're interested in investing $1M+, most countries will roll out the red carpet for you.
> As in, sure, but it is more of an expression of our wants, not an if/then scenario.
To be clear I don't want labor to be more restricted than capital.
<< The Panama papers, the Double Irish sandwich, and the US government pressuring the EU not to tax American tech companies all say otherwise.
It is an interesting argument to make. Given current efforts to reshuffle existing system, those may no longer be available. Let me ask you a hypothetical instead: if those 'ways' are gone, is it automatically a given that new ones will emerge? If yes, why? If no, why?
<< Trump has proposed a green-card-inspired
I don't want to write too much of an obvious comment, but.. how is it different from existing pre-Trump green cards sold to interested parties ( with lower price tag, but I am not asking about the price )? Is the existence of the card proof that capital has no borders or of something else? Is it inherent? I am now genuinely curious about your internal world model.
> Let me ask you a hypothetical instead: if those 'ways' are gone, is it automatically a given that new ones will emerge?
It's important to remember those were not the only ways, they just happened to have be the most effective, and became notorious because of it. Tax havens still exist, and we are still far from taxing corporate in the same stringent ways we tax individuals. The fact that governments only chipped at the edges with no systemic changes is telling.
> I don't want to write too much of an obvious comment, but.. how is it different from existing pre-Trump green cards sold to interested parties
You need to be specific about how green cards are currently sold before I can attempt to explain the difference. Further, if there is no difference IYO, then why is Trump proposing something new?
<< You need to be specific about how green cards are currently sold before I can attempt to explain the difference.
I was personally referring to EB5[1]
<< Further, if there is no difference IYO, then why is Trump proposing something new?
Eh, I have a personal theory, but that one will likely need some time to confirm. The shortest, handwavy way I can offer is politics ( and separation/differentiation from existing EB5 ), but I am open to alternative explanation.
<< It's important to remember those were not the only ways, they just happened to have be the most effective,
True, but I am questioning how much some of this stuff will be increasingly challenging to evade. The fact that beneficial owner version in US was effectively scrapped suggests the AML regimes were getting pretty close to the issues you were referring to. And, as always, conversations within the industry players are discussing more monitoring, more data.. not less.
<< The fact that governments only chipped at the edges with no systemic changes is telling.
That is true, but it does not prove that capital has no borders ( original point of contention ).
> That is true, but it does not prove that capital has no borders ( original point of contention ).
Which is easier to execute: legally investing on a goat project on Mongolia or Djibouti over 2 years vs legally living there for 2 years?
It's self evident that there are far fewer hurdles for capital to transcend national borders than people. I am not certain if your argument is that the existence of minimal friction proves that there are borders for capital. If so, I'll concede that capital crossing market and judicial boundaries will encounter some minor bumps - typically from the country of origin. This heavily contrasts with labor, which faces significantly more resistance, and the resistance is from the destination country/market/juridiction. Would you agree with "Countries bend over backwards for capital inflows, including from individual investors"? It's a mouthful, but perhaps expresses the same sentiment.
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.
> you might just need to wait 3.5 days when he changes his mind and reverses the tariffs for some reason.
That reason will be that he and his pals have already bought up all the stocks that are crashing or the businesses that start failing all at insanely low prices which they can sell off for huge profits once the tariffs are reversed and their value returns to normal.
I think this, more than anything else, has been the real issue ( and I even think there was a recent Marketwatch article that basically said the same thing ): 'erratic decision making process'. There is an argument to be made about the direction of the policy, but the crazy back and forth, where it is not entirely clear 'who/how/why' and so on that people who do have to make decisions about future moves are left guessing. No one likes uncertainty.
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.
It's only one of the key levers of power of the USA. No biggie. You give people money represented by paper but mostly bits/bytes in exchange for other peoples materials and labor. Can you unpack what kind of stuff you're talking about? Are we talking about nascent industries? This stuff, who are you going to sell it to ?
Fake, no not at all. Look around your where live. Think about who, where, and how those things were made. Scam? From whose perspective? There is only one global reserve currency. For all intents and purposes, that is the crown and heavy is the head that wears it. Sure it feels like a scam for anyone outside of the 1% or the political class or the plutocracy.
The world followed the lead and it just wanted reciprocity (exclude the enemies of course).
What seems fake to you and who is getting scammed by who?
I’m saying it seems like a scam when we consume more than we make by giving other countries pieces of paper. Why doesn’t the EU make the world’s reserve currency if that’s so great? Why doesn’t China try to make the Yuan the world’s reserve currency?Why did Angela Merkel cry when Obama tried to get Germany to engage in deficit spending? https://www.express.co.uk/news/world/1084075/EU-news-Angela-...
And why do other countries keep doing it if we are the ones getting the better end of the deal?
Read up on 1900s world history and what path dependency is. The dollar is the reserve currency because the USA won the title of world power near the end of the first of half of the 1900s. It was formalized in the Bretton Woods agreement in 1944. The US helped win the war and gained enormous trust and goodwill around the world which it has slowly been squandering since then. POTUS hit the turbo button just a few months ago.
The PRC has strict controls of their money because that is how they can became the factory of the world. They played the hand that were dealt with and battled adversity and they are reaping the rewards.
The president said today that the US trade partners and allies/friends have been taking advantage. You can easily verify if that is true or false. US capitalists moved production overseas to make more money at the expense of the local workers. That's the scam.
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?
> 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.
I've this assertion made here multiple times. The LLM's tell me the average tariff on goods coming into the EU is 2-3%. That's not what I would call "high". The tariffs imposed by the current USA administration start at 10%, and range up to 54% for nation it imports most from (China). Now that's what I would call "high", although if you are going to call 2-3% moderately high then you need a better superlative - perhaps "extreme".
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.
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.
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.
https://x.com/_PeterRyan/status/1907879785151475801
Protectionism is like child rearing. You're trying to protect the young (industry) so they survive to adulthood. The tarrifs are too broad. How the hell are you going to sell goods from HCOL area to the rest of the less affluent world? Even if some countries could afford it, how are you going to get goods across burned bridges?
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.
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.
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.
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.
> 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.
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.
billionaires have a lot of money tied up in the market but they aren't cash poor. They typically keep hundreds of millions in cash on hand. Supposedly, Jeff Bezos keeps over $9 billion in cash. Their day to day lifestyle doesn't change one bit when the market drops. They don't have to stop buying the groceries they normally do just because a stock drops by 10%. Buying up some stock while it's down when they know they can sell it back when it jumps back up is just free money.
Even if they somehow ran out of money in all of their accounts (and that's extremely unlikely) and at the same time lost all the money they had that wasn't in stocks they could very easily borrow money.
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).
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.
https://www.usaspending.gov/explorer/budget_function (linked on that page but easy to miss) provides a great visualization/interface for the budget that can drill down deep into each category's sub-categories and beyond.
OTOH they might be asking more specifically for a view that controls for how different tax/income sources might be earmarked for specific spending, thus skewing how income tax dollars are distributed compared to the overall budget distribution - though I'm not sure that's going to change one's income tax dollar distribution much. AFAIK even social security is only nominally funded by social security tax, and the deficit means there's debt filling the gaps everywhere anyway.
That page is a good start. It at least shows the breakdown of % by programs, etc.
However as you point out there are different types and methods of tax which go to different bins. The IRS filings are the most likely place to have all that together.
*value for taxation* is also really difficult to discern. The report needs to help break down where someone's tax dollars went...
But it also needs to help collectively show how tax dollars _benefit_ them. That one not just in the taxes they paid but overall based on where they are and what they're doing.
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.
>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?
Promote the lie down movement in the short term and let the negative birth rate take care of them in the long term. Thats the only way unless the US somehow gets a magical AGI and robots before China.
"let the negative birth rate take care of them in the long term"
There is a presumption hidden in that sentence: namely, that procreation will always be left up to the people and their decisions. That is far from certain. If anyone has the nerve to actually develop and deploy artificial wombs, it is China. And the resulting kids will be simply pushed onto young people to raise - an authoritarian country won't have to ask anyone.
Having kids is one of the last almost-non-industrialized attributes of human lives, most people are still being born in the same way as they used to in the Stone Age. I wonder how long will that situation last.
>If anyone has the nerve to actually develop and deploy artificial wombs, it is China. And the resulting kids will be simply pushed onto young people to raise - an authoritarian country won't have to ask anyone.
We will have to take that info as it comes. I was working off the info we have today. Their birth rate (as well as the birth rate of most of the world) is horrendous. This was a problem they should have started tackling 20-30 years ago.
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.
Some tariffs are fine. These tariffs are a disaster. There are some companies that could eat the increased costs (or at least a large percentage of them) and still make a healthy amount of profit overall, but they won't. They'd rather import less and/or jack up prices until people are priced out of things they'd normally buy. Some companies are fine with turning what used to be common purchases into luxury items available only to a small number of people.
If these tariffs continue for long, it'll mean many more people needing to put up with having a lot less.
> 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.
> 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.
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.
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.
I read this and I was quite disappointed that he didn’t talk about labor costs and other comparative advantages for labor-heavy manufacturing to be in a different situation trade market-wise than it was in the 1930s.
He does talk about comparative advantage, though. Extensively. The bit about Ricardo's precondition is absolutely wild and I'm more than a little scandalized by the fact that it wasn't discussed when I took econ in school. Not to mention the history with Alexander Hamilton.
Are you sure you didn't just read the link? If you want a book-sized argument, you need to read the book, or at least listen to it.
> the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries.
This is true only if we impose barriers to geographic mobility, which we do via artificial scarcity of housing in our major cities.
If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor.
> the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
We don't need more high-quality education nor do we need to onshore. We need to deregulate the housing market, we make it easier to migrate to the US (funny enough, yes that would help with inequality). And I do agree we need better social systems.
There is no way to frame this admin's policies that makes it look reasonable. It's a Crony Clown Club show.
> If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor.
Why would they want to do that? Their priorities are myriad, but raising a family, having a degree of autonomy and space to themselves, and remaining a part of their community are all generally on the list.
What’s generally not on the list is living in a tiny rabbit hutch, owning nothing, working a dead-end service job, trying to raise a family in a city (or just not trying at all), and paying a higher price for the privilege.
Because that’s where the money is. The world over people have exhibited their revealed preferences for living in a city, as everywhere continues to urbanize
all the "low-skill" people would be able to move to the city and find a job
That this doesn't work is self-evident. Cities are currently filled with low skilled people. The vast majority of whom find no employment or employment in illegal activities.
Also:
We don't need more high-quality education
The idea that the world, and the US in particular, has no need for more and better education is laughable. Considering the fact that a lack of education is, arguably, what got the US into the current situation in the first place.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
Scandinavia has its problems too, but they're doing a lot better than we are in many measures that aren't "number of billionaires getting richer while the rest of the population gets poorer every year."
People there are happier, healthier, and better educated than they are here.
Sweden has less income inequality and higher economic mobility than the US (Norway does better). Although it's been getting worse, the American Dream is still much more attainable in Sweden than it is in the US.
That is only Norway. Maybe a little bit of Denmark, but Denmark is not considered an oil economy.
And I don't know what you mean with "captive tax base" but Norway just piles up the wealth they are too afraid to use it since it will increase the inflation.
Norway is the one that actually makes it work. Their GDP per capita is slightly higher than the US and more than $30,000 higher than the other Scandinavian countries.
"Captive tax base" means the industry can't move to another country as a result of high taxes. You can move factory jobs to China by moving the factory. You can't move oil and gas extraction jobs to China by moving the oil field.
That's the premise, isn't it? The local sandwich shop owner, a small business, makes more money relative to the global price of an iPhone or a solar panel so there is less wealth inequality.
The only useful increase in equality is the one that makes ordinary people better off. Making them poorer just to spite the rich by a larger amount is absurd.
The idea behind subsidising re-education is that it benefits the society in the long run. I guess I have no proof that it isn't what makes Scandinavian GDP/capita lower.
It isn't funding education in itself that lowers GDP, it's high tax rates. Investors put money where it gets the best returns. Suppose one country has a 20% tax rate and the other has a 60% tax rate, i.e. they keep 80% of the returns instead of 40%. Then they don't invest in the second country unless the returns are twice as high to begin with, and in most cases they're not.
Governments making beneficial use of tax dollars can counteract some of that, because the investments would increase productivity there (e.g. more educated workforce), but for that to work the government would have to make net positive investments against the losses resulting from higher tax rates. That's notoriously difficult and governments more often fail than succeed at doing it efficiently, and there is a strong incentive for corruption. If any significant amount of tax money is directed to cronies or politically connected constituencies, the possibility of not causing net harm quickly plummets.
Moreover, government spending has diminishing returns. Collecting enough in taxes to have a basic government that can at least enforce laws against violence and provide transportation infrastructure has very high returns. The first $10M you spend on police might cause the number of unsolved murders to go from 1000 to 500. The next $10M you spend might cause it to go from 500 to 450, because the remaining ones are harder to solve, and because there are fewer remaining to solve. At some point additional spending isn't getting enough of a benefit to be worth the cost. And the same for infrastructure and education and all the rest of it.
The exact breakeven point is obviously a matter of some debate, but there is generally a negative correlation between higher tax rates and GDP per capita, implying that most current governments are either taxing at inefficiently high levels because the marginal government program isn't worth the cost, or that there are productive investments governments could be making with the existing money but instead they're allocating it to something else, e.g. because of government corruption or mismanagement.
> There is generally a negative correlation between higher tax rates and GDP per capita
There are lots of reasons for high/low GDP per capita, but I would like to see proof of this to believe it.
Why is Denmark so high up for example, generally considered the country in the world with the highest tax pressure, and without any substantial natural resources. Cherry picking of course, but your claim is very sweeping, so I'd put the pressure on you to prove it.
They are optimising different things and the GDP for them is just a means to an end. They are trying to achieve objectives like: healthcare for all, certain minimum standards of living and safe neighbourhoods everywhere. It's natural that if you don't optimise for GDP then GDP will probably not be maximised.
What our objective function should be is of course a very deep and interesting question. We don't talk about it enough. Most people think about solution first like: socialism, liberalism, sharia law, biblical law etc...
what you're saying in short is that the US economy has changed from Manufacture-based to Service-based, just like China.
People don't realize this but China is moving toward Service-based, naturally, as they raised their standard of living, thus education.
What's missing is not raising tax on Income but taxing Wealth: the super rich has their wealth sitting and growing unproductively (house appreciating is not productive, buying farm lands and rent it to other farmer isn't productive). Holding Limited version of a Ferrari isn't productive. Feel free to find other Assets.
Once the super rich completed their journey in this world, they will inherit billions to their kids, whose productivity output does not match the wealth they inherited, again, not productive.
So?
Less capital chasing after housing means housing prices fall.
If the capital was not destined to be used in the first place, then it only serves to inflate the economy
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
You are assuming that this administration has the same goals as you, just different ("foolish") methods of arriving there. I'd posit that they have very different goals that these methods are solving for.
Tariffs will probably be bad, but on the other hand the old system didn't really work either in the long run. Perhaps he can bring some manufacturing back and I don't really believe consumer goods getting more expensive will be immediately felt. Could be wrong though.
Well, at least it might get interesting if you like crazy. I don't really believe those crying the loudest that they are particularly interested in combating inequality or are too interested in protecting low income people. Yes, maybe they need industries protected by tarrifs instead of cheap t-shirts. Maybe this perspective is rather stupid though. We will find out if that works or not. Economics projecting the next depression aren't really sources to trust either.
This is a regressive tax that hurts low skill and low wage workers proportionately more since basic necessities of life are going to increase in price - it will be a much larger share of wallet than rich. This will not materially change purchasing behavior of very rich (save maybe waiting to buy a car due to increased pricecs)
It would be beneficial to increase taxes on the massive service economy and use the proceeds to subsidize lower wage industries.
In trumps first term after tariffs affected farmers, they had to subisidize them to keep them afloat. It didn't quite work the way it was intended. The trade war relief program in the first term spent $30bn keeping farmers afloat.
> The obvious solution is... for the government to lower the cost of high-quality education
Not everyone is smart enough to land in the professional class. The US does its young population an enormous disservice by pushing low academic performers to go to college. There needs to be, somehow, a way for people to make a living with their hands, because for some people, that is genuinely all they are capable of.
> ... build out social systems...
The way you build out the social system is by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program. You don't take those jobs away by offshoring them.
I'm not saying I'm against offshoring in general or that I support Trump's tariffs - I don't. But it's not exactly controversial to point out that, since the end of the Cold War, the US prioritized the recommendations of economists over social cohesion and socially harmonious policy. A lot of people were thrown out of work and were left to fend for themselves. Many of them ended up as victims of the opioid epidemic. I'm not convinced that the prior system was completely peaches as cream.
What happened to the information economy? And getting everyone trained on that type of skills? Nowadays education seems to be frowned upon by those in charge.
The "move" from an agricultural economy to an industrial economy didn't end agriculture being a significant part of the national economy; agriculture just lost relative share of GDP. Similarly, the "move" to an information or services economy isn't necessarily going to eliminate either agricultural or industrial work. China, for example, has its tech giants (Tencent, Alibaba, etc.) but it also has vast industrial capacity (e.g. Shenzhen) and agricultural capacity (e.g. the largest pork production in the world). American education deciding to push children towards information-economy jobs that were a poor fit for their talents, neglecting classes like shop skills that were once common, was a mistake and certainly not inevitable.
> by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program
Like building out clean energy infrastructure?
Modern "ditch digging government programs" aren't necessarily low-skill. Even at the time, the new deal government programs were massively beneficial for society while also providing jobs for folks who needed it, at reasonable wages. Let's not shit on good government programs just because the right has been feeding us propaganda demonizing it for decades.
Building out clean energy infrastructure provides value. That's perfectly fine. There is plenty of need for hands to maintain American road infrastructure that is falling apart and build new infrastructure like high-speed intercity rail and more subway lines to help support additional population growth.
The reference is to how a government can pay people to literally dig ditches then refill them. This nominally increases GDP (due to additional government expenditure) but it does not produce value and, more importantly, does not give people the dignity they would ordinarily achieve through their labor because they know such work is bullshit.
Thanks for your comment, it explains why there seems to be a high degree of support for these measures in some quarters (was looking at the youtube comments to the liberation day speech) vs the consensus here at HN.
Let's suppose these policies are to the benefit of some Americans over other the benefit of other Americans. The open question now is: does it matter? does it really have an influence on the gross profit numbers? Will an isolationist foreign policy destroy the international order and how could this effect the US in return?
As a highly skilled and comparatively highly paid worker, I feel it is outrageous to suggest that I am within the class that needs to give up any reputed "wealth" when I am nowhere near the 1% who hold more than 50% of it. Such a claim just contributes to the wealth making of the 1% misers even more. Class warfare! I have already had to give up significant amounts of college and retirement savings from these tariffs.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education
I'm always skeptical of the idea that we can just educate ourselves out of problems.
As I see it, that would only raise people's wage expectations which would make us even less competitive on a global market?
The need for blue collar workers doesn't just evaporate, and there's frankly only a finite demand for white collar workers. You give everyone expectations of a white collar job, and they end up working blue collar because there's no job for them, you're just setting society up for mass disappointment and resentment.
You give your average blue collar worker today a degree, are they actually more valuable to their current position? Probably not.
Your problem statement is missing "national security" angle. As I understand the current administration sees US de-industrialization as a threat to it and tariffs as a soution.
So basically: the solution is "do more of the same".
I suppose that's the point, people were tired of hearing the same old crap by leftists who fancy themselves as smarter, as their quality of life continued to drop, so they figured "screw it let's try the opposite".
> As such, this administration's policies are foolish, 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.
Very few people who work as full-time devs are so wealthy that they are totally insulated from general social decline.
You're arguing from a steady state. In point of fact the pain of the at-this-point-seemingly-inevitable recession is absolutely going to be concentrated on the working class. Those of us with savings and work flexibility will do just fine.
Even someone making a first principles argument for a revision of US trade policy should agree that this is insane.
The real pain will hit the working class harder, but the nominal pain will hit the capital class harder. Historically, this is how inequality unwinds. See: recessions, World War II. Let's hope to god that this is "just" a recession and doesn't cook into World War III.
The current spending bill has a 4.5T giveaway to corps and the ultra rich. The goal is to drive prices to the floor and then buy everything up.
What's a 50% drop in value to a billionaire? Most of them would still be a billionaire and the ones that fall from that group still have more money than they could ever spend. No wealthy person will truly feel what's going on. They'll still vacation and eat their caviar. Caricatures aside, it's absurd to compare someone stock sheet numbers going down with people not able to find medical care or feed themselves.
Definitely looks like an intentional precursor to WW3.
- Threats of annexations
- Existing conflicts in North America, Middle East, Europe and Asia. (whats up with South America?)
- Mass unemployment and poverty in US freeing up able bodied people for some soldiering
- Right wing blowhards everywhere
Just crazy that this is essentially because rich people dont want to pay some debts, and some crazy russian guy's ego
I think the quote below attributed to Caesar is applicable here ( not only in the sense that egos play a role in most leader's process ). I am not sure I disagree with you; I just hope you are wrong.
"Go on, my friend, and fear nothing; you carry Caesar and his fortune in your boat."
Yes! I've been consistently frustrated at both sides of the issue. It became salient for me when I read about how China had sanctioned three American drone manufacturers that were supplying Ukraine last year, and how it disrupted their supply chains and ultimately the war effort.
It is unacceptable for any other country to be able to do this to any part of the western-aligned military supply chain.
We needed a targeted policy -- I don't care about American cars except to the extent that those factories can be converted to aircraft and tank factories.
But the conversation has been frustratingly reduced to 'reshore low skill work' vs 'save my infinite trough of cheap plastic slop'.
I don't want to hear about tariffs bad, I want to hear about how subsidies are better or about how it doesn't matter anyway because of the structure of the Chinese economy (I saw it claimed without evidence that they depend on imports from places aligned with the west which is reassuring if substantiated).
There's an underlying issue everyone is dancing around.
I don't know why you are being down-voted, I think you raised some interesting points that add to the discussion.
National security / foreign interference hadn't occurred to me, and now I'm wondering what would happen to US economy and manufacturing if it was at war with China and or the EU over Taiwan and or Greenland.
How would US deal with Russian style sanctions? Can China simply ban all exports to the US?
In times of war, it probably is super important that a country and manufacture all essentials.
Just give it a few minutes to settle out. Sometimes people tap the downarrow by mistake, since it's 2mm away from the uparrow. It's not always a conspiracy :-)
If I were a third party downvoting my comment I would probably take issue with the characterization of the anti-tariff position as "save my infinite trough of plastic slop". Other countries do have highly skilled artisans. Tariffs are also considered bad on the merits (looking at it from a liberal [economically] world view). It's like vaccine skepticism to economists: an extremely low-status opinion for kooks and cranks. But I am open to being convinced on illiberal economics (this is not the same thing as saying I support it) because I consider military supply chain erosion a national emergency and I don't think "balloon the military budget even more with subsidies" is a politically viable position and "just build it in an allied country we now have to keep permapoor to make the economics work out" is cruel.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
You're proposing to tax an international supply chain. To tax something it has to be in your jurisdiction to begin with, and then you have several problems.
The most obvious of these is, what happens when the stuff just isn't there anymore? Suppose the US isn't competitive with China for manufacturing certain goods, e.g. because the US has a higher cost of living as a result of a purposeful housing shortage and then has higher labor costs, or for any other reason. So manufacturing moves to China, not just to sell to the US but also to sell to the domestic market in China and to Europe and India and the rest of the world. No part of those other transactions is in the US, so the US can't tax them and use the money to help the people in the US who used to be doing that manufacturing and selling those products to the rest of the world. Whereas if you sustain domestic manufacturing through some means then it exists and can make products to sell to the rest of the world because the fixed costs of establishing a manufacturing base can be covered by the domestic market and then it only has to compete in the international market on the basis of variable costs.
Next consider the industries where the US still makes stuff. You could tax those things because they're still in the US. But that makes the US less competitive in the global market for investment capital, which is highly mobile. If higher US taxes cause returns to be lower in the US than they are in other countries then investors go invest in the other countries instead, and then the thing stops being in the US. So that doesn't really work. You can see this in the case of e.g. Europe, which has even worse problems with the loss of manufacturing than the US.
Which leaves the activity where it's the other half of the transaction happening in the US, i.e. China is manufacturing something but the customer is in the US. That you could tax without a huge risk of capital flight, because companies can rarely change the location of their customers, but that still leaves you with two problems.
First, either of the countries participating in the transaction could levy the tax. In the case of China, then they can levy a tax (or some tax-equivalent) to only such an extent that it consumes the surplus in the transaction attributable to the competitive advantage of their country. China can do this because they have a lower cost of living etc., which doesn't work for the US. But because they do that, the US can't tax that portion of the surplus, which was the gain from moving manufacturing to China.
And second, a tax on imports is called a tariff. Which the US can impose to tax that portion of the transaction surplus that isn't attributable to the foreign country's cost advantage, i.e. the preexisting transaction surplus where it costs $8 to make something someone is willing to pay $10 for regardless of where it was made. But tariffs are the thing you don't like.
OR use borrowing (e.g. current account deficit). If government spending drives productivity growth then it’s a net positive?
OR tax wealth. If most return on international capital investment is being stored in the US, taxing this effectively taxes profits on international sales???
> OR use borrowing (e.g. current account deficit). If government spending drives productivity growth then it’s a net positive?
That's basically what already happens. The US has been running a huge deficit for a while now.
It also requires government spending to be the spending that drives productivity growth, which most of it isn't.
> OR tax wealth. If most return on international capital investment is being stored in the US, taxing this effectively taxes profits on international sales???
Why would they store the wealth in the US if the US had a wealth tax? One of the biggest problems with a wealth tax is that it has such a strong propensity to induce capital flight.
It's also not just a question of how you structure the tax. Wealth taxes are hard to avoid for things like real estate (can't move it), easy to avoid for things like factories or intellectual property (can easily move it), but the same is true for other taxes that apply to those things. It's easy to impose an income tax on rental income, so you don't need a wealth tax for that. The hard thing is how to impose any tax on all the money the Saudis have without causing them to just invest it in something else, possibly in some other jurisdiction.
It's possible that the US acquires what it wants by simply conquering the producing countries by force. The US gets back it's industrial base by force.
The US is going to conquer China by military force? That seems unlikely when they both have nuclear weapons.
It wouldn't be a solution even if it was possible. If China was a US territory and still did all the same manufacturing, how does that help the people in the rust belt get better paying jobs, or address the single point of failure where some turmoil in Asia can disrupt global supply chains?
The only thing that works is to diversify manufacturing out of that single region, and that doesn't require conquest.
> for the government to lower the cost of high-quality education
Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs. For some reason, with intellectual labor, we are able to pretend that there is no threshold and everyone can do it. It's an idea that makes people feel good but what if it's just not true? Can everyone be made above average in something with enough education?
If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that? How do we maintain a democracy? Sometimes people float the idea of UBI, but that could turn out extremely dystopian with a huge underclass of UBI-collecting people in a state of hopelessness and boredom. That doesn't work much better for democracy than a huge underclass of under-employed and unemployed people.
To make matters worse: the fact that our past strategy works so well for increasing GDP means it it tends to inflate assets, including things like housing prices. The end result is a country that looks, to more than half its inhabitants, like a vacation town where outside capital inflates the cost of everything way above what local wages can support. It might not be a coincidence that San Francisco, New York, and other capitals of high margin high skill industries have real estate prices that lock ordinary people out of even "starter homes."
I absolutely do not support Trump's execution here -- it's ham-fisted, reckless, and badly thought out. If we are exiting this neoliberal model, Trump's exit from it is a little bit like Biden's exit from Afghanistan. Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind.
We can't keep doing that if we want a democracy. If we exclude 50-80% of the population from anything meaningful or any economic stability, we will get one of two things. Either we'll get the kind of totalitarian state that is required to maintain that kind of inequality in perpetuity, or we will get a string of revolutions or a failed state. People will not just sit around in hopelessness forever. Eventually they will be recruited by demagogues. Ironically Trump has been one of the most effective at this. I'm sure more will eventually show up though. There's a big market for them.
> If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that?
The most important thing here is to do something about the cost of living, i.e. the price of necessities.
Housing isn't inherently as expensive as it is in the US, it's made that way on purpose. Healthcare likewise. If you only make $25,000/year and housing is $20,000/year and healthcare is $12,500/year, you're screwed. If you only make $25,000/year and housing is $10,000/year and healthcare is $5000/year, you're not.
I’ve reflected that resource extraction jobs often end up in the high wage / low educational investment category, and I’ve wondered if that motivates the whole “annex Greenland” bit as much as “securing critical resources” does…
Will the US be able to survive as a superpower while severely cutting down the top 20%'s standard of living? They could simply defect somewhere that offers them a similar position in society as the US, similar to what the US has done to the rest of the world.
> Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
You still need education to become a nurse, caregiver, welder or kindergarten teacher. And the right subsidies (free education) allows people to make the switch.
> Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
Agree with this.
Also, what if there's just not a need for it?
Even if "everyone" in some abstract sense is capable of "high-skill" jobs, how many are really needed? Look at software jobs alone and the onslaught that is the current labor market.
I think there's nowhere near enough "work" ("real" or otherwise) to go around to maintain the level of employment necessary to support the population that we have at the costs that we have.
I don't think any sort of "UBI" (assuming you mean direct cash payments) is a realistic solution, either. People need to "work" in some organized fashion to avoid the common negative outcomes associated with "welfare" scenarios.
I legitimately, unironically, support the kinds of "fake" jobs that were prevalent in years' past (day in the life TikToks come to mind, Gov jobs where people send three emails a week, etc).
I guess in another sense I do support "UBI", as long as it's paired with the illusion of "work."
I understand this seems nonsensical, but just from practical experience it makes total sense to me.
Here's an example.
Years back I worked a software gig at a large non-"tech" F500 company. Much of the programming work there was extremely dull--occasional maintenance of large barely functional enterprise Java messes, writing a few SQL queries a week for wretched multi-table joins requiring all sorts of nasty casting and hacks as "normalization" was an alien concept to the original author and the like. Realistically, folks worked on this stuff perhaps 10 hours a week?
Anyway, I know a few people hit with a layoff that worked there a long time (decade+) and now they're back in the Thunderdome looking for work as "developers". The people in question are nearing retirement but presumably not there, for one reason or another.
Hows this going to work for them? I'm not denigrating them, but having worked with these folks, they're not going to be tearing into broken pipelines, adding React components, configuring Docker builds or whatever--there's a skill mismatch and the workload I've seen at roles lately is just so far beyond the pace, scope, and "scale" that there's no way they'd make it, if they can even get an interview at all.
In this example, would it be best to give them "UBI" payments, or some other slow near-sinecure where they have dignity?
> I don't think any sort of "UBI" (assuming you mean direct cash payments) is a realistic solution, either. People need to "work" in some organized fashion to avoid the common negative outcomes associated with "welfare" scenarios.
That's actually the point of a UBI.
The problem with existing welfare programs is that they're a poverty trap. If you have no job or a very low paying job, you get benefits. If you make any more money at all, you lose the benefits, and simultaneously you lose the time and expenses of taking the job. If that means you e.g. have to buy a car to go to work, taking a job causes you to lose money. Sometimes you lose money even before your working expenses because overlapping benefits phase outs can consume more than 100% of marginal income.
With a UBI, the amount you get is only the amount you need to avoid starvation and homelessness, but you get that amount unconditionally. If you can find any work at all, you get the UBI and your wages, instead of getting your wages instead of welfare programs. Which allows you to work, even if you're only qualified to do low paying jobs, without being put in a worse position than you'd have been if you just stayed on welfare.
I'm of a similar mindset, just look how many software adjacent roles are basically UBI already.
With DOGE the US seems to moving backwards, cutting down on gov busywork for what self-defeating purpose? They just end up flooding the market, or worse, sabotaging productive teams with their meetings and ceremonies.
> Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs.
"pfff it's easy-peasy, just go attend a (literal) bootcamp, you'll be fine, anyone can do it"
----
> Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind.
god yes
The elephant in the room here: there is no money for anyone not in the top20%, it all goes into their pockets and they just sit on it, leaving only scraps for everyone else, tax the rich, anyone with more than x% of the median amount of wealth should have everything above that taken away and redistributed to everyone, possibly by means such as UBI/welfare/etc!
But we ain't gonna get any of that without revolution. And honestly it feels like Trump's getting us closer and closer to the brink of that.
This is the kind of side debates you get by framing it as “low-skill” versus “high-skill”. Whether the “~20% of the ability” curve should help the poors from their apparent attraction to demagogues.
And how do you propose we do that? By giving schools even more money at taxpayer's expense?
> raising taxes at the high end
40.1% of US taxpayers on the low end of income distribution pay no income tax, 16.5% pay neither income nor payroll taxes. Top 1% pays 40.4% of all income tax (while holding about 30.8% of net worth, 13.8% of the total is held by top 0.1%). Top 1% (with the possible exception of a few billionaires) already pays through their nose.
Funding public universities and giving them the mission to keep tuition costs low. Public universities are capable of providing enormous value to students, but over the past two decades their funding has been substantially cut. The result is that those schools became more reliant on expensive out-of-state tuition, which in turn means competing with private institutions for students, which in turn means building more luxuries (awesome gyms) and not focusing on value for money.
So, giving even more taxpayer money to the education cartel, then. Got it. Good luck with that. Over the past several decades staffing in administrative positions has exponentially ballooned all across the education system, starting with grade schools, while academic metrics moved in the opposite direction. Now the question is, do we continue setting even more taxpayer money on fire, or is there a better way?
What people don't discuss about the taxation is that rich people will universally pundit, preach, undermine, subvert, and squirm out of any law to tax themselves more. If you are preaching more taxes thinking it will affect the politically well-connected, it will be unwound and castrated by the politically well-connected. Or just deflected into somebody else's responsibility.
In that case, someone else is going to be holding the bill that you might not have intended.
I hate discussion of percentages, because every percentage seems reasonable by itself. It's the summation of the percentages that politicians have no interest in discussing.
In fact, it should be a requirement of government to sum the percentages of federal,state,medicare,social security, sales, resort, fuel, local levies, internet sales into one effective percentage that a given citizen in a given city has to pay.
Has anyone calculated that number for themselves? I've been collecting all my transactions and taxes to figure out what percentage of my income actually goes to taxes.
==40.1% of US taxpayers on the low end of income distribution pay no income tax==
According to 2022 IRS data, average deductions for those who itemized totaled $43,686 in tax year 2022 [0]. The 2022 bottom two quintiles of income were under $44k [1]. That means in 2022 rich people AND poor people didn't pay income taxes on their first $45k of income. Is that unfair to rich people?
Worth noting, the 25 richest Americans paid an average effective tax rate of 13%, as of 2018 when IRS data was leaked [2].
==Top 1% (with the possible exception of a few billionaires) already pays through their nose.==
"While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent." [3]
If the average effective rate hasn't changed, but the effective rate paid by the top 1% has fallen by ~40%, how is the difference made up? The 99% pay more.
this glib analysis neglects the part where decades of plans and budgets have been addressing " build out social systems" while simultaneously building crony networks of political appointees, guarding the hen house. Short term pain is loudly announced for the purpose of defeating the political opponent, not addressing the long standing inefficiencies in a swollen and obese wealth exchange centered in the USA.
tons of cynical one-liners from partisans drown out efforts to really examine the impacts over medium and long term. A horrible problem with this move is that it is not entirely wrong from a fundamentals point of view? It certainly creates winners and losers, no question about it.
The political class and plutocrats always wins regardless of the election outcome. The two party system guarantees they come out unscathed regardless of their jousting.
Nope. It's true that free trade WAS hugely beneficial to the US economy as a whole. Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long.
Free trade is not hurting the economy. American domestic policy impacting the distribution of the produce of the economy is, even in times of strong aggregate economic performance, hurting the felt effects of the economy on large swathes of the population, but throwing up protectionist policies that collapse both the global and local production possibilities curves doesn't help that; it just shrinks the pie without doing anything to deal with the bad distribution which makes people feel like the pie is shrinking even when it is growing. The results you can expect from that should be obvious without experiencing them, but it looks like we are all going to learn about them through painful experience real soon now.
How much do you expect to raise taxes to cover that gap? You double my taxes and I’m in the welfare line.
Further, and this is not referenced enough - the US must rollover ~9 trillion in treasuries this year. The lower the interest rate to do that, the better. Otherwise it increase the deficit even more.
The only way this ends is one of two paths - a path similar to what we are on; default.
We may not like this one, but default is world destroying because of the broad use of the Dollar around the globe.
In CBO’s projections, the federal budget deficit in fiscal year 2025 is $1.9 trillion. Adjusted to exclude the effects of shifts in the timing of certain payments, the deficit grows to $2.7 trillion by 2035. It amounts to 6.2 percent of gross domestic product (GDP) in 2025 and drops to 5.2 percent by 2027 as revenues increase faster than outlays
"The budget projections are based on CBO’s economic forecast, which reflects developments in the economy as of December 4, 2024. They also incorporate legislation enacted through January 6, 2025."
Taxes should be raised on the rich. Elon Musk alone is worth $330 billion. There is plenty of money to pay for what we need. The question is whether we can muster the political will to do it.
From what I understand, de minimis exemption has also been removed.
That is a huge, huge deal. It effectively means that all goods imported from China will be slapped with a 30% import tax, as soon as said goods arrive the US border / customs.
Usually what happens then, is that the courier will pay that tax, and then bill the recipient later on - as well as charge some fee/fees for the work done.
This is why in some European countries, that $1 item from China with free shipping can end up costing $10, because you're paying $0.25 in VAT or import taxes, and $10 to the shipping courier for doing the paperwork.
If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
(That's just from the most obvious consumer example...then you have pretty much everything else. Goods, commodities, etc.)
So it is even worse, you either pay $25 per shipment, or 30% - whichever is higher. Then later it moves up to $50 per shipment, or 30% - whichever is higher.
a $1 item with $1 shipping will end up costing you as much as $52 after June!
> This is why in some European countries, that $1 item from China with free shipping can end up costing $10, because you're paying $0.25 in VAT or import taxes, and $10 to the shipping courier for doing the paperwork.
Not the big China exporters, not any more. They all include taxes in the price on your country specific web site, ship to their warehouses inside the EU, handle taxes and your local courier just delivers.
Now if you're talking DHL yes, they have you fill forms upon forms and charge you for the forms you didn't ask for. But if that happens, no one will have time to process all the forms so private imports from China will simply ... halt for a while. Until Temu/AliExpress/etc sort out for the US the same system they use in the EU.
If in the US, I'd hold on any direct purchases from China for 3-6 months.
> So it is even worse, you either pay $25 per shipment, or 30% - whichever is higher. Then later it moves up to $50 per shipment, or 30% - whichever is higher.
Hah. That's DHL commission territory :) Definitely hold from direct purchases until Temu sorts it out for you.
> Until Temu/AliExpress/etc sort out for the US the same system they use in the EU.
The thing is, the EU specifically set up a structure to make this easier for sellers and transparent for customers (the "import one-stop shop") and I don't see the US government doing any effort to make importations more seamless.
Incidentally, even Amazon US uses that facility. They charge me my local VAT plus some change ("exchange rate whatever" commission, something under 1%) and the package arrives in my hands via courier without any further interaction.
Even Mouser has set up a warehouse inside the EU in the past years. They went from a pain to order from to a pleasure.
Just to emphasise, this system has been set up for ages because you did need to pay VAT on imports anyway. Even without any special tariffs. And that means a visit to the post office in person.
Yeah EU doesn't have a special tariff per se, but they wanted a responsible legal entity in EU to deal with taxes and customer rights so they created this structure.
US just doesn't want anything imported. Doesn't help to set up US entity. You will have to pay this amount. Though, it helps with $1 orders if they import them and process them in bulk.
Well, the point of the action in the US is to stop imports, not just tax them, so manufacturing moves into the US. The minimum fee per item is clearly punitive.
Not that that matters, most manufacturing will simply never be in the US ever again, and having punitive taxes like this will simply drive up costs massively.
If I buy something from amazon.co.jp or Apple and it arrives from Japan or China with DHL/UPS, I don't do anything at all in Poland. It's all transparent, I just get the package for the price on the website.
From which Apple store? If it's your local store of course they have VAT built in.
Interesting about amazon japan, never tried it. Have you tried amazon us?
Edit: interesting, amazon.co.jp seems to be its own thing. My login works on amazon US and all european country sites, but it doesn't work on the JP site.
Amazon is pretty good at handling VAT and all the import paperwork if it's sold as "Fulfilled by Amazon", regardless if it's the local Amazon site, or the US or Japan sites. I've ordered from all 3.
Even eBay has sorted this out now for orders from the US, with VAT and import fees baked into shipping costs. They give sellers the address for their warehouse in Chicago. eBay then forwards as the seller of record.
Fulfilment doesn't have to go through eBay for this.
If I sell a package on eBay.de to a buyer in the UK, I get a customs tracking number to show eBay has collected the required UK VAT. That goes in the form when buying the delivery label and completing the customs (export) declaration.
The EU prepared for years setting this up. It meant all the national post offices updating their systems, and integrating the private parcel delivery companies. It was planned before Covid, then delayed because of the concern for possible disruption.
The USA seems not to have done this planning, and certainly hasn't allowed the months it will take to prepare for it. At least they may have some of the other half of the system, having set that up for exports to the EU/UK.
I suspect that this $25/50 per item policy is to prevent people from claiming a lower value than the actual price of the item. I've received international packages marked "gift" with a value of $10 that I had paid much more for.
I doubt the US will even manufacture substitutes for most of the things I liked and ordered from AliExpress. People with hobbies primarily supplied by Chinese manufacturing (like mine- electronics, 3D printing, FPV drones) are just going to be paying more for the same thing. There's no way we'll get an American substitute for niche products- all the US chip fabs are going to be filled with orders for higher dollar parts.
Note that the fact sheet says per item, not per shipment. So there doesn't even seem to be a way to make one big purchase of several items to pay a single fee. They will hit you for every item in the shipment.
Quick edit: I also note that the fact sheet makes a distinction between things sent through international post vs. other means. If you send via UPS/FedEx/DHL there will be regular customs fees (34%?), and through post you will have the $25/50 per item fee. So I will definitely have to pay attention to the shipping method for anything bought from AliExpress from now on.
Quick edit 2: I literally have a PicoCalc from ClockworkPi coming in the mail in a few days- I guess we'll see if DHL charges me any extra fees.
To add some color: when I've placed orders like this in the past the small items didn't come packed like consumer goods in a nice box but in something like a zip lock bag or an envelope.
I'm not sure how it'll work in the US but in the UK when I'm buying cheap Chinese stuff on eBay there are usually two options - have it posted from China which is cheapest but slow, or order it from a UK distributor who has bulk imported from China which costs a bit more but arrives in a couple of days. I guess everything will move to the latter system?
Realistically, the $25 minimum is to cover the costs of handling the imports (with some premium), so it doesn't make sense to charge it for every item in a batch separately.
Great. AliExpress was the RadioShack of 2025. No way I’m spending $25+ for a strip of SMD resistors, and I expect to never see them available in the US at a price that makes sense as a hobbyist. This isn’t helping anyone, will prevent a lot of prototyping, and just be a bad experience in life. Thanks for ruining the fun of the last 5-10 years of DIY electronics golden age.
I had plans to build some animatronic Halloween decorations for this year over the summer. I’m not going to spend hundreds to thousands of dollars on parts that nominally cost less than $50.
My own pain is minor though compared to everyone I know who uses Temu and other things to basically outfit their life. This will be insanely regressive as they have the least to spend on “on brand” products, which themselves are imported too. This is like “super sales tax for the poor.” Me, I’ll just save my money and wait for the next president to undo the mess. My buddies not as successful monetarily as me? Their quality is life is going down the drain.
De minimis exemption expiring has been a planned thing for years through administrations of both parties. Trump admin has been delaying the already planned expiration during the Biden years to use as a negotiating carrot.
Basically it just means Temu/Aliexpress/Etc. will ship their goods to the US in bulk instead of bypassing customs on individual small orders, and distribute from domestic warehouses, having to now compete with US producers who do the same thing.
It does completely kill any business built on dropshipping individual orders from chinese factories without ever touching inventory however.
I'm inclined to believe they're already doing something like this. I don't shop them but my wife uses Shein and Temu pretty often, and commented last year that more and more stuff was shipping from the US rather than overseas now.
In Europe, Alibaba has their own warehouse in the Netherlands. I wonder if that's to be able to do a single "international" import. Could the same happen in the US?
Aliexpress does that as well, with a warehouse in Hungary. They ship the products there, import them en masse as a business, then relabel and send them off to the recipients.
They may be compelled to do that; there's 1.3 million packages from Chinese retailers a day coming in through the Netherlands, but since they're all individual packages, they fall under a threshold for import taxes. There's now calls to drop that threshold so that people pay import taxes for small items as well, and / or to compel Temu and co to stop shipping individual packages but do it in bulk.
The exemption for low value imports was removed a few years ago, see other comments near this one in the discussion.
Purchases from Temu pay EU VAT according to the location of the purchaser, and an electronic system means the money sent to Temu gets to the EU and the package can sail through customs.
Courier will only pay the tax if it's a DDP solution, and then bill it back to the actual merchant. FedEx, DHL, and UPS provide this as an option. If it goes USPS, or no DDP solution is in place, it's going DDU and it will simply be stuck in a sufferance warehouse or at the local post office until the recipient comes in and pays the bill.
Yeah, the stopping drugs thing is just performative propaganda. It’s really about the money, and the attempt to punish China (which will in fact mostly hurt Americans as much or more, anyways). If it were about the drugs only, there wouldn’t be such punitive measures, and the press release wouldn’t mention the fact that China doesn’t have a de minimus exception.
Do you expect their annual turnover to go up? They might get a bigger slize of the pie but the pie itself is getting smaller.
Pre trade AMZN was down 7%
Down 6% in premarket, will have to wait and see but likely wont help them much as tariffs will impact a significant amount of their products regardless.
Yeah, but it sounds like the tariff is a higher percent for single item shipments. That means that aliexpress would sell less to individuals and more to Amazon resellers.
In addition to what everyone else has said, if Europe goes through with the new "Big Tech tax" and/or tariffs on digital services, AWS would presumably take a big hit.
>> If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
All three of those stores are very popular in my part of Europe. So there must be some workaround. Based on your edit I would guess that they would import a bunch of orders in one shipment to make the 'per shipment' charge small per item/order.
>> If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
All three of those stores are very popular in my part of Europe. So there must be some workaround.
Well, the good news is almost nobody is gonna like this, so I don't anticipate it lasting beyond Trump's presidency, assuming he makes it 4 years at this rate. The bad news is that even after tariffs are removed, it will take years for prices to recover, if they ever do.
Actually one policy that Biden kept in place after the 2020 elections was the Trump Tariffs.
I think we are underestimating how popular protectionism is with progressives, it may turn out to be an unusual alliance between disaffected voters on the far right and left outnumbering free trade advocates in the center of both parties.
I haven’t seen any progressives in favor of this. Disaffected voters on the left want more housing and universal health care, not tariffs on avocados. Disaffected voters on the right just like to see libs getting owned… but they won’t appreciate their wallets being liberated of their money.
They're going to try to make sure we never have fair elections again. I'm not saying they're going to succeed, but they're sure as hell going to try, which is terrifying.
> This is why in some European countries, that $1 item from China with free shipping can end up costing $10
This is what strikes me about these new tariffs... for all the concern about how it's going to impact the US economy (and I don't doubt it will), this is STILL far, far, less protectionism than literally every other country in the entire world. Donald Trump's justification for all this is that the U.S. is propping up the entire world economy to it's own detriment, and I'm not sure he's necessarily wrong here.
"less protectionism than literally every other country in the entire world"
I ordered from Temu and it's shipped from China and arrives at my door with my local sales tax applied -- because Temu abides by Canadian law -- but otherwise with no additional fees. Got a pair of headphones and a three timer device yesterday for $10 CAD.
Or you know, Trump's constant yapping about Canada's diary tariff. In reality the US ships 4x more dairy to Canada tariff free than the reverse, and we, by design, do not target sending dairy to the US. But Trump takes advantage of the poorly informed and/or stupid, and it works amazingly.
>U.S. is propping up the entire world economy to it's own detriment
If you're sitting in the richest large country in the world, literally at the height of its economic accomplishment, and you really buy it when someone tells you that you're the victim, you might be profoundly misinformed and with literally zero context of reality.
The US has an amazing amount to fall, and it's going to happen. And when you're working on the assembly line doing extremely low value work, having been ostracized by the entire planet, enjoy how you made the libs pay.
Aside from everything else one thing what strikes me as particularly insane is how it’s not even defensible as a protective measure. My favorite everyday olive oil comes from Tunisia. They now have a 38% tariff on them. There are no out of work olive farmers in the US.
The orange man wanted tariffs, the orange man is going to get tariffs. Now we have to hope the American people aren’t so dumb as to still be convinced only he can solve their issues. I don’t hold out hope for that.
If Jan 6th didn't dissuade people, I don't think anything will.
Additionally, his base will not blame him, they will swallow whichever of the many narratives the propagandists are currently cooking up that suites their fancy.
I disagree with this. Jan 6th didn’t affect 99% of peoples lives directly. It was clearly bad, but few people saw impacts in their own lives.
Higher prices and a possible recession will affect every person in the country and even globally.
His MAGA base might not blame him, but that’s only like 30-40% of the electorate. The other 60-70% won’t be happy if their lives are negatively impacted.
IMO the only thing that can get through is actual personal consequences for the voter themself
Well, yes. And his approval rating has been steadily declining in tandem with the stock market declines he's caused. If/when prices suddenly skyrocket because of tariffs, you can bet his approval ratings will decline further.
What exactly on this list is a day to day item that is going to adversely affect the middle class/blue collar Trump voter enough to cause them to flip their alliance? On that list maybe clothes and shoes. But even still those are generally bought only a couple of times a year and any increase will be griped about in the moment, but come election time will be forgotten.
There are only four things that will make a middle class voter feel pain enough to re-align their vote. Fuel/energy costs, general food costs, rent/housing costs, and job insecurity. If these tariffs do not adversely touch those areas, they will have little to no impact on switching votes. Also of note, over the last four years those items are the ones that drove Trump back into the Oval Office.
Middle class people also have to buy new cars, maybe want to treat themselves with some foreign alcohol, they still need furniture, coffee is still one of the most traded commodities in the world and americans guzzle it down.
That won't work. WaPo, LAT, etc. have run numerous articles where MAGA voters talk about the consequences of his actions to them or immediate family members (getting laid off, losing medical coverage, deportation, etc.) and they say it's worth the sacrifice because they just know that Trump is actually looking out for them and won't let them suffer for too long.
Don't expect much. Modi's overnight demonetization of Rs. 1,000 bills back in 2016, caused a lot of inconvenience to almost all the Indians for 3/4 months at-least. Demonetization and flawed implementation of GST caused many small scale companies to shut doors.
With media in their pockets they can get away with anything.
> It was clearly bad, but few people saw impacts in their own lives.
It did though, they just didn't know how to measure it, and it wasn't felt immediately. It was like the flash of light that dazzles before the pressure wave of the nuclear bomb blasts everything (which in the analogy is this moment, now).
What happened on Jan 6, and in the leadup and response to it, was the erosion of democratic norms. Before Nov 2020 they were stronger, and after Jan 6 they were significantly weakened. Our institutions are essentially built on trust, and Trump in his campaign to overturn the 2020 election spent every waking moment for months attacking those foundations. He purposefully eroded people's trust in Democracy for no reason, because there ultimately the fraud he alleged in that election was not found.
That impacts everyone. They just don't feel it in the supermarket; they just have no "democracy meter" that they can use to gauge how healthy their representation is in government. But the reason he's able to do what he's doing now is he because he laid the foundation in 2020.
One thing worth noting is that congress isn't pleased about the executive branch high jacking the powers of appropriations from them (i.e. imposing a tax on the people in the form of a tariff).
I see no evidence of your claim. A total of 4 senators of the President’s party voted symbolically on a non-binding resolution against his Canada tariffs. The Speaker of the House, who also belongs to the President’s party, won’t even bring it up for a vote. There has been no motion from the legislative branch to undo the President’s direct subversion of the power of the purse by effectively eliminating the staff required to disburse Congressionally-approved funds.
> There has been no motion from the legislative branch ...
Surely you mean there is no motion from those in power in the legislative branch, namely the Republicans. The Democrats and Democrat-aligned independents make motions which are blocked by the Republicans.
People's inability to recognize who is responsible for bad acts leads to throw-the-bums out elections. People are disgruntled, whether based on facts or false beliefs fostered by propaganda. They throw the bums out. They hope for better things.
If we want the government to function better, we need to assign responsibility, not let Senator X and his pals, or Representative Y and her pals, screw everything thing up and then hide in the crowd. "Oh, look what the legislative branch has done! Throw them all out!"
The root cause is the IEEPA (1977) which was vaguely worded to supposedly shrink executive authority under TWEA (1917) which allowed essentially unlimited executive authority "emergencies" to be declared for an unspecified amount of time. IEEPA was used to block TikTok, which still may get blocked, and used to set these arbitrary tariffs. IEEPA needs to be fully abolished. (And we also need to bring back the Tillman Act (1907) and get an amendment to overturn CU.)
trump would love a government shutdown, as he has proven. I really doubt shutting down the govt would change any situation when trump is legislating by executive order, and mostly a shutdown would hurt Americans. You're trying to simplify something that isn't simple at all, and blame the Democrats for not doing what an armchair expert wants.
It's not just about what Trump wants. Most Republicans in Congress would like to get reelected.
In the comment above you suggested there's nothing congressional Democrats can do. That is incorrect. Any time the Republicans don't have unanimity, and any time they need sixty votes in the Senate, the Democrats have leverage. They need the guts, and/or the understanding of basic game theory, to use it.
Calling me an "armchair expert" and waving your hands about how things are complicated is not a counterargument.
Jan 6 was far from many people's lives. It was a philisophical debate at most. When they get to the stores to buy groceries and they are 30-50% higher and their next TV, laptop the same way, they will realize that voting for an Oompa Loompa was a bad idea, and will want him out.
Spoke to a friend who is a big Trump supporter just yesterday - his view is that we shouldn't react to short term impact, these policies and tariffs should be viewed and judged in the long term. These tariffs will remake american manufacturing. I dont know if thats the current faux news talking point.
Yep, that's the talking point. Howard Lutnick has been out there saying this.
For better or worse, though, voters don't judge politicians based on the impact their policies have in 10-20 years. They're going to judge these tariffs in 18 months when they vote in the midterms and again in 2028, long before a widespread shift in manufacturing can occur.
> There are no out of work olive farmers in the US.
Is that because we can't grow olives here, or because we don't have federal subsidies propping up a domestic olive industry that can compete with corn and soy?
I ready don't know the details well enough there, but it feels like this could just be selection bias at play.
You can grow olives in the US and there are some farms in CA. The quantities produced are orders of magnitude off though and given the time it takes to grow olive orchards we cannot replace our imports of olives in a reasonable time period.
There's a lot of examples like this. Coffee, and bananas come to mind. You can only grow those in Hawaii, or maybe Flordia, and there's absolutely not enough land to sate our imports. The whole theory behind international trade is that some countries do things well and others don't. In the case of food the reality is more that others can't.
Hawaii is the only U.S. state where you can grow coffee and their coffee costs a fortune. You need tropical weather and high altitude. Florida won't cut it. Besides, we already have fruit rotting in the fields in Florida because there's no one to pick it.
Want to put tariffs on Chinese electric cars or batteries? Ok, fine. But tariffs on all imports? It's the most brain dead policy in my lifetime. I can't think of any products that are produced 100% domestically without any foreign inputs. These tariffs will drive up the price of just about everything.
Leverage over importers, i.e. all of industry. If you're a captain of industry and want an exemption or a lowered rate, they you approach the deal table, cap in hand, with tears in your eyes and beg like a dog. "Please, sir..."
In return for a minor reprieve, you ensure your factory bathrooms and hiring policies are aligned with the president's agenda, among many other things. This can be a cudgel over the heads of the Apples and Costcos of this country who dare to defy the edicts of POTUS on social policy.
Other popular options are very publicly taking your card of the Party, writing odes and poems to the Great Leader, and give your firstborn daughter's virginity as a token of vassality.
The problem is not so much that people don't like doing such things - they get by - it's that, at some point, enough people will start getting more favours than you do, and you'll start feeling the need to stage a coup, which is a lot of work.
I wonder how it will work out in a world where tiktok is always there as a much less exhausting form of entertainment than revolutions.
Sure, but that's the rationalizing of someone who can't get strawberries in winter. Getting food that's not grown locally much less in the current local season is one of the most QoL-improving parts of the modern world.
Kinda sad to go from that back to "well I guess I don't really need these nice things we took for granted. I suppose I can live off jellied eels again."
> If we could snap our fingers and domestically produce most or all of our own products, would you not prefer that?
That's like saying "If we could snap our fingers and every state would have mild weather, abundant capital, and a highly talented workforce, would you not prefer that?"
Yeah, then every city could be like SF or LA or NYC.
But it's not even worth it as a thought exercise because it completely ignores reality. The reason I live in NJ and pay high taxes is because this is where the high paying jobs and good schools are. Cottontown, Alabama theoretically could be a financial capitol of the world and if you want to base your position on that, then you should probably re-examine your position.
This is called rejecting the hypothetical. Just because it's not worth it for the arguments you care about doesn't mean it doesn't have value as a thought experiment to explore the consequences.
No, I would not prefer that. A robust distributed system is less likely to crumble under local pressures. A blight could more easily sweep through a single nation and take out a staple crop or two, where it'd be impossible for that to happen globally. You can't spin up additional global trade quickly after you've shut it down, which could lead to people starving in America. I like systems that can't fail. That's especially true when that system is how I'm able to eat food.
Global trade isn't a security issue, national or otherwise. We don't increase safety or stability by reducing sources of consumables.
Edit; super timely example because this isn't an unlikely hypothetical: egg availability due to bird flu.
We've had plenty of wars since globalization came in post-WWII though. Its impossible to know what wars would have happened without it, and how much war may have been prevented due to trade rather than the threat of nuclear war, for example.
Those were good wars, though, apparently, since they bolstered US dominance and the spread of a certain flavor of "liberal democracy" based on progressive politics and consumerism.
I could have sworn they were bad wars when they were happening ("No blood for oil"?), but opinions on that seem to have shifted all of a sudden for some reason.
No, I wouldn't; Ricardian comparative advantage is a thing, and the kind of extreme autarky you suggest means sacrificing domestic prosperity available from maximizing the benefits of trade for the aole purpose of also harming prosperity in foreign countries (but usually less sonthan you are denying yourself, because they have other potential trading partners) by denying them the benefits of trade.
I’m not familiar with any arguments that would lead somebody to prefer that. Maybe to avoid giving adversaries leverage over you, but isn’t that better solved by diversifying your supply chain? Maybe to salve the domestic effects of the trade adjustment, but isn’t that better solved by reallocating the surplus wealth rather than eliminating it?
Self reliance and resilience, at least to certain pressures, would fit. I don't think many people would be willing to give up cheap electronics and only buy stuff we produce here, but those are reasonable goals even if uncommon.
Environmental concerns would actually fit the bill too, if one is willing to consider externalized costs. Its easy to ignore mining damage in other countries and all the oil burned shipping over the oceans. When that all happens at home people would more acutely feel the costs and may be more likely to fix it.
describe how a entirely domestic food chain would be more resilient than one that is global?
Self reliance is a defective meme that breaks down once you want anything other than individual survival. Dependence on a community allows humans to specialize. Humans being able to specialize is the only reason this comment, or this thread exists. More simply, not just the Internet, but modern life couldn't exist without it.
Once you acknowledge that interdependency is a reasonable trade-off for the other nice things about life. A simple infection no longer being a death sentence is a nice thing we've commoditized reasonably well. The only question is, how do you build a robust and resilient system?
EU depends on the US for many things. That was clearly a mistake, and it's now working to work out backup solutions.
Having your government depend on foreign cloud and software was always a bad idea in my opinion, but IT security is not high on the list of the people that make decisions.
Russia depended on Europe, but got wiser after 2014 and certainly after 2022. To the point of having it's own Linux distribution (which I ridiculed along with everyone, and now it turns out they were right). Geopolitics change, friends become enemies and enemies become friends. Barring a civil war, a country will never refuse to work with itself, so it's the most reliable partner possible.
I have, and that depends on whether you are concerned at all with where we externalize our costs to. We had it good while messing up a lot of other places.
Maybe that's fine, maybe its not, but its not as simple as trade makes everyone better off.
I don't want a cost of living increase either. However, this raise the question of what the real cost is. The prices might be cheaper, but is that only because we're exploiting poorer people in markets with fewer worker protections and fewer environmental protections? Is it just because I'm greedy and I'm not willing to pay someone a liveable wage here or go without whatever it is? I'm not sure, but it makes for an interesting thought experiment.
For some things that's true. For others it is not, or at least not enough to make up for the difference. For example, "housing" might cost less, but the definition of housing might be different. Even if we adjust the standards and built the exact same thing, it would be cheaper, but likely still out of reach for the average person in the poorer market.
Right, and there's a good case to be made for tariffs that are explicitly tied to another country's worker and environmental protections, where the country has actionable steps to improve their worker/environmental protections in order to avoid the tariff.
But the current administration is itself actively opposed to worker or environmental protections, and the result of the current tariffs will just be that the poor people overseas end up even more impoverished and still lacking in protections.
> but is that only because we're exploiting poorer people in markets with fewer worker protections and fewer environmental protections
That's definitely happening, but there are other possible reasons. For example a good could be more efficiently grown or produced in a country because of geographical reasons.
Also, from a pragmatic standpoint, it is simply not the case that all wages and wealth across the countries of the world are equal. Maybe that could be a goal but is anyone talking about that? Either way, it does not follow that the workers in that country are necessarily exploited when paid lower wages compared to the importing country, unless we are using different definitions.
This is not to mention that untargeted tariffs can increase the cost of living _for no gain at all_. If Germany manufacturers some specialty tool (not with slave labor, I would hope!), and no US manufacturer wants to make it, then I suddenly have to pay X% more for no reason at all.
Sure, not every country needs the same pay. Things like cost of living can vary. It seems hypocritical to say that people in one country deserve better protections than in another though. If we aren't creating the same protections as the workers here, it would seem that we are exploiting the less protected group. Workers here deserve real unions, but not in China. Workers here deserve OSHA, but not in China. We've decided as a society that people deserve certain protections, benefits, and even environmental protections. These costs factor into the cost of the goods. To not extend these protections (or the remuneration to pay for them) to the poorer group is exploitation by definition.
If tariffs were being added as a response to poor working conditions, and a requirement of lifting the tariffs was to improve working conditions, that could potentially be seen as a generally positive outcome for the world.
Producing the same good in the US, at anywhere near the same price, requires automation or prison labor (legal slavery in the US) and likely won't result in more manufacturing jobs and likely won't result in higher wages for workers. Florida's approach here is child labor, which is both exploitative and cheap.
If the good is so cheap that we can't get close to it here, that might actually be a good case for a targeted tariff depending on the circumstances. It's essentially similar to anti-dumping depending on the specifics even if it isn't tied to overseas conditions.
"because we're exploiting poorer people in markets with fewer worker protections and fewer environmental protections"
This can easily be overdone. If you stop doing business with poorer people, you all but guarantee that they stay poor. Counter-productive to say the least.
In my lifetime, I saw a lot of countries grow at least somewhat wealthy from extensive commercial contact with the West, including mine (Czechia).
Yeah, you don't want to stop business, but if the price gap is massive, it might be good to ask why. Sometimes it's because something is more efficient in that country. Others it's just people getting taken advantage of.
I think my answer to this question would be no? The food example is specific, all food can't be grown here, but for other products that aren't commodities, I want different cultures competing to build the best products i.e. cars, and I want other cultures innovating things that maybe their culture is optimized for (video games, electronics in Japan, in the 1980's?). There are some interesting questions recently about how maybe globalization have turned luxuries into commodities (i.e. all cars look the same) but I think my point still stands.
Are relations and allies impossible to have with trade tariffs? Historically we have had both, I'm not sure why they would be considered mutually exclusive.
No, for the same reason I don't try to manufacture my own car in my backyard or build my own house, or grow all of my own food, or ...
This is basic fucking common sense: I'm good at some things and other people are good at other things. We each specialize in the things we're best at, and everyone ends up better off.
You went to the extreme though. I didn't ask if one wants to do everything themselves. In the US, for example, there are still hundreds of millions of people to specialize in various roles.
The exact growing conditions for olive production aren’t common in the US, so most of the production comes from California - west of Sacramento and south along the San Joaquin river. There are a lot of barriers in bringing specialty crops to market related to know-how and contracting sale of product, so even in other areas where growth may be possible it may be infeasible.
Most likely the answer in many such examples is it needs cheap human labor. US seldom lacks anything in terms of natural resources and always comes down to this.
US does produce olive oil, particularly in states like California, Arizona, Texas, Georgia, Florida, Oregon, and Hawaii. So you do have a few options:
1. Support local producers. There are high-quality olive oils made right here in the US that might surprise you.
2. Work with Tunisia manufacturers to move their production to the US
3. If you don't want to support local producers, pay extra and enjoy your Tunisia olive oil as much as you want
4. If politics is the real issue for you, move to Tunisia, there is no "orange man" there
That said, refusing to support local production out of principle isn’t really a solution.
I don't know how much you know about olive oil, but it comes from olives, which grow on olive trees. Olive trees are famously long-lived and, together with the very specific types of land that they grow on, they represent extremely persistent and valuable investments for the people who produce olive oil.
This is not true. Next time you grab an olive oil bottle read the fine print: unless it’s very expensive it will be a blend of oils from 4-8 countries, ie production doesn’t have to be in the same country where olives grow on olive trees, as you eloquently put.
> There are a few olive trees in my neighborhood. I should plant some too.
They are nice trees, but beware you won't be eating the olives unless you put a lot of work in. They have to be de-bittered or "cured", which is done by soaking them in things like caustic soda. https://anrcatalog.ucanr.edu/pdf/8267.pdf
So if you are after a nice compact tree that doesn't need a lot of water, then an olive tree is a good choice. But if you want a garden of Eden fruit tree, there are much better choices.
US consumption of olive oil is more than 10x domestic production of olive oil. It is not possible to spin up olive orchards in even a medium timespan as the trees take many years to grow. It’s not about wanting to support domestic producers, it legitimately is not possible.
You are right about olive oil. So why did he do it? The trade imbalance with Tunisia. Why is there are trade imbalance with Tunisia? US consumers have money to buy products from Tunisia, Tunisian consumers don't have the ability to afford products from the US. Why can't Tunisian's afford US products? This is the central question for every country in the trade war and it has myriad factors, but two of the biggest are: A higher cost US dollar, suppression of wages in countries like Tunisia (and Germany, and China, etc).
There is this group-think on HN today that services are intentionally left out as part of the US trade balance. That confusion likely comes from tax and corporate structures. Ie all those profits are locked into sub-corps, so Apple-Cayman Islands or Google-Ireland (corporate tax havens) which is why they don't show up on the balance sheet as "trade" into the US (typically those sub-corps buy financial assets with those profits). Read the first chapters of Trade Wars are Class Wars for more depth.
It's not a weird take if you reasonably assumed that OP meant: "they don't have the ability to afford the same value of products from the US." Which makes total sense because their income per capita is only a fraction of that of the US.
California produced 1.94 million gallons of olive oil in 2023. That same year the US used ~98.5 million gallons of olive oil. There just isn't enough space to produce that much olive oil in CA much less produce it profitably or in ways that wouldn't devastate the environment. And all that is ignoring that it takes around 10 years for an olive tree to get to consistent production.
Because they will price their product to be just a little cheaper than the imported alternatives. This has been discussed to death, with citations, and I believe it to be true. We will see, I guess.
And even if they don't raise their prices to below the imported alternatives immediately, the increase in demand means they'll sell out so quickly, they'll raise their prices anyway
I mean, if their main competitor just got price jacked by taxes, that will push the demand to them. Since they cannot scale up to satisfy the demand, a correct choice is to raise prices. You can argue that this is price gouging, but the easy counter is that this is the market reacting to the taxes and adjusting the going price.
>Onagri data show that Spain is the leading destination for Tunisian olive oil, with 47.4 percent flowing to Spanish ports, followed closely by Italy at 42.2 percent and the United States in third at 33.8 percent.
This is interesting to me, because Spain and Italy are also exporters of olive oil. And there have been famous discoveries of fraud in the EVOO market as it has boomed. I wonder what percentage of Spanish and Italian EVOO exports are actually blended with (or wholly!) Tunisian imports?
Many Spanish and Italian oil blends do indeed use (unprocessed) olive oil from Tunisia. This is a problem for Tunisia because we’re missing out on the meat of the profit margin generated by the final bottled product.
We have had recent successes with developing & selling our own bottled products directly - Terra Delyssa is one good example that has gained traction in the US market.
From what I've understood from that chart, the "percentage" is just a difference between imports/exports with the USA. It's not actual tariffs in place by Tunisia ON USA goods. Am I right/wrong ?
Or is Tunisia tariffing the hell out of US Olive Oil in order to protect their local production base
Why do you think it's a good idea to buy olive oil from Tunisia instead of from California? Are you aware of how much CO2 is released to ship a trivial commodity across the atlantic ocean?
Just a guess as he said his favorite olive oil so could it be one tastes better? I imagine like many other things taste can be effected by the region it is grown in.
As for your other point in a perfect world we would all care about global climate change but many are not going to eat something they don’t like to do their part. But really cargo ships are small fish in such a big problem. Ban private jets or cruise ships would be way more beneficial.
Help me understand your viewpoint here - is the assumption that an entire ship is dedicated to shipping trivial commodities and the cargo isn't co-mingled with anything else? At the same time, what isn't counted as a "trivial commodity", and should ships _only_ be used for those items?
It just seems like the only things we should be importing from across the globe are things that absolutely cannot be produced domestically. For example, I've heard that coffee beans only grow in certain climates, so that would be a commodity that makes sense to import.
Pretty much everything else, including this supposed Tunisian olive oil, just sound like luxury goods to me, and should be priced accordingly.
>> There are no out of work olive farmers in the US.
I'm not sure this is true. I buy olive oil specifically from California. It's niche but could be larger if they weren't competing with lower overseas labor costs.
Not 50 times larger which is what it would need to be to supply the current domestic consumption. California only produced 1.94 million gallons of olive oil in 2023, that same year the US used ~98.5 million gallons of olive oil.
Even if we could snap our fingers and create the orchards out of thin air there's not enough land and water to grow 50x our current production. Then where's the worker population coming from? They're also trying to drive overall immigration to essentially zero.
According to Trump Tunisia has to buy olive oil from you for the same amount of money that you spent on Tunisias olive oil. Otherwise one side has a trade deficit and that's unfair!
So, we can and do grow olives here in California, but it is a very small industry compared Spain, Italy, etc.
However, one thing we absolutely cannot grow here in any sort of money-making way, is coffee. So 32% tariffs on imports of coffee from Indonesia.... when we do not even export coffee.
We get a lot of titanium from China. That's because the largest natural Ti deposits are in Eurasia. That is due to geology, not politics, and now US companies who need it (read: high performance transport, medical products) will pay substantially more for it.
Why wouldn't they? They can immediately raise prices by however many percent the tariff is. Probably a bit less because higher price causes lower demand. So let's say raise by half of the tariff.
Maybe it will partially offset the increased cost of everything they need to buy and sell olives.
They still probably use equipment, packaging and other materials that come from overseas. Or they work with suppliers impacted by tariffs. Their costs are going up. Everyone's costs are going up, although some more than others.
Except none of that 38% extra in price is going to the farmers. It's a tax not extra profit for the producer. Crazy how many people still do not know how tariffs work.
You may want to re-read GP's comment because they did not indicate whether they cared if the 38% went to the government or the farmer. Reading their comment as written, they simply said they would happily pay the tariff to continue enjoying Tunisian olive oil. It's "crazy" of you to imply they don't understand how a tariff works when you're the one mis-reading what they wrote.
I did not misread. He used `undervalued` which implies that there is a difference between quality of the product and its price. Slapping on 38% tax to Tunisian olive will undermine this value proposition without improving the producer or the consumers product experience. If anything the relative price (due to the repetitively high tariffs on Tunisia vs Italy) will ruin the value to price ratio that attracts GP to the Tunisian olive oil.
Moreover, his use of the word 'happily' suggests he is not aware of the negative consequences for both the Tunisian exporter, who may have to lower prices or even reduce product quality standards to compete with the now relatively similar-priced Italian olive oil, and the American consumer, who ends up paying more without any improvement in value.
Why would someone be happy with a price increase if it is not helping the producers of the good (which his comment implies he is sympathetic to) or adding any value?
15 dollars for a liter of my favorite Olive Oil is a trade I would happily make. I didn't say I was happy that the price increased, nor did I say that I am happy about the tariff, nor did I say that I happy relative to how I felt about the trade last week.
If anything those Tunisian folks would have to reduce the price to compete. The tariffs go straight to the US coffers at the customs, nothing to do with the farmers.
> what strikes me as particularly insane is how it’s not even defensible as a protective measure
You must not have read many of the comments here. Way too many people are trying to defend this just because they don't want to have to admit that they were wrong on Trump being better for the economy.
The orange man is saying: "Looks like you are sending a lot of $$$ to those olive oil farmers in Tunisia. With my tariffs you now have two choices at your disposal: either you keep buying their Olive oil but then you are going to have to give me $$$ as well to pay for our national debt. You are going to buy less of it; and help your country in the process. Alternatively, you can decide that maybe you don't need olive oil all that much. We have this amazing product called 'corn oil' which is produced locally and is now comparatively less expensive, buy that instead and support your local farmer. Choice is yours".
Maybe you don't like either of these choices; but at the same time; saying "I believe that having cheap access to product produced halfway across the globe is a god given right to American people; how dare you imposing me to make such a choice" is part of the reason why we need 13 earth to sustain the modern US lifestyle.
I am really not a Trump supporter at all. But at the same time the gradual reduction of tariffs has been a key factor of increasing global trade; which in turn is a key component of the increase of CO2 emissions. Finding a way to dampen a bit the international component and making sure that locally sourced products and services are not affected seems not that bad.
The whole "decide that maybe you don't need olive oil that much" thing is what's going to crush the economy in the US. The problem is that demand does not shift to alternative supplies elastically. It takes years and sometimes decades to build an alternate supply chain for some industries. So what you're saying is that an entire generation of children in the US are going to have to grow up materially worse off than their parents and grandparents. And that's assuming that a bunch of businesses magically start overnight to fill the enormous gaps caused by a lack of access to international supply chains. If you look at other countries such as in South America or for example Italy where there are huge protective tariffs, the industries you expected to magically appear didn't. Instead people just have less and work less.
So your dichotomy applies, but it's not some magical ratchet out of globalization unless there's a corresponding push on the federal or state level to build competitive domestic industries to replace the international supply chains we've been cut off from.
> I am really not a Trump supporter at all. But at the same time the gradual reduction of tariffs has been a key factor of increasing global trade; which in turn is a key component of the increase of CO2 emissions. Finding a way to dampen a bit the international component and making sure that locally sourced products and services are not affected seems not that bad.
I'm not sure about that part.
International shipping in particular isn't a huge part of the energy cost of the goods that get shipped, so making the same things locally doesn't save much. This is from 2016 so things will have changed since then, but back then it was 1.6% of emissions from shipping, vs. 11.9% from road transport: https://ourworldindata.org/ghg-emissions-by-sector
What trade does increase directly is the global economy, and that in turn means more money is available to be spent on energy; historically the energy has been carbon intensive, but everyone is now producing as much green energy as they have factories to work with, and are making factories for those green energy systems as fast as they have bureaucracy to cope with.
I am from Western Europe and the story that "the majority of the meat we eat is imported from Argentina at great environmental costs while we have farmers unable to make ends meet; this is what's wrong with globalization" is a key story that gets repeated constantly by environmental activists and NGOs. Similarly, there's a big push by the same green parties to "stop consuming pineapple in November, buy locally sources seasonal veggies instead".
I almost never see anyone disagreeing with that, and anyone that does is immediately qualified as "climate change denier". To me it looks like tariffs similar to those introduced by Trump would constitute a step in the right direction (make stuff more expensive = less consumption + if you buy it anyway you have disposable income so you give more to the state) . It feels weird to me that now it suddenly doesn't seem to be so much of an issue anymore; if it's only 1.6% why is it such a key argument.
Similarly; almost everyone agrees that "it's not normal that we depend so much on foreign countries for things that are essential for our future". That idea really came up during the COVID crisis and never left. The EU is launching "big plans" to address this issue (as usual; with barely any impact at all). Again; the reason why we have FFP2 masks made in china is purely because it's cheaper. Make them more expensive; and local options can pop up, naturally. It will take decades; but the ideal moment to begin working on your goals was yesterday. The next best opportunity is today.
There are many many things wrong with the way Trump computes the tariffs rates; the way they are announced, handled etc. But at its core: "less trade, less global & more local" is a key pillar of virtually every Green Parties over here; it's so weird to me to see Trump (!!!) actually do something that looks like it aligns with those goals.
> But at its core: "less trade, less global & more local" is a key pillar of virtually every Green Parties over here; it's so weird to me to see Trump (!!!) actually do something that looks like it aligns with those goals.
But it’s not for the same reasons. Also, the Green parties explicitly want to reduce everyone’s consumption. Do you think American Trump supporters have intentionally voted for being able to afford less stuff, have less variety at the grocery store, etc?
IMHO the idea is that they are ready to accept the suffering of Tunisian oil lovers for the greater good, which is the empowerment of certain type of people like them.
It's basically Europe but hundred or more years ago.
The COOC web site lists California olive oils that they've certified. Last time I checked California Gold Olive Oil was certified, and they even sell it in half and full gallons. That's just one I've tried and liked-- there are a bunch of others listed on the COOC web site. (Edit: there are probably certification trade associations for other countries/regions, COOC is just the one I'm familiar with.)
The bit I love is that countries with which the US has a trade surplus aren't getting the opposite of a tariff (a grant, I guess) on their imports to the US, they aren't getting zero tariffs on their imports to the US, they're getting 10% tariffs.
Heard Island and McDonald Islands, two Australian territories inhabited only by penguins, get singled out for a 10% tariff.
Norfolk Island, an Australian community of 3000 with no exports to the US, gets its own 29% tariff. They're expecting a tourism boost from the publicity.
Now what the underlying items are that were traded? Not sure. Guessing you can dig it up in AES https://www.census.gov/foreign-trade/aes/index.html but have not been able to figure that out. Let me know if you do.
Nah, they just went down the Wikipedia list of places that trade with the US. This is how Réunion winds up on there, despite being actually part of France.
Norfolk Island is part of Australia. Logically it would be swept up in the 10% tariff on Australia. It has no exports to the US, that being the US government's justification for tariffs over 10%, let alone an individual 29% tariff.
A comparison would be another country putting a 10% tariff on the US, but singling out Rhode Island for its own 29% tariff.
That might be the case with places like the UK which has a trade deficit with the US but still gets taxed at 10%. I feel however the penguins put up an obvious non tariff barrier by only accepting fish rather than hard currency.
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."[0]
>It explains why they singled out Reunion from France, it has a separate ccTLD
It also has a separate country abbreviation (RE). You know, like you'd see on an address. The thing that tells you where something, like a good imported in to the United States, is coming from.
This is is why it has a separate ccTLD by the way.
This blue sky thread is just an incredible example of motivated reasoning.
> It also has a separate country abbreviation (RE). You know, like you'd see on an address. The thing that tells you where something, like a good imported in to the United States, is coming from.
Yes, obviously, it's ISO 3166-1 but that's a batshit way of assigning tariffs. To the point I suspect it's a LLM.
Norfolk Island? The island with 3000 people, which in the context of international trade is a speck at the side of Australia. Or the uninhabited Heard Island and McDonald Islands with zero trade?
If Reunion and Norfolk Island are to be considered separately from their mainlands, where are the tariffs for Easter Island (Chile)? It has more people than Norfolk and probably more trade, it's 3700ish km from the administrative region it belongs, so it geographically distinct like Reunion.
Anyone (with a pulse) tasked with calculating the tariffs would see this and think "I have to remove these outliers". So the two options are:
A. Someone took the ISO 3166-1 codes and brainlessly calculated their batshit formula without noticing that HM doesn't produce anything. They did not instead do the more natural thing, go from highest imports to lowest which would've eliminated HM and most anomalies. They didn't even check their work.
B. They asked an LLM, which calculated this in the most naive way possible one-shot.
I dunno governor, this looks like vibecoded Excel spreadsheets.
Its worse than that. Its like saying you must have used chat gpt because you answered that 2+2= 4 and gasp so do the LLMs! Nevermind that its just the obvious answer to the question.
Lets see the prompt. The prompt further down in the thread that reproduces it was asking how to use tariffs to balance trade deficits with a 10% minimum. Is there any other answer then set the rate such that the deficit goes away or 10%, whichever is greater? No. That's just the answer to the question and is why ALL LLMs give the same answer.
LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.
Are you implying there is a very small chance that if someone posted in 2018 reddit "We should tariff Algeria at 35% because X", the LLM that the administration may have used would have agreed with random redditor?
It is really silly to say that because an LLM gave a similar approach a single time and someone took a screencap of it without full context, that Elon and Trump are sitting in the whitehouse asking Grok what to. This level of hyperbole is why reading about anything to do with the two of them is really exhausting.
>It is really silly to say that because an LLM gave a similar approach a single time and someone took a screencap of it without full context, that Elon and Trump are sitting in the whitehouse asking Grok what to.
A similar approach to a close-ended question.
The original screenshot doesnt show the prompt. The one reproducing it asks for a tariff policy to eliminate trade deficits with a 10% minimum. Umm... hello? There is only one answer to that. The greater value between 10% and a rate based on the deficit. Of course the Trump policy and all 4 LLM answers agree. The answer is determined by the question.
Its like accusing little Timmy of cheating on his math homework because he said 2+2=4 and -- GASP -- so do all the LLMs!
People are saying they literally used the trade deficit and the formula they published that they claim doesn’t do this multiplies that value by 4 and then 0.25. Yeah… that is what we are dealing with.
> Elon and Trump are sitting in the whitehouse asking Grok what to
Not perhaps Elon or Trump themselves (doubt Trump can actually use a computer), but it could very well be one of the teens like the so-called "Big Balls" that apparently have their hands in everything.
> This level of hyperbole is why reading about anything to do with the two of them is really exhausting
Almost as exhausting as their daily actions / tweets / rants.
Wow. So they came up with zero-effort estimates of the tariff rate which would balance the trade deficit. The method is like something you'd be asked to criticise in A level economics.
Then they incorrectly labelled these numbers as reciprocal tarrifs implying this is what other countries charge the US.
The worst of it is that all of this misinformation will be happily accepted as truth by so many people. It's now going to be almost impossible to have people realise the truth, especially those people who support Trump. Ugh.
Are we factoring in digital/service trades? For example, Netflix is in Vietnam. There are many Netflix subscribers in Vietnam. Does that get factored into the trade deficit? Or is it only physical goods that get factored in?
Vietnam uses many US services such as Microsoft Office, Netflix, ChatGPT, Facebook ads, etc. This is revenue that directly go into the pockets of American companies.
No services, only goods. This is according to @JamesSurowiecki on Twitter, one of the first to reverse engineer the equation for how they’re coming up with the numbers. So Office, Netflix, etc wouldn’t count against the deficit.
This is where the calculation is extremely unfair to a country like Vietnam. They export low value physical goods and import high value services like ChatGPT, engineering consultations, etc.
They're getting screwed by this tariff plan.
Any tariff based on trade deficit needs to account for services.
You shouldn't put tariffs based on deficits period because it's a brain dead way to think about international trade. The whole idea is flawed from the jump so there's no way to make it rational, it's inherently irrational.
No it doesn't. Trump's whole issue here isn't making more money for the federal government. His issue is that the American economy no longer works for you if you are a blue collar worker.
The services we export are performed largely by white collar, college educated people. A good number of whom are here on H1-B visas. What service can an unemployed factory worker export to Vietnam? We have to end globalization of industry or wealth inequality will just continue to spiral.
There are ~600k H1B visa holders in the US. the tech sector alone has ~10M workers, and professional workers are ~9x that again. That boogeyman represents < 1% of the relevant workforce.
“White collar” work is the majority of US employment. It’s unclear to me if you’re proposing sacrificing white collar for blue collar jobs, but that’s not a trade our economy overall wants to make.
Relatedly, the unemployment rate for US factory workers is 2.9%. This is a very low unemployment number - 5% is generally considered “full employment,” and anything below that indicates a labor shortage. So your hypothetical factory worker should probably just go get another job.
I don't understand the nostalgia for manufacturing jobs.
My mom worked in a factory putting pickles into glass bottles. It was not her dream job. I can still remember how she smelled after a shift.
But it was the only employment she could find in that village.
Things got better when we moved after a few years and she shifted into a healthcare job. White collar if you will.
His issue is actually that Putin told him to jump, and so he has to jump. You're utterly delusional if you think Trump gives a single diaper filled with shit about the "blue collar workers"
I'm glad I read your comment because I've been wondering the whole time whether services are factored in. It's absolutely insane that the administration is ignoring the exported value of some of the biggest companies in America that all these countries are buying services from.
Of course not. The entire time Trump is railing against the deficit, he's talking only about goods. He wants to bring back manufacturing to America, didn't you hear?
I can think of at least a dozen reasons but I'll give you one: We are in delicate peace negotiations with Russia _right_ now. There is good reason to isolate all foreign policy decisions with that country to those negotiations. It is called doing more than one thing at a time.
We are also in delicate peace negotiations with Ukraine right now, but we still put import taxes on them. If you think that the administration would put more import taxes on Russia after the negotiations are done, then at least you're consistent. I need your other 11+ reasons to be convinced.
If we were in delicate peace negotiations then we should put more pressure on them. Tell them extra tarrifs will be removed if they agree. The main reason there is still war is Putins stubbornness in admitting he started an unwinnable war. More pressure is helpful
This is down from $23B in 2019, and is basically just fertilizer and minerals used to make fertilizer.
Fertilizer is not sanctioned due to the fact it’s needed for food security in the EU (surprise suprise, the EU is not just insecure domestically in terms of military and energy and technology, but also in terms of fertilizers needed to grow food, fantastic governance they have over there…leaving potash mining or nat gas extraction to other countries does look good for those domestic net zero calculations though!).
EU peace is assured by inter-locking trade within the block. Countries within the EU are gently encouraged to trade essential goods with one another instead of producing them themselves.
This policy dates back to the end of WW2 as an attempt to prevent one country getting too aggressive and hence starting another war.
Since the fall of the wall, Russia was seen as a legitimate trading partner for the block and, in the long term (just as Türkiye), as member of the block.
Hence sourcing fertiliser from Russia was taken to be a strategic positive since it tired Russia to Europe.
I think we should be aware of history, that does not imply acceptance nor agreement.
Instead had I said this ten years ago, the majority of politicians in the EU would have been d’accord. What does that imply about our political systems?
There have been a bunch of alliances in Europe over the centuries, none have been permanent.
Stealing the assets of countries like Venezuela and Russia caused this to happen by making the rest of the world move off of the dollar to secure their asses. Doing more of them is the dumbest idea that can be proposed.
The Eu will take care of that by slapping taxes/tariffs or regulations, and the rest of the world will also do the same. Play stupid games, win stupid prizes.
I see how the tariff numbers may have been calculated. But why is it done that way? What is the rationale behind such a calculation? Is this a way to balance the existing trade deficits? How does it work?
Would appreciate you (or anybody else) shed some light on the economics of the thing.
The label "tariffs charged to the US" is just straight-up wrong, either due to incompetence or malice (likely to justify the high tariffs).
But basing the tariffs on import/export ratio makes sense if your goal is to be a net exporter with every country, as it discourages imports until that's the case. It's still somewhat arbitrary though; my guess is that the White House is pursuing that goal mostly for political, not economical reasons.
I would love to hear the plan on how the US can be a net exporter of coffee with, say, Indonesia (32% tariff). Perhaps we can take the funds from the tariffs and build mass greenhouses?
Interesting. While I think these tariffs are a bad idea, I'm not qualified to fully pass judgement. However, knowing Trump, when I saw the numbers I instantly suspected they would be wrong.
This won't bring home manufacturing but let's say that it will...
The US doesn't have the people to do the actual manufacturing. I saw a video recently explaining how sectors like the military, construction and the automotive industry each have 100K+ positions that they are unable to fill. A return to manufacturing adds to that shortage.
Apparently there's some 7 million young men of working age that are...missing in action. Self-isolated, gaming, addictions.
In construction, for every 5 people that retire, only 2 enter. And it's been like that for over 10 years. The people aren't there nor is the motivation.
I'm sure you'll have Apple investing in a mega plant where 50 educated people push some buttons though.
Plus, even assuming there existed lots of people to fill the gap, why would they sign up for manufacturing jobs? They pay like crap. Unions and worker rights have been gradually chipped away at for years and now they're straight up chainsawing them. Why work a monotonous job that pays at or just slightly above minimum wage, has skills that aren't really transferable should you decide to change careers, is rough on the body and doesn't even provide proper health care or sick days to rest, and employers will call you in during natural disasters with the threat of firing you otherwise and then leave you to literally die while pretending it's not their fault when you do die? [1]
It's companies and the government saying, "We want everything, and in exchange, we'll give you nothing. And you will be happy." No American sees their kid growing up and thinks, "I hope my child will one day work long hours at a factory." People in some countries do, and it's because those jobs are a step up from the current standard. Factory jobs in the US are, in many cases, a step down and that step keeps lowering. High tech/high skilled manufacturing can be an exception, but the bulk of the jobs they're hoping to bring back aren't that.
> Plus, even assuming there existed lots of people to fill the gap, why would they sign up for manufacturing jobs? They pay like crap.
Maybe that's just you talking from a position of relative privilege (e.g. as someone who's likely an extremely well-paid software engineer or some adjacent profession), and not really understanding other people's situation. Not everyone has a pick of the perfect career that ticks every box.
It's very well document that there are lots people bitter those manufacturing jobs got off-shored, and lots of communities that wish they'd reopen "the plant."
> Just reopening won't bring back the comparably high wages from that time period.
It's a start though. If the plant stays closed, those "comparably high wages" certainly aren't coming back. If the plant opens, there's a chance.
There's a lot of "letting the perfect be the enemy of the good" protecting a shitty status quo: "don't do that because it doesn't fix X," implicitly requires that one solution fix everything perfectly all at once.
I'm saying that this outcome will never exist because more has changed than just the plant closing. If we coupled "reopen the plant" with "the plant makes entirely new things" and "the plant trains local workers to take these jobs" and "the plant pays above local service/construction wages" and "the plant will be successful in geopolitical competition" and "the plant can do 10x the amount of business due to advances in automation to get to the same level of employment" and on and on.
We could solve _each_ of these problems, absolutely - but they are all interlocking parts of a wicked problem. Blowing up the economy and threatening a global recession won't actually solve any of these.
> Do you assume it can't get worse? Or that 10 other things could not get worse?
> Like, much much worse?
It will at least afflict the comfortable, otherwise they wouldn't be so opposed.
And that's fine. We've been running on a twisted "win-win" logic in this country for a long time: no policy can be pursued where the working class "wins" unless the well-off also "win" (because if they don't, there will be much whining), but if the working class loses it's "Who cares! They've got to suck it up and adapt. Be more grateful and go fill the holes in your life with cheap shit from Walmart."
Enough of that, and a lot of people rightly stop caring if things can get worse. Trump is the chickens coming home to roost. If people didn't want this outcome, they should've gotten together to fix the problems with neoliberalism.
Are there problems? Sure! But "fixes" that just makes everyone* worse of helps.. nobody.
> Enough of that, and a lot of people rightly stop caring if things can get worse
I get the feeling, but it's still dumb: "My neighbor is playing loud music, so I'm going to burn down the block. Ok, so I don't have an apartment anymore, but at least hes not plying loud music anymore!! Win!!"
* well, not the rich. They will be fine, at least in the short to medium term
> We could have kept that and implemented policies that were far less painful and far more likely to increase wages.
Yeah, but we didn't, so this is what we get.
That's why, ultimately, I blame Democrats for Trump. They had many opportunities to improve things, but they chose to ignore the trouble and prioritize other stuff more amiable to their increasingly upper-class base. The root cause was their neglect of the building pressure, Trump is just the explosion. They keep claiming they're the competent and responsible ones, but they are just irresponsible in a different, more subtle way.
You'll find many leftists that agree. The flubbing of so many social issues while moving with the exactitude of a striking cobra to maintain their stock-trading rights, disrupt upstart progressive campaigns, and shield financial markets from the concequences of their own actions, has lead many to recognize that we might be getting KSed. They walk the walk, yeah, just a different one from what you figured just a moment ago. Duckstep? No, the other fowl play.
Yes, the hard part is convincing owners to part with their wealth in order to fund better pay. This is partly because they themselves are wrapped up in a massive obligatory apparatus; call it "the financialization of the economy." I'm by no measure a Trump supporter, but I do hope that what we're seeing is a proper crash that wipes out some of these folks. Once defaults are rampant, you'll have destroyed a lot of wealth, but also a lot of the obligations that necessitated all of this shifting of wealth upward in the first place. You'd also have a lot of very sophisticated people in the clock-in line, suddenly very interested in pay equity. That's one of the happier scenarios, at least.
I'm from a very poor Appalachian town. My only option to better my life was to get up and leave.
People from my hometown do talk about the good old days. People worked at union factories and my grandfather worked a well paying railroad job. My no-name town of 1000 people had a train station that made it possible to go to NYC. My grandpa got paid a handsome retirement from the railroad company. When he died, my grandmother was able to receive his benefits.
My hometown votes against building railways. The station has long crumbled. They vote against unions. The factories are long gone. They've voted against any sort of retirement benefits. The elderly are struggling and depending on churches handing out food.
Even if those factories come back, they'll be paid less than my ancestors did. They'll never have an affordable link to cities hours away. They'll never get the retirement benefits my ancestors had. And if you mention giving them these benefits, they yell and say they don't want them. The youth in my hometown who worked hard in school (we somehow had a decent school, all things considered) used their education as a ticket out. Now the people there are pissed and they're coming for education next.
These people don't want "the plant." They want to be young again, without understanding that their youth was great because my ancestors busted their asses to give us great opportunities. They squandered everything that was given to us.
I'm sorry to hear that. That's genuinely painful to read, but it's a reality that I've seen reflected elsewhere.
I tend to think about Feynman's Challenger commission report whenever I come across stories like yours, "For a successful technology, reality must take precedence over public relations, for nature cannot be fooled."
For a successful society, reality must take precedence over public relations, for nature cannot be fooled. And yes, nature will come for us all be it pestilence or disease, or a storm that washes it all away. Nature never stops.
We created civilization and society as a way to escape nature's wrath. To become something more, to rise above the muck, and when we degrade that we will inevitably go back to the muck.
32 years after my father died, I still only get 1.9x the pay he used to get for manual labour. Given that inflation goes roughly double every 20 years, its clear I am getting less pay then he did. I also had to leave my village, because there were simply zero good opportunities to work in IT. The young leaving rural villages are pretty much common, and has almost nothing to do with how people vote. Neither in which country they actually reside. Its a downward trend, everywhere.
My background is very similar. Grew up in a small, poor mountain town that once boomed with industry but today is crumbling to dust as the population becomes increasingly elderly and young people either leave for greener pastures or abuse substances in order to escape their reality and succumb to addiction.
The industry that once fueled the town is long gone and isn’t ever coming back, and as you say even if a new industry moved in the jobs it’d open up would be so grueling and abusive that it wouldn’t be a net improvement to anybody’s lives, thanks to all the worker protections stripped away over the years.
It’s not enough to “just” make jobs available. They need to be good jobs with proper protections and support that allow people to thrive.
This is very telling. The American Empire didn't even work for Americans. Who really benefitted? Just the Elites? Why should common people care about propping up an empire if the people in power don't bother about them. For context, read this thread.
because, like Yishan is saying, they don't even realize the 'empire' _is_ working for them. We sit around in absolute physical security, awash in cheap goods, able to travel anywhere, finding our cultural and technological products in demand across most of the world, ...
We only feel want in areas like medicine and education where protectionism and prejudice have prevented us from fully enjoying the benefits of that position.
> The original architects of American global power did something very clever that no other empire had ever done before: they deliberately hid the instruments of their power.
> Specifically, they institutionalized the hard power of the post-WW2 American military into a "rules-based international order" and the organizations needed to run it.
> ...
> The reason they did this is because repeated use of hard military power is fragile and self-defeating: it engenders resentment and breeds defiance.
I think a similar thing happened to the people with the ideology of markets: they're presented as some neutral, optimal thing, but they aren't. They encode biases and preferences that suit powerful interests, which can take a lot of effort for a common person to discern. But since there's no leader or decision-maker to point to and defy, so it's hard to organize people about the problems, and then it's hard to point them at the right root cause/solution.
Spot on. “The market” is presented like it’s some state of nature, some law of the universe like physics. It’s been said Slavoj Žižek, Mark Fisher, and Fredric Jameson, but it appears Jameson was likely the first:
“It’s easier to imagine the end of the world than the end of capitalism.”
The guys on TV told them the people who supported it were communist and unions are for lazy people and welfare queens. They were told by the people on TV that if they vote against this, then those people will have worse and they'll have it better.
45 minutes down the road was a town with a large black population. When people talked about "those people in (town name)" being lazy or "those people" getting jobs or "those welfare queens" somehow benefiting from anything, everybody knew what they were talking about. It was better to be racist instead of caring about the future of their children
Now, decades later, it's still the same. "Welfare queen" isn't the word that's used much anymore--everyone knows it's used as a substitute for various racial slurs and it's hard to deny it. Instead, they complain about DEI and woke. They replaced the word, but the meaning is the same. They still deny that it's meant to refer to "those people", but they always mention "that" town name when talking about it.
"If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you."
> Why work a monotonous job that pays at or just slightly above minimum wage,
If you torpedo the economy so people have no other sources of income, raise the price of all goods, and cut of all social supports and programs, people will have no choice but to take jobs they would have turned their noises up at before.
Then raise the wages. Yes that means products get more expensive, but so be it. The economy will find a new equilibrium. White collar workers will see their purchasing power decrease, but factory workers will see it increase.
>No American sees their kid growing up and thinks, "I hope my child will one day work long hours at a factory."
Maybe its just me, but I think theres something seriously wrong with society if people have existential dread over the thought of having to produce the things they consume. If the production of it is so unethical, it shouldn't be consumed at all.
The same people proposing bringing back all these factories also want to lower wages.
The dread isn't over production. It's about the conditions they face while producing them. Americans dream about having a small farm and doing their own woodworking and blacksmithing or doing so with a small community. They don't dream about working on a factory line and being fired if they miss a day due to being sick. But at the same time, if someone else says they don't want this, they call them lazy and say the kids don't want to work these days.
It's an odd paradox.
And high skilled manufacturing still exists in America. That work is often paid decently and people are fine with working those jobs. The problem is tariffs being made to bring back low skilled manufacturing, and the desire to make the standards of employment lower in the US so that it's feasible.
> Americans dream about having a small farm and doing their own woodworking and blacksmithing or doing so with a small community. They don't dream about working on a factory line and being fired if they miss a day due to being sick.
They dream about being treated better than that, but this is a big cultural gap. There are a lot of Americans who do, genuinely, dream about working somewhat hard factory jobs. They feel proud and fulfilled that they work in the steel mill just like their dad and grandpa and great-grandpappy, and they want to make sure their son will have the same opportunity.
F-Them... I want a future of Star Trek replicators that can molecular print most of the stuff I want. Heavy engineering seems to still need at least some high energy refinement though. (Or at the very least, replicators with different composition.)
The tariffs are high, but not 1,000% or whatever. If the alternative is "build new factories in the US, substantially raise wages and benefits for employees to encourage them to leave service positions for these roles, and then spend time training them" then the furniture from Vietnam with a 50% tariff is still going to be cheaper.
the good production worker's wages came from the unions. the GOP is fervently anti-union (with the exception of the police union maybe). they also oppose minium wages. there is no reason to think they'd support wage raises.
Everyone in the United States was much more well off in the 50s/60s/70s as they had just won a huge war that left most of their competitors factories completely destroyed. There's no economic boom today.
The triumph of conservative ideology has broken the unions. No individual factory worker has the leverage to negotiate a better compensation package against the professional management team at Gap or Deere.
The 80s was a period of explicitly designing for this condition; it's just taken a while for the ramifications to be acute. Although it's been obvious for decades that we were headed here.
Wealth inequality. Increases in productivity are going to the top, not the worker. It's also why social security is going broke. It could be funded if you remove the cap. Removing the cap wouldn't be necessary if there weren't such a wealth inequality problem.
The ultra wealthy are hoarding wealth then telling the rest of us we can't afford things we've afforded for over 50 years.
> "They were able to in the 50s/60s/70s. So why not now?"
Because the 50s/60s/70s was the post-World War II economic boom for the US. Unless you're volunteering to endure World War III so that the next generation can enjoy that kind of boom, that is not going to happen again.
If you build a product that is too expensive to be competitive, nobody is going to buy it. You will not earn money and will not be able to pay workers salaries.
> rough on the body and doesn't even provide proper health care or sick days to rest
That's why I'm bullish on human shaped drones controlled with full-body trackers. If you could do most physical jobs without being physically near the area you'd open them to more women (so widening the potential workforce) and improve on-the-job accidents statistics.
I don't know that I agree with this. The US is too large a market to ignore, and this is effectively raising the profit margin for local production. Foreign companies will either move some portion of manufacturing to the US (for the domestic market), or cede the market completely, and I don't know that they're prepared to do that (well, maybe Chinese ones are). Factories have a long lead time, so even if this is abolished at the end of his term, they'll be locked in with sunk capital costs. The main reasons not to do this are a) abandoning the market, as mentioned, or b) you think you can hold out long enough until the political landscape changes.
If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages. Pay enough, and someone will do the job. This is especially true for low-skilled work. There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
And even if these jobs aren't in running these factories, they've still got to be built. Money is a powerful motivator, so I have no doubt they will. Companies will bleed because of this, but there are clear benefits for the US working class even if they're paying more. The gamble is obviously that the benefits outweigh the negatives of higher prices overall. Modern economics says no, but modern economics also believes in service-based economies, and that countries should only produce what they're good at, which, eventually, becomes a repudiation of the nation state. No country wants to buy bullets from an enemy, even if they're cheaper, and the web of infrastructure and industry necessary to maintain a defense industry mandates that at some point, you abandon the theory. Which is to say: I don't know, but I'm also skeptical that economists do.
> If the people aren't there, wages will rise until they show up. [...] There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
While this might be in a theoretical and pedantic way true, sometimes you do not have the economic context to provide those larger wages, so there will technically be no "shortage" - but just because the jobs themselves will disappear.
If you look at poor countries or regions, there is garbage, dirt and dilapidation everywhere. Clearly there is - in a practical way - a need for cleaners, but by your definition there is no "shortage" - because they cannot afford to pay anything for those jobs.
> effectively raising the profit margin for local production
This is the sad thing for US consumers.
If there is now a tariff on Product X that means instead of costing 100 it will now cost 125, I will guarantee you that the price for a locally produced competitor item will be 124.99 The local producers are not going to leave 25% profit on the table.
Why would it have to be that way? Are you imagining a monopoly on all locally produced goods? Why wouldn't there be competition with a healthyish margin? Seems entirely and 100% cynical.
The point of raising a tariff on a $100 imported good to make it cost $125 is because the US provider cannot profitably sell for less than $125. The tariff doesn't magically fix the domestic provider's cost basis.
If the US provider was able to compete close to the $100 level (as they already have incentive to do!), there would be no complaint and no need for the tariff in the first place.
Well taking that 34% number as reference. You could have been brought from 0% margin to 34% with a penstroke. US manufacturers were ground down just to the level of being unprofitable for the last 4 decades, of course they are close to the break even level.
Let's leave aside for a moment the notion that there are any significant number of US manufacturers making stuff for 0% margins.
So you suggest that increasing the tariff allows the US maker to increase their margin. We're not talking about them reducing input costs (in fact, the opposite in many cases), so the only way you could mean for them to increase their margin is by raising price. And to get the full benefit, you suggest they raise their price to match the price of the imports. And yes, this is what will happen, US makers will increase their prices because their low-cost competition is gone.
So you're now kind of agreeing with the poster you initially disagreed with.
(Of course, for many goods there are no US factories here and no reasonable ability to make the goods here at prices that would make sense, even accounting for high tariff barriers. So in those cases, consumers will just pay more for the same goods.)
Yes, but if the profit margin is now higher, it a) permits new competitors, and b) allows breathing room for debts to be paid off, and investments to be made that improve local capabilities. Like most things, tariffs can be good or bad. Yes, they can stifle innovation when there's no additional impetus for improvement, but they can also be necessary to protect local industries that are of strategic importance.
All industry exists in a web, and you can't just excise parts of that web without affecting the whole. The US has de-industrialized while its rivals have grown, and its global dominance is predicated on its technological and military lead. This de-industrialization was purely a function of financial incentives, whereby companies could juice their profit margins by seeking cheaper labor elsewhere, and skilling up foreign populations. But the bill for that is coming due now.
No-one will move any manufacturing because people don't expect this to last long enough for it to make sense.
The congress can remove Trump's authority to determine tariffs at any point by declaring the crisis to be over. The Republicans have a knife-edge margin in the house and the most consistent two rules in American elections are that the party with the president loses some support in the midterms and that bad economic times means that the opposition party gains.
It would take years to move production, and next congress is 20 months away. There is no world in which this ends up good for the USA. Even if you believe that this is a situation where short-term pain leads to long-term gain, there is no way this will continue long enough for that gain to ever materialize.
> If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages
I don't know about this in the US. Sure, we're not at full employment, but I don't know how factory jobs are going to change that. My impression is that there is already a deficit in labor willing to work hard for good pay (construction, trucking, etc.,) and tightening immigration policies will make this even worse.
The definition of good pay is relative. Increase wages enough, and people will leave other industries, and new workers will join the workforce straight out of high school rather than going to university. Those jobs will be filled.
Op is implying that there's excess labor lying around that with moderate prices (say, what you make in fields like construction, electrical work, etc.,) would be picked up. This isn't the case, or they'd already be taking the jobs in those fields that are relatively in demand.
I agree that if you paid people as much as software engineers to work in a factory you would certainly see disruptions in the labor market. I don't know what the market clearing price would be for factory labor sufficient to meet the US demand, but I don't think it'll be pretty.
To what benefit though? People in the US currently provide advanced services such as software sold to people everyplace, and people in developing nations are manufacturing cheap goods, sold to people everyplace.
After tariffs, people in the US are (maybe) manufacturing cheap goods, sold mostly only here, and developing nations continue to manufacture cheap goods for the rest of the world, and fewer people are providing advanced services such as software.
Overall, the world just becomes poorer and has fewer useful services provided. Yes, the US becomes less dependent on the rest of the world, but the rest of the world also becomes less dependent on the US. Material wellbeing of everyone is worse off.
But that's assuming all went to plan. In practice, it's hard to see how they would even achieve bringing manufacturing here through tariffs. Crashing the stock market is a sure-fire way to ensure the next administration (3.5 years away) will revoke them. You could install a dictatorship, but that makes it even less likely for companies to invest in the US. In practice, this will likely just make Americans poorer, but not bring any meaningful amount of manufacturing jobs back. Pretty much the epitome of "cutting off your nose to spite your face."
You say foreign companies will move manufacturing to the US or cede the market. You leave out the most likely option: everything will stay the same yet you pay more for your imports.
There probably isn't enough labour to onshore everything like you're implying.
The US currently consumes about half of its goods from domestic manufacturing. There are about 12 million people currently employed in manufacturing, and 7 million unemployed people. Matching the historical all-time low for unemployment rate would give around 4 million unemployed still.
> There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
I mean, by that logic there's never a shortage of any profession. But in practice, I've seen what happens with a shortage of cleaners in a popular tourist town (my wife used to run a cleaning business) - it becomes nearly impossible to hire cleaners because everyone's salary in the area is inflated and people would rather work at an easier job. You run into persistent performance issues with your remaining cleaners - they're dishonest, simply stop showing up to work without notice, etc. You can't hire anyone from outside the area because there's no housing available other than dingy, overpriced basements. Holes get blown in the budgets of schools, hospitals, etc. because they have to contend with cleaning rates that are effectively set by the competitive market for cleaning AirBnBs.
I heard a great story from a colleague that worked in fashion development in the UK. There's a big push for "Made in the UK" clothing and consumers associate it with quality, but the items are lower quality, because the UK lost its garment manufacturing skills 50+ years ago. Meanwhile Asia has gained those skills, so if you buy clothes from China they are likely higher quality than you'd get here and cheaper.
This is not always the case, Italy still makes high quality leather goods, Portugal is still making good shirts and trousers etc, but for the most part as economies have moved away from manufacturing into services they have lost the skills and to force manufacturing to happen there means accepting higher priced, lower quality products.
This has probably little to do with skill being lost, and more with how little one gets paid to do this kind of work. Skilled people can get jobs in other fields that earn a lot more.
No no, it's the skills. My colleague worked for a very high priced fashion brand who were able to pay high rates (and indeed did for this and other parts), but they couldn't get the quality they needed.
At the low end, sure, it's obvious you'll get more for your money abroad. The point here is that the skills are lost and you can't pay any amount anymore, at least not at scale (there will always be artisans who can produce extremely low volumes but these don't affect the market much).
Skilled people are still mortal and after a couple generations, they do pass away. They won't be replaced by new skilled apprentices if the industry hasn't been hiring.
Skilled people don’t just appear out of thin air. Skilled people need years of practice, and advice from a network of adjacent skilled people to become skilled in a particular craft.
You can be skilled at Excel and be 10 years away from knowing how to make even mass produced low quality clothing.
> The US doesn't have the people to do the actual manufacturing
The core issue is that, historically, experienced workers have passed down their knowledge to new generations, ensuring a steady accumulation of expertise. However, when factories close and seasoned workers retire or move to other fields without training successors, a vast amount of valuable knowledge is lost. Rebuilding this expertise is both difficult and time-consuming. Subsidies will be required to support local production - initially yielding lower-quality or significantly more expensive goods - until the Western world relearns how to manufacture at scale.
Furthermore, if you want to build something, you likely won’t do it by hand. You’ll need machines to automate the process or enable complex material operations. Rebuilding this capability from scratch will take time, as existing manufacturers lack the necessary capacity. Additionally, similar equipment is produced much more cheaply in China, creating another challenge that must be addressed. What’s likely to happen is that Chinese manufacturers will establish companies in the United States that replicate their production facilities elsewhere (e.g. mainland China). They’ll ship in parts, and final assembly will take place in the U.S. This approach allows them to bypass trade restrictions while maintaining cost advantages. I already know of several cases where this is happening.
A lot of that experience isn't needed though - automation replaced a large part of the expertise needs. I used to work at a factory, it produces as much as it ever did (though with a lot of modern innovations), but today only about 200 people work in it, compared to over 2000 in 1950. The CNC laser cutters replaced 70 people running saws with just 3.
This isn't uniformly true in all industries or throughout all manufacturing. Not to mention that you need qualified people to operate and maintain these machines and the machines themselves.
No people, no supply chain, and no total lack of environmental regulations mean most manufacturing jobs are not coming back no matter what the tariffs are. It's not just one reason that the manufacturing jobs have left, but a conflation of reasons.
Unless… well, unless you eliminate the EPA, invade Canada and Greenland and take their raw materials, and make people so poor that they take up factory jobs again.
didnt you listen to the 70 year olds planning this? we're just going have the robots do it.
you know how people said putin was surrounded by an echo chamber and thats how he got stuck in ukraine? Thats the us now but with billionare VC's and 2nd tier 1980's NYC real estate developers. Look at their numbers and listen to them talk, they're genuinely not grounded in reality as whole group and theres no fixing that
No, this is the effect for the last 50 years' usual "I will have my high paid cushy job while some other country somewhere manufactures products for me, taking on all the negative effects. Only positive effects for me. Yes, you should use our currency and take part in our inflation. Or we'll invade you. We will print 6T USD[1] in 2 years and you need to absorb that along with us."
Thankfully, this is coming to an end soon. No tears anywhere.
I know a version of this is what happens in every human age, not singling anything out, but don't get onto the moral high ground of "I am just trying to ensure everyone is well paid".
[1] additionally, 80% of all US dollars added to the supply were added in the last 5 years.
This is the part that confuses me too. The US is in an enviable position where a lot of the "shit" jobs are outsourced and in return we get cheap stuff. Why is this a bad thing?
US is good at bits and bytes but not in actual atoms i.e. manufacturing. That role has been outsourced to China. Without real manufacturing in control of US, it is beholden to what China says which is bad for American empire and its power projection.
This is wrong. The US still has an excellent manufacturing industry. Just because you don’t make sneakers over there anymore, doesn’t mean you’re not good at manufacturing.
This is such an important point. Lumping all "manufacturing" together obscures that some production is low-cost goods like matches and socks. Other production is 787s and F-150s.
What the administration is suggesting is that we resume manufacturing low-cost goods. I'm not sure where they would plan to get the labor for that.
My interpretation is that today other countries are less willing to take on the role the US would like them to. So, the chosen solution in the US now is to wind down this approach, and try to bring back production to the country. I don't know enough to comment on the effectiveness of the method they are using to do this, but that they are doing it is clear to me.
China is not going to play this role anymore as has been made clear over the last 2 years. Them being the largest country playing this role for the last decade has fueled this recent revamp in the US.
Russia has not really played that role for a long long time.
India(me being an Indian, I might be biased) is way way too slow to be depended on to sustain the sheer scale of US' requirements. Also, compared to china, it's actually getting more and more difficult to get "shit jobs" done here, which might be surprising. It is for all the wrong reasons though, so not much to celebrate as an indian. However, india has enough domestic potential to be self sufficient, so nothing to worry about either.
A few years ago, I thought the next "dump yard country" for the US would be africa. But their progress to the required level is clearly multiple decades away, so that's out of the window in the short- and medium- term. Europe is already finding it difficult to get much out of Africa, despite still basically controlling multiple countries there. Thus, they are having to resort to immigration from the middle east (some 10 years back, it was all from africa)
Needless to say, "freewheelers" (for lack of a better word) such as western europe and australia&oceania were never under consideration, and will never accept this role.
Eastern Europe/SEA are "up for grabs", but the former is already saturated playing this role for western europe/russia (and the two fight for control of the same) and the latter is thoroughly saturated playing this role for china. You saw this play out recently with the attempt to get ukraine's rare earth industry serving the US. Russia invaded them for similar reasons.
The upper middle east clearly will not play this role, preferring to live in substandard conditions and submit to terrorist organisations instead (and who can blame them?) China seems to love supporting these lot too.
Saudi Arabia/UAE are options, and the new US government has made good use of them (atleast on paper) with the new investments. However, they can only do so much given their size, geography and demographics.
I never thought they would allow it to happen, but even LatAm is slowly being "lost" to china.
And suddenly, you've run out of countries! Maybe we'll find some martians though, they can do the welding for the starship.
Strangely, the US is also seemingly losing its ability to maintain an edge through intellectual property. The whole hype in non-technical circles when Deepseek came out was a reaction to this. 20 years ago, it would have been protected better. The IP from 20 years ago is protected well... even today! See: semiconductor manufacturing. Some people say this is because you're now needing to import people too (and so, the knowledge leaks). Some people probe further and say that this happened in the first place because of worsening education in the US. I am inclined to agree with this, since over financialization/trade/empire-building and increasingly poorer education was also what killed medieval india, which I have more knowledge of. However, I might be making more of the symmetry than there is.
It isn't a bad thing - unless you don't have a job/have been stuffed with the idea that meaning and good pay could be yours if not for those foreigners.
No it wouldn't, it would end up in even more inequality as the middle and lower classes would be able to afford even less while the rich would just see their assets rack up in price. We had that problem in my small European country.
Nevermind the improbability that a decrease in living standards would actually compress the distribution of living standards - Are you seriously arguing that's desirable? That it's better to reduce everyone's lots so that we can be more equal?
If you asked me a couple years ago, I would absolutely oppose it, but now I am seriously entertaining the idea that it may be better to live in a poorer but more equal society.
It seems that the majority cares far more about comparative wealth than absolute wellbeing, and is willing to destroy the system if they don't get what they want.
I'd actually agree that, at any level of living standard, the more equal society is probably happier. I'd question whether that'd be an effective _intervention_ though. Actively reducing the median standard of a relatively well-to-do society to compress the overall distribution does not seem like it would lead to a net increase in happiness.
Why? Who is looking at the societies of countries where manufacturing is happening and saying “we want that”?
Manufacturing used to be great for the US because other places couldn’t do it, either because they hadn’t developed enough or they’d been ravaged by war. It wasn’t “manufacturing physical goods” that was great for the US, it was “having industry that others don’t”. Now, other countries have manufacturing capability. America’s uniquely exceptional industry is now tech - mostly software, but also hardware design, and design of tech for other industries. That is what we should be focused on - supporting the industries that set us apart from other countries.
I don't see how that follows. It's not a step up to be forced to work in a factory, compared to before when not working was an option because costs were lower.
This essentially amounts to subsidizing industries that aren't competitive. It's like choosing to bake bread at home for $5 when you could buy it for just $2.
Or it could be interpreted as putting a higher value on self-sufficiency and domestic production capacity than standard free trade economic theories value those things at ($0).
Standard comparative advantage narratives don't really account for production "webs" being ecosystems that get big synergies from colocation. They do not account for geopolitical risks either.
True, it keeps wealth circulating domestically, fostering local economic activity. However, drawbacks of this system are higher costs for consumers and inefficiencies in production, so it needs to be balanced.
> This essentially amounts to subsidizing industries that aren't competitive.
That's not a bad thing, especially if they are "not competitive" because foreign workers can be exploited more (and not some real competitive advantage).
There are more desirable things than the few neoliberalism optimizes for.
This is basic economics that the administration refuses to understand.
Trade allows you to consume beyond your nation’s manpower and resource constraints.
And it’s even stupider when you’re putting tariffs on raw materials like Canadian lumber. So not only do we need to magically find millions of workers to work in these new factories we also need to find a bunch of lumberjacks and start cutting down our own trees? We’re at 4% unemployment, who’s going to do this work?
We literally don’t have the people to make this work.
(Spoilers, the problem they had was that even when they found companies to manufacture their bbq scrubber, it was harder to find someone in the USA to make the parts that are used to make the parts.)
Simone Giertz said on her channel her company approached multiple factories in the US, EU and China about manufacturing a product. None of the US factories even replied.
Suppose you even find those workers. How are american products going to compete with cheaper chinese / european ones. People over there are used to much lower wages / purchasing power. You can look at Tesla vs BYD prices as an example
More likely the goal is for foreign companies to set up factories in the US for the domestic market. The US market is too big for most industries to ignore, and as they move manufacturing there, they skill up the US population.
Industries don't exist in isolation, and you need to be able to make simpler things in order to cultivate the know-how to make complex things. If China makes better phones, it won't be long until they make better drones. This is as much a strategic initiative as it is an economic one.
And BYD should be a wake up call that the US cannot compete in high value goods anymore.
>If China makes better phones, it won't be long until they make better drones.
They already do. China makes the best drones. Most of the drones in the world, most of the drones use in wars, etc. are manufactured in China, or are comprised of mostly Chinese parts.
I'm referring to the ones that carry a Q designation, not the DJI kind. China hasn't yet caught up in that domain. Electric drones are seeing a lot of use in Ukraine and other conflicts, but they aren't helping to establish air superiority.
China has direct copies of our Reaper drones, they aren't some advanced technology, they are very simple craft actually, and descend from essentially target drones and some toys the navy put together in the 80s.
>but they aren't helping to establish air superiority.
A reaper style drone does nothing for air superiority. It's not meant to. It's a surveillance and ground attack platform. It has no means of equipping or targeting actual air to air munitions meant for Air Superiority.
Why did you believe the MQ9 was relevant to air superiority? Or some special machine that China couldn't make?
Reapers aren't the only military drones, and yes, there are drones that do help establish air superiority, either on the reconnaissance and logistics side, or (more recently) directly on the combat side.
China doesn't have the same level of sophistication in stealth tech, and they still struggle to make decent jet engines, because they don't have the required materials technology for certain components. There's also decades of work in signals processing, which is at least as important as the platform. Not to mention sensor packages, but they almost certainly have a lot of that down. A drone is simple until it needs to fly close to the coffin corner, do air-to-air refueling, land on a carrier, be invisible to radar, be hardened to jamming, act as a wingman to a human pilot... You get the idea.
And since it apparently wasn't obvious, I'm not really talking drones specifically, I'm talking about all defense hardware. China doesn't have anything close to an F-22, and as far as we know, their tanks aren't as good. They can't build carriers that can compete with US ones. But they're already outcompeting the US when it comes to building civilian vessels, and they're taking over the electric car market. How long until they can build a decent carrier or tank?
In real life, people are spending years looking for jobs making enough to barely survive. I should tell them about your video you saw, if only they know.
Eh. This always gets presented as a, "Why don't Millennial/Zoomer/Alpha men want to work?" Lack of training? Maybe. But I see that as more of a subset of the actual issue, which is two-fold: work conditions and compensation. So many jobs suck, and pay less than they should, and provide no real opportunity for growth. Let's break it down:
Jobs that suck: bad hours, bad bosses, bad processes that create inefficiency and stress.
Jobs that don't pay: can't afford a house, can't afford to date/get married/have children, can't establish a stable lifestyle .
Jobs that don't allow for growth: masters don't pass along their skills, managers don't promote (and, eventually, step aside), employers push employees out with stagnation and the hoarding of opportunities for nepo-hires or outsiders.
And why are we in this situation? Essentially, because someone likes the way things are. Managers and seniors don't want to change their work styles, even if those styles are dysfunctional. Employers don't want to pay. Older workers don't want to leave, or jeopardize their marketability by training juniors.
Every young worker can tell you about their experiences with older workers who promise to train and won't, managers who promise advancement and don't, having to be in the office at an ungodly hour or the warehouse or factory late into the night. And for what? Nothing of the American Dream, at least without putting up with the more ridiculous end of the job spectrum, or having been born into money, or having been lucky enough to rub shoulders with someone born into money.
It's Japan's hikikomori problem, transposed. Japanese authorities constantly blame the shut-ins, but outside observers recognize that the problem actually lies with the "functional" side of society, and its unwillingness to confront the way it alienates and produces perfectly reasonable, if dysfunctional, responses in these men (and women).
Agreed, the root of the problem is that America has relatively zero modern manufacturing infrastructure and manpower, especially compared to China. Those MAGA folks just don't know this. Offshoring happened not just because of cheaper price; China already had a much better environment even 20 years ago thanks to billions of people.
> sectors like the military, construction and the automotive industry each have 100K+ positions that they are unable to fill. A return to manufacturing adds to that shortage.
Feel free to offer higher wages than the previous stagnant wages.
> The US doesn't have the people to do the actual manufacturing
I am willing to move anywhere in the US to do any manufacturing job if it means that I will be paid enough to afford a house with two bedrooms and basic living expenses. I have a bachelor's degree and have been unable to find such an arrangement. So where exactly are all of these unfilled jobs that you speak of? Are they unfilled because we don't have the people, or because they're trying to pay in peanuts? Unfilled because we don't have the people, or because HR departments are filtering away qualified resumes based on voodoo? This outlandish claim you're making that we don't want to work is offensive to a lot of people who are aware of their own existence and know that you're spouting bullshit to trick people into more wealth inequality.
Your 7 million young men aren't 'missing', you're just refusing to hire them. The jobs don't exist.
The only question is how to get them employed where our economy needs them. Honestly I've worked in Manufacturing and it is fucking gnarly. Clean factories don't exist. Many of the men I worked with had some sort of mild mental disorder tending towards aggression. Constantly short serviced machines and price gouging by any contractors involved. There is a lot to figure out and before you end up with a hospitable work environment. I'm doubtful tubby mcgamesalot is going to hold down a job stamping metal parts all day getting his lunch eaten or pissed in.
Speaking as such an unemployed Tubby McGamesalot (well, minus the gaming) I'm pretty sure we're all aware, and would rather starve than work in manufacturing.
Well, if I had to guess based on my own personal experience, it's easy to simply be... forgotten. Nobody asks you to do anything, and you don't have the will to do anything of your own accord because everything you want feels hopelessly out of reach.
No one will want to do lower income jobs while the cost of living is high and continues to rise. Wear and tear on the body is also not compensated, not to mention healthcare being expensive. Meanwhile, I do CRUD apps and work remotely 20/hours a week with no bodily harm (on the contrary, I have time to work out and make bad posts on HN)
No one in their right mind is going to choose manufacturing over what I have if they can do both, and most people could honestly learn to do CRUD apps. Even if my salary were to go down by 5-10% yoy due to people moving in, I'm still in a better position for the other reasons mentioned. I'd have to be below manufacturing and blue collar wages to get me to switch.
The only sensible explanation is that they're trying to force people to have to take these jobs by crashing the globalized parts of the economy because they are obviously better than starving and dying homeless.
All this assuming that Trump isn't just intentionally trying to destroy the country.
Can you blame the new generations for not wanting to work their asses off doing arduous manual labor, payed a minimum wage that is barely enough to afford a single room?
Republicans made work awful. I've heard some wanting to get rid of minimum wage too. Do you think this will help?
> The US doesn't have the people to do the actual manufacturing ... I'm sure you'll have Apple investing in a mega plant where 50 educated people push some buttons though.
I feel like this could be used to steel-man the Trump administration's plan, though, should you want to. The best-case outcome here for America is it forces large capital investment in automated manufacturing facilities based in the US by making manufacturing that relies on cheap overseas labour expensive enough that the investment is worth it.
I'm doubtful, but, in the unlikely event it works like that, and this comes online in the next couple of years without causing a catastrophic wipeout in the mid-terms, Trump will look like a genius.
IMO it would have been much smarter to explicitly incentivize this with tax breaks and start with small tariffs that would ramp up a little bit each month, if it's the plan, and not just incoherent policy making.
Why is that the best option instead of raising wages until those jobs are attractive to domestic workers? There's this weird back and forth where people bemoan stagnating wages for the working class but at the same time cheer on importing labor that is willing to work for those stagnant wages.
In any other market, the balance of supply and demand is reflected in the price. But for the labor market the perpetual solution put forward seems to be juicing the supply side so that the price does not move up to a new equilibrium.
Both would have to happen. There's very little slack in the labor market to absorb anything. Even if legal permanent residents take up manufacturing jobs, they'd have to give up whatever jobs they have now creating a shortage. And given then even most undocumented people are working, someone needs to fill those jobs.
> Do you think if children were going to be harmed in The USA then maybe the federal government should introduce a ban of that kind of shit federally?
I'm not sure the federal government can. There are powers reserved for states that the federal government can't circumvent. They have supremacy, but the jurisdiction of that supremacy is restricted.
I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities. These securities mature at varying intervals and require continuous "rolling" or refinancing to pay off old debt with new borrowing.
Significant rollovers are expected from April through September 2025, with additional short-term maturities due by June.
Higher interest rates significantly complicate US' ability to refinance. The cost of servicing this debt — paying interest rather than reducing principal — is already a major budget item, surpassing Medicare, approaching Defense and Social Security levels.
If rates don't come down soon it locks in higher costs for years. The country is at risk of a debt spiral.
How can rates come down? The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
Treasuries are considered safe during such crisis. Increased demand for Treasuries pushes their prices up and yields down, effectively lowering interest rates.
> How can rates come down? The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
Rising prices due to tariffs won't pressure the Fed to lower interest rates. It will increase inflation and worries of inflation, which will actually pressure the Fed to RAISE interest rates. A slowing economy won't stop inflation... We are likely entering into a period of "stagflation". The way out last time was very high interest rates and short term economic hardship.
Prices rising due to tariffs isn't "inflation" in any traditional sense. It's not driven by consumer demand, and therefore the logic for raising rates (i.e. slowing economic growth by reducing money in the market) doesn't apply.
> Prices rising due to tariffs isn't "inflation" in any traditional sense.
Yes, consumer prices rising is inflation in the traditional sense (since, unqualified, “inflation” refers to increases in consumer prices.)
> It's not driven by consumer demand,
Inflation is not restricted to demand-pull inflation, which is why the term “demand-pull inflation” has a reason to exist.
Tariff-driven price increases are a form of cost-push inflation.
> and therefore the logic for raising rates (i.e. slowing economic growth by reducing money in the market) doesn't apply.
The existence of cost-push inflation doesn't change the short-term marginal effects of monetary policy on prices, so of you care just about near-term price levels, the same monetary interventions make sense as for demand-pull inflation.
OTOH, beyond short-term price effects things are very different: demand-pull inflation frequently is a symptom of strong economic growth and cooling the economy can still be consistent with acceptable growth.
Cost-push inflation tends to be an effect of forces outside of monetary policy which tend to slow the economy, so throwing tight money policy on top of it accelerates the slowdown. This is particularly bad if you are already in a recession with cost-push inflation (stagflation).
The good thing, such as it is, about cost-push inflation where the cost driver is a clear policy like tariffs, is that while monetary policy has no good option to fix it, there is a very clear policy solution—stop the policy that is driving the problem.
The problem is when there is irrational attachment to that policy in the current government.
You're just using new terms ("cost-push inflation") to disagree without actually disagreeing.
> so of you care just about near-term price levels, the same monetary interventions make sense as for demand-pull inflation....Cost-push inflation tends to be an effect of forces outside of monetary policy which tend to slow the economy, so throwing tight money policy on top of it accelerates the slowdown. This is particularly bad if you are already in a recession with cost-push inflation (stagflation).
Again, you're just saying the same thing that I wrote above, but arguing (?) that it's actually called "inflation".
If your point is that tariffs are bad, fine. We both agree that what you call "cost-push inflation" is not something you'd rationally raise interest rates to counter.
Increasing cost of imported goods will increase demand on equivalent domestically produced goods, which are also often supply constrained. Locally produced goods will increase their prices as much as the market allows (which is somewhere around the cost of the imported good with the tariff). Tariffs cause inflation as a whole.
When the tariffs are dropped, do you think the price of the imported good is going to go back to the original price? If the domestically produced version is priced near the tariff price, they'll reprice slightly lower than the domestic price, ensuring prices stay high.
If a pair of shoes today costs $30, and a pair of shoes tomorrow costs $60 (not saying this will happen, just positing a scenario), from a consumer perspective, there has been 100% inflation in the price of shoes. It doesn't matter that the price increase is due to tarrifs on imports from Vietnam.
I'm an American that owns/operates a design and manufacturing company -- we build customer products in China and export to USA buyers. Let's say we build the customer product and sell it to them for $20 ex-works China. That means USA customer must pick it up at our dock and pay the shipping fee. Lets ignore the shipping fee to keep it simple. Assume USA customer currently sells the product for $80 in USA. If USA customer now needs to pay 35% import tariffs on $20/unit, then their cost goes up $7 USD. If USA customer passes 100% of that cost to their own final end customer, then they need to start selling it for $87 USD. So 35% tariff ultimately turns into a price increase of 8.75% for consumers.
But actually, tariffs have been 10-25% anyway for a number of years. So for existing products, some tariff cost was already included in that $7 total tariff cost. So, for existing products, the cost may go up ~$3.50 and our customer would sell it for ~$83.50 and the actual increase consumers would see is ~ 4.5% increase.
Now, this is a typical pricing scenario for our USA customers, they are selling individual products that cost $20 in China at volume, in USA at retail for ~3x-5x the per unit purchase cost from China, this is quite common. Now, the USA customer must buy ~5000pcs to get that $20 USD unit cost, while consumers get to buy only 1pcs and pay $87 USD, whether or not that is fair pricing given the risks and R&D costs, that's just the reality. Anyway, I'm not sure of the ex-works cost of shoes, but I'm highly confident big brands like Nike sell them for at least 5X the ex-works cost. So the math would be similar.
Yes and there will be the usual political consequences associated with inflation; but this type of inflation is caused by a tax and cannot be combated by raising interest rates.
Why wouldn't a rate hike make a difference? It will lower demand and therefore prices, no? I mean, this isn't really something that we should celebrate or want, since it essentially just means discouraging people from buying shoes because they can't afford it, but it does bring the prices down (or at least slow the rate of shoe price increase).
A couple of things. In practice, most goods are actually priced as cost-plus, with very thin margins, and any response in prices is highly asymmetric.
If the purchase costs for a good suddenly increase, retailers will increase prices very quickly because they would otherwise start losing money very quickly.
If demand for goods decreases, that doesn't affect the retailer's cost of goods at all, and if they were to reduce their prices, they'd eliminate their thin margins. From their perspective, it's better to sit on inventory for a while.
So any downward pressure on prices would happen much more slowly.
BTW, this kind of asymmetry is why a bit of inflation is good, actually. Inflation acts as a universal and permanent downward pressure on (real) prices, in the sense that if retailers and others are unable to justify an increase in nominal prices to their customers, their real prices will drop.
True but that mechanism is indirect at best. Usually high interest rates discourages more borrowing and lowers spending that way.
But in this case the price increase is already due to the government putting its thumb on the scale. The best way to reduce the price is not via the Rube Goldberg interest rate mechanism to shrink spending and thus demand for the $60 shoe, but by removing the tariff and make it a $30 shoe immediately.
It's only inflation if you also double your earnings (tongue in cheek, this takes obviously place on a macro scale). This is about balancing costs. Globalization created environmental externalities that are not sustainable. While you enjoy the $30 pair of shoes, the people by the factories suffer.
Almost nobody importing goods is really checking the supply chains properly enough. We have pretty strict EPA laws here that are a tariff in their own way.
If the consumer price index, which is a metric the Fed uses, goes up, then inflation has gone up. Every dollar buys you less (less purchasing power), and the nominal price has increased. To me this indicates inflation. Of course, you need to calculate how this balances out in terms of jobs/wages and the flow of investment, but that's really hard to figure out at this point in time.
I'd expect the CPI to go up in the event of global tariffs at a baseline of 10% assuming all things go ahead as described.
Yes, that's fine. But if the acute cause is not consumer demand, raising interest rates won't do anything.
(Note: a sibling comment suggests that it "doesn't matter", because if you slow the economy enough, you'll offset the artificial "inflation" due to tariffs. Maybe so. But that would be cutting off your arm to treat a paper cut.)
But the acute cause is consumer demand. If the consumer reacted by not buying the tariffed stuff there would be no cause for alarm. But no, they continue to buy the higher priced goods. I'm not sure what happens next, but it seems if that is allowed to continue some sort of feedback loops develops leading to inflation getting out of control. We've seen that happen often enough, and the effects are devastating. So devastating governments use the interest rate hammer despite knowing it will likely get them thrown out of office, which is what happened to Biden.
The interest rates hikes (again for reasons I don't understand) effectively suppress demand. But it isn't necessarily demand for the tariffed goods, it's overall demand. Typically what you see drop is advertising, restaurants and similar discretionary spending. Notice they are services - not tariffed goods. This brings down spending to match income, and which somehow keeps inflation dragon in it's box.
In other words, the point of raising interest rates isn't to cure the tariffs. The only thing that can do that is to remove them. Instead it's to counter the effects of the tariffs - which is that they have made the economy less efficient, in the sense in the consumers can purchase less stuff with the money they have in their pocket. The consumers are in a very real sense poorer. The interest rates are just a hammer to ensure they act like they are poorer, and buy less stuff, and bring the economy back into balance. They react to being beaten with that hammer by voting out the party that chose to hit them with it. But it was for the own good, and so the political party deploying it has effectively decided to take one for the team. For all the cynicism our political systems and the politicians cop, I sometimes think they are undervalued. (But only sometimes, and only some of them.)
I suspect Trump is thinking "but the money hasn't been destroyed - I've now got it". And that's true. The effect of the tariffs is to divert trillions of dollars (by Trump's calculations) to the USA federal government. Before the citizens of the USA were free to spend that money as they see fit. Now they have handed over to Trump, and so have have effectively lost a freedom they once had.
If you look at other economies around the wold that have dragged themselves up by the bootstraps by imposing tariffs, like say China of Singapore, they poured that money into infrastructure, education and R&D. Maybe spending it in that way is perhaps more productive than letting Joe Sixpack using it to pay for takeout. I dunno.
Admittedly it's still an open question, but to me it seems the odds of Trump spending the money in that way is remote given he is currently cutting back on those very things. Perhaps even more telling is the USA go to be the most powerful economy on the planet by explicitly not letting government decide on where surplus money should be invested, but rather leaving that decision to it's capitalist economy. As it is, Trump is moving the USA from a capitalist economy to a command economy, with him in command.
Amazing stuff to see. I'm glad I'm watching from afar.
I would be ready and prepared to sacrifice a fair amount of my quality of life for the greater good (of being more self-reliant, more secure, bringing some manufacturing back on shore, etc, etc).
But these guys have basically said "we're all going to have to suffer, and then..." nothing! No huge capital investments into green energy. No workforce retraining. No infrastructure. Nothing. So yeah, you're asking me to sacrifice my quality of life? For what? Ew, no thanks!
Of course, I'm pretty confident I know where this money is going to go: contracts and grants to private corporations owned by Trump's personal network. They are already prepping for this by gutting huge swathes of the federal government. When they say "actually, we think some of these functions were necessary after all, but for efficiency reasons, it's best that private companies take over these functions..." naturally those contracts will go to the right people who are capable of making america great again.
It's actually insane, it has me absolutely livid about this whole situation. Sorry, I do not care how anyone feels about "the libs." These people are going to steal the quality of life -- that my parents built, that my grandparents fought a war to create -- from me and my children. They will use it to enrich themselves. They will burn the this country to the ground to accomplish this.
One way around this might be a twist on Goodhart’s Law: if you come after the people at BLS who produce the CPI [0], and replace them with political appointees, then maybe you can arrive at an “improved” CPI that hews more closely to your political desires. Assuming you’re the kind of leader who privileges optics over high-fidelity data.
The fact that we decided allow a massive tax increase by executive fiat is irrelevant. The fact that we’re risking a death spiral from decreased consumer demand via government imposed inflation is irrelevant.
You’re right in that the usual formula of turning the knobs on interest rates to ease economic challenges is unlikely to work. We may have to turn the knobs to prevent a total death spiral, however. Get ready for 16% mortgages.
It doesn't matter what the root cause of increasing prices is. Fed doesn't have any other levers but to adjust rates up to reduce demand. It will work either way because even if demand is not the source, it will reduce whatever demand that was there.
Inflation is definitely going to happen due to tariffs. If I'm paying 20% more next year on average for products above what I'm currently paying that is 20% inflation for me, that is what people will see; they don't care about your purist form of inflation arguments. They also vote against people who cause inflation, especially when they promised the opposite.
Actually, price increases caused by tariffs are a type of inflation—specifically, cost-push inflation. This is consistent with standard definitions found in macroeconomics and international economics textbooks.
You can’t isolate these things, the Fed’s charter is to try and reduce inflation for consumers not regulate the bond market for the US debt, but their interest rates and repo actions move the bond market.
It doesn't matter what causes inflation. It's always a sign that there's more money than is needed for current and anticipated levels of economic activity. And the correct course of action is always to raise the rates to reduce the pace that the money is printed at.
At least if you care about avoiding hyperinflation.
+1. In my relatively uninformed opinion what trump is doing is accelerating a kind of global arbitration in which the US is no longer the dominant economic power. We are going to have to share our toys. The “3rd world” is developing and it isn’t as easy to bully the globe into doing all our dirty work.
In my imagination, 50 years from now we will have a quality of life more similar to Central Europe: fine, but nothing special. Most people will live much more simply, rent smaller spaces, drive less ostentatious cars that they share. People will live with their families out of necessity and strawberries won’t be available in December.
The logic is very reductive. It's like: "the Fed's job is to cut a snake, so if they see a snake around their head they'll just close their eyes and cut both".
Raising rates does Absolutely Nothing to undo the tariffs or bringing the price down. Fed is not a blind machine.
Since people won't actually have more money to spend, you would expect it to lower the prices of other things like housing or travel. So there should be a negligible impact on inflation depending on the weighting.
This is flat out wrong. The Fed raises and lowers interest rates to stimulate or tamp down demand. Raising interest rates because prices rise while demand drops due to a trade war would accomplish nothing.
> The Fed has two mandates: maximum employment & stable prices.
It actually has three listed in the Federal Reserve Act:
* Maximum employment
* Stable prices
* Moderate long-term interest rates
It's popularly called a “dual mandate” because it is perceived that properly balancing the first two will naturally also achieve the third.
> If prices go up, the Fed is mandated to raise interest rate.
No, it isn't, especially if employment is already below the “full employment” level and expected to drop even without the rate hike. Demand-pull inflation in periods of strong employment and economic growth or looming deflation in periods of weak enoloyment and economic growth are easy-mode monetary policy choices (at least as to direction, magnitude may be tricky).
But tariff-induced cost-push inflation in weak growth slowing employment conditions, where Congress and the President decline to remove the non-monetary policy root cause, that’s hard-mode monetary policy, because the usual tools to address either the employment or price problem will make the other worse.
They're mandated to raise interest rates in the event of structural inflation, not in the event of a one-time increase in prices. It would be silly if the government increasing the VAT required the fed to increase interest rates.
Even if the tariffs work as desired, they result in persistently higher prices. Unless you're expecting American laborers to work for less than literal Chinese robots, I guess.
Right, I’m just saying that raising interest rates in response to that doesn’t make any sense. It would be functionally equivalent to raising interest rates as a response to an increase in the income tax rate in order to restore the buying power of your pre-tax-increase income.
The dual mandate makes plenty of sense when you realize that the Fed and monetary policy aren't intended to be the whole of economic policy, and that the actual main piece of economic policy is with Congress and fiscal policy.
The first sentence is right. The second is wrong, as implied by the first. If raising interest rates would exacerbate a recession and thereby unemployment, the fed will not do it just because prices are rising. You are ignoring half of their mandate.
The Fed has a mandate to keep inflation under control but a lot of leeway to decide if they should increase interest rates or not. If they see a price increase as temporary or structural, and not based on an interest-rate-responsive process, they will not increase rates. Some prices are "sticky", some are definitely not.
No - because generally there will be a lot more folks in the labor market with less leverage so they will not need to pay more in order to attract the talent they need. This is also why inflation is typically solved by recessions. They reduce labor demand which reduces wages which (generally) reduces the price of producing things overall.
1) Economic/Monetary Inflation, which is an increase in the money supply in an economy driven by government or central bank ("print money").
2) Price Inflation, which is an increase in the general price level of goods and services that people typically notice at the groceries or gas and usually derives from monetary inflation, but can also be due to the new tariffs.
Is the Fed going to do the same confusion and use 2 to justify higher rates for longer?
I think they shouldn't unless they're being disingenuous and politically motivated (push just enough to make the entire Trump mandate an unending crisis until Democrats get back in power).
According to monetarist theory these two things are one and the same.
The main source of "money printing" is banks making loans. And this is what the Fed targets when it raises interest rates.
I'm not quite sure whether tariffs really do lead to inflation. It depends on how consumers and companies respond to higher prices of imported goods and to the general sense of uncertainty.
It's not something I was aware of until recently, but I was surprised that it was not more under the control of the government and central bank (in the UK, anyway, if it turns out it's different in the US).
Interestingly that paper from the Bank of England makes no mention of "fractional reserve" anywhere, but they do say:
>Another common misconception is that the central bank
determines the quantity of loans and deposits in the
economy by controlling the quantity of central bank money
— the so-called ‘money multiplier’ approach
>While the money multiplier theory can be a useful way of
introducing money and banking in economic textbooks, it is
not an accurate description of how money is created in reality.
Rather than controlling the quantity of reserves, central banks
today typically implement monetary policy by setting the
price of reserves — that is, interest rates.
>In reality, neither are reserves a binding constraint on lending,
nor does the central bank fix the amount of reserves that are
available
Anyway, I think I'm digressing from the topic a bit here - but I _think_ what I've learned recently is that in the UK it isn't actually fractional reserve banking, which I was surprised by.
>but I _think_ what I've learned recently is that in the UK it isn't actually fractional reserve banking, which I was surprised by.
The BoE doesn't currently impose a mandatory reserve requirement. They do have more general liquidity requirements though (central bank reserves being one possible source of liquidity). I would still see it as a fractional reserve banking system, especially as these minor differences don't matter for the question of how money is created.
Yeah I think that's a fair shout, the main element being that private banks create the money via loans. Thanks for engaging, I appreciate the discussion. One day I might grok how modern economies hang together, but I've a way to go yet.
>I'm not quite sure whether tariffs really do lead to inflation. It depends on how consumers and companies respond to higher prices of imported goods and to the general sense of uncertainty.
They won't absorb the new costs. That has not happened in the history of capitalism as far as I am aware. Higher costs will inevitably equate to higher prices without an offset somewhere.
Investors don't like unpredictability, which Trump has already shown to be very unpredictable in regards to tariffs (the whole on again off again stance changes for example).
Higher prices also lead to less buying activity. History has proven this out too.
If you mean that importers will not absorb costs then I agree. They will pass on most of the costs, if not immediately (to avoid sticker shock) then over a period of time.
But the question is what happens to demand for imported goods and demand for everything else. At constant money supply, prices of some goods going up could put pressure on the price of other goods and services, although this seems less likely as the tariffs are so extremely broad.
A lot depends on how people respond. Will they reduce saving to pay higher prices? Will they take out loans to maintain living standards (creating new money in the process)? Or will they cut back on spending causing a recession?
And what will companies do? Will projects be put on hold because the return on investment is too unpredictable? What happens to the dollar? Will Trump cut other taxes to offset his tax hikes on imports? What about the massive budget deficit?
Consumers will pull back, if not right away it will show up with 18 months, though early indications suggest they already are to brace for the price increases as most were already trying to simply get ahead of the last few years of inflation to begin with.
Businesses are already cutting back. My employer has already talked about the impact, I know other people who are saying the same thing. Lots of things going into freeze or slowing down. It will take a minute for this to get through the economy but it absolutely will.
I don’t think this is highly uncertain territory, history has clear examples of what will happen if in doubt. Generally, it’s not good for most, especially consumers or those who have any reliance on foreign material or goods, which nowadays is most businesses and consumers, and the US won’t be able to magically fill that in.
> I think they shouldn't unless they're being disingenuous and politically motivated (push just enough to make the entire Trump mandate an unending crisis until Democrats get back in power).
They've been saying since the Biden administration they are going to keep raising rates. If the Trump regime's choices drive us into an unending crisis, bailing him out with rate cuts would be the politically motivated choice. Continuing to raise rates is just sticking to principles.
That’s a speculative article that was wrong. I was also somewhat misremembering JPow saying he wouldn’t cut rates after the inauguration as him saying he was going to raise them. Rates changed a small amount in September, then they did two big cuts after the election. Not really evidence of political bias in any case.
The gist is that Republicans are going to blame the Fed of playing politics when I terest rates are lowered, and blame Biden for when interest rates rose. Rates go up, Bidens fault, rates go down - politics. That is the republican talking point. The article ascribes no direct motive but says the reduction in rates is due to the fed claiming victory on inflation. Which, was wel down and approaching target when the fed started cutting rates.
It is ironic that an article that says (paraphrasing) "here is what the political talking point would be", be used as __evidence__ for that talking point.
> I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities. These securities mature at varying intervals and require continuous "rolling" or refinancing to pay off old debt with new borrowing.
No one is mentioning this because no one cares, least of all the guy who just signed massive tariffs.
What you're describing is the end result of 30-ish years of Republicans implementing "Read my lips: no new taxes" and this country refusing to have to a mature conversation about revenues. Also, over that period, wages remained stagnant, meaning more people look to the government for assistance, which then costs money in the form of deficit spending. The numerous expensive wars didn't help, either.
There's no good fix to this other than some serious revenue raising through taxes on people who can afford it. Of course, those people are of the opinion that they're entitled to net worths that measure as a significant portion of a trillion dollars, and will simply push the costs onto consumers in order to maintain share prices since that's what most of the net worth sits in.
You have to break those people of that idea. Talk of interest rates, Treasury securities, Federal Reserve policy, it's all just noise. The money going in must be a larger portion of the money going out, and significantly burdening the average American with more tax debt isn't going to solve the problem before causing social upheaval.
> I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities.
It's very hard to even assume that's a concern of the current US administration, based on not only the fundamentalist goal of radically cutting taxes and regulations, coupled with the fact that it's purposely pushing a recessive economic policy that defies any logic or reason.
The very least that you'd expect is a progressive tax policy that didn't excluded corporations and mega-rich. You're not seeing any of that.
I'm sure it has a lot of sources, but it was popularized more recently as a mistranslated Circassian proverb, which caused a Turkish journalist to go to jail and then was picked up by various English news outlets.
The whining about how social security payouts was going to sink America while at the same time handing out tax cuts for corporations hints at a ideologically driven agenda.
Tariffs increase prices. This tends to cause a wage-price spiral, and indeed that's one of the stated objectives (increase US wages by onshoring manufacturing). The increase in prices and wages is inflation. This will cause the Treasury to raise rates to force contraction.
The next consideration is: what is the budget actually going to look like? Is it going to cut spending and leave taxes where they are, resulting in debt paid down, or is it going to be a huge tax giveaway to the top few % while increasing the deficit? (personally I'd bet on the latter)
Then the consideration: other players also get a move. What do the retaliatory tariffs look like? Does cutting off the ability of other countries to earn dollars negatively impact US exports?
Devaluing the dollar against other currencies will also force up rates by the arbitrage principle.
S&P down 4% so far today. Do we think that indicates the measures are good or bad for US industries?
I know there is a crowd that talks about debt alot and these are all legitimate concerns
However they could also raise taxes on capital gains and top end income brackets - which are at ludicrously low levels for folks of significant wealth - which would go a very long way here. Some estimates suggest it could put the US back in a surplus quite quickly
edit: I'm saying there is an argument for raising taxes. I don't think its off the table like some people suggest. I know it may not be popular with some but we could discuss the merits.
Cutting fundamental government services feels wrong too
The problem is that raising top end rates don't go far enough. It's a start, but we also need to raise the lower rates to solve the problem. That, or dramatically cut benefits.
I don't think broader tax increases are off the table either, but we haven't even attempted to simply close up the loopholes used by corporations and the ultra wealthy and raise taxes in kind. Once that happens, I think its fair to reassess what to do with any lingering problems of raising revenue.
It's been argued a lot that such a move would cause a good portion of American billionaires to just pack up and move to another country. Rich people are mobile in a way that poor people are not.
Believe it or not but there are Americans who relinquish their passport precisely because of this reason.
Patriotism is automatically assumed but we live in a globalised world.
The US is fairly unique in imposing an "expatriation" tax precisely to avoid this situation. The IRS taxes all of their assets as if sold on the day before expatriation.
Of course collecting taxes internationally is difficult, but anyone wealthy enough to meet the criteria will probably need to visit the US at some point.
Most of the times I've heard of it happening it's someone who's net worth is well below the threshold for this (indeed well below the threshold where they actually need to pay any income tax to the US government), but because of the headache of needing to file the paperwork and the fact that a lot of banks don't want to deal with US citizens due to extra requirements imposed on them by the US government (via its financial system).
The USA is not unique but member of a very exclusive club. The other member is the enlightened dictatorship of Eritrea. And, IIRC, Trump promised to abolish this taxation during his campaign. I'm not holding my breath.
I don't think its that simple and is overly simplistic. If it was all about getting a better deal why wouldn't they have all left for Switzerland by now? Objectively, its a better deal than what the US offers - even on tax rates.
Just within the US you could ask why wealthy people aren't all moving to states without any income taxes more frequently. Plenty do move to certain low tax states but network effects, infrastructure, stability, well-understood regulations, etc., seem to often play a bigger role.
Everyone has their own tipping point. Just as salary isn't the only reason to move job, taxes aren't the only reason to stay. But at some point, people move. And the US makes you pay tax overseas anyway, so you can't just move and re-domicile. You have to emigrate and gain citizenship elsewhere.
Where does their income come from? (e.g. investment growth, etc.)
Can't you basically tax their income, and quadruple that tax if they move abroad and want to move their money out of the U.S.?
(I'm guessing it's not easy, but I also guess the reason it's not done is because the ultra rich have so much influence on the politicians and tax code... not for whatever other logistical reasons might exist.)
Plus, if you do that you're a frigging communist. On the other hand, it's so much better to call neighbors, allies and everyone else people pillaging/raping the country. People like drama :)
If the billionaires pack up and move to another country, then those who are willing to pay their due taxes and operate with a lesser profit margin would take the place they left in the market. There is no need to oblige sociopathic profiteers because they threaten to leave.
And, where will they go, really? There are considerable taxes in every country that billionaires would consider. And if they choose to cram into some small island tax haven in the Caribbean, the US can easily pressure that tax haven to do anything it wants.
A) The Fed & Treasury have the ability to buy back the securities at any time if they wanted, since they can basically poof the currency into existence. And t-bonds are as good as cash anyways, so that money is basically already in the economy.
B) The country's national debt is also our citizens' savings accounts. Every major company in the country (and the gov't itself) holds an absurd amount of t-bonds because its the best place to store billions of dollars for safe keeping. Paying off the debt means this capital needs to go somewhere. Should it go to China? The EU? Canada? American real estate?
The national debt is probably the most misunderstood concept in the country. It's denominated in USD, unlike other countries, whose debt is borrowed in currencies they don't control. And "paying off" the national debt risks capital flight and/or asset bubbles - both of which are detrimental to the economy.
The system we have in place is a good one.
Thought experiment: consider what would happen if the US Treasury decided interest rates are negative. That is, you pay $10,000 for a bond and receive back $9,900 after 10 years. What do you think this would do to the economy?
Now ratchet up that negative rate to 100%, that is, you pay $10k for a t-bond and eventually it's worth $0 after 10 years. That's pretty much what paying off the national debt would do (in fact, that's probably how the national debt would be paid off, if ordered to do so, the fed would purchase these bonds and the treasury would use the proceeds to buy existing bonds off the open market). It's two sides to the same coin, but instead of prohibiting the purchase of t-bonds, you just disincentivize it.
All I know about this issue is what you wrote above, but it sounds to me like the US taxpayer is paying interest on bonds so that bond holders can earn interest.
I think its perfectly reasonable for the taxpayer to say they would rather not pay interest on those loans. The bond holder could lend the money somebody else instead.
In fact, I think its really unfair that one generation of people can leave debt behind for future generations to pay with higher taxes.
Many critical flaws. Your getting lost confusing the forest for the trees.
For starters you are focusing on the % on the interest payments which is a line item. However when all of your allies stop buying your goods and services you run into bigger problems.
Bonus problem: If one of your internal metrics is that you want to have a trade deficit but nobody to sell to because you have created a hostile environment for trade.
In the long term, yes. In the medium term, companies and people liquidating their assets and paying capital gains tax actually gives the state a windfall.
The flaw is that the USD is massively dropping because of the tarifs.
This will push up interest rates on US bonds, because bond holders want compensation for the value loss of their bond.
> The flaw is that the USD is massively dropping because of the tarifs.
That's all but certain. Currently it's dropping, but long-term it might as well rise, as the demand for foreign currencies from US importers (and by extension consumers) will go down.
> This will push up interest rates on US bonds, because bond holders want compensation for the value loss of their bond.
How do existing bondholders get to demand anything? They may want compensation for a reduced market value, but nobody owes them that. Fluctuating market values are part of the deal of buying bonds.
Existing bondholders can't demand anything of course. But the bond price is determined by buyers and sellers. With dropping USD, buyers will pay a lower price for the bonds, i.e. the yield will go up.
We mostly abandoned the long-term viability of that in the Bush years with the tax cuts plus expensive wars, and doubled down in Trump's first term (more tax cuts). That exhausted our margin for responsible emergency debt spending, and we had two crises on top of it (as always happens from time to time) so we were down to just playing for time and hoping for a way to spread out the pain rather than let it hit all at once.
We now do not appear to even be playing for time and are rushing toward the "all at once" thing.
Can totally happen when the people in charge are economically illiterate and surrounded by sycophants or crooks (I'm not sure which Mugabe was), demanding a wealth transfer that can't be funded by the actual economy.
Inflation can also happen when production goes down, not just when money supply goes up.
Now I don't claim to be an expert at economics, I'm just a software nerd like most here and may be wrong so take with a pinch of salt, but the things I've heard that are associated with stagflation include de-globalisation and supply chain shocks (e.g. a trade war with major partners), tariffs, and shrinking labor force (aging population not helped by a combination of low immigration and aggressive deportation).
To even begin to understand Mugabe you have to understand his very long and strong relationship with the Chinese military and the reasons why they invested so heavily in his posse.
Yes, but if they let get into a debt spiral, the only solution becomes devaluation of the dollar to the point of hyperinflation. Only then debt is reduced, but it would be terrible for everybody except a few.
I don't see any way the actions we've already seen haven't moved up drastic action on the US debt by at least a decade. And it's only been a very-few months.
We were probably screwed when we cut taxes going into two crushingly-expensive wars, and certainly were when we cut taxes again, but now we're rushing toward crisis instead of trying to at least delay it.
A plan like that could backfire, as one of the primary things that the Fed looks at when setting interest rates is inflation. Increasing the costs of imports across the board will likely increase inflation, which would make a rate cut less likely.
But in general, I think this is too complicated. The simpler explanation for all this is the Executive branch is currently held by isolationist.
Instead of throwing around historically illiterate analogies, let's talk about the real issues:
What are the actual inflationary risks right now given the state of the economy? What are the costs of not spending (i.e., austerity)?
Because history also shows – very clearly – that austerity imposed due to debt panic in countries that could have afforded to spend is often way more damaging than the debt itself.
The "printing money" quip misunderstands how modern monetary systems operate. The Fed doesn't just "print money" - it has only two real tools: buying and selling assets, and raising/lowering interest rates.
Wealth tax is a nice idea but non-starter in implementation.
It works in real estate (property taxes are wealth taxes) because the land can’t move.
One way to tax the super rich is to tax loans against assets. They don’t sell assets to buy a yacht, but borrow against them to avoid paying taxes and keep future gains. Tax those loans as if they sold assets.
We're clearly throwing all pre-Trump orthodoxy out the window at this point, so maybe we'll see PRC-style capital controls, though with essentially no white collar crime being prosecuted for the foreseeable future, enforcement might be tough. OTOH the threat of being "deported" to El Salvador can be a powerful motivator to stay in line.
> the United States needs to manage its massive national debt,
> The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
> What are the flaws in this thinking?
Flaw #1:
Massive treasury rollovers isn't new.
22% of all Treasuries have a duration of 1 year or less.
The only new thing is that rates have gone up.
Uncertainty is a short term solution to a long term problem.
Flaw #2:
Economic uncertainty and supply side shocks risks a recession.
Recessions usually increase national debt.
Flaw #3:
The right answer to reducing national debt is to ensure incomes exceed outgoings.
The current administration is so focused on extending trillion dollar tax cuts, no amount of tariffs or government efficiency is going to lower the national debt.
Flaw #4:
Treasuries only really go down during a recession.
Recessions are bad, not good.
If you think finding a tech job is hard now, or that your RSUs are hurting, wait until you see a serious recession.
The flaw is that it's like setting your house on fire because it's cold outside. It may well achieve your goal in the short term, but it won't last, and it's just going to make things much worse in the longer term.
It is like that indeed. It should be apparent to anyone who has listened to Trump that he is indeed a conplete asshole. There shouldn’t be any need to go into details.
Likewise, it should be apparent to anyone with a cursory understanding of economics that tariffs are bad for the economy, and imposing mindless tariffs on the entire world is really bad for the economy. “Crash the economy to address the national debt” is a bad plan.
> Likewise, it should be apparent to anyone with a cursory understanding of economics
Can you explain why countries have tariffs if tariffs are bad for their economies as a general principle? I'm assuming you're not the standard sort who thinks Trump invented tariffs.
> Can you explain why countries have tariffs if tariffs are bad for their economies as a general principle?
Primarily special interest groups. e.g. You have a hundred people, everyone loses 1% of their salary due to tariffs, but one person retains 90% of the tariffs and the remaining 10% is lost. The net result is negative, most people don't care much about the 1%, but the one winner is vociferously against losing his entire income.
To protect local industries which create higher prices. Smaller countries do this to protect jobs from economies of scale but pay a price and have a lower standard of living.
Because people largely believe what they want to believe, and people are flawed, especially politicians. Is that sufficient or do I need to go into detail?
Trump didn’t invent tariffs nor did he invent being an idiotic leader enacting policies that hurt his country.
One thing I am not sure about is how much reluctance foreign holders of US treasuries will have to buy more treasuries. My guess is both foreign government and commercial holdings will edge down quite a bit, even without any reciprocal activity. Just because they will have reduced US reserves, and in effect need for treasuries.
God knows what happens if reciprocal activity starts towards using another currency also for global trade.
> Increased demand for Treasuries pushes their prices up and yields down, effectively lowering interest rates.
> What are the flaws in this thinking?
Not sure why international investors would want to buy more t-bonds when the country issuing them is starting a trade war and their money could effectively be locked abroad.
The key, IMHO, is to maintain the status quo of the USD as the safe haven which also has the ability to destroy other safe havens. As long as the USD is the primary safe have the amount of debt is irrelevant.
this SHOULD be really obvious to those in charge, but I think is too subtle for them, or they're willfully ignoring it for the "trade deficit" narrative. I don't see how the end result is not a decline in the global role of the US and a whole bunch of pain for everybody as this all unwinds. All for the hubris of an old man...
If the Trump admin's goal were to reduce the national debt it would make way more sense to use fiscal policy (increase taxes) rather than some roundabout way to force the Fed's hand on monetary policy. The tariffs do basically function as a massive regressive tax increase in the form of a sales tax, but that comes with truly immense risks on the demand side of the economy. Guess what happens to tax revenue during a recession.
I'll believe it when I see a bill pass the House. But this adminstration loves to make bold claims about what it's going to accomplish without gathering the necessary votes in the House, where it could most certainly push a bill through. News articles don't count.
> The cost of servicing this debt — paying interest rather than reducing principal — is already a major budget item, surpassing Medicare, approaching Defense and Social Security levels.
Military ("defense") expenditures are always understated. Over $180 billion in veteran's benefits were paid last year. This is not counted as military expenditures. Also the debt you talk about is to not only pay for the money sent to Israel and the Ukraine last year, but still for the adventures in Afghanistan, Iraq etc. That just becomes generic debt in the skewed analysis, alienated from its past military adventures. The military budget is higher than stated.
Trump is a wildcard, but I could see the US defaulting on its debt, probably in some way that focuses the default burden on foreign countries holding US debt with some relief for domestic holders. I would definitely not be holding it over the coming few years.
I agree with you. To just offer a counterpoint, I sometimes see quotes like this one:
But plenty of economists looked at the economic hole left by the 2008 financial crisis,
and concluded the stimulus policies on the table weren't nearly big enough to fill it.
The size of the hole is all that matters.
Whatever level of deficit spending is required to fill it is the right level of deficit spending.[1]
or this one:
We need the government to be out there borrowing money because of the long-term investments it's making in our economy[2]
The line of reasoning seems to be
1) The government is special because it can go to extreme measures to repay loans if necessary (i.e., print more money or raise taxes)
2) The reliability of the government means that it can borrow at a low rate (say, 3%) and make investments that are worth far more than that (say, 10%).
Put those together, and the government's borrowing amounts to a net benefit to society.
This argument reminds me of the 'then a miracle occurs' comic [3]. It doesn't hold water because
1) The extreme measures are very harmful - they cause high inflation and hardship amongst taxpayers.
2) Even if we accept that government investment makes a good return (a highly questionable assertion), that return does not go to the government. If the government borrows money to build a new road, then there is no doubt some economic benefit, but the government does not receive that benefit, and they are on the hook for the repayment anyway. So government spending does represent a pure cost - not an "investment". And in any case, interest payments represent investment that can no longer happen.
I would also point out that back when we ran briefly ran a surplus in the late 1990s, economists were not exclaiming about how terrible this was, or how paying off the debt represented a missed opportunity or a catastophe in the making. Everyone agreed at that time that surpluses were good, and that paying down the debt was good. The current "this is fine" thinking smacks of economists who have a predisposition to accept and justify the status quo, whether it is objectively good or not.
So all of that is to say that I'm with you - government debt is bad. We are in danger of some combination of insolvency, default, or very high inflation. And once we enter that spiral it will be impossible to get out of it without permanent damage to the economy and the global standing of the US (such as it is).
> I would also point out that back when we ran briefly ran a surplus in the late 1990s, economists were not exclaiming about how terrible this was, or how paying off the debt represented a missed opportunity or a catastophe in the making. Everyone agreed at that time that surpluses were good, and that paying down the debt was good. The current "this is fine" thinking smacks of economists who have a predisposition to accept and justify the status quo, whether it is objectively good or not.
Oh? I remember all the teeth mashing about all those funds who have to buy treasuries and now what are they gonna doooo! And how this is unprecedented and how are the markets going to reacccct! Numerous articles about that sort of thing in The Economist and various other outlets.
> but the government does not receive that benefit
Yes it does, through increased tax revenues due to the increased economic activity brought about by the road existing earlier than it would have if the government had to wait several years to save up the money to build that road.
Also, at least in the US, the government is nominally "We the People," so if the general population experiences increased economic activity, then the government is benefiting, as it exists (nominally) for the benefit of the people.
-> Treasuries are considered safe during such crisis.
Is that truly still the case? Does the world consider the US stable right now?
I am astonished at how effectively the administration has blown up every pillar upholding the US economy, short, medium, and long term. The damage done here is incalculable. In all of human history never has so much wealth been destroyed so quickly.
This is just delusional. Everybody is looking for some reason that makes this less stupid than it looks, but there is none.
Intentionally causing a recession to lower the debt burden makes no sense, neither politically nor economically. Besides that the US is not some third world country that issues debt in a currency they have no sovereignty over.
I think what’s happening backstage in this magic show are desperate moves to recapitalize the country. Foreign and domestic investors are pledging to spend trillions, probably under duress. Stocks are being crashed to create a flight to treasuries. Dollars are partially anchored to crypto by so-called stable coins. Federal assets are getting dumped and operating costs cut.
Maybe we will get out of this without having to survive on cat food, but I’m not holding my breath.
Fed rate influences treasury rates, but it's not a direct impact. If creditors lose faith in our fiscal situation, rates will rise no matter what the Fed does.
> Treasuries are considered safe during such crisis.
No. Not during such crisis. It's already visible in prices of traditional safe havens (those based on US credibility) that this crisis isn't like the others. They are dropping like flies. Only gold remains.
The F-35 does work, and is deployed around the world right now including the middle east for the recent houthi operations.
National debt is absolutely a problem when interest payments crowd out the rest of your budget. Interest payments currently comprise about 17% of the budget, and this is set to grow. Those can only be paid with taxes or inflation, both of which hit joe taxpayer.
A progressive wealth tax starting at 2% on net worth from $50 million to $250 million and increasing to 8% for wealth over $10 billion is projected to raise $4.35 trillion over 10 years.
Seems like a great start to me.
Alas, I'll never understand people who make average wages defending billionaire wealth hoarding.
>The F-35 jet will cost over $1.5 Trillion, doesn't work and won't be used
You've bought literal Russian propaganda hook, line, and sinker.
The F35 is an incredible piece of technology.
Do you remember infamous articles saying it couldn't dogfight? Not only were those stupid propaganda (you can't dogfight at 100km engagement ranges), all the people repeating them seemed to miss the comment by the older aircraft pilot that the radar assisted gunsight on their gen 4 fighter could not track the F35!, not even at knife fighting range. Go lookup how good gunnery was in WW2 if you want to understand how hilariously bad that is for gen 4 fighters.
The F35 is pricey to run, $40k an hour, but so was the F14, which is correctly understood to be a high tech masterpiece, a tech platform, and one of the best aircraft ever made.
We've already built 1000s of them, and they are already being used today. Israel's attack on Iran that showed just how impotent soviet era air defenses are was conducted with f35s.
"Israel used more than 100 aircraft, carrying fewer than 100 munitions, and with no aircraft getting within 100 miles of the target in the first wave, and that took down nearly the entirety of Iran's air-defense system,"
It's a very impressive machine, that everyone wants, and China is really rushing to build something competitive.
>There are nearly 1,000 BILLIONAIRES in the US, the debt is their problem, they can pay more taxes until it's down to a number you like.
150% correct. The USA is stupidly wealthy on the world stage. We don't have to play pretend poverty, if we would tax the people who have hoarded all that wealth.
Also, the now $2 trillion is the total program cost. It is development, cost to buy 2500 aircraft at $80-120 million each. Mostly, it is the maintenance cost for aircraft for decades of future service. The program cost is spread out over decades.
The important thing is that if the US wants to have air forces, it needs fighters and needs to replace the current ones. The F-35 is better and similar price to older fighters so it is the best option to replace them.
Everyone is quick to deride this move as stupid. I don’t disagree that there are downsides to the approach, but there is a set of very real national problems that this might address.
For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well? Increased foreign competition pulls down domestic wages; telling people that they should shut up and be okay with that because they can get cheaper goods isn’t palatable to a lot of people facing the negatives of globalization. Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
There really are structural challenges to onshoring production due to strength of the dollar due to its reserve currency status; our society as such is biased heavily toward importing goods rather than exporting goods. This is a real challenge that needs to be addressed as well.
Our national debt is not sustainable either. Either we pay it down some, or we inflate it away; these are the two ways it goes away, ignoring the option of a world-shattering default on the debt. Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
> Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
Wouldn't restoring the prior taxes to those with highest incomes, and adding a proper capital gains tax, address this directly? As I've started to accumulate small amounts of wealth I've realized, my capital gains are taxed lower than my income; when I sell my house, I get up to 500k of gains tax free. If I backdoor a Roth IRA, I get tax free gains there too. etc. Add additional taxes to investment properties, in the form of property taxes could be one approach as well - I personally know of one investor that owns at least 20 (SFH) properties for example. So I'd propose starting there, as it targets both the wealth gap as well as hits those who can most afford it directly.
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
If tariffs significantly reduce demand, or worse cause a recession, they will have the opposite effect. It would take time to sort out the full impact. But AFAIK, the tax cuts are proposed to be pushed through immediately, without firm corresponding spending reductions nor time to sort out the impact of the tariffs; similarly the tariffs are being implemented in what seems like a haphazard way, with everyone unsure of what they would / will be, how much, etc.
In general, I think if the plan were modest tax increases, esp. around capital gains policy and targeting SFH as investments, (very) modest tariffs, and well executed spending cuts, nobody would be in uproar. I will be pleasantly surprised if the current plan ends well, but it certainly feels as though only those steeped deeply in ideology are supportive of them at the present moment, and I think that is probably telling.
This was actually the real cause of the collapse of Zimbabwe. The tax base disappeared. People think it's just because they printed into oblivion but that's not the full picture.
Regulations kill any and all profit on physical goods made in the US. It was more important to lift China out of poverty (Communism), kill a whole class worth of jobs and enact regulations to stifle any innovation because it’s okay if China pollutes, just not the US. It’s okay to buy goods from mega polluter China shipped on boats running on crude oil, instead of supporting Americans and American companies.
As you are about to find out with a president who is busy removing as many regulations as possible, consumer/worker/health/environment-protecting regulations are not the reason why physical goods are not made in the US anymore.
in 1800, 95% of American were farmers
in 1900, some 65% of Americans were farmers
in 2020, it's down to like 5%.
My point is some industries just die. And its okay. The solution is not to go backwards, but tax the winners of the change to subsidize and retrain the people who lost.
But in America, the extreme winners have convinced the rest of us that we shouldn't tax them, and Trump is now asking us to instead tax everyone more
> in 1800, 95% of American were farmers in 1900, some 65% of Americans were farmers in 2020, it's down to like 5%.
> My point is some industries just die. And its okay.
You've got your example dead wrong. American farming didn't "just die," it got insanely more productive.
And a lot of the industries people want back didn't "just die," they just got moved so the "extreme winners" could profit off them even more. And then those same winners and their defenders always go "herp derp, industries gone, nothing we can do! Don't fight it, just repeat: gone foreverrrr."
The vast majority of industries from the past are now highly automated and would be made even more so if the alternative were paying US-scale living wages to the employees.
So you bring the factories back to the US, but 95% of the created jobs are for robots.
100% this, in 2010 I briefly worked for a company that built assembly lines in the US and number one requirement for every client was reducing the number of workers needed. Almost every project going at the time reduced the number of workers by 80%+ and I imagine it's only become more automated since then.
It is absolutely wild to me that money gained from letting it sit is taxed less than money gained from working your ass off. A crime against the working class.
The point is that this isn't some fundamental property of our society that we all agreed to. It's de facto capitalist, not de jure. Just because a bunch of people pushed it one way doesn't mean we have to throw up our arms and just go with it.
That's the entire reason why income tax is progressive, and there's no reason that couldn't be applied to any other implemented tax including capital gains.
Hard disagree. Compared to the OECD average, we collect almost double in personal tax revenue as a proportion of total tax revenue. What's more, historically personal tax revenue as a % of GDP stays roughly the same - regardless of active tax rates.
Where we fall dreadfully short compared to other countries is corporate tax revenue. In 2021, corporate income tax revenue in the U.S. was 1.6% of GDP, compared to the OECD average of 3.2%
It's messed up from first principles - hard work should be valued as a society over investment gains, and reflected at the individual level in take home income. Obtuse measures and comparative aggregates are irrelevant.
“Should be” is doing a lot of heavy lifting there - I have heard reasonable arguments either way - but it misses the point: whether the personal tax rate was all-time high or an all-time low, personal tax revenue stays roughly the same historically. In other words it’s a trap - raising the rate might make you feel better, but if history is any indicator it won’t change anything for everyday citizens.
Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer.
Also when talking about tariffs reducing demand and inflating prices, I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
He's one economist from a very conservative line of thinking.
As a counter example, Thomas Piketty argues at length that taxation and wealth redistribution remain an effective way to bolster a societies resilience and lessen wealth inequality - which is still a very real issue in the world, and arguably one that the US shows can have very real negative consequences for letting it go unaddressed.
As for demand and inflating prices, yeah, domestic products may be more attractive, but the economy is huge, and much of it does not have a domestic allegory. The other issue here is the tax is on all imports, not only manufactured goods, which means raw materials - which often have to be sourced elsewhere - make manufacturing more expensive even domestically
I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books?
> raw materials - which often have to be sourced elsewhere
Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it...
>I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books?
I'd say start with Capital in the Twenty-First Century by Thomas Piketty. Its a great read, if a bit thick (its a very large tome indeed and very information dense)
>Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it...
Its about access, cost, amount, etc. One company getting lithium is a rounding error. The entire market for lithium is bigger than Tesla and even electric cars. Then there is the entire question of how fast you can get the lithium online. Its not like most (if any) of the businesses reliant on lithium - which again, more than just auto makers certainly - take in raw lithium and produce something with it. It is typically pre-processed depending on its use. So that needs to come online too. Also, is there enough of the US workforce that can get this material online quickly? We're talking years before something comes online in sufficient quantity to be meaningful, let alone replace other sources.
Then you have to ask how much of the given resource do we even have? Whats the quality? Not all lithium deposits are the same, after all.
And many more questions I am not likely thinking about, and this is only in regard to lithium. Think about the raw materials for everything in our lives - gold, silver, uranium, iron etc. and you'll find in more cases than not its simply unfeasible to start mining & processing it in the US, you will have to import it.
Your idea of what this takes is, frankly, a bit too simplistic to be realistic or useful until it answers all of these kinds of questions.
The way its being framed in the public - and often in discussions even in this Hacker News comments section - is its an alternative to raising other taxes. Trump is selling it that way, along with simultaneous tax cuts he wants to either extend or implement, which goes to show the tariffs are not some way of addressing the national debt concerns either.
While nothing does, the actual discussion around it isn't allowing any room for non-tariff tax increases regardless.
I agree with your point about how the discussion is framed. To add to where it should be framed, in my mind, you can toss in cost cutting at the federal government in there as well.
Neither tariffs nor cost cutting, unless it targets major programs such as Social Security or Medicaid, will have an effect on the national debt or the deficit.
Cost cutting always enters the equation, because somehow its better to eliminate benefits. Why not reform the programs? There is actually ample room for this, particularly with Social Security. Why not raise revenue via land value taxes, closing tax loopholes and other less and/or non regressive means?
The social safety net in this country is already terrible, making it more terrible by cutting the programs won't be better for anyone except a slice of the wealthy
Remember when Piketty advised the government of François Hollande? They enacted the wealth tax and there was simply a ton of capital flight and nothing was fixed? Leading to Macron winning the elections and enacting a ton of conservative policies and leading to pretty decent economic growth...
As I recall, Hollande decided to ignore all the advice around him[0]
>Mr Piketty’s second criticism touches on Mr Hollande’s tax policy. For years the French economist has argued for a more progressive tax system, which would merge both income tax, currently paid by only half of French households, and the “contribution sociale généralisée”, a non-progressive social charge paid by all. This too was one of Mr Hollande’s campaign promises. Yet the president has shelved any plans to overhaul the tax structure, preferring instead simply to increase taxes on the middle-classes and the rich.
First off, capital flight is not a good argument against high wealth taxes, it's an argument for more controls to prevent people from doing this, so they are forced to reinvest in business.
The wealth tax was in for a meager 2 years, and the richest in the country started calling it "anti-business" even though they were transparently refusing to reinvest that money in their company. Anti-business is shorthand for "We can't hire the 1 high-earner executive we want to play golf with instead of the 100 lower level employees that would actually help the economy."
Instead, they kept THEIR salaries and ate that tax cost, and told their employees they would suffer during these times. It was a coordinated effort to discredit something that was meant to create more jobs. Much like when Saudi Arabia artificially restricted oil until after the 2020 election. And the administration had no controls on this.
So yes, high taxes on the rich by themselves are worthless, but that doesn't mean those policies coupled with tighter controls aren't essential for wealth inequality.
Of course, conservative news is going to talk about this in the context of debt, and claim because the amount raised did not match the debt (moronic) that it was clearly a bad idea to tax the rich, when the real takeaway is there needs to be more controls and a bigger spotlight on how these scumbags jerk the system around. At the end of the day, they are trying to keep their yachts and their massive, unnecessary mortgages, and will fight tooth and nail to do so, and anyone falling for news stories about "oh it didn't work in 2 years, my boss said I was going to take a salary cut" is helping that agenda and nothing else.
> taxation and wealth redistribution remain an effective way to bolster a societies resilience
Tangentially:
It’s wild how inconsistent the public and political reactions are to different ways of getting revenue. Take this common pattern:
When DOGE identifies billions of dollars in waste, fraud, or unnecessary spending, the reaction is often: "That’s only 0.01% of the federal budget. It’s nothing!"
But when someone proposes a tax on billionaires that would over time raise a similar amount suddenly the reaction flips: "We’ll solve inequality! Fund healthcare!"
This contradiction is everywhere. How can $20 billion in government savings be "nothing," while $20 billion in new tax revenue is "transformational"? It's the same money.
>When DOGE identifies billions of dollars in waste, fraud, or unnecessary spending, the reaction is often
Did DOGE actually identify significant levels of any of this or is it simply labeled that for the expedited purpose of shrinking the federal government's effectiveness by any means possible?
They've been far less than transparent with the data that supports their findings and have been called out numerous times for misrepresentation[0][1][2][3] and lack of transparency which took a lawsuit to at least partially recitify[4]
I don't think anyone would scoff and the discovery and elimination of waste or fraud. I think the vibe you're describing is doubt that these supposed billions in waste/fraud/abuse live up to the hype.
Surely there's plenty of waste in federal spending but I suspect the vast majority is not going to be blatant and easy to identify
NPR did in their February article about DOGE; their story is ostensibly that out of everything claimed, NPR could verify “only” $2B in cuts which they present as meaningless:
> NPR's analysis found that, of its verifiable work completed so far, DOGE has cut just $2 billion in spending — less than three hundredths of a percent of last fiscal year's federal spending.
> "Think of Congress and its budget as the debt-ridden dad on the way to buy a $250,000 Ferrari on the credit card, and DOGE is the $2 off gas card he used along the way," Riedl said. "It's great that he saved $2 on gas, but I think his wife may be more concerned about the $250,000 car."
I don't know who these people are that you're talking about, who only propose taxes on billionaires and not the rest of the upper class, or who have compared those two numbers and seen they are different. I would imagine you're talking about two different groups with different figures.
Regardless, "taxing the rich" is not one mediocre policy, but several interdependent policies. It's not just picking the 5 richest people in the world and taking their money. The transformation doesn't come from redistributing $20 billion (wherever that figure is from) but encouraging executives to reinvest into their company instead of trying to suck as much cash out as possible.
Bobby Kotick making $155 million a year while Activison lays off hundreds of employees is insane. What on God's earth could you possibly need more than $20 million a year for? That is not right no matter you slice it. That money needs to be aggressively taxed so it is instead used to keep people employed at a much lower tax rate, not in the hopes that the government can use it for spending.
The argument is that increasing government revenue doesn't automatically mean We the People benefit; it usually means more pork and other ways of funneling money to benefit the people with the power to funnel it.
Not necessarily, if there's adequate competition and no collusion. I think of Costco's Kirkland products which have a capped profit margin, for example.
It’s hard to see tariffs on steel (say) not raising wider domestic prices. Any domestic industry using steel (car making, house building etc) presumably now has to pay more for its steel which feeds through to consumer prices. You might increase the number of steel worker jobs but at a hidden wider cost to the wider US economy.
We already have Section 232 tariffs on steel and aluminum imports, and have since March 2018. These new tariffs exclude steel (since we tariff it already).
> Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer.
That is the most harebrained argument I've ever heard. If politicians are "bad at taxing rich people", maybe the solution could be electing people that actually share the average citizens perspective and attempt to do this more effectively (like Sanders or Tim Walz), instead of billionaire nepo babies that spend half their career on a golf course?
I mean if I was a billionaire, making policy for billionairs, got paid by other billionairs and had working class people still elect me, I most certainly would not try to tax rich people harder, either...
> I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
Increased demand for domestic goods means increased price for those. And actually increasing domestic supply affects other sectors, too, driving up costs all over the board (=> see baumol effect)-- there is no large unemployed workforce to throw at manufacturing without driving up costs in the places that worked in, before.
Sowell would be against tariffs, he’s a free market fundamentalist.
As usual, libertarianism is used as a justification for corporate fascism, mercantilism, taxes on the poor… basically the Republican agenda. Funny how that works.
The tax increase wouldnt be used to create better jobs, they would be used bolster social welfare and reduce the national debt, at the expense of wealth generation in the upper class.
The primary benefit of the approach is that the pre-tarrif economy is strong, health care, high prices, and very high SFH prices are the primary ways people are hurting. Modest taxes as noted above address 2/3 without upending the economy in the process.
Prices wont come down, but unlike the tarrif plan they also wont go up so... seems like a better option at least to my relatively uninformed brain.
Increased taxes (on the wealthy) could also be used, not just to pay down debts, but to start new programs like expanding domestic production, back loans for small businesses and house construction. Heck even just 'new new deal' style jobs that build infrastructure.
Though I am partial to using new revenue to increase competition (new startups) in weakly competitive markets. That's the most effective way of increasing supply, and choice, and letting a market function.
If you believe in these tariffs then the major problem is how he enacted them. Businesses want certainty. It takes years to build factories. The next president could just wipe away these tariffs instantly. Hell, even the current one could. That does not give these companies the certainty they need to commit years of effort to building factories. If the goal is to spur domestic manufacturing then, at a minimum, he would get the tariffs enacted via a new law so they're more likely to stick for the long term.
This is the key point. Even if tariffs did everything Trump claims they will (they will not) no one is investing billions to build factories in America for tariffs that will not be there in a few years.
Turns out that governing based on the whims of the executive has downsides.
There is still a functioning system of laws in this county. Devolving into a monarchy is not a necessary condition for stable trade policy (and the particular guy trying to install himself has not proven a force for stability in trade policies, even his own viz. USMCA).
I wondering who "they" is. It can't be the WH. Yes they said they want to work around term limits, but if the reason they are offering is the stability they've shown us so far ...
> Hell, even the current [president] could [eliminate these tariffs].
The point is that the goal of building onshore production isn't as likely to be reached with these tariffs due in part to the uncertainty surrounding the method of enacting the tariffs.
Tarrifs are a tool that must be applied strategically. You typically announce tarrifs years in advance so business can shift their logistics and build out manufacturing where you want it. However a daily change in tariffs only creates a chaos that the economy cannot simply respond to fast enough.
A new steel mill won't magically appear in the middle of the US within a month.
> What about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
What about all of the domestic producers of finished goods who can now can not afford their materials and supplies? What about the domestic supplier of that finished goods producer who has their orders cut because the finished goods producer needs to cut production? What about the domestic consumer who'd like to buy those finished goods, but they can't afford it because prices over all have increased? What about the barber shop by the finished goods plant that has to shut down because the finished goods plant cut their workforce by 50%?
100+ years of studying tariffs have shown that they are effective when very narrowly targeted. Otherwise they almost never achieve their stated goal of actually increasing domestic production.
Should we tax goods from Mississippi to NY to save jobs in NYC? After all, wages in NYC are way higher than in MS. Trade with MS pulls down wages with NYC.
So if people were trying to make the world a better place congratulations they succeeded. JD Vance uses a bit different framing(!).
Anyway, back to your question, IMHO the problem in thinking here is that it implies that there must be "They" and "Us". You can't just get prosperous as a humanity, it needs to be a subgroup like "Americans" or "Germans" that do amazing things and they are very unsatisfied that Chinese and Indians got advanced and no longer do the shitty jobs. When they say globalism has failed us, they mean we thought that Vietnamese will keep making our shoes but now they are making cars too.
Essentially the core of the problem(or ideal) is nationalism and borders associated with it, preventing of people move around and pursue happiness.
A group of people like the generations of Americans who pioneered many technologies and sciences built a world, then other group of people(mostly their offsprings or people who caught up thanks to proximity to the ground zero) operated within that world and made some choices and transformed the world into something else. Now, they are unhappy with the current state and propose teaming up around something like religion/attitudes around genders etc. If you subscribe to the idea that people should team around these things and if you think that you won't be suffering that much and you don't care that some people might suffer a lot, then yes the current actions actually makes sense.
> is that it implies that there must be "They" and "Us". You can't just get prosperous as a humanity
This idea of humanity transcending our genetic (due to geographic proximity) tribal groups is a uniquely European one. Pretending we can abandon all tribalism and integrate the entire world into a European model is either immensely incompetent or intentionally malicious (I tend to think the latter). The current billionaire class profits immensely from all the diversity (both generic and ideological) in the west. It’s much easier to parasitically rule a divided people than a unified one. Nationalism is a defense against these parasites.
> needs to be a subgroup like "Americans" or "Germans" that do amazing things and they are very unsatisfied that Chinese and Indians got advanced
The issue isn’t other countries improving. The issue is the average America should not have a degraded quality of life (barring major natural disasters etc) so that our billionaires can be richer. A nationalist elite class would correctly say “no, we keep those jobs here because it benefits my countryman even if I’m going to make less money”. We do not have this and the wealth gap continues to increase.
> If you're subscribe the idea that people should team around these things and if you think that you won't be suffering that much and you don't care that some people might suffer a lot
Do you think parents should prioritize their children? Not saying this snidely - there’s no black and white lines here, but I think universalism can only be accomplished by taking care of our own and growing our tent, as opposed to diminishing our own to lift up others (who in many cases do not share our universalist sentiments).
I fail to understand what is "malicious" about the idea that we, as a single species, can someday achieve an equitable and global state of cooperation despite historical tribal / racial / religious differences.
Just because an idea originated in Europe doesn't make it a bad one out of hand.
> This idea of humanity transcending our genetic (due to geographic proximity) tribal groups is a uniquely European one. Pretending we can abandon all tribalism and integrate the entire world into a European model is either immensely incompetent or intentionally malicious (I tend to think the latter).
I did not realize Star Trek is uniquely European, that explains all the accents they have. It's a good thing Gene Roddenberry was European otherwise all this nonsense would make us Americans less isolationist.
> The current billionaire class profits immensely from all the diversity (both generic and ideological) in the west. It's much easier to parasitically rule a divided people than a unified one. Nationalism is a defense against these parasites.
For as much evidence as you present I'll assert that nationalism in fact profits the billionaire class much more than anyone else, thinking of most marketing campaigns, most nationalist leaders are all backed by the billionaires to win over the hearts of the working class. It's almost like you say yourself, "It’s much easier to parasitically rule a divided people than a unified one" and nationalism is just as much about dividing a nation's people from others than about real unity.
I agree with the goal. I disagree with the execution.
First, from the outside looking in, it appears these tariffs were implemented in an adhoc basis which disrupt supply chains potentially bankrupting companies and result in more layoffs in the short term.
Second, there should be a carve-out on tariff policy to respond to national security interests. e.g., if and when the US wants Ukraine to rebuild its fledgling export economy, the US should set the tariff on Ukraine's products to zero as it is in the US' interests that Ukraine is financially strong. Similarly, the US should use tariffs to protect industries it deems strategic such as manufacturing advanced computer chips.
In other words, instead of using a purely political process to set tariff policy, I would argue tariffs should be managed by an impartial semi-independent agency such as the Federal Reserve. The governors of such a tariff agency should be tasked with the goals of advancing long term US interests, economically, employment-wise, and national security interests.
The Trump administration set the Russia tariff to zero, and we do still import stuff from Russia in spite of all the sanctions and set the blanket ten percent rate on Ukraine as you write. Maybe this is simply the current administration's national security interest.
Most of Tulsi Gabbard's professed foreign policy beliefs prior to being added to this administration echoed Russian state policy, she called it being independent. Tim Pool was just added to White House press pool, he claims he was fooled into repeating information provided by Russia state media, after it was revealed they paid millions to him to do so. There is an awful lot of smoke here.
> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
Good faith negotiations with our allies and trading partners that creates a balance of trade and reduces wealth inequality in the west. I'm not opposed to the actual ideas being floated, but the people doing are are completely unserious and it's being implemented in a stupid nonsense way.
> Good faith negotiations with our allies and trading partners that creates a balance of trade and reduces wealth inequality in the west.
We can look at a 50+ year history of every major U.S. trade partner increasing their protectionist policies, largely targeting the U.S., while the U.S. allowed trade deficits to balloon out of control. I don't see evidence that this "good faith" approach you speak of has any viability at all. The global economy can't say with a straight face that it has been a fair trade partner with the United States. For the past 50+ years the U.S. market has been open for business for all global producers, but the same has been far from true for pretty much every major U.S. trade partner. You can't even operate a company in China without 50% Chinese ownership, for example. The global stance on trade has all but made this an inevitable outcome.
We negotiated those deals, we aren’t the victims. Now we don’t like how a deal turned out so instead of renegotiating we are throwing a temper tantrum like we weren’t the ones who suggested it in the first place. It’s embarrassing to be represented like that, and it won’t work! We will wind up weaker than we started, I hope they prove me wrong.
The u.S. didn't negotiate protectionist policies against their own exports. Can you cite a single example of this?
A more charitable explanation is that the U.S. has been all in on globalization and free trade since the 1970s and the rest of the world took a protectionist stance in response. I'm sure the rest of the world had their reasons. But the U.S. does now, too. Globalization and free trade that only substantially flows in one direction simply is not sustainable.
> A more charitable explanation is that the U.S. has been all in on globalization and free trade since the 1970s and the rest of the world took a protectionist stance in response. I'm sure the rest of the world had their reasons. But the U.S. does now, too. Globalization and free trade that only substantially flows in one direction simply is not sustainable.
We negotiated those free trade agreements. Stop acting like we were being taken advantage of. Now, if you want to argue that American labor has been hosed, then I agree with that too, but China didn't do that - Nike did. None of these idiotic tariffs are going to help the American worker either - what remains of accessible opportunity for the masses has already become more like sharecropping with huge corporations owning the plantation, and it's only going to get worse under these policies.
If it's fundamentally a jobs program, you can be a lot smarter about it than tariffs.
If companies couldn't compete before, they're now further disincentivized to compete, leaving the rest of us worse off and uncompetitive with the rest of the world.
That's the part I just don't get about the pro tariff as reshoring manufacturing argument. That industry only makes sense and will only be profitable in a world where the tariffs are permanent. The Vietnamese textile factories aren't going to just disappear their exports will shift to other parts of the world and if the tariffs ever disappear they'll shift right back to the US. So you'll have a tiny fragile industry beholden to the government for its continued existence that makes an expensive product only for domestic consumption... Maybe that's the actual goal create a new raft of client industries and workers in that industry who'll support the administration because to not do it will destroy them simply by lifting or easing the tariffs.
As a software engineer dealing with bits and bytes all day, it's easy to lose sight of the hard and sharp parts of reality. My wife is a chemical engineer who actually goes into a factory and is constantly dealing with production issues in actually making soap, ice cream, chemicals flow (different factories over her career).
JD Vance had an interview somewhere (I think in the NYTimes?) where he claimed that national prosperity is downstream of military might which is downstream of industrial base. It made me stop and think, because that does line up with what I was taught about how the Allies won WW2, and the US beat the Soviets in the Cold War: we outproduced them. I'm not sure if this is "fighting the last war", though, since I imagine a lot of warfare going forward is going to be technological and with things like drones, etc.
It's just so easy to deal with our economic abstraction, of dollars flying around, and computer work, and services and so on, that I sometimes do wonder about your point here about the actual physical, production of goods, and how important that is. Can you have a long term, stable, healthy, successful country that doesn't (and can't) produce anything physical?
We clearly can still make some stuff. I have a great squat rack and barbell set from Rogue Fitness, which makes stuff here in the USA (captured in this beautiful advertisement video[0]), and it's awesome. But I also have a made-in-the-USA wood pellet smoker which is garbage, and which I kind of wish I had just bought from China.
All to say, yeah, I think there's the potential for there to be something along the lines of what you're saying. That said, the implementation is maybe not great. Even taking the Tesla Texas Gigafactory, which was built in warp speed (construction to first cars in about 1.5 years), that's only leaving 2 years before a potential next administration could roll back the tariffs if they wanted.
Agreed there are serious restructuring that needs to happen in the US.
That said this approach doesn't make a lot of sense. There are many ways to do this without antagonizing all of your allies which only helps out your enemies and ostracizes the U.S.
Loss of confidence in the greenback is deeply problematic for US power.
>For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
We could instead pay for re-education and training for these folks to find jobs that do align better with the global economy and bolster social safety nets to help with job loss.
Tariffs are no guarantee the jobs will come back either or even if some of the manufacturing does come back to the US, that it will employ people who need it most or in the same number. Manufacturing automation is quite sophisticated nowadays. Even if the manufacturing comes back to the US - which I don't think is going to happen en masse if at all - the employment prospects that you're suggesting in this line of reasoning won't come back with them, is what the evidence suggests.
>There really are structural challenges to onshoring production due to strength of the dollar due to its reserve currency status; our society as such is biased heavily toward importing goods rather than exporting goods. This is a real challenge that needs to be addressed as well.
Why? Why is onshoring production of non critical goods a benefit to the US as a whole over the long term? Why do we want to protect manufacturing interests at the expense of other interests? These questions haven't been addressed. Not to mention the pain tariffs are going to cause isn't being addressed either, we're simply told to 'grin and bear it', and for what are we doing that exactly? Whats the actual nuts and bolts plan here?
Everywhere I look at the argument for tariffs I come up short on legitimate answers to these questions
>Our national debt is not sustainable either. Either we pay it down some, or we inflate it away; these are the two ways it goes away, ignoring the option of a world-shattering default on the debt. Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
There's other ways to handle the national debt than put broad tariffs on all our trading partners - including allies who have actually been very generous about their trade terms and investments in the US, like Japan, the UK (really much of western Europe), Canada etc.
If we really want to strength the dollar, we could raise wealth taxes (like capital gains or instituting a land value tax for example) and moderate spending. Why are tariffs superior to this? Tariffs only hurt the poor and middle classes anyway, who can't simply fly out of the country for large purchases to avoid them.
I really want to read a good response to this comment. I have the same questions, and I’ll add one more thought.
Lots of people talk about how the US should be more like Europe. People say the average European has a better quality of life, etc. Well, Europe has tariffs…
So does the US??? Ex - we've been placing tariffs on solar/ev parts for many years now to drive investment in those industries (And this is hardly the only place we've done this).
Targeted tariffs to protect and strengthen specific industries are fine - especially if done slowly and while supporting those industries internally to make sure that they aren't disrupted, and that they can actually capitalize on the space provided by a tariff.
---
This policy is not fucking that. It's just a backdoor tax on everyone, with zero planning and support internally to bring those industries back.
Simple terms for your simple comment:
A morbidly obese guy slowly exercising is great.
A morbidly obese guy getting dropped into a marathon with no prep is a recipe for a heart attack.
Weighted average is an interesting metric, but I'm not sure of its value in this context. I can imagine that perhaps 2-3% is more of an equilibrium and any amount of tariffs will still trend towards some market equlibrium.
I believe the EU has 10% tariffs on all US autos and we didnt have tariff theirs. That seems relevant in a way that this weighted average doesn't account for, right?
And the US has a 25% tariff on F150s (light duty vehicles).
You can go tit for tat down the line, but all in all the numbers I gave you are the sum of everything.
Heavy tariffs won’t bring an equilibrium. It will only make imported goods expensive and allow the existing domestic producers to become laze and uncompetitive, all in all zeroing their export value.
We tarrif Trucks because they tarrifed our chickens. Tarrifs are pretty complicated and often don't make sense. But no the idea that EU tarrifs on the US are much higher on average is unsupportable
Doesn't the US already have the most progressive tax system in the world? If you want more public services the tax rate would need to increase at all levels but dramatically so at the middle to low end.
The U.S. tax system is less progressive than those in many other industrialized nations. European countries like Denmark and France have higher top marginal tax rates (above 50%), while the U.S. top federal rate is significantly lower. Additionally, U.S. taxes and transfers do less to reduce income inequality compared to peer countries.
That is not what progressive means. The US doesn't have the highest marginal tax rate but a greater share of taxes are paid by high-income earners than others on a per dollar basis.
Raising rates on soley the rich will make the tax system even more progressive but will probably not make public service much more generous. Raising the tax rates on everyone would probably make the tax system less progressive but might actually fund a large increase in public spending.
You're right that "progressive" technically refers to how tax burdens increase with income, and by that measure, the U.S. looks progressive because high earners pay a large share. But that doesn’t mean the system is actually effective at reducing inequality.
What matters is outcomes, and the U.S. system—compared to other developed nations—does far less to redistribute wealth or fund robust public services. Other countries raise more revenue overall (often through broader-based taxes like VAT), and they spend it more equitably. So yes, technically progressive—but practically insufficient.
> Doesn't the US already have the most progressive tax system in the world?
It's arguable, but it's safe to say that it's one of the most progressive among development countries, but that's in large part a function of the comparative inequality and low tax rates to start.
> If you want more public services the tax rate would need to increase at all levels but dramatically so at the middle to low end.
"As a result, the latest OECD data show that while the United States has the tenth-highest level of income inequality of the 31 OECD countries examined before considering taxes and transfers, it has the fourth-highest level of inequality after considering them."
"As the OECD report notes, if two countries have identical tax schedules that include graduated marginal rates, the tax system will have a more progressive impact in the country with higher pre-tax inequality, because a larger share of that country’s income will be taxed at the top rates."
"Because of their comparatively small size and below-average progressivity, U.S. cash transfers do less to reduce inequality in household cash incomes than those in any other OECD country except Korea"
If you really want to onshore production, you don't increase taxes on the import of raw materials, parts, and components, you only do so for finished goods. That isn't what this administration has done though. They say they want to increase domestic manufacturing, but their actions clearly prove that that is not their goal.
There are two different questions here: (1) is Trump's strategy a good one to accomplish his goals? and (2) what are other good ideas to do so?
Just because there aren't many ideas in bucket #2 doesn't mean you should do #1.
For a trivial example, consider steel and aluminum tariffs (Larry Summers gave this example on Bloomberg yesterday):
There are 60x more jobs in industries that rely on steel/aluminum inputs than there are in the US steel/aluminium producers. 60x!
Steel/aluminum tariffs increase the cost of inputs to the companies that employ those 60x more people; their businesses suffer; those jobs are more at risk.
Meanwhile, it will take a decade for steel/aluminum production to be fully done within the US, and even then it will be a higher cost (i.e. the reason the US imports a big share of aluminium from Canada is that Canada uses cheap hydro energy to produce it - something that the US can't do).
Through that decade, every single item that uses imported steel/aluminum as an input will be more expensive for average Americans.
So you risk 60x the jobs, for a slow and ultimately non-competitive local industry rebuild, and meanwhile average Americans pay higher costs.
Now multiply that across every category of good in the economy?
#1 is bad. I don't have a great idea for #2, but #1 is bad.
Look at it from Trump's perspective for a moment. The only tool he has is tariffs, and the people he's negotiating with are not just foreign governments but also Congress. Because he has this authority he can use it to try to bring any of those to the table and negotiate alternative approaches. Not saying that's what he's doing. Just saying that's a possibility.
He's got the entire congress! He's got the entire universe of industrial policy to advance whatever domestic improvements he wants to pursue. Clearly they even have the political capital and appetite to do a massive tax increase!
The tone of discourse on HN has gotten quite negative lately. It can be possible for Trump to believe that what he's doing is good even if what he's doing proves bad. He seems sincere in thinking that yesterday's tariffs will do good for the U.S. Who knows, tariffs might yet do good (or not), and Democrats used to advocate roughly the same thing:
- Bernie, 2008: https://x.com/mazemoore/status/1907883583228051964
- Nancy Pelosi, 1996: https://x.com/ThomasSowell/status/1907875133638705646
- Roger Moore's films
Clearly they changed their minds. It would be interesting to see why they changed their minds.
The tone of HN is something. For instance there always seems to be someone partisan enough to defend Trump no matter how ridiculous and terrible his actions are.
It true that there are democrats who are more skeptical on free trade and I would disagree with some of their views although adding workers rights and minimum wages into trade agreements are things which might have some merit but none of them would try something as ridiculous and economically suicidal as this. They're literally putting tarrifs on an island with a bunch of Penguins.
That's because he's lazy and doesn't really care to learn about policy or listen to the vast majority of economists including conservative economists tell him he's blowing up the economy and he doesn't care much about the damage he causes. He might remotely care about the stock market going down or losing political power and being tried for some of his many crimes but he doesn't really care much if his supporters (much less the half of the country that voted for someone sane) suffer, starve or die from a preventable disease.
> very real national problems that this might address.
This is a dubious claim to begin with. If you believe that 'trade deficits are bad,' can you explain why? Post Covid, the US economy has emerged in significantly better shape than nearly every other country in the world, so I'm failing to see how these deficits are meaningful.
> Globalization has played a big role in creating the massive income inequality in our country
What is your source for this belief, especially when comparing globalization with other factors that cause inequality? From my understanding, the biggest recent contributors to a higher cost of living in the US are housing, health, and education. Health and education purely services-oriented, and housing is one-third a labor cost.
> our society as such is biased heavily toward importing goods rather than exporting goods
I think that's great. America exports services. We innovate to create new technology, are a leader in designing the things and systems that people want (think of our tech industry), and we delegate the work of manufacturing to others. That seems fine to me, and a function of having (relatively) open, free trade.
> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
At a high level, the problem is that free trade makes the pie bigger, but causes distribution/inequality problems. So generally speaking, the best measures are going to be those that improve inequality while minimizing the impact to the size of the pie. Raise taxes on the wealthy, increase spending on social programs to the non-wealthy, fund investments in programs that benefit everyone equally. (Public transit, libraries, healthcare, education, etc.)
Tariffs shrink the pie, and I'd heavily bet against those hurt by globalization being those who are able to grab a bigger slice under the current administration.
According to the Bureau of Labor statistics, there are 7 million unemployed in the U.S. currently.
I don't know how you expect these to cover for all the manufacturing you imply might come back to the U.S. with these tariffs, and that's assuming the space and the production means (factories, etc.) are here already. They aren't, and not for a couple years.
Combined to the fact that the U.S. is clearly sending a signal that coming there is dangerous now, especially for any other category than white males, and I don't see how you can even imagine that this situation is going to be working out.
There is a net outflow of US dollars, because we keep issuing new debt. The fix there is to stop issuing new debt, by fixing the budget. Sadly, no one seems to think this administration will do that.
Globalization is fine. Wages in this country are quite high overall. Inequality isn't caused by trade, it's caused by low taxes on rich people, weak unions, and weak labor regulation.
The terrible state of US production is a myth. The US is the second largest manufacturer in the world. The #1 spot is occupied by a country with over 4x our population. Manufacturing employment is down because our manufacturing productivity is really high. Yeah, we don't assemble smartphones or make plastic trinkets. We make cars and jetliners and computer chips.
If you want to address the national debt and inequality, the solution is to correct the power imbalance between employers and employees by strengthening labor regulations and unions, and to raise taxes, especially on high incomes, and especially on the super wealthy. Taxing people like Elon Musk down to a more manageable 10 or 11 figures of net worth won't do a lot for the nation's finances directly, but it will do a lot to curb their power and get the government to be more responsive to our interests instead of theirs.
(And no, tariffs are not a good way to do this, since they're regressive.)
Aren't "weak unions" caused by globalization? Unless the union is global, employers can always respond to stronger unions by pulling the off-shoring lever even more vigorously than they already do.
Globalization adds competition for both labor and business, which will drive prices down. That will limit what unions are able to bargain for, but it also limits what non-union workers are able to bargain for, so it's somewhat orthogonal. A smart union won't bargain so hard that their employer decides to move the facility instead.
Tax corporations and the wealthy since they receive the majority of the benefits. They benefit from a trained healthy workforce, social safety nets, infrastructure like roads and electricity and water. They benefit form the US dollar being the reserve currency for most of the world. I literally cannot list all the ways these two groups benefit in a real tangible outsized way than any other individual.
Trump wants to eliminate all federal taxes. That's NOT going to reduce the deficit. The current republican spending bill includes a 4.5T tax cut to the wealthy and businesses, while cutting only 2T in spending from entitlements WE PAY INTO SEPARATE FROM TAXES. I am entitled to the money that me and my employer pay into Social Security, it's an investment, not a tax.
Let's stop taking from working people who are quickly falling further and further into poverty and start taking from the people who literally own everything!
> For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete
That misses the point on so many levels. First of all consider that this is a domestic problem too. What about all the businesses abandoning California for Texas because wages are so much lower to achieve an equivalent cost of living?
Cheaper goods produced elsewhere is not necessarily a security concern for the economy. Silicon produced only in Taiwan is a security concern for the US, for example, but rubber production isn't even though the US cannot produce natural rubber.
Finally, and most importantly, price depreciation of goods due to global options frees up American businesses and employees to seek more lucrative ventures as the market demands that would other not exist due to opportunity costs.
Do you honestly believe that there are significant numbers of US citizens lining up to take up low-margin manufacturing work as is currently done in China or elsewhere?
Chinese manufacturing workers live on a $25k/y income ($15k without adjusting for purchasing parity!). Do you beliefe that raising prices on goods by 30%ish is enough to make those jobs attractive to US citizens?
What sectors would you suggest primarily sourcing domestic manufacturing workers from, and would you agree that just doing that is going to lead to further cost increase for the average consumer?
In my view, the current tariff approach is a rather naive attempt at improving national self-sufficiency at the cost of the average citizen, and the administrations explicit statements and goals make this pretty clear-- shifting government income from taxes to tariffs is a very obvious losing move for the vast majority of people that spend most of their income.
US economy right now is heavily biased towards providing services and high-tech goods because that is the most valuable use of its citizens according to market dynamics. Managing the economy in a "I know better than the market way" certainly did not work out for the soviets...
Sometimes I feel that people construct elaborate theories of how Trumps policies will end up beneficial for the average citizen, despite clear, explicit descriptions of how that is not the goal and historical precedent of acting directly against working-class interests (i.e. raising estate tax exemptions above literal 1%er-thresholds).
So you are okay with exploiting people for labour, often in inhumane conditions just so you can buy some unnecessary junk for cheaper?
> US economy right now is heavily biased towards providing services and high-tech goods because that is the most valuable use of its citizens according to market dynamics
So basically geared for upper class / banking industry? US has some of the highest wealth inequality of the developed world.
But by far the most important aspect is military. Manufacturing capability is extremely important for military. US may be the most advanced, but a $10m rocket will not beat 10,000 $1000 drones.
> So you are okay with exploiting people for labour, often in inhumane conditions just so you can buy some unnecessary junk for cheaper?
Do you think that better wages and working conditions in underdeveloped countries are a goal (or even just side-effect) of Trumps policies? How is that achieved?
> Manufacturing capability is extremely important for military. US may be the most advanced, but a $10m rocket will not beat 10,000 $1000 drones.
I don't see a coordinated effort to expand the domestic arms industry that is pushing for those tariffs.
If your narrative is that tariffs are driven by military strategy, then you have to show how those military-industrial concerns drove political decisionmaking- because all I see right now is the president preferring tariffs over taxes for ideological reasons...
> Do you think that better wages and working conditions in underdeveloped countries are a goal (or even just side-effect) of Trumps policies? How is that achieved?
No. It will make labour in US competitive where you have labour laws. Consumers will pay the fair market price for products rather than relying on abusing labour in poor countries.
> I don't see a coordinated effort to expand the domestic arms industry that is pushing for those tariffs.
It's not about creating military industry. It's about creating a manufacturing industry which can be converted into war effort if needed. It's also about self reliance. It's also about creating meaningful jobs that actually create something (as opposed to the wall street where you have upper class just extracting wealth from the working man).
You can't look at this move as something in isolation. Trump has also completely flipped geopolitics on their head.
Here's other things he's done:
- Threatened Canada
- Threatened Greenland/Denmark
- Supported Russia (it's obvious)
- Told NATO allies export F-35s will be nerfed just in case we come into conflict
Americans are already very insular, I don't think you all realise just how much you've pissed off Europe and Canada (I live in both places throughout the year, family in both)...
American multinationals have benefited greatly from trade with other countries... Look around the world: iPhones and Apple products everywhere, Windows computers, Google dominates search, the USA is a top travel destination, American weapons are used by most allies, etc...
Right now in Canada and European countries we're talking about completely cutting out all US trade and travel. Like all of it. It won't be policy but the US has completely destroyed all goodwill and cultural influence it has across the "West".
Because of immense hatred of Russia, China is now the "lesser evil" and pretty much all developed countries will band together. And not only will countries move on from US hegemony, they'll accept any pain that comes with it because Russia is threatening Europe and the USA is threatening their neighbours. Without the geopolitical aspect, the US might have won this trade war. But no one is going to bow to the US to then get sold out and conquered by Russia...
One unintended benefit of this move might be reducing greenhouse gas emissions from global shipping ... if US consumers are consuming more US made products, the supply chain for those projects will have gotten significantly shorter in nautical miles.
I'm hesitant credit President Trump with this too soon though, after all, his motto is "drill drill drill", but It's going to be interesting to see what happens.
Emissions from shipping are about 3-5% of global greenhouse gases, and my understanding is that also includes all domestic shipping.
Emissions from personal vehicles (not including freight trucks) is at something like 10%.
I don't have specific numbers for America on hand, but I'd be very surprised if Trump's administration broke even, let alone cause an overall reduction.
> Everyone is quick to deride this move as stupid. I don’t disagree that there are downsides to the approach, but there is a set of very real national problems that this might address.
Because it is stupid. It's important to point out that this is stupid and not only doesn't help with problems that come with the benefits of globalization but makes it worse. How will a deep recession fox anything? Including debt(which is high but manageable under a sane government)
This is a bunch of nonsense that is not driven by data and not even worth a response.
I am tired of people spitting BS just to defend Trump's inane policies and everyone else having to rederive modern economic trade theory in comments in order to counter it.
Physicists used to get a bunch of derision for thinking their high skills in analytical thinking in physics easily carried over to other fields, and now we have CS majors thinking the same.
Regardless I will do some of the countering:
> what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
We had a candidates that offered job re-training programs. Those candidates weren't selected and those jobs went away even as we tried to put up protectionist domestic policy.
> our society as such is biased heavily toward importing goods rather than exporting goods.
This is fine. Comparative advantages and all. We just need to produce the goods necessary for national security. It worked out well so far. Do we actually want to have other countries do the high value services and us doing the low value manufacturing???? Why are you justifying engaging in a trade war with Cambodia and Vietnam?
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
This is not backed by any data. Every single economic thinkthank worth a damn, including conservative ones, have detailed how it will raise the national debt.
I am tired of people saying ridiculous arguments just so they can stave off cognitive dissonance.
Tearing down our soft power and throwig out every trade deal we have carefully crafted since WWII is absolutely ridiculous.
Denmark, Sweden, the Netherlands, Norway, Finland.
You don’t get world-class infrastructure, universal healthcare, and top-tier education without paying for it. High taxes are the price of a civilized society. Get over it!
While I agree those are great things, don’t fool yourself - someone IS paying for it
Those countries have a population that is a fraction of the US. I’m sure they make more effective use of their taxes too. In the US, taxes continue to rise and health care and education costs rise even more. There are many things that are broken. Painting all billionaires as the problem and thinking that confiscating their wealth via taxes will solve the issues… is a popular rallying cry but is not an actual solution
Strongly encourage you to learn about their favorite money making concepts of passive income and compound interest. And other various "financial engineering" techniques corporations are engaging in.
These guys make more money taking a dump than 1000 US workers doing hard labor. I'm sure they are like 1000x more genius that most people but I doubt you could make an argument where a system that rewards this sort of behavior, while contributing absolutely 0 net value to society can also coexist in harmony with the rest of us.
When the most efficient methods of accruing wealth are literally predicated on profiting from doing nothing, they are not the signs of a healthy society.
I’d encourage you to do some research on the history of charging interest. It does indeed make for a large wealth gap and that is indeed a significant social problem.
However it isn’t a problem limited to capitalism or the US. And “billionaires” have been around for quite a long time - I find it strange that some are placed on a pedestal for some reason
Yes current crops of billionaires aren’t particularly different, but the methods they have access to are increasingly detached from any real world value. And due to the overall wealth of the US and money in the world in general, their ability to create capital out of nothing is on the very extreme end of the spectrum.
They are driven by tunnel vision and are distorting the very concept of money and the purpose it has to serve in society
Dont pretend capital = productivity and wealth = wisdom. That’s how you end up with a system where work is taxed more than ownership, and basic rights like healthcare stay out of reach. U.S. exceptionalism is only notable on it's exceptional inability to do what 150 other countries already figured out.
A blanket 10% minimum tariff is a great excuse for any local US manufacturing to increase their prices.
I used to live in a country with heavy tariffs, every time tariffs were raised the local producers increased prices to be just below the imports. Even after the tariffs were abolished the prices (on local and imports) never really lowered in any significant way.
That always seems to happen with this sort of protections. It's like when the government tries to incentivize people to buy electric cars by paying 25% of it (example from the climate bonus in Sweden, which was given for years), but what happens is that buyers actually end up paying just maybe 5% less as the car companies now can increase their prices and still sell the cars they produce while making more money.
That happened in New Zealand, where the govt. paid $5,000 for electric cars. When this subsidy expired, prices decreased by a few thousand.
If a consumer was willing to pay $20,000 for a car why would they sell it to them for less than $25,000 when the final bill to the consumer will be $20,000, with the govt. paying an extra $5,000.
That's why the better policy is not to subsidize the purchase price of the car, but the various taxes associated with owning one, as well as offering certain perks like being able to drive in the bus lane. This was a huge success in Norway. Though now the percentage of new car purchases that are electric is so large that the subsidies are being rolled back because they've gotten too expensive(and the bus lane thing no longer makes sense because if the majority of cars can drive in it, it's not really a bus lane anymore). But I think that's fine. You can make an argument that when subsidies were introduced, electric cars were still struggling to compete with combustion cars in numerous ways, like range, capacity, access to chargers and repair services, etc. Subsidies/perks acted as compensation for those downsides for early adopters. The playing field is obviously a lot more even now. Chargers(including home chargers) are generally widely available, range is improved via better battery tech, there's a lot more players in the market, meaning more choice, etc. Not really a car guy, but I assume the repair situation is also improved, though it may not be on par yet.
In principle, that still injects cash into those companies though; it's just that the popular conception is that these subsidies are intended to make the product cheaper for consumers, instead of encouraging companies to produce them because they're more profitable due to the subsidy.
(This should not be taken as a blanket endorsement, god knows that companies follow the incentives, which is rarely perfectly aligned with the intent)
Basic Econ 101 - The only way to lower prices is to increase supply (or decrease demand, however I'd really rather not have a huge pandemic, war, illogical engineered recession, or other situation that decreases the number of viable consumers...)
That this would happen is evident to everybody with a minimum knowledge of economics. It’s the same reason UBI won’t work because it would make prices skyrocket.
It certainly could. Depends a lot on the specifics of how the UBI is implemented, and how UBI affects salary levels. If everything remained the same and everyone just got x more income each year, then yes, inflation is very likely. On the other hand, something more like no questions asked/no demands made social security, where the only requirement is being unemployed, could improve conditions for people who are unable to work while paying for itself in eliminating heaps of red tape, and also freeing up a lots of manpower towards helping people sort out their lives instead of pouring over disability pension applications, without paying out a bunch of money to people who don't need it because they earn plenty from work already.
One could also pay out ubi universally, but have a one time down-adjustment of salaries the first year.
Right and wrong. Right if it increases aggregate demand more than available economic production thus leading to inflation.
But if we overall had capacity to tame in the added UBI, then no. Unlike targeted subsidies like EVs, UBI is do much better. Each industry is still competing with other industries
A laborer in a subsidized, low-productivity industry is one less worker available for a high-tech, high-productivity sector. With a finite workforce, misallocating labor like this inevitably hampers innovation and economic growth. The U.S. should focus on being a powerhouse of technology and innovation, not divert resources to low-value tasks like picking olives from trees.
1. Not all workers are fungible. Your average 30th percentile individual =/= the person progressing your biotech industry. Would they be more beneficial to the economy working in a customer service job, or in a factory?
2. It's very hard to be a powerhouse of innovation if you don't vertically integrate. China has taught us this. You can't split out the gritty part (manufacturing) from the fun part (invention) of technological innovation and win in the long run.
I live in a country where we have many protectionist tariffs and the locally produced goods are expensive and lower quality compared to imported goods which guarantees profits at the expense of consumers.
I don't understand why people still believe in this day and age that wages will ever increase despite data showing the opposite for literal decades.
If you frequent an American form as a non-American, you'll have noticed by now that for most Americans it's as if the rest of the world doesn't really exist. You can talk all you want about how the thing they're proposing has been done in other countries with terrible results. Or the thing they're saying it's inviable exists in many other countries and it just works. You'll be ignored either way
Maybe that's how Trump believes tariffs work, but they are actually a tax on imports, that the importer pays. The importer passes that along to the American consumer.
Other countries are angry about this because it discourages importing from them, and their US exports may go down, or they may have to lower their US export prices. Not because they have to pay a fee or a tax to the US.
I also don't think it's enough to justify moving manufacturing to the US. The investments are to high, especially for something that might only last for four years. The US also doesn't have enough workers, so wages would increase.
Count on it. Especially after Trump (AKA we the taxpayers) gave the oligopolies and monopolies huge corporate tax handouts, for which they thanked us with massive price hikes and the current "inflation."
Oh, and of course there were Trump's tax hikes on middle-class Americans to boot.
This is expected and normal? Demand for locally sourced goods will skyrocket which means prices should as well. What you are leaving out is that the US is well capitalized and those sky high prices will be a strong incentive for more competitors to join the market. With competition in place prices will eventually fall. Prices will likely never go back as low but at least our fellow countrymen will be employed, housed and hopeful instead of on the streets doing fentanyl.
People will starting fighting against more houses being built to protect their wealth even more than now. You'll be earning like $25/hr at the factory and all the single-family houses are 300k+ with significant interest. Assuming they never have a huge healthcare bill which also shows no signs of becoming affordable, if the factory jobs even offer decent benefits but my guess is they will all be high deductible plans.
So the US has been, more or less, the best place in the world to do business. Stocks historically soaring, yadda yadda yadda ... and somehow this guy sells the story that the US has been taking advantage of by all the other evil countries in the world. It does not, in any way, make sense.
What a clown. A totalitorian clown unfortunately.
> For technical reasons, there is not one “absolute” figure for the average tariffs on EU-US trade, as this calculation can be done in a variety of ways which produce quite varied results. Nevertheless, considering the actual trade in goods between the EU and US, in practice the average tariff rate on both sides is approximately 1%. In 2023, the US collected approximately €7 billion of tariffs on EU exports, and the EU collected approximately €3 billion on US exports.
Yeah, I think best way is to look at the total tariffs collected by the EU on US goods - about $3.3b USD in 2023 - compared to imports ~$370b USD in 2023. So like, 1%.
No, I'm asking for details in this specific case. I don't have deep knowledge and understanding of the subject, so why is it no applicable in this case?
> The European Commission says it charges an average tariff of just 1% on US products entering the EU market, "considering the actual trade in goods". It adds that the US administration collected approximately €7 billion of tariffs on EU products in 2023 compared to the EU's €3 billion on US goods.
> A World Trade Organisation (WTO) estimate puts the average tariff rate on US products entering the EU slightly higher at 4.8%.
> In both cases, this is far off the 39% figure quoted by the Trump administration.
Taking Vietnam as an example, keep in mind that the trade deficit calculation only uses physical goods.
Vietnam exports low value physical goods to the US. The US sells high value non-physical services such as Microsoft office, ChatGPT, Netflix, Facebook ads, iOS Appstore fees, iCloud subscriptions, etc to Vietnam. Other services include engineering consultants, US tax auditors, US consulting companies, etc. None of these are factored into the formula.
So a country like Vietnam gets royally screwed by this formula. They are actually buying way more from the US than just the physical goods.
If you're Vietnam, it's very hard to "just take it" as suggested by Treasury Secretary Scott Bessent. The formula is flawed in the first place.
If we truly want fair, the formula should be based on total profit of the goods and services sold. Services have much higher margins than physical goods typically.
The tariffs might be a bad idea, but this accusation is ridiculous. For a simple methodology like this, it's trivial to prompt engineer a LLM to produce the same response. It doesn't mean that that's how the administration came up with the policy, any more than a LLM getting the same (correct) solution as a student on an assignment means the student used a LLM on that assignment.
I think the accusation carries more weight than you're implying because while correct answers are all similar having two students give eerily similar wrong answers is often used as evidence for
cheating.
The fact that this announcement is, to put it generously, weird, and not how anyone in the real world actually implements tariffs points to this administration going with the formula from some undergrad econ textbook or econ blog they found and applying it to a spreadsheet. Maybe they got it from an LLM, maybe they didn't, but what matters is the college sophomore level of consideration of the individual tariffs.
I really don't think this is entirely spurious considering Elon has been using LLMs to fire government employees. It seems like a very plausible explanation for how they came up with this policy.
from Mike Johnson, about DOGE's use of algorithms: ""Elon has cracked the code. He is now inside the agencies. He’s created these algorithms that are constantly crawling through the data. And as he told me in his office, the data doesn’t lie. We’re going to be able to get the information."
My speculation, but it's very likely that one of those pieces of analyzed information was the 5 bullet points from each federal employee justifying their job.
I think so, but I'm not actually sure that any of the realities that would have lead to this outcome is any less embarrassing for the administration. Because there is real information contained in the fact that pretty much every LLM gives roughly the same answer— it doesn't help that the wording is similar either. Does it mean that they used an LLM? No not really, but it does strongly imply that their formula and the source for it are the "StackOverflow answer" for lack of a better term.
And while it's not wrong I guess it's also the kind of thing that you would expect to use for your econ homework than a real application of policy. I don't think it's unreasonable to assume that the person who made this spreadsheet really did do something to the effect of type "how to calculate reciprocal tariffs" into Google. And that's not a bad thing necessarily if you're a rando who's just been tasked with figuring that out but you couldn't have found someone with more experience with actually doing this and modeling the economic effects?
I think that it's a testament to the genuinely breakneck speeds they been trying to get policy out there that it's been so slapdash.
Specifically they used 2024 trade balance figures. Example: take a random country, like Botswana, and the country's page at https://www.census.gov/foreign-trade/balance/c7930.html shows a 2024 trade balance of 104.3 (exports) and 405.1 (imports) so 1-104.3/405.1 = 0.74 which matches the "74%" "tariffs charged to the USA" claimed by Trump...
Rarely you get handed such blatant evidence that someone produced bullshit numbers and/or doesn't understand where the numbers come from !
Edit: someone said it doesn't work for Japan but it does. Every country I checked by hand matches the figures exactly... For Japan the figures are from https://www.census.gov/foreign-trade/balance/c5880.html and their 2024 trade balance is: 79,740.8 (exports) and 148,208.6 (imports) so 1-79740/148208 = 0.46 which matches the 46% "Tariffs charged to the USA
" from the table shown by Trump...
thanks for the information. In light of this, it seems pretty silly: economy on a world scale isn't a line, it's more like a ring (country A has a deficit with country B, which has a deficit with country ... N which has a deficit with country A) at best. Isn't it like saying everyone should trade everything at the same price with everyone?
...and every country USA has a positive trade with, will get slapped with the 10% tariff. Every country on the table Trump posted, that have received the 10% tariff, the US have a positive trade with.
Not saying I agree with it, but Trump has communicated that ideally these international companies would build factories in the US. There would be no point in doing that if not for some floor tariff.
I think a lot of people assume the economic consequences like these have not been understood by the WH. Although I don't like this administration I beg to differ: they know what's going to happen, and they expect the coming storm because they seek what follows.
They want to repudiate foreign held debt, or devalue it, by revaluation of the USD and they will wear what they think of as a one time economic shock to get their reset in a belief they can make it less like the Smoot-Hawley great depression because so many other economic levers exist now, including floating currency, MMT, and massive fintech.
Personally I think it's a mistake but hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care. Some amount of foreign trade will absorb the cost. Not all, not most. Not all prices in the US will rise and some substitution will happen although spinning up cheap labor factories again isn't going to happen in 2025. Maybe by 2027? Rust belt sewing shops and Walmart grade cheap goods production lines?
What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
The weighted average of the new U.S. tariffs will be 29% it seems.
Maybe they know the consequences, but to give you a idea... it was 1.5% before. The new ones will be equivalent to Brazilian tariffs in 1989 before opening the economy (31%, data from World Bank).
Now, Brazilian tariffs, which have one if the most closed economies, by weighted average, is 7%.
China, have 2.2%.
The United States will be an autarchy, similar to how LaTam was in the 70's, when tried this exact idea. The tariffs being as high instantly, will impact the economy, later, the country will probably grow, which is what they expect, but this is not a productive grow. Because your new factories now are not competing with external products, so your productivity go down, this means real income will also go down.
So yeah, some people at best (if is not a robot doing the job) will have a job in a factory, but on what he will be able to spend with his wage won't make it worth even for this person.
>Import substitution is a policy by which the state aims to increase the consumption of goods that are made domestically by levying high tariffs on foreign goods. This gives an advantage to the domestic manufacturers as their goods will be cheaper and preferable in the market compared to foreign products. India adopted this model post-independence, and it continued till the 1991 reforms. Due to import substitution, the domestic producers captured the entire Indian market, but there was slow progress in technological advancements, and the quality of Indian products was inferior to the foreign manufactured ones. But after the reforms, the Indian market was opened to everyone, and the consumer got the best value for the price he paid. The Make in India policy of the present government is reminiscent of the pre-1991 inward-looking Indian state.
In the US it will be even worse. The US is already high-tech economy outsourcing low value-adding manufacturing to foreign countries while industries move towards higher value-adding products. After the tariffs, US manufacturing sector will sift to lower value-added, lower complexity products.
Yeah. Specially because the U.S economy is service-focused (and consumption as well).
Like, imagine now that all your computers will be more expensive/worse. This will affect services from like, a law firm - to a tech company. Will make harder for young buy good computers and start to code, etc.
I say this as a Brazilian, to us Brazilians watching, this is like: Why are the U.S repeating the same mistake?
I don't think Americans know this, but here in Brazil, we also have phone, tablet and PC national brands (Positivo¹, Multi², Philco³). National TV brands like Semp, AOC, Mondial. A ton of home appliances brands like Mondial, Philco, Britânia.
But why Americans don't know them? Because they only exists because of the tariffs. So they only exists in Brazil internal market. They are worse than foreign brands, but they exists because it's cheaper to buy a Mondial Kitchen Stand mixer than a Kitchen Aid!
And worse that most of these products are only white-label Chinese products, sold way more expensive than the real chinese ones.
This also create a whole gray market. A lot of people start smuggling products without import tax.
And this only with a 7% average tariff. Not the U.S 29% lol. Brazil with 31%~ prior to the 90's was WAY worse than this. A lot of brands just died when we opened a little the market (Consul, Brastemp, were Brazilian big fridge, Washing machine etc makers, they got bought by Whirlpool in the 90's)
American Brands then will now look for the U.S gov to ask for exceptions too, and this create a lot of corruption. And after you put these tariffs and there's a whole new companies made to internal market, it's almost impossible to remove because of the lobby from these companies (and corruption).
In Brazil, the Philco operation was bought by Gradiente (The company that sued Apple over the use of the iPhone trademark) in 2005. Before that, Philco was from Itau (a Brazilian bank).
Stop. Hold on. You just heard a solid set of examples and logic on why the tariffs were bad for Brazil's consumers and your takeaway was that one brand that couldn't compete in the US moved to the sheltered manufacturing environment and that is good?
The policy is good for uncompetitive manufacturing - and so you are in support of it? Why is that less-competitive manufacturer from Philly who couldn't compete anywhere but Brazil more important than the people of that country?
Not at all - I'm not really taking a solid stance one way or another because I'm not an economist.
My only point was that Philco was being used as an unknown crappy Brazilian brand example. It used to be an American company that actually made quality things, and through outsourcing and general 'physical and financial enshittification' is pretty much an unknown to Americans now.
If you're in favor of quality things being made in the US, it's an argument for said policy.
But the examples _just_ given show that the same kind of tariff policy in Brazil caused shitty local options that could never compete with the outside world and cited example after example. The whole "grey" market for un-tariffef foreign goods.
There is nothing that says tariffs cause quality things to be built locally and the examples are counter to that.
Yes I understood the post but the difference is that Brazil didn't have a burgeoning or top tier electronics industry at any point I can remember. The US did and slowly gave it away to cheaper producers. Further, the average American has more disposable income and won't necessarily just grab what's cheapest.
So it's not easy to conclude they are the same in any fashion.
The question is what would happen today if the US ends up in the same situation. Will we go back to producing top tier electronics, or get stuck with crappy brands taking advantage of the situation? It's hard to say. I'd guess a mix of both. Top tier stuff would probably in house what they can, but the low end would get much, much worse. But that's just me guessing.
Yeah, but the U.S. govt funds a lot of important research so it may not fall behind technologically unlike India…
Wait, what did you just say? The U.S. government has decimated its research funding?
Oh, well, at least the U.S. has a lot of high quality colleges churning out highly educated Americans, so that still may not be as much of a problem…wait, did you say Americans are increasingly turning away from college due to the high costs and the resultant loans that cannot be terminated even in bankruptcy, because the government has been cutting back significantly on funding education for years now?
Oh well, at least the U.S. is welcoming to immigrants who have founded over 50% of unicorns and usually tend to be the most dynamic and brightest slice of their country’s populations, so it may maintain its technological edge…
> The Make in India policy of the present government is reminiscent of the pre-1991 inward-looking Indian state.
Have you seen the 70s or the 80s? I was a child during the 1980s when India was a socialist state. There were very few private enterprises, because there was absolutely zero government support. Taxation peaked at 90% during the early 1970s under Indira Gandhi, who also nationalized many of the largest private companies - because private enterprise was seen as a bad thing. It was also impossible to bring in foreign investment, because that would come with profit motives.
Basically, the comparison you're drawing is not really accurate. The current Make in India plan is very similar to the US bringing in strategic manufacturing back into the US; a plan which has had bipartisan support (for example, the CHIPS Act). It incentivizes businesses (including foreign companies) to set up manufacturing units in India. And is quite the opposite of what was happening during India's socialist era.
> Even though Make in India is not a classic import substitution case, it aimed to reach that end.
So it's not really import substitution. But let's ignore that article, it's not a serious piece anyway.
A key idea of Make in India is to make and export - which means that unlike socialist-era import substitution (via tariffs and permissions), the ones which aren't good enough will fail fast and cheap. It won't lead to people driving HM Ambassador cars for 40 years.
Whether Make in India will succeed or fail is a very different matter, of course.
>It incentivizes businesses (including foreign companies) to set up manufacturing units in India.
That type of protective policy works for India in incentivizing manufacturers to come build locally because Indian labor is still dirt cheap and the government will work with you to give you what you need without the pesky nimbyism, environmentalism, etc getting in the way of factories. US is not in the same case.
Quite a coincidence, I was reading this LRB essay [1] this morning by British political philosopher and historian Perry Anderson, analysing the last decade of political and economic (lack of) change in the West. He ended with this paragraph, I had to look up "import substitution" and then in this thread about the tariffs I see it mentioned again, there might be similarities with Trump and Getúlio Vargas. Any people more knowledgable in Brazilian economics want to chime in?
>Does that mean that until a coherent set of economic and political ideas, comparable to Keynesian or Hayekian paradigms of old, has taken shape as an alternative way of running contemporary societies, no serious change in the existing mode of production can be expected? Not necessarily. Outside the core zones of capitalism, at least two alterations of great moment occurred without any systematic doctrine imagining or proposing them in advance. One was the transformation of Brazil with the revolution that brought Getúlio Vargas to power in 1930, when the coffee exports on which its economy relied collapsed in the Slump and recovery was pragmatically stumbled on by import substitution, without the benefit of any advocacy in advance.
Honestly wouldn't compare Vargas with Trump here. Trump policies for me seems similar to what the military regime did (1964-1985)
Before Vargas rule (around the 30-40's), Brazil was an agrarian state, basically commanded by coffee barons and so on.
Brazil got the independence in 1822, and abolished the slavery in 1888. During this time, it was reigned by Dom Pedro I and Dom Pedro II. When the empire ended the slavery (one of the latest countries to end), the military and the agrarian folks, did a republic coup. In Brazil we call this republic "Coffee with Milk republic", because it was not a democracy yet (only 4% could vote), and the power was divided by São Paulo (Coffee state) and Minas Gerais (Milk state).
It's a long and complex story, but in short, in 1930, Vargas did what we call "1930 Revolution". It was a dictatorship, he persecuted the Brazilian integralists (fascists) and communists (and banned foreign languages aimed at banning italian/german/japanese speakers etc). The dictatorship ended, he got removed, and later he comes by election, in the first Brazilian proper democracy, with huge people support.
Anyway, besides all that, he basically industrialized the country. Moved the country from an agrarian state to modern industrialized state. But not only because of import substitution, he created like Ministry of Health, Education, all the modern BR state that we know. Penal code, and everything is still from 1940.The industrialization was mainly led by state-owned companies. He created a state owned oil company (Petrobras), created a state owned car company (FNM), steel company (CSN), mining company (Vale), etc.
The development during this time, was basically making the state to be the one that would industrialize the country.
The military dictatorship goal was different, after all, it was a coup against "the communists", with the U.S support at the time. So the industrialization was also led by the private sector, protected by the state with the huge tariffs, and some areas they just banned imports.
Instead of the FNM car company for example, we had then Gurgel, a private company making cars.
Of course, a lot of these companies died when Brazil opened the economy in the 1990s, exactly bcause they were not competitive and wasn't exporting anything anyway.
But one thing that people need to keep in mind always, it's how all of that makes the product expensive. A car in Brazil it's way more expensive than in the U.S and so on.
I think to nurture developing industries, it can be fine, but at some point you have to expose them to competition if you want to exceed what the domestic market can do.
Domestic industries DO compete - both with each other AND with foreign companies which are levied with tariffs.
One of the reason why China's import substitution was almost unreasonably effective was because domestic companies were driven to compete fiercely with each other.
(In America there is a drive to do the opposition- wall street likes consolidation and oligopolies)
And yeah, once your national industrial ecosystem is sufficiently powerful most countries suddenly get religion about removing all tarriffs everywhere. This is what America was like in the 90s - and they were just as obnoxious about that as they are about this - the exact opposite.
The US outsourced to China because of cheap labor, not because Chinese products are good--precisely because US companies were competing with each other and needed ways to reduce prices and improve margins.
That this ultimately had the effect of diminishing the manufacturing base in the US doesn't speak to the ability of US or Chinese companies to compete.
China is a centrally planned economy. To argue it's more competitive than the US is again not tenable.
>The US outsourced to China because of cheap labor
Yeah, in 2003. The US offshores to Bangladesh or vietnam for cheap labor now and has for a long time.
Manufacturing is offshored to China simply because it cant be done in the US at anything resembling a reasonable cost, not because labor is cheaper. That is because the Chinese industrial ecosystem is unparalleled.
>China is a centrally planned economy. To argue it's more competitive than the US is again not tenable.
The economic dogma of the late 90s is getting a little long in the tooth now. Not least because it was completely blindsided by the rise of China.
It turned out that the most effectively run economies were a hybrid of distributed and centrally planned (China has open internal markets while credit allocation is largely centrally planned).
By the way, what I find most baffling in these discussions is that these calculations are always based only on physical goods, ignoring services, where the US usually has a positive balance - eg, with the EU, the US has a 109B positive balance. In our economies, which are more and more service based, why are services ignored?
Services are ignored by Trump for precisely the reason you mention. The big question is: What will other countries do, like Germany, who tend to export goods to the U.S. but import services. Right now, those are the countries who would rather prevent this thing from escalating, but if escalation it must be and they run out of ammunition within the scope of tariffs on goods, where will they go next?
Tariffs on services may also be less popular with the citizens. It's not obvious that the locally produced fridge is only cheaper because of tariffs. It will be more obvious that everyone non-EU based pays more. It will also be harder to control (how will EU extract tariffs for payments I do to companies with no EU presence?)
But I don't how much about it, maybe these are already solved problems. After all VAT already exists and faces similar challenges.
There are two kinds of "services". You have jobs that are in finance and software, which make good money, and you have jobs in cosmetology and fast food, which have terrible pay. The services that we export are the former.
Your high school grad (or high school dropout) isn't going to get one of those finance or software jobs. But they could get a factory job, if we can get those back.
So the best spin I could put on this is that the emphasis is on physical goods because that's where the people who are hurting in the current economy could find real work.
(Of course, if that were the case, the reasonable thing to do would be to explain that, instead of just acting like services didn't exist as something that is traded.)
I was reading an interesting article about tariffs put on foreign garlic or mushrooms can't remember which, rather than buying American companies just paid more for the foreign product and charged higher prices. The American makers of the product didn't sell more the company's just didn't care. Prices will go up Americans will buy less deflation will occur because they have to sell the product.
Likely will result in worse products as well (which is what happens when you remove competition).
LaTam is perfect example on how bad this "wide" protectionism is. There's a ton of economic papers about it.
If you really want protectionism, you could do something more similar to how South Korea did, by choosing specific sectors of economy you want to "protect", to create a "national industry".
Most protectionist industrial policies also exempt imports of machines and other supplies used in factories.
e.g. It makes no sense to put tariffs on machines used in a factory in the USA. AS that would make it more expensive for a factory to operate if they have to import a more expensive machine from Germany. "Buy a machine from the U.S", that would mean a more expensive machine likely, as it only exists because of tariffs.
That basically means you'll have factories on best case scenario, but your cars, your computers, phones, won't be exported.
It's great if you want to be self-sufficient pending a great war. The way things are going, it may be the only thing to justify such blatant self-sabotage, and hence necessary to start one.
If you make everyone rely on each other, war hurts everyone more and is more likely to be avoided. If going to war doesn't cost you a supplier, war is more palatable.
Well if you do all you can to stirr some 'great war', you will eventually get it. Its only US saying there will be one though, rest of the world is in WTF mode. China doesn't care about anything global but Taiwan and its own security. They are probably more capitalist than US at this point and prefer having stable trade cash flows rather than expanding.
So, if thats the real underlying reason for all these steps then US is the warmonger here attacking literally everybody preemptively. 5D chess at least.
Short term consequences are probably different then long term.
In the short term you can't just create a new garlic farm in a day.
In the long term it will still be more expensive (if american garlic was the cheap option they would have used it from the get-go) but there will probably be more adjustments then in the short term
That's part of the reason why these tarrifs are so stupid. There is no warning on the specifics so there isnt time for companies to come up with alternative plans. Given how inconsistent trump is, there is also limited incentive to seek alternative supply chains, because who knows if he will just change his mind again.
>The United States will be an autarchy, similar to how LaTam was in the 70's, when tried this exact idea. The tariffs being as high instantly, will impact the economy, later, the country will probably grow, which is what they expect, but this is not a productive grow. Because your new factories now are not competing with external products, so your productivity go down, this means real income will also go down.
If what you say is true, tarrifs should not exist in any country. And yet, most countries are using tarrifs.
What if a particular country is using dumping and sell at prices so low, it will kill a particular industry? And after they kill it, they start jacking prices at unseen levels and you will have to pay because you don't have a choice?
Most countries do specific tariffs on areas of the economy they want to develop/protect them.
If a country is doing price dumping, there's even legal ways of protecting these sectors, by applying to WTO (but the U.S basically killed the WTO). But even if the U.S don't trust the WTO, they could apply antidumping tariffs to these specific sectors (like the 100% tariffs Biden administration did to EVs).
U.S is not doing this right now, it's protecting "all sectors" of the economy. There's no other reasonable developed country with a 29% tariff.
Domestic producers can redeem part of their VAT, which foreign producers can't, effectively making it a tariff. Also European countries apply their own bona-fide tariffs to foreign imports, which anybody who has imported into the EU has experienced. It is stated "tariff" on the bill you receive from customs and in the law that regulates said tariff, and in your accounting for expenses if you are a business. But now we have to pretend these tariffs do not exist? What kind of game is this? Has everybody became psychopaths?
China has many tariffs and non-tariffs restrictions. They are targeted as tariffs tend to be (well...).
For instance, tariffs on cars vary from 25% to 47%. It is quite the status symbol to drive an imported car.
Their policy has always been to develop their own car industry, so foreign manufacturers had to set up factories in the country but even that could not be fully foreign-owned and had to be through a joint-venture with a local manufacturer. I believe Tesla's Gigafactory in Shanghai (opened in 2019) was the first fully foreign-owned car factory they allowed.
It's hard to imagine that there's a way they thought this through in several redundant dimensions.
I understand rationally that there was an economy before the US plunged the world into neoliberalist global free trade in order to build its trade empire, and there will probably be an economy after... but likely not a US trade empire.
But another thing is investment uncertainty. The mechanism by which protectionist tariffs are supposed to work functions over a timespan of a decade or two - foreign imported goods are made more expensive, and so when investors believe they're confident in future tariff conditions, they spend money on domestic factories to produce goods, which have a large setup cost and gradually pay back the difference relative to their good-importer competitors that are paying high tariffs.
If investors can't form a confident prediction on future tariff conditions, investors can't invest; The sheer uncertainty of having a lunatic making up random numbers for every country over lunch and then rolling them out at close of market is instead going to scare them off. Trump has gone back and forth over tariffs with Canada and Mexico over the past couple months, and this doesn't just demonstrate that tariffs can be set extraordinarily high for arbitrary reasons, but that they can be set back to zero for arbitrary reasons. Both of these transitions cause economic ruin for one investor or other; If it's going to happen every few months then nobody is going to build factories or launch import supplychains, at least not for competitive prices. The risk of going bankrupt tomorrow (or in four years when the next administration takes over and abruptly cancels every tariff) on what is basically a coinflip then gets priced into consumer goods for both producers and importers.
The most frustrating of Trump's projects are not just when he shreds your rights or shreds precedent or tries to topple the government, but when he looks favorably at a policy you think is a good idea (like having a manufacturing sector) and chooses to pursue it by running around with a flamethrower setting everything ablaze because on some lever somebody's taught him about the Broken Windows Fallacy wrong, as a joke, and he's upgraded it. During his administration, we circle the wagons and declare that the policy is a terrible idea. Post-Trump, the absolute ruin that the execution of that policy predictably brought will discredit it for the rest of your adult life.
People are also getting way too caught up in the math and numbers. They think WH calculated the percentages through incompetence but the 25% tariffs weren't based on anything very real either. The entire goal is not carefully calculated trade equality, it's mafia style intimidation to get some easy concessions as quickly as possible from everybody... before the economy crashes too hard. Spamming tariffs to see what sticks. The math is just a plausible justification for something they would have done anyway.
It's bully tactics.
For ex see Canada's fentynal importation issue, which was something invented to justify a natsec emergency legally. The numbers don't have to be real, just plausibly deniable.
>They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
Devaluing dollar does not reduce debt measured in dollars. It only makes US debt less valuable to forefingers.
Devaluing dollar can work well only if foreign investments into US stop or reverse. "foreign investors at the end of last year owned 18% of U.S. stocks, according to Goldman Sachs" The trend has already reversed https://www.reuters.com/markets/us/foreign-demand-us-assets-... Killing foreign demand for US assets more permanently is possible but it means financial market crash.
I certainly don't understand enough of economics, but:
- If everything overnight costs 20% more for the American consumer, it equals 20% less disposable income and less purchasing power.
- US companies, even the few ones not directly affected by tariffs, are going to be hit by less demand, and that in the aggregate is going to affect the performance of all American companies.
- So, it makes sense to dump as much American stock (and perhaps other instruments) as rationally possible.
The rest of the world is also going to feel the shock, though at this point is unknowable to what extent, and it also depends on the policies governments outside USA enact. In Sweden for example, we react to imported USA inflation by increasing central bank rates and catapulting the country into recession, and I totally see that happening in the next few weeks. Even it does not, it is what the public expects, and already many may be reigning in on consumption and investment. And dumping American stocks like crazy.
Yes. That's what I said "Devaluing dollar does not reduce debt measured in dollar"
The US would still have to pay the debt in Dollars. Devaluation affects currency exchange rates. Debt would be less valuable in Yen and Renminbi but just as expensive for the US government.
Doesn't Europe and Japan have dollar swap lines with US? So ultimately it is US buying its own bonds through Japan to create an illusion that there exists enough external demand.
That's a crazy showertought. WH might actually consider it.
After hypothetical successful debt relinquish negotiations, any new US debt would have similar interest rate to Argentinian debt, 30% or so. Wall Street would shrink and London (or Frankfurt) would become new global financial center.
In reality, countries do just as what they do now. They raise counter-tariffs. The US faces coutertariffs from everyone. Other countries only from the US. Trade between countries other increase and they gradually adjust. Europeans start buying less iPhones and buy more Androids made in South Korea. Less Fords more Nissan.
I wonder... they're all made in China anyway. And shipped from there directly, not through the US. I'm sure that either the US tariffs won't apply to them, or Apple will shuffle some subsidiaries so they don't.
Yes and no. As a headline "I reduced $7t of foreign debt" is pretty good. The plan appears to be to invite people to Mar a Lago and offer to trade the existing debt for new instruments out in the never-never.
Domestic debt might not be such a big deal? Who is coming to collect?
Wasn't that the plan all along, people always said "Ballooning Government debt is fine since unlike normal debt Governments can just print money and never really pay back the real value".
Someone has to get screwed over when you do that, who do you suggest get screwed over?
That was a rainy day argument for not caring too much about debt. But what's happening now is we're raiding our savings account to pay for bath salts. No, it was not "the plan all along".
YES. About ~30% of people appear willing to experience a loss as long as they believe they're inflicting a greater loss upon other people, and this personality type is baked in young. In my vier it's not a coincidence that polled support for Trump consistently hovers around 30%.
So the full faith and credit of the US Treasury is thrown away just like that?
No one collects the debt. It’s just redeeming treasury bonds. If they are no longer good then the sub prime crisis is going to look like a minor economic wrinkle.
> Domestic debt might not be such a big deal? Who is coming to collect?
Old people with retirement needs. A lot of that debt is borrowed from SS surpluses in the past, and now the system is actually in deficit (so needs what it lent out back and then some). I’m all for screwing over boomers, psychologically I’ve convinced myself they are responsible for Trump and this mess (not entirely true, but the boomers as a generation messed things up for us before Trump was president, anyways).
Still fits within a populist agenda. Not a lot of sympathy for mutual funds and the wealthy holding treasury notes that get inflated away.
I'm not excited that 20% of federal revenue goes pay debt interest to some investors and stockholders. Especially when much of the original debt spending also went into the pockets of stockholders, sometimes the same ones.
Of course, the actual problem is lack of control and debt spending, not the fact that investors exist.
People say that public debt doesn't matter because it domestic, but the recipients and payers are different. It doesn't cancel out when I'm responsible for paying taxes and Vanguard or JPMorgan get the debt interest.
Yeah, national debt is splattered all around the US economy, but that doesn't mean it is uniform, or the payers and recipients are the same in terms of participation, returns, or even time.
Foundationally, national debt is about passing costs into the future, which also creates another huge dichotomy in payers and beneficiaries. Minimal federal spending is on growth, so isn't really about investment as how much value can be extracted from one group to another, largely, but not entirely overlapping group.
> but that doesn't mean it is uniform, or the payers and recipients are the same in terms of participation, returns, or even time.
I’m not sure if I’m following, but a (let’s say) 20% cut to the value of an average retiree’s pension account will hurt much _more_ than the same cut to a diversified wealthy person. This is simply because poorer people are affected more by fixed costs. I don’t see where the populist angle comes in. Shouldn’t the populist angle be about targeting the “elite” specifically?
Given everything recent I’d say competence in the WH is a stretch
The prez is literally holding up placards where half the numbers on it are mislabelled and they rest of the numbers are that mislabelled/misunderstood number divided by half
That sounds like garden variety incompetence to me not 5D chess
There is a low cunning at work though - Trump now runs the largest military in the world and the largest economy and if the only way he can impress other people is to use that power he will use it to try to beat them into submission. Chaos at this point is his friend as he attempts to stay in power as long as possible, so expect trade wars, war, domestic chaos and forcing others to show loyalty to him personally and pay him off as the biggest bully in the room. He sees this in very simple terms. So no there is not a high intelligence at work but he is not without agency and cunning. He has operated this way all his life due to inherited money and got away with it.
And damn the consequences for everyone else, including the people who elected him, he doesn’t consider that in his calculations, which is what makes them so confusing for those who think he is playing by normal rules of politics or business.
The bring manufacturing back to the US never made sense to be numbers wise.
Thing A is currently manufactured in China | Vietnam | whatever lower cost country and sold for $x today. Slap on 50% tariffs so now it costs $1.5x. That provides an incentive to produce thing A locally sure.
But if you can already produce thing A locally for $x, you wouldn't have offshored the production in the first place. Maybe producing thing A locally will cost less than $1.5x, but it'll still be more than $x. So cost still end up increasing.
They see a way with china by the end of the decade so they are trying to remove dependence on their manufacturing and flip Russia to our side.
Except there isn’t any guarantee of a war with china, it’s just an idea they have. For all we can tell they have no intention of that. Taiwan is tricky though
Whether one umbrella factory moves from China to the US within this election cycle doesn't really make a dent. The moving of industry from the US happened over decades, and was hand-in-hand with the US making fewer umbrellas and more computer programs, satellites, and microchips. Moving basic manufacturing of low value goods to the US would cannibalize the capacity of producing higher value goods. And none of it will be noticeable while Trump is still alive.
Hard to say re: labor cannibalization - if you are sociopathic about the labor force like Trump is, all these fentanyl deaths are just spare capacity that didn’t have an input interface and should have been in a factory.
The missing piece is not all costs are passed on to consumers.
Company absorb costs all the time. If you think cutting your price by 10% will boost sales by 20%, you do it because total profit is higher even though per unit profit is lower.
And the reverse is true - companies might increase prices and accept lower volume.
Not to mention not all items are interchangeable. Is a car made in Mexico worth the same as the same model made in Germany?
Low cost items, of the type the vast majority of the population are quite sensitive to the price of, have almost no margin on them to start with. There isn't 10% to cut.
Two typical scenarios that we know from the past in industries like cars for example.
Corp one has two factories one smaller one in the us one bigger one in the eu. They will now shift more of the production to the us from eu to avoid tariffs.
Corp two only has a factory in the eu. They will now build another factory in the us to be able to avoid tariffs and keep selling their goods at competitive prices.
Forgive me my ignorance, but: parts from which cars are assembled (or raw materials from which parts are manufactured), are also subject to tariffs, aren't they? So the only shift that would happen is that of the labour (and US labour is not the cheapest, IIRC).
They would in the current scenario, yes, but the OP said “Two typical scenarios that we know from the past in industries like cars for example”
In the past, countries would put tariffs on importing cars, but not on importing car parts (with some complex definition of what constitutes a car and a car part. IIRC, there once was a loophole where one imported a car and converted it into a van by removing back seats to avoid a tax on importing vans)
For manufacturing physical goods, labour cost is a small percentage of the total cost of the good. Why is this? Because modern labourers are extremely productive: they are highly skilled at their jobs and use very efficient tools and machines to do their jobs.
The problem with this theory is the tariffs will both have to remain in place for a decade and businesses will have to believe that they'll remain in place for a decade for that to pan out.
Nobody is building a new factory, based on tariffs that they expect to be gone in three years time.
They will only shift if it's predictable that the tariff policy will stay for long enough to recoup the high capital investments of building a whole new factory just to serve the internal market.
For many industries it might not make sense unless it's a 5-10 years long plan, the risk of investing a lot to build a new factory, bringing it online over the next 2-3 years, to then have tariffs removed and making your new shiny factory more expensive to run than one outside of the country, will also be factored into the total cost.
The tariffs are so broadly applied that the risk factor is much more massive than anything the USA experienced before (like during the Japanese cars era of the 70s/80s), it's wishful thinking the domino effect will happen in the short/medium-term.
> They will now build another factory in the us to be able to avoid tariffs and keep selling their goods at competitive prices
They won't be competitive prices though; they'll have to charge more because of the capital costs in setting up a whole new factory and supply chains, increased labour costs, and having to pay tariffs on importing parts.
I imagine that not being able to export cars from this factory due to reciprocal tarrifs will also drive up prices, due to things like lost flexibility, redundancy, and economies of scale.
And it isn't like we have especially high unemployment right now. There isn't a labor force available to suddenly staff a bunch of factories even if they took zero time and capital to set up.
That's the entire point of it all. I think you are the only person in this thread who gets it. When there isn't a labour force available, you have to increase salaries to get workers. This means other industries and businesses have to increase salaries to keep their workers, giving a domino effect – meaning higher salaries for workers across the board. It might even mean that shit industries can't find any workers and have to close shop. For example the restaurant industry.
This also means higher prices across the board for consumer goods, but the worker still net benefits greatly.
Who does not benefit: The people who do not work. And that's fine. But it's also this class of people who make the entire political and media class, and hacker class apparently, so that's why we have this enormous resistance.
"Domestic production will replace imports" is conditioned on the cost of domestic production being lower than the cost of imports with the tariffs added. "Just spin up new factories with capital investment, raise wages substantially to get people to change careers from service industries, and train all these new people" isn't going to be a cheaper approach to building furniture than continuing to import it from Vietnam with a high tariff.
The effect will be minimal new domestic manufacturing and higher prices for large numbers of goods.
I think you fail to account for just how little a salary needs to be increased for it to be interesting to switch jobs for the people who are making the lowest wages. In Europe, people compare wages with single digit differences per hour when deciding for switches in jobs and careers.
And low paid workers in the service sector aren't low skilled and costly to get going. They're intelligent and honest, and would be fine workers in manufacturing if given the opportunity. They're working in the service sector because those jobs couldn't be off-shored.
If corp two could have factories in the US and still sell them at competitive prices they would've done that already no? The fact that they haven't indicates it didn't make economic sense. So then doing so would mean their costs would go up, which would either mean they have to eat the extra cost and reduce profit or pass the extra cost to consumers.
They can only pass the extra costs if there is no competition and they can only eat the costs if their margin is big enough to absorb the cost and still remain profitable. If their us market share is important they will shift their production around to the us or somewhere that has a favorable trade agreement with the us.
The stated goal of tariffs is to force companies to shift production back to the US. But US production costs more, hence the outsourcing in the first place, so shifting production back to the US increases cost.
If costs goes up then either prices go up too or margins go down or a mix of both.
In the first scenario the investment isn't astronomical, and if there is surplus capacity you can definitely shift around to avoid tariffs. I think Volvo already announced this wrt. to their US plants. They can take some production from the EU or China and use capacity in the US to build cars. The parts are still imported from China and the EU so will be more expensive, but they still seem to think this can help.
But the second scenario is a massive investment. It not only requires the economics of it to work today, it requires knowing what the situation is 1 or 2 decades down the line. You can't build a car factory in two years. Barely in four. And even if you do, it doesn't matter if it's likely to operate at a loss in 8 years!
The most important thing for that type of investment is stability and predictability, not just "the costs will be lower for at least 2 years now! or maybe 2weeks we don't know since the tariffs seem to come and go depending on which side of bed the local czar wakes up on".
You just made me think of another scenario, Corp three has mostly idle factories at important locations around the world but designs their factory lines to be packable and shippable around the world to hedge against tariffs. The carrying-cost of buildings is considered insurance.
3-4 years is a LONG time in business. I do not know how long the tariffs will last. Maybe they will come to a deal next week maybe not. but if they stick around businesses will move stuff to the us. I'm saying this as an EU citizen.
3-4 years is not long at all in this context. Most places take that long to get permits, and additional years to build the factories, and additional years to even become profitable and self sustainable in ideal circumstances.
It's not a long time if you're talking making massive capital investments into things like new factories or capacity.
Your second sentence indicates the more significant problem though, because that uncertainty on timelines makes even the 3-4 year time horizon questionable. Nobody is going to invest anything based on tariffs that may go away or change next week and the only way you can tell if they're sticking around is waiting so long you don't have time to make the investment any more.
It might be different if Trump came in with a clear, transparent tariff plan on day one. But they're already all over the place and being implemented in extremely unpredictable ways. Some people might argue his unpredictability is an asset in general, but it's absolutely not in this case.
3-4 years is a very short time for developing land in the US, anywhere near population centers. You’re looking at that much time just to get permitting done, optimistically.
That’s may be true. But why does Vietnam have such high tariffs? They should be competitive based on their lower costs right? So it’s simple: Vietnam can eliminate tariffs on imports and the U.S. would eliminate tariffs as well.
The one thing I hope Americans think about is to believe in democracy, and discuss with others on the other side of the aisle. Really, most have voted the way they did for real, valid reasons. And recognizing them is the path to heal your country. Only through understanding will democracy prevail.
Do not spiral into dividing your own country. That is the real goal of authoritarian regimes.
The answer to this is pretty simple, although American Exceptionalism makes it hard to see for many Americans. For every other country, most could see pretty clearly that they'll not plan on holding free elections going forward.
Except those islands are Australian territories. And they've given Australia higher tariffs, so in theory they could reduce these tariffs (which will be paid at least in part by US citizens) by exporting through there?
There's nothing strategic about a 4 column excel spreadsheet and one formula.
I said they expect the outcomes people are complaining about. They've workshopped this, and are aware how this is playing out. I would be very surprised if there is a significant leak of "we didn't expect this" anytime soon.
> they know what's going to happen, and they expect the coming storm because they seek what follows
If they do they’re lying. The mechanism by which tariffs restore production is by raising prices. That makes it more lucrative to invest in serving that market. If producers have to absorb the tariff, they won’t boost production and the tariff is just a corporate tax increase.
> to repudiate foreign held debt, or devalue it, by revaluation of the USD
My personal opinion is less complicated: they're pulling the economic levers they have in a way that they can use to enrich the top 0.1% even more. The richest of the rich got very wealthy during COVID (economic fallout, buying up lots of stocks at a discount then the biggest stock market bull run we've ever seen) and they want to make it happen again.
I am amazed at how many people are still imputing intelligence to Donald Trump. Him winning the presidency again after everything is less about him being some deep mastermind and more an exposure of the issues with America that have been there building for decades now.
The difference between Trump 1 and Trump 2 is that all the "establishment" R politicians who were "corrupt" or "deep state" but willing to work with him could at least steer the ship in the first term. Those people are gone and all who remain are ideologues and yes-men. Trying to find logic in the madness strikes me as someone going through the stages of grief near death, trying to find sense in a senseless, uncaring world. Take occam's razor, no one is steering the ship at the white house right now.
> a lot of people assume the economic consequences like these have not been understood by the WH
I think you're making the same mistake a lot of observers are making: you're looking at this from an economic perspective, and think those decisions were taken on an economic basis. But that is likely not the case.
The Trumpist movement is entirely focused on political aims: re-establishing old hierarchies of power inside the country, and entrenching them for good. The important work is the slashing and burning of welfare and safeguards for lower and middle classes, putting minorities "back in their place", and entrenching the wealthy into positions of absolute dominance. Everything else is a distraction, to keep newspeople busy and the population focused on recreating an idealized, "Happy Days" 1950 society. Enemies will be created to make you hate, this or that policy will be picked up or dropped just to keep you arguing, and meanwhile the important work is made irreversible. Once you destroy what was built over a century, it will take decades to rebuild them, and meanwhile the New Normal will take root and become impossibly hard to remove.
Fascism and nazism did not move from economic principles - they picked up what they needed as they went, opportunistically, because their main aims were fundamentally political. The Trump II administration works in the same way: the priority is political dominance to achieve political aims at societal level, everything else is tangential and opportunistic.
> hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care
I think they know, they care and decided that it is a reasonable way forward given very limited (trade and budget deficit) options. Otherwise I think you are spot on.
To spitball some ideas on your midterm comment (again, agree to it). One possibility is they see it as an unavoidable loss, plan on using veto to maintain course set during the first 2 years (which is why they rush) and hope to be in the updraft phase by the November 2028 elections. Maybe.
This seems likely, but I cannot figure out why they are not trying to pass more legislation in the first 2 years if they're fairly sure they're going to lose the midterms.
The only conclusion that can be drawn from their public actions is that they believe they can more or less enforce all their policies by executive order and that they're very sure they will be keeping the executive in 2028.
I don't think its about devaluing the currency to pay back debt at all. I believe it's about a fundamental vision of an autark USA, decoupled from any international obligations, whether its NATO, WHO or WTO and focused purely on producing and selling domestically whilst having a "beautiful ocean on each side".
I believe that's an unrealistic vision, not least since America's debt means it cannot afford significant shrinkage of its global market or a loss of its status as reserve currency, but I believe autarkie is the goal none the less.
> and they expect the coming storm because they seek what follows.
Well, a lot of economists, including one Nobel Prize winner (Paul Krugman) have commented on this being a bad idea for the economy...
On the off chance that those people who are supposed to know what they are talking about are all wrong and haven't thought about it being some genius diversion tactics -- it's generally still a pretty bad idea for a government to effectively ask everyone to "tough it out" and "just trust me bro".
It's really disappointing that people are actually trying to theorize this as some kind of genius plan. It doesn't take a genius to figure out the amount of irreparable damage they have already done to regular folks is unacceptable (uh... I'm sure some nutters out there think that DOGE is keeping track of all the damages they have done and will pay everyone once their genius plans have worked out).
paul krugman isnt useful example because he is a liberal democrat and people will try to say thats why he said its stupid. even though hes right and it is stupid. plenty of conservative economists are basically saying wtf Bro to these tarrifs. Sadly that will also probably not help but it has more of a chance to do something
> they know what's going to happen, and they expect the coming storm because they seek what follows.
I agree that that's their understanding. I'd argue that in reality they don't, they can't. International relations are a very complex system. And there is no precedent of an empire wilfully dismantling its periphery.
I really don't enjoy the whole "may you live in interesting times" thingy
> They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
Given how dependent usa is on foreign debt, that sounds crazy to me.
If they accomplish that sort of thing, they wont be able to borrow at favourable rates anymore. That seems incredibly bad for usa. Am i missing something on how severe that would be?
> They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
I don't understand, who's holding that "foreign held debt"? foreign countries I suppose, so which countries do you have in mind?
For one, it's not China, which holds a large amount of US treasury bonds (so basically, China is a lender of USD). So the revaluation of USD would work great for China: one, the value of the China-held USD bonds increases, and second, the price of Chinese exports decreases in USD terms.
So help me understand, what's the plan with the revaluation of USD?
Of course there are people who know. But not the decision maker. I notice the use of collective pronouns, but there is only one person driving this. Everyone else is riding the tiger.
Not sure why, despite long and consistent experience, that people keep thinking he’s anyone but exactly who he appears to be. There’s no grand plan, calculated risk, or 4D-chess. The clown is just putting on a performance, based on his immediate feelings, and the immediate reaction of the crowd. There’s nothing else there.
That runs against basic financial reality. The treasuries are the basis of all U.S. liquidity. Owning commercial papers or stocks doesn't help as companies own treasuries. Putting deposits in banks won't help either because banks hold treasuries.
You've read up on the purported "Mar a lago" accord model? The idea is to threaten a repudiated debt, or agree to convert to long term non interest earning debt alternatives which can't be traded.
That's supposedly done with the agreement of the creditors. There's never paying down of national debt over an extended period of time. That's not how modern finances work. Why they feel the need of cramming down friendly creditors is beyond me.
Foreign held debt is less than 30% of outstanding, and less than that is sovereign-owned, so I don't think devaluing or attempting to restructure foreign debt via "century bonds" will have much effect on US debt obligations.
I seriously doubt this administration understands any of this. I agree that they don't care, but I don't think they know what's going to happen. No one does.
In my opinion you are giving the US government far too much credit. Trump has through his usage of social media created a weapon that he can strike at anyone that stands in his way. With all branches under Republican control there's simply no one left who can stand up to him without having his political career destroyed. We've seen this story unfold so many times in countries around the world - Turkey would be one recent example where the misguided policies of Erdogan have left the country with record inflation rates for years.
> I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
They tried to steal an election already - it's pretty easy to understand why they are making decisions as if they don't have to worry about elections anymore
If it didn't hit midterms it would hit the next presidential race. You gotta pick your poison. I guess they decided it's better to just get it over with.
As a professional armchair economist, I would call it a power off rather than a reset.
It took over a hundred years for countries to once again have economic trust with France again when they went hard on tariffs in the 1600s causing war.
Who in their right mind would negotiate with a man known to rip up existing agreements on a whim?!
I have a feeling that this will knock the United States down a peg economically to the point where we look back on Liberation Day as America’s Brexit
This was a macro argument assuming a benevolent intention. However if we look purely at self interests the main thrust is to increase revenue on paper to cut taxes. At the same time raise debt ceiling. And when the tarifs proof unsustainable then well, we are in happy deficit spending land with no fault on the drivers side.
> Rust belt sewing shops and Walmart grade cheap goods production lines?
Are we really going to see this happening in 2 years? I'm not sure about this. The cost of Mexican/South Asian factories are still a lot lower than US.
The plan may be that there are no more elections, or that the only people who are allowed to vote are identified MAGA supporters. Does this seem impossible? Everything Trump has done would have been considered impossible only a couple of months ago.
What Trump reveals is the utter apathy of Americans. They're sheep in lions' clothing, not the other way around.
> "they have no idea what's coming" are I believe naive.
There could be someone who understands this. But this someone never shows their face in public, or provides any rationale for the policies beyond the nonsense like "reciprocal tariffs" or similar nonsense. I mean the literal board with tariff percentages that was held up had numbers that made NO sense, to anyone! Yet there are no critical questions?
It's beginning to feel like a conspiracy theory. That behind the obvious idiots who are the faces of the policies, are some other, less inept people who are pulling the strings. But who would this be?
> they expect the coming storm because they seek what follows.
If there are elections in 2026 and 2030 then what follows is a blue wave in the midterms and millions of disappointed voters who had their 401k's gutted, saw prices of most goods increase 10%+ in 2 years, saw little to no tax cuts, lost their jobs if they worked for the government, and lost their social security.
So I asked this question back when the wiki page for exorbitant privilege[0], the term used to refer to the US’ status, was posted. I was provided with a few links of people who do seem to understand[1]. The Hudson Bay capital piece was probably the most interesting[2].
Why on earth would you spend millions and billions of dollars on investing into a ROI-10-year factory, when a cheeseburger overdose or, heaven forbid, the Dems winning another election will take that investment and turn it straight into the toilet?
Not to mention that you'll be locked out of the world's markets, thanks to reciprocal tariffs.
Trump ran on a campaign that voting is a pain and you won't have to do it again if he wins. Since then he's maintained that third term is the plan. Doesn't really matter how upset the voting population is if you're going to ignore their votes.
they understand first order effects, but second or higher orders are seldom predictable in this matters. So the risk is huge. This massive shock will reveal hidden frailties.
Foreign debt is held in US treasuries, surely they know that? Trump can decide that treasuries can no longer be redeemed, but foreigners only hold 20% of them, so…he would have to somehow make them selectively redeemable, and anyways, there would go the USA’s credit, unless you mean other countries can bribe Trump with treasuries to bring down their tariff? They could also depreciate the USD reducing its debt in real terms but that will most definitely cause hyper inflation along with tariffs.
They have no plan, not even a concept of a plan. Trump is just hoping that he can get lucky with a good outcome, but that is really improbable. This is a huge opportunity for China though if they make deals with everyone else to the exclusion of the USA.
Even the idea of moving production back the USA is misguided, we are already at low unemployment, and haven’t made enough investments in automation like the Chinese are doing ATM. I doubt China will let us import that tech to setup our own factories quickly without worrying about who will work them.
They might be smart about it like you said, but they might also just be stupid. And the theory that they are smart about it is based on a whole bunch more assumptions...
This sounds like typical NYT sane-washing. After the Signal fiasco I've lost all confidence this administration is secretly super competent but just refuses to let any of us see it. There is no big plan here. This is just an old man surrounded by too many yes-men.
There is also a camp of ideologues that don’t care if they implode the economy if they get to LARP the TV version of the 1950s. Imploding the economy might even make it easier to sell traditionalist politics.
This is, as they say, “sanewashing”. Trump is doing this out of a mix of spite and a view of trade as a zero sum game. He may be advised into a path to try to pivot this into a “win” by large scale debt restructuring, but that is not the overarching motive.
Fully agreed. Tariffs are one thing that Trump has always been clear about. He likes them, he sees them as beneficial and now that he has no brakes in this administration he is finally going to try and put them in place.
I mean it's also clear he doesn't understand them. The poster he posed with today has a column labelled "tarrifs charged to the USA".
The main feature of them was he discovered in his first term he could do them unilaterally without Congress, and his audience would just go along with it anyway.
I had hoped that this kind of "Trump is actually playing 4d chess, you just don't understand" argument would be dismissed after seeing him through the first term, but apparently not.
This is a good take, but I think I can answer your question about the midterms. This is timed specifically for them. The drop we're seeing in markets right now isn't a pricing in of the tariffs, per se (at least, not yet), it's a pricing in of policy uncertainty that is going to lead to a near-term drop in investment.
However, because they are doing it so early, they will have time to recalibrate and bake in exemptions until the market / inflation is happy. Up to and including backing off of the policy entirely, if that ends up being necessary. As a political strategy, it is perfectly timed to allow Trump to "save the economy" from his own policies. This is true imo independently of what you may think about the policy as policy.
When it comes to the policy as such, recipirocal tariffs, conceptually, are designed to incentivize the overall global reduction in tariffs. So, as a headline, implementing "reciprocal tariffs" is actually favorable to free trade. However, there are some important details that they have fucked up, such as identifying tariffs with trade deficits in general, and in particular identifying them with trade deficits in goods only. That is really the component of the policy that doesn't make sense, and it is important.
Most likely, they will recalibrate and/or provide a lot of exemptions, particularly as the midterms approach. As a political tactic, I think it will work out fairly well, if they respond to the feedback appropriately - that's the big question though, and that uncertainty is the most significant reason for the market drop.
So my pessimism they can't "heal" this in time is the weak bit, if there are multiple levers they can tweak leading into the midterms to say "it's morning in america"
I say pessimism but in case it's not clear I'd prefer a democrat victory, both in the immediate past and in the coming midterms.
The reason for my "optimism" is that it's just as easy for him to undo this as doing it in the first place. If he keeps them in place as constructed for more than say, 3 months, without shooting them through with loopholes, then he might have a real unfixable problem on his hands, as businesses start to seriously reorient themselves. However, if over the next 3 months or so, he starts tactically peeling them back or being very "generous" with exemptions, the net economic impact could be relatively small, and maybe even moderately positive (depending on the details).
Fwiw I'd prefer the republicans win again, so my optimism is actual (not that I don't have substantial criticisms of the current admin's policies). However, it is refreshing to have a content-focused exchange on the internet about politics, so h/t to you :)
What I don't understand with your argument is, how do you account for the loss of trust of your trading partners? Even if the WH responds and tweaks the tariffs there is no hiding the fact that they have damaged trust in the US as a trading partner. I mean just look at what is happening in most western countries already, there a serious reorienting away from partnership with the US. Also consider that the US is primarily a service export economy and that it's generally much easier to divest from services than manufactured goods, I suspect the moves will have caused serious and long lasting damage to US companies.
The loss of trust issue is the one I worry about most. However, it's also true that the key players who we've implemented tariffs against have had them against us for years, and we've simply absorbed that.
I don't like the mechanism he chose to implement them, or the sharpness with which they were imposed, but I do think implementing actual proper reciprocal tariffs phased in over a reasonable period of time was a good idea. And I agree with you re: the service/goods issue. Them excluding services in their trade deficit calculation is by far the dumbest part of this plan.
Why are we talking reciprocal tariffs? It has been widely reported that the tariffs have been calculated based on trade deficit and not based on existing tariffs. That should alreadyy become clear by the fact that nobody in the western world has anywhere close to the same average tariffs, or that there are different rates for the EU and e.g. La Réunion (which is part of the EU and does not have the right to set their own tariffs).
Eh, this worries me less. I mean ideally yes trade signatures have value but we all know the reality here is that strong nations don't feel bound by international law.
I don't think "reputational harm" exists in international relations. I do think the terms of future bilateral negotiations may be less favourable to the US for a while but if they are too iniquitous they won't get ratified in Congress.
Maybe some significant 20+ year investment choices redirect. Some future 56th president will complain 47 laid the seed of this disadvantage. In every other respect after the noisy bit is over people do what they do.
> the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
There won't be any elections. We will stick with Trumpism. We will be our own best friends, Morty. The outside world will be our enemy. We will do great things Morty, we will do the greatest things. A Trump administration for a 100 years. A Trump administration forever. Over and over. Running around, the Trump administration forever.
You have seen nothing yet. Next he will want a mineral deal with each country to pay back the money they stole from the USA in the past. "Primate Behavior Reference 21": https://youtu.be/GhxqIITtTtU
We even have aspiring leadership in Australia who see this as a win win and have proposed offering JV in uranium, lithium and rare earths. Murdoch press backs the idea, even when criticism of Trump is overt they always go to "we need him more than they need us" because of 50+ years of Defense posture which assumes we're insured by US forces.
What posture?
Contracts with either Russia, or the US are worthless.
E.g. the Budapest Memorandum?
"
According to the three memoranda, Russia, the U.S., and the U.K. confirmed their recognition of Belarus, Kazakhstan, and Ukraine becoming parties to the Treaty on the Non-Proliferation of Nuclear Weapons and effectively removing all Soviet nuclear weapons from their soil, and that they agreed to the following:
1. Respect the signatory's independence and sovereignty in the existing borders (in accordance with the principles of the CSCE Final Act).
2. Refrain from the threat or use of force against the territorial integrity or political independence of the signatories to the memorandum, and undertake that none of their weapons will ever be used against these countries, except in cases of self-defense or otherwise in accordance with the Charter of the United Nations.
3. Refrain from economic coercion designed to subordinate to their own interest the exercise by Ukraine, the Republic of Belarus, and Kazakhstan of the rights inherent in its sovereignty and thus to secure advantages of any kind.
4. Seek immediate Security Council action to provide assistance to the signatory if they "should become a victim of an act of aggression or an object of a threat of aggression in which nuclear weapons are used".
5. Not to use nuclear weapons against any non–nuclear-weapon state party to the Treaty on the Non-Proliferation of Nuclear Weapons, except in the case of an attack on themselves, their territories or dependent territories, their armed forces, or their allies, by such a state in association or alliance with a nuclear weapon state.
6. Consult with one another if questions arise regarding those commitments.
"
Always keep in mind that Blackrock manages the retirement/social insurance funds of a lot of countries. If the USD crashes, they will, too.
The aftermath will probably be complete isolation of the US, because no country will want to trade with them. And the administration is fine with that, because they're not interested in keeping the status quo of democracy alive.
More influence for them, less influence from outside. That's how oligarchs think and act.
Is this a thought held by any serious person? The only major country to indefinitely postpone an election recently has been Ukraine. This idea that the midterms wouldn’t be held is tin foil nonsense.
Ukraine hasn't postponed elections indefinitely. They have postponed them until they are no longer at war.
Other countries have effectively gone from moderately democratic elections to sham elections. Turkey is one major country that is going through this process at the moment.
That all sounds fine except that the admin have no intention of keeping these tariffs, rendering your point kind of moot. Trump will enact/retract these tariffs multiple times over just the next month, and few to none of them will still be this high in three months. Since we are just speculating here - what is probably going on is that Trump has some very bad ideas and no one is allowed to contradict him. I'm sure there are people around him that know better, but he really is this simple minded. To your point about midterms, I'm sure his Project 2025 handlers are beside themselves that he's doing this, but there is little they can do to stop him.
> What amazes me is the timing: the midterms will hit while the bottom is still chugging along.
I think Trump is getting unpopular actions out of the way quickly, perhaps planning to announce an income tax reduction later to save the midterm elections.
I have followed writings of the many in this administration, seen their interviews etc. Anyone who thinks there is a "5D chess", "the plan" etc. is purely drinking cope here.
> cheap labor factories again isn't going to happen in 2025
It is not going to happen ever unless we plan to move people from better paying jobs in McDonalds and WellsFargo to China styled factories or we allow much higher immigration levels from South America.
Trump admin and his advisors genuinely believe that tariffs are good, that they will create factories and jobs within USA and enable white families to raise families on a single income. They think rest of the world's existence is a mistake, they hate Europe, China, India and South America. They don't know much about Africa and admire Russia.
They didn't learn from the last time, when U.S. soybean farmers got screwed (the first time) and other countries established alternate supply chains that of course didn't involve the U.S. at all.
As the USA makes itself a trade pariah and other countries forge new relationships amongst themselves, we're permanently devalued. The world will (continue to) move on without a backward-looking, unreliable, sad, and obnoxious USA.
>They didn't learn from the last time, when U.S. soybean farmers got screwed
They absolutely learned. They learned those soybean farmers they screwed through outright incompetence or being too stupid to govern would still consume their propaganda and happily vote for them again.
Trump's inner circle like Navarro, Miller etc. do not give two hoots about Soybean farmers or anyone else. They think poverty is a good thing if helps their view of "nationalism".
I have never caught even the slightest whiff of Trump knowing what he's doing on any topic. I'm genuinely not trying to be glib either, this is a sincere observation. When has he publicly or privately intimated that he understands how tariffs or trade work? Or energy or immigration or infrastructure or technology? His public persona gives facile and misleading explanations that are ostensibly just politicking, but every tidbit of leaked insider accounts or hot mics or unguarded moments don't show anything more than the same persona.
> Despite the US president attesting to the fact that he finished “top of his class” at Wharton Business School at the University of Pennsylvania, his former college professor, William T. Kelley, had another view.
> After Kelley’s death, Frank DiPrima, a close friend of Kelley, revealed that the professor felt the president was a fool.
> It was, it can be said without fear of exaggeration, a day that will live in infamy. When President Donald Trump emerged from his mysterious one-on-one summit with Russian president Vladimir Putin in Helsinki in July of 2018, the respective visages and body language of the two world leaders could not have been further apart. The Russian president looked smug and sated, like a vampire with a bellyful of peasant blood; Trump looked like a man who’d just received a painful enema.
You are confusing the actual accounts with the surrounding article.
Look, Trump has been claiming that he graduated first in class, but never provided any evidence. In fact, he refuses to publish his college records. Why is that?
> You are confusing the actual accounts with the surrounding article.
The first one is hearsay from a dead guy and the other one is a creative writing project. If you had these accounts handy from reputable sources, you would have posted them from the reputable sources. This is not the standard of commentary expected of this forum.
> Look, Trump has been claiming that he graduated first in class, but never provided any evidence.
The articles I have read on the subject suggest that this claim is impossible because he would have been on the honor roll and does not appear there. This tells me that he’s either delusional, misinformed, or a liar. It doesn’t tell me he doesn’t understand economics.
Go back to my comment further up. When has he ever publicly or privately demonstrated that he understands economics? He repeatedly insists that exporters pay tariffs. He says a trade deficit means we're being robbed. His list of misapprehensions on basic ideas is very long. Absent evidence to the contrary, one can only conclude he knows nothing about economics. Maybe he studied it 50 years ago and maybe he didn't. He has not demonstrated an iota of fluency since entering politics.
Must have been worth as much as toilet paper considering his history of bankruptcies. I would be highly suspect of every person involved in letting him earn a degree in anything.
Trump's greatest talent is in lying with a straight face, then finding explanations for the lies:
>Why the discrepancy? Perhaps this will give us an idea: Trump told Washington Post reporters that he counted the first three bankruptcies as just one.
His failed businesses include money printing machines aka casinos.
It is Howard Lutnick's plan who is the Secretary of Commerce.
Has been widely reported that there was conflict amongst the inner circle about the extent of the tariffs and that it was Lutnick pushing for the most extreme version which is what we ended up with.
Is there a cite for that? I believe it just haven't seen it. Very worrying because Lutnick was Musk's guy and that puts him at least adjacent to Thiel and his cult of monarchy.
Probably the plan for that is to do massive gaslighting on social media and find someone to blame for the hardship. Leveraging emotions (especially the aggressive ones) may be an effective way to keep support of the base.
I really wish I was more optimistic and share your position that voters are driven by self-interest. I hope you're right though.
There may have been a hint of strategy at one time. But the sheer level of gross incompetence coming from every side of this administration does not really lead one to believe that "global 4d chess trade war" is within the actual abilities of this administration to grasp.
Trump wasted his inheritance and has been several times in bankruptcies - and not "I took risks" bankrupt, more "I f*cked up" and "I lied" bankruptcies.
>> hot takes "they have no idea what's coming" are I believe naive
While I agree they probably have some idea what will happen, don't forget that these same people added a journalist to a group chat where they planned a military attack. They fired a bunch of critical people and then didn't know how to get in touch with them to try and rehire them. Assuming they're total idiots isn't much of a stretch.
While we cannot predict the future, it's moving faster. The world system is under immense stress. Complexity at this scale increases the chance of black swans and unpredictable outcomes. Many powerful actors are reacting simultaneously in divergent directions, which can reshape the trajectory altogether. We are vulnerable to cascading surprises.
By the time the midterms come along I doubt there will be many people left who want the job of fixing up this mess. So they will likely get to keep it.
I tend to agree with you that they know. However the signal leeks showed me that they are not just playing stupid in public - it seems that they are like that for real.
Personally I think that their bet is - it will hurt US, but it will devastate EU and hurt China more than US. EU is fragile economically and political instability will follow if its economy crashes. Especially if US pushes OPEC to jack up the prices.
>What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
tax cut financed by the tariffs? Will buy/mislead a lot of voters when those checks would get sent mid next year.
Especially those voters who couldn't notice that all those countries having tariffs (and VAT) are worse economically than US in major part because US didn't until now have much tariffs to speak of.
This explanation doesn’t make sense because dollar denominated debt doesn’t change with devaluation.
What is the more likely explanation is all the countries with trade surpluses will feel the pain long before the US and agree to much better terms than before.
The PM of Canada had already indicated progress is being made on their trade deal.
Does every country in the world maliciously connive to keep their currency low vs the dollar? Currency valuations are not tariffs and it is absurd to compare them to a tariff.
These tariffs are a huge mistake according to almost every mainstream economist, I hope instead of parroting the party line you’ll be able to admit their failure in a few years.
So does every country in the world, this is neither surprising nor reason to slap tariffs on imports (which will hurt US consumers).
> I have no idea if the tariffs will work
We have lots of examples from history of tariffs not working, so there is that. They lead to trade wars, and then sometimes to real wars, never to prosperity.
The unparalleled prosperity the US enjoyed in the last few decades before 2008 was driven by open global trade and being the currency of last resort and the centre of world markets. I think there is a lot of complacency in the US about that position, and we're seeing the beginning of the end.
Interest rates, taxes, subsidies and reserves also affect currency value.
The US uses selective tariffs already, which is fine though not actually that helpful IMO, what is new is absurdly high punitive and blanket tariffs on everything. This will tank the stock market, raise prices, cause a recession and perhaps most importantly ruin the reputation of the US as a safe haven.
The absurd tariffs on trading partners that don’t matter like Laos are a perfect illustration of how much thought went into this.
bit of an 11 dimensional chess answer. Senator Chris Murphy has a much better explanation, which is simply this is Trump's way of holding private industry hostage [1]. The tariffs will be incrementally removed as various private industries give him loyalty pledges just as he is doing with large law firms and universities. that's it! so simple.
Rich people are typically insulated from economic downturns, especially ones they cause, by their ability to shift investments and asset allocations to mitigate and/or profit from changing tides.
Furthermore, Trump has never bought his own groceries, pumped his own gas, or interviewed for a job so retail prices and layoffs are abstractions "for plebs". Plus, he's reaching the end of his life so he doesn't have very much proverbial skin in the game since his motivations revolve almost exclusively around himself.
I hold a more pessimistic view of the cause and I do agree with your argument that they do know the consequences. But they don't care for another reason.
The plutocracy has fully captured the government and now seeks its ultimate goal: complete transfer of all tax burden to the 99%. For this end they cut the government spending, wrecking the democracy and they impose tariffs to generate fake temporary revenues, so they can argue that the huge tax cut (dwarfing all that came before) is economically sound and fully justified.
This will wreck the global economy and with the coming bad times (wars, famine, extreme migration) nobody will have the presence or the governmental weight to rein in these few rich man.
It looks too complex, IMO. As someone living in Trump's beloved country (Russia), I'd say you should ask, "Cui prodest?" If some oligarchs (currently called billionaires, but we'll see) surrounding Trump benefit financially from these tariffs, then the plan isn't about state debt—it's about their personal wealth.
From the people in my life who talked about their preference for this administration, the economy was the core reason I heard. Specifically interest rates, but ignoring that that’s the federal reserve and the president has no impact on that.
Whatever - all that said, I can’t imagine this leads to an economic boom or anything near it by the midterms. Are the republicans going to lose midterms if the economy is shit? I’m not sure, but I can’t imagine this works out well. I’m no economist though, so what do I know.
If we have something closely enough representing a "free and fair election", there's zero chance Republicans hold the House of Representatives in the mid-terms. But they'll still have the Executive branch, the Senate, and a frighteningly strong hold on the Judicial branch.
Though it seems clear and likely that any means of voter suppression that can be used against areas and demographics that traditionally lean strongly Democrat will be utilized, with a lot less checks and balances than have existed in the past.
It's insane, because all those people have now backpedaled and no longer bring up the economy as their primary concern.
Also insane because all of this was so predictable. Trump couldn't stop talking about tariffs throughout all of 2024. It was obvious that he was going to do this, and obvious that it would tank the economy.
They will never if they keep getting constantly bombarded by right wing propaganda. They're already starting to call it "Biden's recession", as they've been told to do by Fox News.
It's fascism, reasoning with people won't work. The economy was the problem because Biden was in power. Now it's fine because trump is "doing what is needed and we all need to pay higher prices".
> “The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”
The “Liberation Day” tariffs aren’t random—they’re step one in a broader strategy called the Mar-a-Lago Accord (yes, named after Trump’s resort). Here’s the playbook from Stephen Miran’s framework and what’s likely next:
The Mar-a-Lago Accord Framework
1. Tariffs as Leverage
• Impose tariffs to force trading partners to revalue their currencies downward (making U.S. exports cheaper globally).
• Example: The “reciprocal” tariffs target countries with trade surpluses (China, EU) to pressure concessions.
2. Currency Realignment
• Weaken the dollar to boost U.S. manufacturing (counteracting its “overvaluation”).
• Miran argues a weaker dollar would make imports pricier and exports more competitive.
3. Debt Restructuring
• Swap existing U.S. Treasury debt into 100-year “century bonds” to reduce interest payments.
• Foreign holders (like China/Japan) would “voluntarily” accept this to maintain U.S. security ties.
4. Sovereign Wealth Fund
• Use tariff revenue to create a fund buying foreign currencies, artificially depressing the dollar.
• (Not implemented yet—still theoretical.)
Where “Liberation Day” Fits?
—> You are here | Step 1 <—
The 10% baseline tariff + “reciprocal” rates (up to 50%) kickstart Miran’s plan by:
- • Generating revenue ($300B+/year) to fund future steps.
- • Forcing allies/adversaries to negotiate (or face higher costs).
- • Goal: Create chaos to pressure partners into accepting dollar devaluation and debt swaps.
What’s Next (If the Playbook Holds)?
1. The ̶C̶l̶o̶n̶e̶ Currency Wars
Expect Trump to accuse China/EU of “currency manipulation” to justify further dollar interventions.
2. Debt Shakeup
Pressure foreign Treasury holders (like Japan) to swap debt for century bonds. If they refuse? More tariffs.
3. Sector-Specific Tariffs
Pharma, lumber, and tech tariffs are likely next to “protect” U.S. industries.
4. Retaliation Escalation
Allies like Canada/EU will counter with tariffs, risking global recession.
The Perils Lying Ahead (Miran’s paper admits risks)
Miran’s paper admits risks:
• Tariffs might strengthen the dollar short-term (investors flock to USD safety), undermining manufacturing goals.
• Debt restructuring could trigger a Treasury sell-off, spiking interest rates.
Bottom line: “Liberation Day” is phase one of a high-risk plan. Success depends on whether trading partners blink first.
"The Road goes ever on and on, Down from the door where it began. Now far ahead the Road has gone, And I must follow, if I can." - Tolkien
A possible retaliation by the EU could be to not enforce US intellectual property rights in the EU anymore. Or we could start taxing cloud companies, who, until now, have not paid taxes in the EU for profits that they generate in the EU.
This is exactly what I was thinking. Is not the US export far higher than import if they take into account the software and other IT services they sell?
I would expect other countires to tarrif that.
That would work of we had viable alternatives (on par with the US offers or as an easy migration). But we don’t really, so if the EU also adds tariffs than we’ll have the same issues the US is going to have. Meaning higher prices for the same offer since we’ll have no other choice but to stick with the US IT offer.
Like other comments said, this could work only if this was long term and everybody bites the bullet until they have a good local alternative to foreign offers with high tariffs. And the chances of having a lower offer as the one you were importing are really high. So, everybody is betting on short term.
Higher Prices? What is the "Price" of Instagram and Google Maps? But on the other hand, how would you put tariffs on these?
The good thing is: If the EU finds a way to tax the money flowing from advertisers to big tech, consumers would not be affected (at least not financially), because they are not the ones paying the price.
Yes. So advertising gets more expensive when targeting EU users. The users don't care, so there wouldn't be much public backlash. And the advertisers will either cut back / relocate their ad spendings or raise their marketing budget.
I don't think the current US administration understand the EU.
There are some things where I have my doubts about the current actions of the European countries, like rearmament. Will that be dropped the minute a new US administration enters? What the EU does well, like really well, is trade and bureaucracy. It is, in my mind one of the few areas where the EU can absolutely run circles around the US, while managing to protect and isolate itself from the worst fallout. We've already seen this with the current EU tariffs, they are extremely precise and targets Republican votes at almost no cost to EU consumers. I think that will continue, rather than imposing broad tariffs, the EU will target things Trump care about specifically.
I have a pet theory on why that is. In EU to become a Brussels career bureaucrat you need to be able to speak a couple of languages fluently. This serves as a kind of a filter. Whatever they are, dumb they most certainly are not. To a lesser extent this applies to European politicians too.
Bureaucrat yes, politicians no. Every eu law is translated in to every language of the union and EU employees an army of interpreters that translate in real time sessions of EU parliament- you can be an EU politician only knowing your mother tongue.
Expense spent on these translation services has a side benef though- you have a large volume of publicly accessible multilingual text which came in handy for training machine translation (eg deepl) even on smaller languages.
That’s why I said “to a lesser extent”. It’s _possible_ to survive as a high level EU country politician without being fluent in a second language, but it’s definitely suboptimal. So it still serves as a forcing function.
The thing is, you need to take into account the fact that a lot of the political "deals" are not done during official EU sittings, when these translation services are available.
A lot of the discussions happen during the informal after-hours in cafes and restaurants.
This is one of the reasons why, for many years, the Dutch delegation was very unsuccessful at pushing their own interests and placing their representatives in "important" positions, as they were all keen on taking the first train home from Brussels, and were skipping these informal gatherings.
It's not a stretch to imagine that a poor mastering of the "important" EU languages will put a politician at a disadvantage in such settings, due to an inability to communicate with his/her peers.
Why not? Multiple politicians have already mentioned IP as a possible method of retaliation. Also, the goal is to hurt Trump, his voters and his allies. Tech Bro's are Trumps allies nowadays.
Denmarks largest export is Ozempic. Ignoring IP rules will hurt EU producers too.
How do you plan to ignore IP to hurt American tech companies. I guess if you allow piracy of all of netflixs content that would work (but same thing would hurt spotify).
Most tech companies are not protected by IP but by network effects and vendor lock in. It would be far simpler to simply implement a minimum tax on revenue or advertising spend in country to extract value.
When americans are angry, they tend to spread that frustration with a shovel on everyone.
My country as been hot by 29% tariffs.. I can't say what we did to upset americans, given that we do not compete with any american industry in any substantial way, bu we are bearing the wrath of the wounded american blue collar worker regardless.
I wonder what the net effect of tariffs will be in an year, americans are so used to cheap imports, especially all those shien/aliexpress/temu stuff.
Your country didn't do anything. America is being run by a madman, quite simply. This isn't reflective of Americans broadly. The people who voted for Trump wanted cheaper prices, now Trump is making everything more expensive.
The next month is going to be very interesting. The business community is going to put huge pressure on Republican representatives to undo this, and Trump's own supporters will revolt once they see the new prices reflected at Wal-Mart.
I don't know how it's going to play out, but this isn't the end. It's just the beginning.
I wouldn't count out Trump sending out "tariff profit" checks (with his face of course) to all Americans. If he gives everyone a $2000-5000 check (undoubably paid for by borrowings not real tariff income) then he'll get a pass for at least a few months.
Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs? In my home country VAT is ultimately charged the end-customer and this happens regardless of the origin of the goods. How can this be a seen as a tariff?
Besides, isn't the "Use tax" most(?) American states have more or less equivalent in function?
Others pointed out that the tariff rate they are pointing to is actually just calculated based on trade imbalance. So the logic is that they have a number they want to get to and are throwing around terms that their constituents don't understand to make it sound reasonable
VAT is not a tariff, no one reasonable thinks it's a tariff but the US doesn't use the term VAT so enough people won't second guess it if trump says it's an tax on american goods
VAT is effectively a tariff though, because it disincentivizes import/trade with the US (and other foreign countries). Since the US has no VAT, it's leading to unfair competition.
VAT complicates the business environment for US companies operating in the EU, and it takes a major chunk of their margins. US doesn't have VAT and has a significantly easier business environment for EU businesses to operate in - leading to an unbalanced playing field.
VAT is just one component though. Remember that US largely subsidizes and sponsors the defense of EU, Ukraine, Taiwan, Japan, etc - but those countries have been giving less and less back, over the past years.
1) EU businesses have to deal with complicated sales tax arrangements that vary by state and municipality.
2) EU businesses have to operate in their own environment and also face the VAT. There is no protectionism here. The playing field with respect to VAT is balanced, regardless of which side of the pond is (...was) an easier business environment to operate in.
VAT complicates the business environment for EU companies operating in the EU too. You're demanding that American companies in the EU should be able to operate the same way they do in the US instead of complying with local laws, ie you're just demanding the right to bring your legal environment with you. Do you believe that foreign companies who open branches in the US should be exempt from US laws and be able to run themselves according to the law in their country of origin, at their US branches? I doubt it.
Completely false. Cost of VAT is passed on to consumers not met by companies and as EU companies pay VAT too it doesn't force US companies to lower prices and so harm their margins.
VAT applies equally to domestic and foreign companies. It's a tax.
Tariffs and barriers to trade are measures meant to incentivize production in the country imposing them. That's what free trade is meant to get rid of, that's why Trump is so keen on tariffs and likes them
If a company moved a production line to within the EU from outside because of VAT they'd still have to pay the same exact amount of VAT as they did before. It's just not an incentive in that sense
Well, they are saying, EU market is harder to operate in (because everyone pays VAT) than the US market (no VAT, also lower regulatory barriers it seems), and also EU firms have a "home advantage" benefit, for example the regulation is written for their benefit.
So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit.
Additionally, US car tariff used to be 2.5%, whereas EUs is 10%. The imbalance is short in justification, though across the board, EU and US charge each other similar tariff amounts altogether, so there are other areas where the US charges more.
Whether that justifies broad brush enormous tariffs in everything, and whether US does the same in other industries (defence for example) is an exercise I leave for the trader.
> EU market is harder to operate in (because everyone pays VAT)
Surely it's not exactly rocket-science to handle VAT...
Explain how it's an disadvantage for an US exporter compared to a domestic company... Give an example instead of handwaving. I'm willing to admit I don't understand all the details, but you wont convince me using this vague statement: "harder to operate in (because everyone pays VAT)" ...
If the US adjusted selected tariffs to protect selected industries the outcry wouldn't be the same, so I'm not very interested in specific examples where the US have a lower tariff than the "counterpart".
> So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit.
It's completely without merit. Do you really think US regulation isn't written for the benefit of US companies? It is!
In any event US cars don’t sell in Europe for a range of reasons including size and fuel consumption. Those stricter rules apply to everyone and I don’t think it’s beyond US manufacturers to meet those rules for cars sold in European markets.
If you’re saying that Europe should loosen its safety rules just so the US can export more cars then the answer will certainly be no.
> Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs?
There is no logic. VAT isn’t tariffs and is not discriminatory. In the same way as trade imbalance is not theft. It’s just Trump trying to find reasons to complain and present the US as a victim.
The only logic is that since the USA doesn’t have a VAT system, there is no way to do export VAT rebates.
> Export VAT rebates mean to refund the VAT paid in various domestic production stages to exporters. The purpose is to ensure that the prices of exported products are free of taxes in order to maintain a level playing field for international markets.
So that can’t exist at all for American exporters, since the USA doesn’t use VAT, their goods are taxed at a higher rate (as far as the exporters are concerned). It’s confusing, but Trump could have just asked for negotiations to get rid of this distortion.
I dont get it. VAT is end customer tax applied exactly once. The rebates exist so importers, suppliers, resellers, shops dont pay VAT multiple times. This applies to every product local or imported.
With special case of digital goods this for a looong time meant that software sold from outside EU over internet was around 20% (VAT) cheaper because VAT was ignored by the companies. That’s quite a big advantage especially for US. And a reason why EU wanted VAT to be applied equally. Many companies still ignore it but it’s illegal now.
I'm not sure I follow. When I read the rules for Norway [1] it appear the importer (in Norway) pay the VAT on the imported goods (as opposed to the the seller for domestic a domestic business). But it's nothing that indicates that this amount payed does not enter the ordinary VAT accounting. Ie.: the amount payed will in effect simply be forwarded to the end-customer, just like domestic goods. I don't understand how a "VAT rebate" would come in play here?
> Export tax rebates involve the return of indirect taxes that have been levied on inputs used to manufacture goods that are eventually exported out of the country. These taxes can include VAT, ...
So this seems to be about imported goods being more expensive in US, not the other way around? Ie. if a US company import some product from Norway they have to pay VAT to Norway? And if they subsequently sell a derived product back to Norway they do not get refunded this VAT?
So let's say you make something in Europe, you pay VAT on the inputs, when it is sold to someone, they pay VAT, you take the VAT that the consumer paid and deduct the VAT you already paid to make the thing, sending the rest to the government, who only gets 20% on the thing, it doesn't get 20$ + 10% + 5% + .
You have to keep receipts of the VAT you paid to make the thing to do this, Europe doesn't like sloppy paper work, and rightfully so. Except...America doesn't have VAT, so there are no VAT rebates, they pay taxes on inputs and the consumer pays 20% on the finished item. But you are also right: if Norway exports a thing to the USA, they aren't getting a VAT rebate either from the sales tax paid on the thing in the states (or does Norway get a VAT rebate on things exported to non-VAT countries? I'm not sure).
But really, VAT is a better way, you avoid double taxation. The US should really just adopt it and make their VAT system compatible with Europe.
So that make short of sense, except according to this
"Selling goods to customers outside the EU
If you sell goods to customers outside the EU, you do not charge VAT. However, you may still deduct the VAT that you paid on related expenses, such as for goods or services purchased specifically to make those sales."
So the inputs are not more expensive to American importer. Yes the European company is compensated for the VAT they paid on an input, but this is a tax to begin with. Which the US companies not pay. So this is not unfair to the US company..
VAT countries apply VAT on all domestic transactions (and that includes imports).
VAT countries do not apply VAT on exports because they _rightly_ assume that the importing country will apply VAT or whatever sale tax equivalent is in place in their territory.
This is not a distortion. There's really no other way to make it work.
Other thing is that when you’re VAT registered, as a buyer of parts you reclaim VAT on things you purchase as inputs. So the tax on the final product is what matters.
With US sales taxes you accrue tax all the way up the chain.
In many states in the US, if you go and buy materials, as a business, you pay a sales tax. There are exemptions and partial rebates, but there's nothing across all industries, and it varies by state. So if you were a farmer you might find you were exempt on fertilizer and tractors but not on a pickup truck.
That's different to a VAT, because there, as long as you're a registered business for VAT purposes, all purchases you make are exempt from VAT - either you don't pay it when you purchase and are invoiced by a business, or you can claim it back if you keep receipts. Companies have to register for VAT when revenue hits a certain amount; here in the UK it's £85k for e.g.
>either you don't pay it when you purchase and are invoiced by a business
As a business you pay VAT when you purchase. And you collect VAT when you sell.
Then you pay to the government the difference between collected VAT and paid VAT.
That's what the "Value Added" part means.
No, if you provide a VAT number, in business to business transactions, companies will not normally charge VAT in the first place, so you don't pay it when you purchase in many cases as a business.
However if you go into something aimed at consumers, and make a purchase, they're normally not set up for this, which is why you're able to reclaim when you have paid it.
> So if you were a farmer you might find you were exempt on fertilizer and tractors but not on a pickup truck.
There are items that generate a non-deductible input tax in VAT countries (often entertainment items or cars).
But usually, those will be the exception and deductible would be the default.
A tariff is a tax specifically on foreign goods. It is an artificial barrier to trade used to make domestic products more competitive. VAT is a tax applied to all products equally, so it isn't a trade barrier. You might be able to construe a convoluted argument that it is easier for domestic companies to work through domestic regulation, but that's pretty weak.
The US seems to have simply taken the value of the trade deficit with a country, divided it by total imports from that country, and used that as the tariff percentage. So in their logic, wherever there is a trade imbalance, this must be explained by barriers to trade. So in a sense this is also a repudiation of the core hypothesis of global free trade as an ideology: That, if countries trade freely with one another, they can specialise on certain production and a virtuous cycle makes everyone richer. In Trump's ideology, trade is a zero sum game, and having a trade deficit means that you are losing.
European VAT makes it difficult for American companies to compete in Europe. US has no VAT, making it easier for European companies to compete in America...
Combined with the fact that the US is the de-facto largest benefactor of NATO, Ukraine, UN, etc... then the US is getting shafted by the EU and Trump is correct in seeking ways to mitigate that.
Applying this economical pressure on the EU is a valid strategy, IMHO.
European companies pay VAT in Europe.
American companies pay VAT in Europe.
European companies do not pay VAT in US.
American companies do not pay VAT in US.
> "American companies pay VAT in Europe. European companies do not pay VAT in US."
VAT is a significant income stream for the EU. They take that money and re-invest it into their economy in an uncompetitive manner, whilst constantly propping up more anti-competitive regulation (which harms American businesses).
Have you looked at EU countries budgets? We "invest" in social security and public health systems. Our defense budgets go in large part to buy arms from the US, and Musk complains if we decide to prop up Arianespace for some defense satellites while threatening to cutoff Starlink for Ukraine paid by Poland. Have you looked at how much money your DoD sends abroad (and how much of it is pork)? You're literally telling us to be more protectionist, and then expect something different.
I don't really care what you invest the money into, the point is that the VAT is a mechanism which messes with the concept of a free global market and it leads to unfair competition and an unleveled playing field. If you combine it with other factors (such as the fact that the US is the sole guarantor of Europe's defense) - the US is in the right for challenging the European economy.
US sales tax is *significantly* lower than VAT, varies by state (allowing for all kinds of loopholes), and applies to fewer categories of products and services sold. No point arguing this, VAT is a protectionist and anti-competitive tax and the US has a right to challenge it.
Why are you arguing this point? It’s de-facto cheaper and easier for European companies to compete in the American markets, than the other way around.
How is it protectionist if the European companies also pay it?
You are arguing about rules that apply to all companies competing in Europe and then extrapolating that to say that “American companies competing in Europe” are mistreated.
If I read you correctly you're saying that a tax imposed on the consumers in a country benefits the country as a whole and thus aslo the companies operating in that country, which make it unfair to foreign companies? Is that really what you're arguing?
We started this conversation with you seemingly not understanding how VAT messes with free trade, and it sounds to me like you're in a different place now. Feel free to keep arguing over semantics all day long, I'll leave it at that.
My place hasn’t changed at all. Everything I’ve said is internally consistent. You are welcome to view any form of taxation as an impediment to “free trade” but that’s not how competition works. Feel free to continue believing that taxation is inherently protectionist, I’ll leave it at that.
There's "taxation", and then there is "taxation". VAT is an incredibly aggressive and overreaching version of "taxation", and it has severe implications on free trade with Europe. I'm not sure why you won't acknowledge this.
And by the way - plenty of economists view taxation as impediment to free trade.
I’m not sure why you won’t acknowledge that a tax that affects domestic and foreign companies equally is not protectionist. But here we are.
I’m not saying that taxes don’t have an impact on the economy, or the business environment, or growth, or profits…of course they do! Maybe the tax will lower demand which makes investment less appealing, and so less investment from Americans happens as a result. But there's also less investment from the Europeans in that case! And most of all, it has nothing to do with the competitiveness of American products in the European market, because the European products face the same tax. VAT does not distort the relative price between European and foreign products.
If you want to say that tax revenue is used for subsidies that are anticompetitive — well money is fungible, you can’t blame that specifically on VAT revenue, and you should be making an argument against subsidies, not the VAT. But then you will need to address the many ways in which the US subsidizes its own industries.
For those who don't follow the link, here's an extract from the article explaining the core situation:
Imagine a car that costs $30,000 to produce before tax. Now compare four scenarios:
1) BMW sells the car in Germany (domestic sale): Germany’s VAT (let’s say 20% for simplicity) is added on the final sale. The German consumer pays 20% VAT, i.e., an extra $6,000, for a total price of $36,000. BMW forwards that $6,000 to the German government as VAT.
2) BMW exports the car to the U.S.: Since the car is exported, BMW does not charge German VAT. Any VAT BMW paid on parts or inputs is refunded by the German tax authority. The U.S. buyer pays the $30,000 price, and since the U.S. has no federal VAT, there’s no equivalent federal tax on that sale. (A state sales tax might apply at the point of sale, but we’ll come back to that.) The key point: the German government collects no VAT on an item consumed in the U.S.. This makes complete sense because that car’s being enjoyed by an American buyer, not a German resident.
3) GM sells the car in the U.S. (domestic sale): The U.S. has no VAT, so the American consumer pays $30,000 (ignoring any state sales tax). No federal consumption tax is collected. (In states with a sales tax, the consumer might pay, say, 7% extra to the state government, but again, the federal treatment is no tax.)
4) GM exports the car to Germany: When the car arrives in Germany, it faces the same 20% VAT as any car sold in Germany. So a German customer buying the American-made car pays $30,000 + $6,000 VAT = $36,000. That $6,000 goes to the German government. From GM’s perspective, it doesn’t owe U.S. tax on that export sale (since the U.S. doesn’t tax exports of goods), but its product will bear German VAT when consumed in Germany.
What outcome do we have here? In Germany, both the BMW and the GM car cost the same $36,000 after tax, and the German government collects VAT on both. In the U.S., both cars cost $30,000 before any state sales taxes, and the U.S. government collects no federal consumption tax on either. Each country taxes consumption within its borders—no matter where the product came from—and does not tax consumption outside its borders. This is precisely the goal of destination-based taxation: neutrality. Consumers in each country face the same tax on a given product, whether it’s domestically produced or imported. And neither country’s producers carry their home consumption tax as a “ball and chain” when they go compete in foreign markets.
US formally don't have VAT, when most other developed countries have.
As I know, US states few decades spent on talks about implement VAT, but have not achieved agreement yet.
For equivalent, most US states have trade tax, could be returned with set of rules.
So, on some abstract level it could be considered as far equivalent of VAT, which is also could be returned with set of rules.
The De Minimis loophole is highly significant with FOUR Million packages per day (What ???). The clause to address this loophole needs to be stated more accurately - It should be clearly defined to be higher or lower of 30 % of the value of shipment under $800 OR $25 per shipment and not either. If either then the De Minimis loophole will be continue to be used at $25 per shipment.
Source : https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...
The whole table doesn't make sense. We (NL/EU) don't charge the US 39% to import . Apparently orange guy (not the Dutch) doesn't understand VAT rates.
Car? max 4.5 + 21% VAT = 25%. But it simply doesn't matter bc we don't want their cars.. Except for thee Dodge RAM, which can be converted to a tax efficient company car (crazy)..
What amazes me even more is that Elon doesn't seems to understand it either.
The thing is that Europeans wanted the Tesla cars. They fit perfectly into the Europeans identity - had Tesla kept on and kept the Tesla cars competitive without any political interference, then that could have been great car exports from the US to the EU.
They wanted it because at the launch until 2018 it was basically free because of all the tax incentives. You got the following benefits (Netherlands):
Model-S was about 85K excluding VAT (21%) for the plain version
Added tax incentives of 36% MIA
Added tax incentives of 28% KIA
Accelerated depreciation of 75% in the first year VAMIL
Free parking in the cities (normal hourly rate 5 - 7.50/hr)
More/better parking options
A free charger in front of your house regardless where (basically your private parking spot until maybe 4 years ago).
0 BPM tax (can be up to 40% of the price)
0 road tax (could be anywhere from 80-150 per month for type of car)
0 personal fiscal penalties of 25% of the new value of the car, including VAT (which would be a virtual 26K/year extra salary. At 51% tax that's about 1000 per month AFTER taxes)
The 85K car resulted in 90K deductibles in the first year.
The 85K car, including everything was cheaper to drive / own than a FREE car.
Almost all of that stopped in 2022, and what do you know? People stopped buying. THIS is politics. Setting policies which drive behavior.
The government "decides" what you will want to buy / drive / etc.
Yes, but only later and only for the Model Y. The irony is that the most popular model, the Model 3, is manufactured in China, across the red sea (houti’s!) to West Europe.
As found elsewhere on this thread, the rate is based on trade deficit. Trump believes that having a negative trade balance with a country means that they're cheating somehow, as opposed to meaning that you just buy a lot of manufactured or raw goods for them.
And no, that does not make any sense, and you're not missing anything. He believes this because he's a fucking idiot. He's aggressively racist, comically petty and thin-skinned, and overtly authoritarian, and as far as I can tell actively wants to permanently destroy American science and civil society out of spite, but he's also really, really, really dumb. In this case, he's managed to combine his powers to take a goal that's born out of racism and xenophobia and then implement it in the most idiotic way possible, and somehow the result is even worse than the sum of its components.
It doesn't make sense because you didn't read the original board. It clearly states 'including trade barriers'. You're attacking a strawman.
Countries, including the EU, like to have 'low tariffs' and then have sneaky backdoor taxes or outright bans on US goods through things like milk quotas (Canada), 'biosecurity' (Australia) or EU courts issuing spurious fines on US companies (based on vague laws that only get enforced against US companies, like DMA).
I think you might be granting the administration too much benefit of the doubt. They aren't based on "tariffs + trade barriers", they're just based on trade deficit alone.
VAT is not a "sneaky backdoor tax", it's imposed on all goods, regardless of where they're produced or imported from.
DMA (and similarly, GDPR) are enforced in EU countries just as much. It's just that the US tends to have more gigantic tech companies that do shady things with user data. Apparently the US doesn't care, but the EU actually does, and so it enforces its laws.
DMA is applied equally, you say. How interesting! Can you link me to the examples of the EU going after EU companies for DMA violations? I couldn't find a single one. Not a single case, ever.
The EU wanted to fine Google $35,000,000,000 under DMA. That's a backdoor tax. No European tech company faces this scrutiny. Never have, never will -- because the DMA is a tax on the United States.
It's also interesting that the Google and Meta DMA fines are expected to land in the next week. What a timing coincidence, almost like it's retaliatory (as many articles have suggested).
We’re talking many 10s of billions in “fines” specifically levied against US tech firms where there is no EU competitor.
I don’t necessarily disagree with all of the laws themselves (some are incompetent EU risk aversion, some are good protections) but given the massive never ending fines being applied in bad faith and constantly moving goalposts it is indeed a defacto tariff on US tech firms.
The fines are not imposed in bad faith, they're imposed for actual, provable violations of the law. Companies who do not violate the law are not fined. Complaining about fines is another way of saying "We'd like to trade in the EU while violating EU laws that every EU company also has to adhere to."
The laws are specifically designed to target US firms without affecting EU ones and enforcement of fines and the size of them is highly selective -- the most attractive targets with the highest willingness to pay without getting to the point where they would pull out of the market.
If you do not see the moral hazard in this, I don't know what else I can tell you. If the EU had a seriously competitive tech industry, many of these laws would have never been created, as the EU is not some moral believer in privacy (they fight against encryption domestically), they are just run-of-the-mill protectionists like all governments.
The thread is specifically about DMA. My parent comment mentions DMA specifically. This 'EU enforces the law equally' position is nonsense, considering Spotify, an EU company, was carved out from the DMA.
This is nonsense, I'm about to launch a company in the EU and these laws are a major consideration and potential pain point for us, too. They are very relevant for EU companies.
This makes me wonder if US companies complaining about the GDPR and DMA have any idea how many more laws EU companies have to comply with in addition to this. It's not easy.
If you ever tried reading GDPR or DMA... you will realize pretty quickly that there is little meaning in them.
I am totally unsure someone can prove a DMA violation. It's simpler with GDPR because a lot of concepts from it have been already somehow interpreted and agreed upon. But we do not have case law in EU, so I guess even known GDPR violations are often dubious.
You're trying to claim a law that is exclusively used to fleece U.S. companies and never EU competitors is 'not bad faith'?
When has the DMA been used against EU tech companies? Never.
Your comment also shows a fundamental misunderstanding of the DMA and GDPR laws. Neither of them are objective laws, and they are applied subjectively without guidance.
Let me be very clear: the EU does not tell you how to comply with either the DMA or the GDPR, period. The law is extremely vague and does not prescribe how to comply in any way, shape or form.
DMA has not been used against EU tech companies because US tech companies are clearly the market leaders in the area the DMA is concerned with. The DMA exists to make sure that companies (from the EU, US, or elsewhere) comply with EU regulations regarding privacy, tracking, and consumer rights.
It's not a "tax" on US companies, it's just that US companies don't bother to comply with the regulations that apply in the EU, and thus get fined.
>US tech companies are clearly the market leaders in the area the DMA is concerned with.
There's a good argument that this is targeted. Why didn't this regulation affect SAP? Their market position gives them leverage over a massive number of companies.
>it's just that US companies don't bother to comply with the regulations that apply in the EU, and thus get fined.
It's not that they "don't bother", it's that they understand complying with the regulation to cost them more than the fine. In other words, the regulation itself is a sort of fine, or tax imposed by the EU, with a magnitude of roughly equal proportion to the fines it imposes.
No offense, but this is a silly argument. Companies in country X tend to develop their products in conformance with country X. Of course, products developed in the EU will conform with EU law. By the same token, I would be surprised if US companies habitually developed products that don't conform with US law.
> It's not that they "don't bother", it's that they understand complying with the regulation to cost them more than the fine.
This means that the fines are not high enough and don't fulfill their purpose. That's an argument for the thesis that the EU is handling fines of violators in a too lax fashion, not the opposite. This has also been the impression of many EU citizens, and it seems to be the reason why so many huge US corporations keep violating EU customer protection rules again and again.
But the reality is also that US companies that violated those rules basically have no EU competition because the EU has an abysmal market in certain tech domains. There simply are no viable EU equivalents to Apple, Google, Facebook, and Microsoft.
>Companies in country X tend to develop their products in conformance with country X
You have the order wrong. The companies came first, then came the laws. So we might reverse this statement to: "countries with company X in them tend to develop their laws so that company X is in conformance with those laws". This latter statement seems likely enough to be true, and is exactly the point of order in this discussion.
>By the same token, I would be surprised if US companies habitually developed products that don't conform with US law.
It's called "growth hacking". Uber was quite famous for it. The only time you'd benefit from breaking the law in a foreign country vs. your own country is if you intend to exit the market of that country; you don't have to worry about paying fines if the country can't reach you. If the intention is to continue doing business there, then any punishment will have to be borne just as if you were headquartered there.
>This means that the fines are not high enough and don't fulfill their purpose.
You're missing the point. The laws scale so that eventually they will be high enough that the company has to conform. The point I'm making is that a company's willingness to break a law shows that the law is costing them money, and we can even estimate how much money it costs them by the size of the fine. If we assume that all laws are fair and just then this just means that the company is evil. However, as we showed above, some laws are unjust, hence them costing a company money can be a way of unfairly extracting money from those companies.
At least as far as I'm concerned, there is no need to further discuss your "laws are made for companies" conjecture. I don't find it plausible for various reasons. Anyway, good luck in your future endeavors!
This argument would be just as valid if the US was the world leader in assassination markets: shitty and illegal practices are shitty and illegal, regardless of whether they were firmly established with significant markets in other countries first.
DMA is. GDPR is. Both are applied principally against competitors using arbitrary fines invented by the EU. No compliance guidance is given, because the laws are inherently vague.
If a city enforces a new speed limit somewhere and only people living outside of the city break that speed limit, you argue that the law isn't applied equally because no resident of the city has been fined so far?
That's the most backward way of trying to prove a point (without even addressing whether DMA and GDPR are a good thing or not, just based on that...)
You might say that's proof of it being unfair, but can you name a EU company which should be one? I can't really think of one, US companies are just so much bigger on the internet, even in the EU.
Looking at the other law you mentioned, GDPR, there are many EU companies receiving GDPR fines.
That's not just some bs - the other side of the coin is crooked billionaires and other reptilians taking advantage of anything in their way blinded by their massive greed and psycopathic traits.
Excuse me, this is not how a society should roll. Not a sustainable one at least.
EU has signed up to lucrative trade deals with Canada and Mexico since Brexit and has many more similar ones with other Asian countries. International trade is complicated and it is very much something the EU specialises in.
Not really, if the whole world sinks into an economic depression then the percentages won’t matter much. What will matter is the starting position and whether the country’s economy has enough headroom to ride it out.
Here's something I want to understand: In 1930 the Smoot-Hawley Tariff Act was passed by congress - an act of legislation. Nearly 100 years later we have the president unilaterally picking any tariff numbers he wants. What happened?
He invoked the International Emergency Economic Powers Act (IEEPA), which gives him the ability to levy tariffs in an “emergency”. There is no actual emergency, of course, but Congress does not have the political will to stop him.
Congress could stop this tomorrow if they wanted. They ceded all control to the executive. [Republican] Congress is hoping to claim credit for anything good that happens, but scapegoat Trump when things crash.
That has 10% across the board starting April 5th, then unspecified rates for the “worst offenders” starting April 9th.
I say “semi official” because it’s not official until US Customs and Border Patrol publishes the rates. So far I don’t think they’ve done that. Their announcements page here doesn’t have anything:
Yes Trump has a history of announcing shocks and then quietly back-peddling etc.
But the numbers come from the big placard he holds up. There are pics of his announcement holding his rate card in article if you scroll down.
Yeah, I’ve seen the boards he was holding up, but the fact that those numbers are not on the whitehouse.gov page and that they’ll be implemented a few days later makes me think they’re not final yet. Plus we don’t know if they’re in addition to or replace the existing China tariffs, for example.
We run a very small business (luckily just for side income). One of our suppliers expects prices to go up 45-55% by the time this is done. It sucks out loud because there are literally no suppliers from the US for the parts we need.
>Some goods will not be subject to the Reciprocal Tariff. These include: (1) articles subject to 50 USC 1702(b); (2) steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and lumber articles; (4) all articles that may become subject to future Section 232 tariffs; (5) bullion; and (6) energy and other certain minerals that are not available in the United States.
Exempting chips alone doesn't make sense. Does Intel have to pay 20% on ASML lithography machines or more on Japanese ones? Meanwhile TSMC can fab chips in Taiwan and export to the US without tariffs.
I thought the tariff goal was also to fix the issue with Pharmaceuticals where the R&D happened in the US, the company then “exported” the IP to the EU factories, and now import the drugs back. This results in a US tax rate of 0%.
I was thinking the same. IT is a huge business, the best kind of business right now, the pinnacle of human technology at this point in time. America is the world leader in development, and "exports" of IT. You can't really tariff software, as it's some kind of IP.
On the other hand, much of the "digital infrastructure" is free and open. Perhaps if rival powers put enough effort into sanctioning US effective sales in IT, however that may work, America could lose it all.
With regards to goods, the EU exports more than it imports from the US, but we do import more services from the US, which can likely be taxed in retaliation.
Yes, but only because iPhones, Dell computers, HP printers are shipped from China and not the US. Yet the majority of profits from these trades are accrued in US companies or offshore tax shelters owned by them.
- each country will impose equivalent taxes on the import of US goods - this is not only expected, but the norm under international trade law.
- with the rest of the world, still having free trade agreements between them, will start trading around the US, the US won't be able to compete
The value of the US$ will likely drop by the value of the tariffs. If everyone starts trading around the US we'll probably lose the US$ as a standard currency to trade in, maybe switching to yuan or euros, the US$ is buoyed by it being the currency everyone uses, that's going to drive it even lower.
"Pay with digital dollar, and you don't have to pay tarifs". Problem solved. Demand for digital dollar will grow, but can also be used for normal dollar transactions. Therefore the USD will devalue, and gone is the national debt.
/s/digital dollar/bitcoin or trump coins or doge coins
This make no sense. Tariffs are paid by the supplier who is receiving money from the US customer. Are you saying if they pay the tariff in doge coins the tariff is zero doge coins?
As for other polices that "punish USD" "reward MagicCoins" ... well the market would hopefully see both currencies as crap and use Euros or Yuan. Or maybe new currency baskets will emerge to decentralise power.
No.. the tariffs are paid by the US importer/distributor (Target, Walmart) who is buying from the foreign supplier (Fererro from Nutella). The importer/distributor will charge the extra + margin to the US consumer. The supplier in the EU or China will pay exactly 0 buckazoids.
So basically in the US, Nutella will become only a luxury food!
My point about creating a new currency is that I wouldn't be surprised if they would allow certain transactions to bypass some regulations.
You know the US already pulled a trick on the dollar about 50 years ago, right?
Speaking of FAANG - EU has been considering proper taxes on the digital economy for some time already[0]. I guess this will speed up the works on this.
But the US$ is kept artificially high because it's used as a reserve currency for things like oil/etc - this is IMHO the main reason why the US is in this position, it wont let its currency float down leaving exporters screwed (but cheap imports for the masses). Just increasing the cost of imports but not making export prices higher (lower in fact because other countries will be raising tariffs against the US)
It's very much a case of "you can't have your cake and eat it too" fix an artificially high US$ and you can force everyone to trade in it for oil, but as a side effect you screw your exporters
Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense.
Devaluing the dollar and subsidizing production in the US makes far more sense.
America got richer and outgrew the phase where tons of factory jobs made sense. It seems pretty clear to me that well-paying manufacturing job in developed countries were the product of a particular moment in time where poorer countries couldn't do it yet. Now they can. It was never going to last.
I live in NJ and people often make a lot of noise every time there's a report of people moving out of NJ because of high taxes and high housing costs (yet NJ's overall population has increased).
To me, it makes sense: NJ is a place where you live to make a high salary (proximity to NYC and Philadelphia) and raise a family (very good public school systems as a result of those high taxes). When you no longer have a need for those circumstances, you move.
Likewise, the US is not a great place for certain types of manufacturing because the labor and raw material supply chain simply isn't there. Why not focus on the things that we are good at instead?
It was never going to last if the US allowed for very low cost imports from those countries. This is literally one of the largest points of tariffs - protecting domestic manufacturing. We could have had high tariffs the whole time and offshoring would have been much less pronounced. I'm not saying that would have been a net positive, but to say it would never last is only true under certain circumstances.
You were still going to lose export markets as international competition grew, and you were still going to shift to higher value-added service jobs as the economy developed.
Can you please explain a bit more about this 'hurt'?
My understanding is that a significant majority of sources of US 'hurt' are internal and there has been ample opportunity to vote at least some of it away, but the votes keep going in the direction of making it worse.
The worst thing about it is that the situation has essentially been perpetrated on the citizens of the US by those with power and influence for the simple human weakness of greed. Unfortunately they've got the power and resources to effectively do large scale "convincing".
The error is assuming that Americans are homogenous. Wealthy ones benefited tremendously by reducing their production costs while the less fortunate were put into international labour productivity competition.
And yet, we have a system where the less fortunate could, simply by choosing to, make the government use some of the wealthy people’s money to make things better for themselves. This has been done in the past in the US, during the years that many consider America’s best. In other countries, the poor don’t have this option.
But, they choose not to. To some this choice is noble, to others it’s foolish. Either way, what can you do?
When the wealth redistribution were done in the past there happened to be a strong movements that backed the change. I don’t see prospects of that happening in the foreseeable future given the new technologies of surveillance and deception.
Well, does the American public make it viable for a politician to push for expenditure of taxes on supporting the "less fortunate", say in terms of re-education or, you know, subsidizing social safety nets? If income inequality was such an issue, why did Americans put into power a billionaire to design the economy twice? Lol
Income inequality does not have a chance of standing as relevant issue in corporate media. Furthermore social media has become a significant suppressor by shaming (perhaps not the right word) people of their circumstances. As a result the perceived public opinion is far from actual opinion of the people on the relevant issues that Bernie Sanders often speaks about.
Whereas some did vote for the Trump in spite to make others suffer as they already do.
They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice.
> Because now most Americans don't slave away in unsafe factories 7 days/week for dollars an hour.
Now they're collecting disability in their unsafe neighborhoods, getting morbidly obese while their substance abusing kids play vidya games in the basement into their 30s.
Yes, it's really like that. People want their factories and incomes back. I don't claim that anything happening here is going to deliver that, but that's the pitch they're voting for. To their credit, at least they're pursuing that in lieu of some UBI ideocracy made of fantasy money.
As for you: it's fine to point out all the ways they may be misguided and/or misled, but unless you have an alternative that doesn't amount to expecting everyone to somehow earn an advanced degree, and then discover it's next to worthless (even before "AI",) your really not contributing much. So what do you have?
People who voted that wouldn't want to work at factories with working conditions and salaries Chinese factories make everything they consume. They also don't support the unions that would make working bearable in factories. Even if somehow factories would return and pay reasonable compensation, that would make the products so expensive most Americans couldn't afford them. People would have to consume a lot less. Which may be a good thing for the planet, but I doubt that's what the voters are prepared for.
> They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice.
Have you considered the platform that the Republicans have actually been running on? Was it one of economic policy? Did you consider why they attacked DEI and minority groups (including LGBTQ)? Because they would not have won on this roughshod economic policy.
> They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice.
This conundrum, like so many others in public discourse, is downstream of the widespread but fundamentally incorrect belief in free will (which in turn is downstream of belief in supernatural powers, because free will sure as hell isn't explained by anything in nature).
Nothing is in anyone's control. There's no such thing as "eyes wide open". People's behaviors are 100% downstream of genetics and environment. Some people behave rationally some of the time, and to the extent they do so it is because the environment set them up to do that. There is absolutely no coherent reason to generalize that into the idea that most people vote (or do anything else) rationally.
I mean in their actual self-interest rather than, say, what they have been made to believe is in their self-interest.
> Deindustrialization and Nikefication in the past several decades isn't "rational" long-term behavior either.
Maybe, but I was responding to "They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice."
There's an implication here, and in a subsequent reply that people voting against their interests is "[t]he go to midwit rationalization for every electoral loss", that people exercised free will when they voted.
This is plainly incorrect, because free will quite clearly does not exist. No one has ever shown the kinds of violations in the laws of physics that would be required for free will to exist.
Since free will does not exist, there is simply no a priori reason to believe that people voted in their interests. People's voting decisions, like everything else they do, are out of their control. To the extent that they vote in a particular way that's good or bad for them, it's driven purely by luck and circumstances.
It is this a priori belief that people vote or act in their own interests that's the real "midwit rationalization".
> There's an implication here, that people exercised free will when they voted.
There's no such implication.
> This is plainly incorrect, because free will quite clearly does not exist.
> Since free will does not exist, there is simply no a priori reason to believe that people voted in their interests.
What are you even talking about.
People (and living beings in general) acting in their own self-interest - pretty much all the time - it is the most universal general principle of life if there ever was one. This doesn't require or involve free will.
How well a biorobot (no free will!) executes in pursuing his self-interests, is the selection critereon.
Now, the people make mistakes pursuing their self-interests, doesn't mean they aren't acting in their self-interest. Because they sure as hell are - all the frigging time! It's their whole firmware!
Deindustrialization / nikefication all the way through the value chain except the very, very top last step of the value add - hasn't been in their self-interest, it isn't in the interests of their nation either.
It's only in the self-interests of short-term thinking shareholders that min-max asset valuations with great costs to everyone else but themselves.
> People (and living beings in general) acting in their own self-interest - pretty much all the time - it is the most universal general principle of life if there ever was one.
Base evolutionary instincts to survive don't translate to humans living in complex modern societies acting in their self-interest.
>Base evolutionary instincts to survive don't translate to humans living in complex modern societies acting in their self-interest.
What are you talking about?
Base evolutionary pressures and instincts have translated in exactly that.
Complex modern societies, and emergent behaviors and strategies arise from agents acting in their own self-interest (organizing in groups or otherwise to further their goals).
The idea that not only people don't act in their self-interest, but you - in fact - know better what's in their best interest is truly some mid-tier thinking. Or that you have some unique ability to know what's in their best self-interest, but they... for some reason... don't.
Now it doesn't mean that acting in self-interest doesn't sometimes result in ruin, because it surely can!
That however doesn't mean that all these choices weren't made with self-interest in mind, front and center, despite people claiming otherwise.
The groups and societies that enact the winning, most sensible strategy, economic and industrial policy will win out.
Those individually or in groups that don't, will go to shitter and or be selected out. It's that simple.
Did you ever work at a factory? I did. I would most certainly prefer to collect a pension and play video games (which I do now in retirement). Anyone would.
Doomsaying prognostications, odd questions, free will talk for some reason, evidence free assertions about voters and their interests, doubts and fears...
And precisely 0.0 alternatives offered.
I can't imagine anyone being surprised that we've ended up with Trump et al. When all you offer is un-actionable thoughts and cowardly status quo, no one will listen to you. Meanwhile, the cohort of disenfranchised, disposable people grows around you until they fear the status quo more than they fear change.
The richest country in the world cannot save their own citizens from poverty. Not to mention most number of millionaires and billionaires. Obviously the solution is to impose tariffs based on some made up numbers. Wonderful idea!
> Now they're collecting disability in their unsafe neighborhoods, getting morbidly obese while their substance abusing kids play vidya games in the basement into their 30s.
> People want their factories and incomes back
Sounds like what they really want is safety and hope for their futures. I'm not sure going back to the way things were - good or bad - is the way for society to move forward though.
I've met a lot of people in St. Louis working various factory jobs. Making different kinds of specialized equipment, food products. I think they get paid $25+ an hour starting out. A fair amount seem like tedious jobs.
There's around 12.8 million people in the US working in manufacturing.
some benefit. many have been in a state of perpetual poverty/welfare, but we don't see those in the official stats because the rich are so rich here it skews numbers
> Saying Americans haven’t been hurt they’ve benefited applies to white collar workers only - no change to jobs and cheaper goods.
And that's a big reason why Trump won: white collar workers, like the GP, lecturing blue collar workers, while being ignorant of their actual situation.
And what Trump has been doing does not actually serve blue collar workers. Republican policies don't serve blue collar workers in general: anti union policies, for one.
Republican policies serve billionaires and make no attempts to hide this, but they win blue collar votes from foolish people who believe culture war narratives matter.
The culture war was invented to distract from class war waged by billionaires against the working class, hello.
You've just repeated the Democratic party line, designed to cover their ass for their inaction and inattention. Democrats will lecture the blue collar working class to not believe their lying eyes and trust the Democrats, then lecture them on how they have to because Republicans are so much worse.
It's a dumb strategy, and it isn't working anymore.
> Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense.
Yeah, some tariffs aren't a bad idea. But this plan? Just stupid, without any thought or strategy behind it.
The tariffs should be used more strategically to reorganize supply chains, not these blanket tariffs of low cost and high cost places. And probably ratchet them up slowly, to give time for production to move, instead of a big bang of putting them up everywhere.
So tariff China and Mexico, not Canada and Germany.
New debt is only more expensive if you have to exchange something of value to obtain the USD to pay down the debt. But since the Fed can expand the money supply at will, it's essentially creating new USD out of thin air which can be used.
(This is how the US has been able to sustain such a large debt without any real consequences.)
What will happen though is that interest rates on T bills will rise, so yes, in that sense, it does eventually become "more expensive" to service new debt. But again it's in nominal dollar terms and so it's just a matter of issuing more dollars. The trick is to do this in a way that doesn't devalue the dollar thus triggering an inflationary cycle.
I'm an American. I've generally benefited from the system here (which speaks to my privilege, of which I'm aware). I don't want to wade into political battles, but I'm genuinely concerned for my future and the future of my children from an economic standpoint, based on where things seem to be going.
I am considering options on the spectrum with ends like:
* Staying here, because this is where I was born and raised and I've felt like the country has generally taken care of me - and hey, it can't stay bad forever, right?
* Leaving to another country, because I am feeling less and less like the country's leadership care about building a society or economy that tries to take care of its people and creates incentives to innovate.
This isn't because of just the last few months; I view the last few months as big symptoms of something more systemic that's been building up. I am also not looking to jump ship quickly because things "temporarily got hard."
On the flip side, I'm also feeling incredibly jaded these days: how could it be much better anywhere else?
Are there places out in the world where my wife and I could take our experience (mine being a strong career in tech, my wife's being a strong nursing career) and put it to use elsewhere where I could hope for a good standard of living, more stability in government leadership, and incentives similar to the economic system I grew up in, where our children could thrive and build a life?
I'm not pulling any triggers quickly or easily... I'm just trying to gather some data and different perspectives, even those that might challenge my own. Maybe an answer is "stop reading news."
If you want to relocate to another country focus on the "pull factors" of that place, rather than the "push factors."
I moved to Sweden because my wife and I felt that was the best place to start a family. I'm on parental leave and cherish every moment I get to spend with my kid.
We would have made the move no matter what was happening in the US. Well, unless there was a major cultural shift and a generous grant of child care benefits equivalent to SWE.
If it continues on the current trajectory, literally all the OECD countries will offer a better life than the US. In every meaningful measure they already do
I've traveled a bit to some of the other OECD countries and haven't felt any disparities in comfort and such while traveling, but traveling and building a life and career are two very different things.
Heard. The thought of moving to another country is, honestly, scary, like starting over, figuring out how to live and build from from 0 again.
It's not just my partner, but also my kids I'm concerned about. The idea of moving my whole family to another country feels overwhelming, but it's a sacrifice I'm willing to make if it means my children can have a chance at a good life, versus what I'm starting to fear they'll experience here.
Not saying it is easy, but when I was a teenager I moved across the world because my father needed the job. It sucked in the moment, but looking back it was the best thing that ever happened to me.
Yeah, go gentrify the locals in some lower-cost-of-living country. You sure 'deserve' it because for some reason you have a 'right' to just immigrate there and buy their housing and sh*t from under their feet.
What motivates such a rude answer? The parent is genuinely exposing a personal question. Nothing in his post suggests that he would go gentrify a low COL place.
I appreciate your frustration, dumbledoren. Your comment speaks to perspectives I could expect to face in another country - thank you.
I can only say my personal intent isn't that. I live a simple life. My family has a small, old home. We garden, grow our own food, and are respectful to our environment.
I prioritize supporting small, local businesses.
I wouldn't want to parachute into another country acting as though I Know Better™ and bringing my "American sensibilities" to another country.
If I were to leave the US, I see myself entering another country, hat in hand, knowing fully I'm not better or special, and it's my job to adapt and to respect the culture and country.
> I can only say my personal intent isn't that. I live a simple life.
And yet you will end up doing that when you move to such a country. Regardless of your intentions.
> it's my job to adapt and to respect the culture and country
Unfortunately respect and cultural adaptation do not alleviate the effects of gentrification via housing costs and cost of living.
It would be less of a problem only if you went to a country and location that has a similar cost of living as where you live now, but then again, that's not really on the table, is it...
> It would be less of a problem only if you went to a country and location that has a similar cost of living as where you live now, but then again, that's not really on the table, is it...
This seems to be an assumption you made, but the poster did not imply or state.
As someone in a similar mindset to the poster, I'm not looking for lower CoL places, I'm looking for comparable QoL places which ultimately points to Europe or Oceania. We'd be paid dramatically less, which we're okay with, but the QoL would be comparable (perhaps even better when counting social services).
So, it already starts affecting stuff. I and 10 other recent hires were cut today because our next round is in jeopardy. That startup is in sales and hiring area, so it senses recession much sooner than other industries, but there's that.
"The UK has duties on approximately 5,000 tariff lines, including on certain agricultural products, ceramics, chemicals, bioethanol, and vehicles. Tariffs on some products such as bananas, raw cane sugar, and apparel, which tend not to be import sensitive for the UK, are maintained to provide for preferential access for imports from certain developing countries into the UK compared to the MFN rate. The UK has some high tariffs that affect U.S. exports, such as rates of up to 25.0 percent for some fish and seafood products, 10.0 percent for trucks, 10.0 percent for passenger vehicles, and up to 6.5 percent for certain mineral or chemical fertilizers"
The idea that a giant regressive tax, which these are, will help the lower or middle class or do anything but kill demand and destroy jobs is madness.
It also won't help the debt because even though we might collect some money in the short term, the long term solution is we need to grow our way out and these policies are recessionary.
The goal of the world now is to specifically target red swing states with counter tariffs so that the democrats will win the midterms, pass legislation to prevent the president from being able to unilaterally impose tariffs in the future and thus put a swift end to the golden age.
Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports. I think more and more we see lots of evidence they don't know what they're doing.
> Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports.
Note that the White House has both (1) officially denied this, (2) provided the formula they assert was used as support for that denial; but the formula is exactly what they are denying but with two additional globally-constant elasticity factors in the divisor, however, those elasticity factors are 4 and 0.25, so...
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."
In practice I believe at least 90% of Americans can’t figure out what that formula actually means; but if they drop the epsilon phi bullshit only 70% can’t figure it out. So it’s pretty effective obfuscation after all.
This is the same president that took a sharpie to a map, to show the incorrect path of a storm, because he could not admit being wrong or making a mistake.
These people are either malicious or incompetent. That's been the case for every single day of the decade-ish that Trump has been foisted upon us.
It also proves (1), since it is a response (QRT, rather than a comment) to a tweet describing the trade deficit/exports approach, and starts with "No we literally calculated tariff and non tariff barriers.", and then presents the formula proving (2).
That formula just simplifies to trade_deficit/2*total_imports per country. It doesn't disprove anything it just looks fancier but the two extra terms are constants that simplify to 2. If you do the math it lines up for every country that didn't get the default 10% rate.
I've seen people use "sanewashing" to refer to the type of comment you're replying to, there's no sane explanation but people try to come up with one because the world doesn't make sense otherwise
I think often trump's policies are rooted in some sort of idea that is perhaps controversial but at least not totally insane, and then implemented in the most boneheaded way possible.
E.g. one explanation given for these trade policies is that trump sees a war with china down the line and is worried that china has tons of factories that could be converted to make ammunition while usa does not.
If so, there is at least some logic to the base idea, but the implementation is crazy, probably not going to work that effectively, and going to piss off all amrrica's allies which would be bad if WW3 is really on the horizon.
E.g. one explanation given for these trade policies is that trump sees a war with china down the line and is worried that china has tons of factories that could be converted to make ammunition while usa does not.
1. US will never outproduce China in ammunition
2. Alienating allies won't help the US produce ammunition
Trump has always liked tariffs [alas, I can't find the source for this pre-presidency, its been blown out by current events]. He thinks trade is a zero sum game, and thinks that someone else set up the petro-dollar system.
Trump has consistently and reiliably always cowered away from war. Using other means to stop it (see russia, NK, China, Iran). Yes I hear the "we're going to invade x, y and z" but they never acutally came to anything (is that because of his advisors?)
Trump doesn't think about future capacity, only future pride. Does this change "make american stronger, and other weaker" is pretty much the only calculus that he's doing.
Trump's thinking is roughly as following:
"Why do we have taxes when we can use tariffs to raise cash and bring power back?"
"Why don't they buy from us?"(china/rest of asia)
"why are we spending money on them, when we don't get any money back? They are weak."(NATO)
"Why are we punishing russia, they are offering deals" (Putin offering cash deals)
There is no 4d chess. Its just a man who's pretty far gone, shitting out edicts to idiots willing to implement them.
"The comment repeated past statements from "The Apprentice" star, who has said he wants to put a 25% tariff on all Chinese imports, to level trade imbalances in the global economy."
> [alas, I can't find the source for this pre-presidency, its been blown out by current events].
Doesn't help that Google's custom time range search is complete garbage. Searched for "trump tariffs" from 1/1/1980 to 1/1/2010 and almost every link is about the current tariffs but with timestamps between 1980 and 2010.
e.g. "20 Nov 1987 — President Donald Trump issued a slew of tariffs on Chinese goods", "30 Jun 1981 — Ontario Premier Doug Ford announced Monday a 25% increase on electricity exports to some American states as a result of President Donald Trump's tariffs", "31 Dec 1999 — IMF says too early for precise analysis on Trump tariff impact", "1 Feb 2001 — Trump's Global Tariff War Begins"
Did find a couple of links that were chronologically correct - a 1999 Guardian story about Trump wanting to tax the rich(!) and a 1987 NYT story about Reagan putting tariffs on Japan.
There is no logic to these things. This is the emperors new clothes, over and over again.
The proximate cause for these tariffs is not some future event. This is post fact rationalization.
The proximate cause is still the ongoing “information” war which determines the perceived reality that is litigated in elections.
Earlier politicians played theater, acting as if the red meat being fed to voters was real on TV, but dealing with reality as need be when it came to decision making.
This was a betrayal of voters, who saw their election efforts result in legislators who didnt do what they said.
Trump does what he says. He believes WWE is real, and acts as if it is. His base believes it is real, and now reality is crashing with the fiction.
The fiction will prevail, because his party has also been working to build the power to enact their will.
Everyone sees logic here, the same way that everyone saw the emperors clothes. The alternative is illogical.
This is the reason potential reasons “we dont know” have to be postulated (war / China can make more ammunition)
It is the logic of schoolchildren. It is the simplistic logic of a teenager discovering Ayn Rand's wikipedia entry. (Grover Norquits came up with his tax pledge while in highschool.) The world is more complicated than any econ 099 exam.
The US are never going into a direct war with China, and China is never going into a direct war with the US. This is M.A.D in action.
At most we might see a proxy war over Taiwan (i.e. the US supporting and arming Taiwan, with sanctions against the PRC). The risk would then be a widespread disruption of global trade, at which point the US would not want to be dependent on the Chinese economy or factories in any way.
So is destroying diplomatic relations with all their allies and trying to force ceding of power in central Europe to a former enemy who is allied to China?
Go on with ya.
He's a prick saving himself from prison whilst being willingly used to establish an oligarchic fascist state from the former USA.
If you follow the logic of it, at least to the first order - fighting a two front war is bad, forcing europe to deal with russia frees up USA to focus on china. America's withdrawl from europe has made european states panic and re-arm, and you could argue that a well-armed europe that grudgingly helps america with a common enemy would be better than a poorly armed europe that uselessly helps willingly.
The second order effects of what he's doing are pretty obviously terrible for usa, but quite frankly i dont think trump is smart enough to see that.
[To be clear i think trump is stupid, but i don't think his actions are entirely random. There is a chain of reasoning here, it just misses the forest for the trees]
> America's withdrawl from europe has made european states panic and re-arm
Russia's invasion of Ukraine is more immediate concern there. Even if Europe still could count on the USA's NATO commitments 100% the war was a big wake-up call in terms of readiness.
If you look at what has happened i'm not sure. The ukraine invasion has been happening for a while now, and it has caused increase defense spending in europe somewhat, but it seems suddenly over the last three month the needle has been moving a lot faster than the last few years.
The problem with this line of reasoning is that Trump just pushed our allies in that part of the world closer to China. China stated the other day they are working on a joint response to tariffs with Japan and South Korea. Additionally, leaving power gaps around the world from the pullback of USAID gives China an in to be the 'good guy'. This is the exact opposite of planning for a conflict with China. In fact, it feels like ceding the fight before it even begins (much like what he did with Russia).
I think there is a bit more nuance. US manufacturing jobs are never coming back. If you look at the stats, US manufacturing output continues to set records. Yes, the US is second to China (has been since ~2010), but that was bound to happen on population/demographics alone.
Could be a thing? Perhaps people might start caring about product durability and stop buying cheap shit that goes in a landfill because the producers only care about shelf appeal.
This is my hope, too. But also I fear the transition is going to be ugly. Personally I feel lucky that I’m not just starting out my life — I already have high quality stuff.
>In a November paper, economist Stephen Miran, whom Trump has picked to chair his Council of Economic Advisors, raised the possibility that Trump could use the threat of tariffs and the lure of U.S. security support to persuade foreign governments to swap their Treasury holdings for lower-cost century bonds.
I wouldn't put 100% of the blame on the Democrats, here in Australia we are frequently voting for the least worst option not the best, and I'm not sure how the Democrats weren't the least worst option when compared to the other option
but for some reason a whole heap of people decided to stay home this time and this is the result, hope they still feel happy with their decision
I've heard that there's polling lately to indicate that's not true (unsure on source, it might have been an interview at Vox.com), and that higher turnout would have advantaged the Republicans further.
> You have a narcissistic asshole in the White House who got elected because the Democratic Party fumbled the ball.
It don't want to sound too persnickety, but there is always at least one losing side in an election. It doesn't have to mean they dropped the ball, it could just mean people preferred the other option. Hindsight bias is wonderful, but you have no idea what would have happened if they'd run with a different agenda, they may have had a worse result.
I'm not sure how you could look at 2024 and not see a historically terrible campaign by the Democrats. They had to force the presumptive nominee to drop out because his brain was dripping out his ears. That alone would do it!
> but you have no idea what would have happened if they'd run with a different agenda, they may have had a worse result.
The 2024 election had historically-low support from normally stalwart Democrat demographics such as Latinos, the youth vote, and black males. That, IMO, supports the conclusion that the Democrats did something wrong this time. Also, not only did those groups abstain but Trump also picked up quite a few votes from them (especially working-age black males), suggesting that they are swing voters who probably could have been swayed to stay on the Dem plantation if exposed to more convincing messaging, or a more compelling Democrat candidate.
Sometimes something does not make sense because we don't see or understand the big picture and what people are trying to achieve, and thus it literally does not "make sense".
Trump is neither stupid nor insane and he will have access to many very smart people, too. Based on that the reasonable assumption is that they are trying to achieve a well-defined objective and have set a plan in motion to do so.
The "game" is thus to figure it out. @ggm's comment above is one possibility.
1. It is authoritarian. Democratically elected leader's duty is to present the policies he plans to implement so that voters can decide if they want them implemented.
2. It is based on the "4D chess" myth - that the leader is way smarter than the rest and is capable of outsmarting other countries. The history shows that it is never true. The leaders are normal people. And the institutions are as good as the founding principles that are honored by them.
> Democratically elected leader's duty is to present the policies he plans to implement so that voters can decide if they want them implemented.
That's 100% not true. A candidate leader might tell you what they're going to do, and then you elect the leader, and then they do them, but they don't propose plans once in power to see if the electorate like them.
As much as I'm not a Trump fan, I really don't like that people use a separate yardstick to measure him vs people they like.
Possibly, but the thing I have repeatedly heard is "Trump is doing this because he promised it on the campaign trail". The things might be bad (e.g. some pardon didn't sound great) but I wouldn't describe him as not fulfilling anything. He seems to have made some very specific promises, and has kept at least some of them.
Maybe there's a website that keeps track somewhere.
(1) is you not liking it, not that it isn't the case. Whether it is authoritarian or not is besides the point. (2) I am not claiming that they can "outsmart" anyone, just that the objective and plan may not be publicly or explicitly stated, or even that what is publicly stated is not the real objective (this is not "4D chess" this is actually how things tend to be in practice from politics to business).
(1) Bypassing the judicative branch is authoritarian.
(2) You just claimed trump has access to smart advisors and some hidden masterplan but you ignore all counter indication. He ousts critical journalists, nominates incompetent staff, invasion-mongers, tweets and plays golf alot.
If i can see any common factor in his insanity, its the need to have an enemy to pose as the strong man against, which indicates that trump does not have a constructive vision for the US.
1) heads of state can in fact be incredibly incompetent
2) the goal could entirely be 'stay in power' (which can also be implemented incompetently!)
The UK for a good few years had a government which had both these attributes. They were only interested in policies which would appeal to their base, but eventually even those soured on them because the policies were implemented so badly.
The simplest solution is the right one. You are projecting intelligence, because you are used to.
This is AFTER the US government has roundly fired thousands of their experts and workforce, AND has just told everyone of its intelligence and army rank and file that there are no repercussions for a massive dereliction of duty.
On the contrary, in context I believe my comment is actually the simplest explanation. Claiming that the US government is insane while we, as random members of the public know better, is certainly not the simplest explanation...
It does not imply that what they are doing is a good idea or will work (whatever the objective is), just that there is more rational thought in what they are doing than what people might assume because the public does not have the information and seeing through what is going on requires insights that most people don't have, either.
Again, check @ggm comment above. I am not saying that this is what is going on but it is a possibility, and an average member of the public would never think of that scenario and thus wouldn't see the order in the apparent chaos.
> Claiming that the US government is insane while we, as random members of the public know better
Not insane, incompetent.
The problem with primarily hiring sycophants from his favorite cable news channel is that he's not getting the best, even from the GOP. This also makes him even more susceptible to people with their own agendas like Musk since no one is willing to pushback.
You don't need much background in Economics to understand that blanket tariffs hurt companies that rely on imports and exports and lead to higher prices. They used an LLM to come up with a formula that's just the trade deficit when you simplify it and called it "tariffs charged to the USA".
To give further evidence that they don't know what they're doing, it's easy to generate this tariff plan using a fairly simple LLM prompt that gives back that same ratio:
If anyone needed any more evidence that they don't know what they're doing, what I find interesting is that the various French overseas territories that are part of the EU are tariffed at different rates than the rest of the EU (treating those as separate countries is traditional for any US company, which is sometimes a headache when you want to order something).
Réunion is at 37%, which isn't a problem because any company in Reunion could just use an address on mainland France, but there's more: Guadeloupe, Martinique and French Guiana are tariffed at 10%.
Does that make an easy loophole for any EU company wishing to export things to the US at a 10% tariff?
If these published rates actually going to be enforced this way, it seems like the whole EU has a very easy way to use the 10% rate.
Are those part of the EU? The whole membership of EU (or more precisely European institutions) is a mess and I really only know EEA, Schengen and Eurozone by heart. But there definitely are territories which are part of e.g. France, but not part of the EU
They are part of the EU and are part of the EU customs area, there is no practical difference with other EU territories regarding trade.
They are not part of Schengen (but EU citizens don't need any visa, it's mostly intended to curb illegal immigration from South America via Guiana) and have the ability to use different VAT rates from mainland France, but that's all.
I found it interesting that when the UK was part of the EU, the Isle of Man was not, but because they held British Passports, the people of the Isle of Man were EU citizens.
Not quite, at least not by default. The pre-Brexit Manx passport did confusingly include the text "European Union" on its cover, but holders of Manx nationality were only citizens of the EU if they had lived for at least 5 consecutive years in the UK or if they descended from a UK parent or grandparent.
It's the same for all the non-EU French territories. EU citizenship is not territorial, it's directly linked to the person's nationality so you wouldn't remove EU citizenship from a French citizen just because he happens to live in New Caledonia. French or British citizens living in Canada also are EU citizens after all.
The state of British citizenship is a bit more complicated though I think. A bit like US citizenship which kinda depends on which US territory one lives, as far as I understand.
Right, but citizens of British overseas territories, crown dependencies and whatever other statuses exist are not necessarily British citizens. Same as with the various US territories.
This is what I meant when I said these citizenships work in more complicated ways than the French one.
I think all French territories are part of the EU, but some other countries work differently. The prime example is St. Martin, where the French part is in the EU, but the Dutch isn't (yes that technically puts a EU border through the middle of the island, although there were no pass controls when I was last there.).
Sure they are, 2 seconds of googling compared to a minute writing your post:
> The European Union (EU) has nine 'outermost regions' (ORs): Guadeloupe, French Guiana, Martinique, Mayotte, Réunion and Saint Martin (France), the Canary Islands (Spain) and the Azores and Madeira (Portugal). The ORs are an integral part of the EU and must apply its laws and obligations.
LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.
I watched the man with my own eyes as he seriously floated the idea of injecting disinfectants to treat Covid-19. That was five years ago. His mental faculties have not improved since then.
The site was of course trash, but from what I remember he was asking if people gave themselves sunburn would it kill covid.
His words to me felt they were those of a typical 5 year old, or an 80 year old with dementia, asking questions about subjects he doesn't understand but desperately trying to fit in.
But no, he did then ask about injecting a disinfectant.
Now it's quite possible Trump doesn't know the meaning of the word "disinfectant".
In the same press conference he also asked if "heat and light" will get rid of covid.
(Although of course he says this as "suggestions" and the "I'm just asking questions" tactic)
The strange thing here is that you've chosen to defend the indefensible on the grounds of trying to "both sides" something that really is only from one side.
Watch the whole thing for yourself https://www.youtube.com/watch?v=zicGxU5MfwE He talks about light for the first two things (cover the body and put it under the skin) and then switches to disinfectant. Was clearly talking about some kind of chemical to "clean the lungs" like you would clean you bathtub.
Yes. These are College Freshman Essay economics, where you know just enough to declare it's time to go bold and are still stupid enough to believe it will work.
It's not that there's no strategy, it's that it was designed by reckless amateurs who haven't done the reading, haven't consulted with anyone that understands all the trade-offs, and have an uncapped appetite for risk.
The TV version works out perfectly, since the writers control the ending.
It's not: in the formula they posted, phi is the "passthrough from tariffs to import prices". That's where the country's own tariffs are factored in. Or am I reading this wrong?
Have you considered the possibility that they know perfectly well what they're doing and they're just lying about it? Lutnick, the commerce secretary, has been CEO of Cantor Fitzgerald for over 2 decades. The treasury secretary has a similarly stellar resume. There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.
Trump personally may or may not understand it (I think he does) but his political superpower is his willingness to stand up in public and say complete bullshit knowing that it's bullshit, knowing that some people are fools who will uncritically believe the bullshit, and other people are cynics who who will nod along with the bullshit either to make money out of the rubes or because they think it serves a strategic purpose.
You can waste years wondering which side of Hanlon's razor someone is on, but it's important to remember that obsessing over such dilemmas can lead to paralysis. Just like there are a lot of street hustles and cons that depend on confusing/misleading the mark before tricking or mugging them out of their money, there are a lot of political gambits that depend on inducing analysis-paralysis in opponents. Manufacturing dilemmas is also a key element in military strategy.
My advice is to stop worrying about whether these people are such fools that you owe them some sort of empathy and an effort to save them from themselves, or you will end up like Charlie Brown having the football pulled way by Lucy yet again. It is OK to cut them off and treat them as bad actors, for the same reason you should often round off quantitative values instead of obsessing over precision.
Let’s not forget Congress could assert its authority over tariffs at any time. This isn’t just the executive branch unilaterally creating the biggest, most regressive tax hike in our lifetimes, it’s a coordinated GOP operation.
One thing they do is allow him to raise taxes on the middle class and poor, who will be paying those tarrifs, while lowering the taxes for the rich. Everyone's talking about some 3D chess when "more money for the rich" has always been the only consistent Republican policy.
> The Republican party passed the Civil Rights Act
Way more Democrats in both houses of Congress voted for it than Republicans (to be fair the Democrats held the Senate 67-33). A Democratic president signed it. His Democratic predecessor asked for it. How do you figure "the Republicans did it"?
My interpretation: "No one really knows what will happen but it could work to bring some production back to our country, let's give it a try, if it doesn't we try something else."
>Have you considered the possibility that they know perfectly well what they're doing and they're just lying about it?
Politicians are just pretending to be dumb? Why?
>There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.
I don't think most people deny that these are capable individuals. The problem is - I think the people in Trump's inner circle now are sycophants first. They know what Trump is doing is destructive, but they are just choose to be yes men. Remember, this isn't Trump's first go-around, and the majority of people who stood up to Trump the first time (Pence, Barr, Perry, Price, Rex Tillerson) are gone.
Funny enough wikipedia has an article[1] about this that is so large that it has many sub articles. Ultimately, I can't trust that his appointments are exercising any sort of discernment because a large number of his 2016 appointees were fired for doing so.
In short, Fitzgerald could be a genius, but all signs point to him being a yes-man that would rather sink the ship than stand up to Trump.
> I think the people in Trump's inner circle now are sycophants first
If this is the case, we could at least likely put to rest most concerns that Trump will be implementing much of Project 2025.
I'd be very surprised if he had too much to do with that plan directly. Assuming that's true, and if he's only surrounded by yes men, no one is there to convince him to do anything other than exactly what he himself wants to do.
I told you: because it creates a strategic dilemma that paralyzes the opposition. The same reason a hustler pretends to be dumb to lure the mark, the same reason trolls use shitposting to bait people.
Yeah, and what if Lutnick doesn't care about making America better but just making money for himself? And his salary is not tied to his performance, but to his sycophancy?
It is not as if he is going to die of starvation because of tariffs. He has no skin in the game.
In my experience, people who operate that way often convince themselves that they can do both. They'll make themselves rich, that's the primary goal, but they contort reality enough to paint the picture of a win-win.
A great example is Rubio. People may disagree with his politics, but he has been a competent government person for a long time. Even had a legit shot at POTUS at one point. And now, he's trying to shrink away while Trump and Vance make a mockery of the Oval Office.
>Lutnick, the commerce secretary, has been CEO of Cantor Fitzgerald for over 2 decades.
Lutnick clearly has zero actual influence in this administration. He's a barking dog sent to do TV soundbites, and his explanations are often full-bore nonsensical or completely contradictory to his prior explanations. Foreign officials (such as Canada) have repeatedly come out of meetings with Lutnick almost...assuaged....as if Lutnick is saying "he isn't really going to do this...there's no way", because even Lutnick doesn't realize just how stubborn Trump is about his outrageously stupid ways. These guys keep trying to pretend this is all some masterful negotiating strategy by the Art of the Deal master.
And based upon 100% of Trump's history in government, it won't be long before Lutnick and Bessent are out of this admin, both will be "RINOs" attacked by the MAGA cult, and they'll both be telling the tale of how outrageously stupid Donald Trump is. Like closing on 100% of Trump's administration in the first term.
Just look at the lead up to these tariffs. The day before Trump was still "deciding". This is something that a team of expert economists should have worked on for months, probably to conclude that free and liberal trade is what made the US the richest large country on Earth, but instead it was something that everyone had to sit around and wait for Trump to pull something out of his ass.
Trump has openly and widely talked about tariffs replacing income tax for years. This administration is clearly one where no one ever can counter any harebrained idea from Trump -- and they're all incredibly stupid ideas from that incredibly stupid man -- so whatever nonsensical takes he has they have to all try to make talking points around and create some post facto rationalizations. It is the most dangerous administration in human history, and the American voter looked at this traitorous, constitution-shredding, law-breaking imbecile and said "more please!"
There is no 4D chess happening here[1]. There isn't even checkers happening. No masterful long term negotiating strategy. It's just a fumbling moron (rapist, charity-stealing imbecile) that is doing the most nonsensical way to deal with a deficit rather than, you know, raising taxes. And to be clear the US deficit is untenable and needs to be dealt with, and the head in the sand approach by successive governments is not reasonable, but combining DOGE's ham-fisted stupidity with Trump's economic destruction and the deficit is likely going to be much, much worse. The US is on the fast track to insolvency.
"But China....next war....China!"
Trump started this whole thing by attacking allies. By dissolving alliances and trying to economically harm its closest friends. Precisely the opposite of expectations if the US were seriously trying to counter China.
[1] Aside from corruption. Tariffs are the foundation of corruption because everyone has to come, hat in hand, begging for exemptions. There is going to be a line to the White House of manufacturers and importers, from Apple to military contractors, begging for special waivers. Which they'll get if they grease the right palms, as this is the most blatantly corrupt administration in US history. He's selling pardons in the open, and operating a literal protection racket, and this is just...an ordinary day now.
Why are you so certain that these tariff plans were still being decided by Trump the day before? He sure likes to put on that front publicly, but I'm less clear on how we'd know whether that's him playing games or an actual representation of the reality of how his cabinet is operating.
If one does want to impose a large block of tariffs, it does seem reasonable that you would want to keep details quiet until the entire package is announced. You wouldn't want other countries responding early
Quiet? Trump has been bellowing about his tariffs for months. China, South Korea and Japan -- long absolute adversaries -- even had a meeting about how to respond. The actual tariff plan is 0% based upon reciprocity, and instead is based upon "we're a rich country that buys lots of stuff, so let's punish the citizens who buy stuff" (as the largest tax hike in history). There are tariffs for unoccupied island chains.
And these apply immediately. This is an administrative impossibility. CBP is going to have a disastrous couple of weeks about this rag tag collection of barely defined nonsense.
Details of the tariffs weren't known at all until yesterday, they were quiet.
The comment I replied to was claiming that Trump himself was still deciding what the tariffs would be until this week. My question was how we could be so certain of that.
As far as reciprocity goes, how is this plan not based at least in part on reciprocity? They claim other countries have taken advantage of the US and we're on the losing end of trade deficits. The tariffs they announced seem to be based entirely on trade deficits/surpluses with each country.
I have no idea if this would work or what the administration's real motives are, but the on the surface it sure seems like they proposed tariffs that target the problem they claim - trade imbalances.
Specific rates weren't known because they were spitballed last minute, apparently based upon a ChatGPT conversation. That there were going to be significant tariffs has been openly gloated about by this admin and mouthpieces like Howard Nutlick for months. Do you think every other country needed a specific number to start their response plans?
And really that is a silly theory regardless. The US would achieve maximum effectiveness by doing a normal tariff legislative process and then soberly discussing with all parties. Instead it's constant on/off brinksmanship. Because Donald Trump is a profoundly stupid imbecile with a simpleton, child-like understanding of the world. There is going to be customs and business chaos as this is factored in.
>As far as reciprocity goes, how is this plan not based at least in part on reciprocity?
It has zero bearing on reciprocity. Reciprocity is matching the other party's tariffs.
If you're richer than the other party, or if they sell things that you want but you don't sell things that they want, that isn't reciprocity. It's like if I tariff my children when they buy from McDonalds -- I mean, McDonalds doesn't buy from me! - and claim it's reciprocity. That would be insanely stupid, right?
It's a massive tax hike on Americans -- a regressive tax that will hit the working and middle classes the hardest -- shrouded under some patriotic America thing. No way anyone falls for this...right?
All that is correct, but I think you missed the point the other poster was making. What if, instead of blundering about stupidly, the goal is to cause as much chaos as possible in order to consolidate political power?
Does the exact percentage of the tariffs matter? I suspect it doesn't - these look like approximate numbers to obtain concessions, and a complex formula doesn't really help anything.
Far as I can tell, the ideal would have been to simply double incoming tariffs, but that would be infeasibly large. This was a way to generate a plausible smaller number that can be increased later on an individual basis depending on how the country responds.
Now control the SEC so the privileged won't get investigated for insider trading.
That's how you devolve into a 3rd world country by the way. I've lived in 3rd world countries and seen this over and over again. That's why 3rd world country stock markets don't go up - because locals and international investors have a distrust in them. Locals know insider trading is rampant.
Once this kind of corruption is accepted in society, everyone will need corruption in order to stay ahead.
He doesn't care about Tesla anymore. He's making some fat money out of AI, SpaceX is a money printing machine now that he's got the ear of Trump and he's spending almost all his daytime (and nightime) hours shitposting and boosting racists on twitter.
This is just a stray thought of mine - but I feel like the US might go down a very dangerous path - I think to avoid retaliatory tariffs, US companies, such as NVIDIA might decide to create foreign subsidiaries, and license the technology to them - after all the tariffs don't apply if Europe does business with a Taiwanese subsidiary.
But this will expose them to a technology exfiltration scheme and/or hostile takeover in the vein of what happened to ARM China.
They already wouldn't be subject to this tariff if they bought directly from Taiwan. Tariffs only happen when goods cross the border so unless Nvidia's logistics required them to ship into the US to get goods to Europe they shouldn't be affected by the tariffs directly.
Genuine questions: why are they calling it “reciprocal”? Is the US just matching the tariffs set by the other countries?
Also, this announcement has wiped out any plans of buying tech products this year, plus a holiday to the US and Canada later in the year. Good thing too, as the entire globe is probably staring down the barrel of a recession.
Someone calculated the formula used. They divided the trade deficit of each country by total trade of each country and assumed that was all a tariff.
So for example Indonesia and the US traded $28 billion. The US has a 17.9 billion trade deficit with Indonesia. 17.9/28 =0.639, or 64%, which is assumed to be all caused by tariffs. So they divide by two and impose 32%.
Anyway no the US isn't matching tariffs they're dramatically exceeding them.
That's a bit of a messed up way to calculate things.
I also think the US deficits are hugely overstated because much of what the US produces is intellectual capital rather than physical goods and the profits are made to appear in foreign subsidiaries for tax reasons. Like if I buy Microsoft stuff in the UK, Microsoft make out it was made in Ireland for tax purposes, but really the value is created in and owned by the US. The US company both wrote the software and owns Microsoft Ireland. So much of the perceived unfairness Trump is having a go at isn't real.
You raise an excellent point that US corporate tax evasion is exaggerating the trade deficit. However, from the perspective of winning US elections, I think it does not change the issue that the trade deficit falls more on de-industrializing Midwestern states, and the corporations you are referring to are concentrated in Northeastern and Western states.
Secondly, if Microsoft or Apple makes the profit appear in Ireland, it cannot move that money back to the domestic US, right? So as long as the money sits overseas, it would not count towards US trade and thus the deficit calculation is fair.
They don't move the profit back to the US, but through Ireland and the Netherlands they move it out of the EU mostly to some tax havens in the Caribbean. From there they use them for their stock buybacks, which I think equals mostly flowing back into the US.
Again, not flowing back to the right people. All of this could have been solved by sane redistribution, but no. It'll still be redistribution but in a cruder, less apparent form.
If the profits went back to Apple HQ directly they would serve to raise the share price and allow stock buybacks and stock based compensation for employees. Same as they do now.
You may not like a tech company succeeding at exports and having a rising share price, but that is distinct from the overall point which is that properly considered these are US exports obscured by the US tax code which incentivizes profits abroad.
That's a great point. I checked into this, and if and when the profits are repatriated they indeed only show up in the capital account, not the current account.
However, in practice even if not repatriated those exports show up in the us economy. Profits raise the share price, which allows stock grants at higher values, effectively a wage as one example.
I wonder how big an effect this phenomenon you highlight has. Must be a fairly large overstatement of the US trade deficit.
If the US has a trade deficit, doesn't that mean the US is trading make-believe pieces of paper for real goods.
Like, if I scribble on a piece of paper and then trade you the piece of paper for an incredibly engineered brand new laptop, is that bad for me? Is this a sign of my weakness?
I know economics can be complicated, and probably "it depends", but why is a trade deficit bad? Why does the Trump administration want to eliminate trade deficits?
Because when the blowback comes, people will be looking to cast blame for starting this whole trade war, and when that time comes Trump will point to the word "reciprocal" and say "we didn't start this, we were only reciprocating".
> Is the US just matching the tariffs set by the other countries?
No. Trump claims that the new tariffs are a 50% discount on what those countries tariff US goods at. (Even if that's questionable - is VAT a tariff?)
If he's correct, or anywhere close, this is a "tough love" strategy to force negotiations. We'll see how it goes. It also plays to his base - why should we tariff any less than they do us? And they have a point, it's the principle of the thing.
According to [1], the White House claims Vietnam has a 90% tariff rate.
According to [2], 90.4% is the ratio of Vietnam's trade deficit with the US -- they have a deficit of $123.5B on $136.6B of exports.
The same math holds true for other countries, e.g. Japan's claimed 46% tariff rate is their deficit of $68.5B on $148.2B of exports. The EU's claimed 39% tariff rate is their deficit of $235.6B on $605.8B of exports.
Who knows, maaaaybe it just so happens that these countries magically have tariff rates that match the ratio of their trade deficits.
Or maybe, the reason Vietnam doesn't buy a lot of US stuff is because they're poor. The reason they sell the US a bunch of stuff is because their labour is cheap to Americans. (They do have tariffs, but they're nowhere near 90%: [3].)
America's government is not trustworthy. Assuming that what they say is truthful is a poor use of time.
Prior to yesterday's announcement, the claim regarding tarrifs was that the goal was to bring manufacturing back to american soil. This is unlikely to happen in any case, but it requires at minimum that consumers put up with high prices for a while (with "a while" being measured in years, if not decades). Actually, the "liberation day" tarrifs strongly agree with this goal: after speculation, the administration announced the formula for these new tarrifs, which has nothing to do with counter tarrifs or trade barriers as claimed, and instead comes from a ratio of the trade deficit in goods and the overall amount of trade. In other words, countries that export a lot of goods to the US (and the US doesn't have commensurate goods exports to) get high tarrifs. This makes sense if the goal is to incentivize manufacturing in the US, by making manufactured goods from outside more expensive.
There is another camp that thinks that trump doesn't really have a goal per se, and is rather doing all this as an exercise in showing off his strength and to draw attention to himself. This camp holds that eventually trump will get bored, or the public will turn on him, and he'll need to get rid of tarrifs to save face. We call these people "optimists".
And there are a lot more countries in that list, South Korea and Taiwan are going to really hurt for electronics. And I assume Vietnam, Cambodia, Bangladesh and other countries will hurt for other good that are made cheaply there.
> And I assume Vietnam, Cambodia, Bangladesh and other countries will hurt for other good that are made cheaply there
Vietnam and Bangladesh would hurt American consumers (clothes). Cambodia not really.
Silver lining, Brazil and Colombia (edit: and the rest of Latin America) are kept at baseline, and Philippines is now the lowest tariff developing Asian economy.
We'll probably see a significant amount of capital returning to Philippines (who saw de-industrialization when South Korea signed their FTA with Vietnam).
> Are those in addition to existing tariffs?
Yes (Edit: not sure now, I'm hearing some say they include the 2017 tariff regime of flat 10% - smh shows how this was just a political ploy that answers for such a critical question are mixed)
(Edit 2: was right initially - thanks u/inverted_flag)
Depends on the country. India is negotiating a Bilateral Trade Agreement by mid-2025, Vietnam has sent a trade delegation to DC to negotiate as we speak, and tariffs on Colombia, Brazil, Philippines, and Turkiye are the lowest for middle income countries.
The harshest pain will be felt by Cambodia and Vietnam, because both are part of ASEAN like Philippines and share similar trade partners (Japan, SK), Bangladesh as they have an FTA and significant capital from India, and China as EU (looking at you Poland and Czechia), Turkiye, Japan, SK, and India are now cost competitive
You'll be seeing more "Made in Philippines", "Made in Colombia" "Made in Turkiye", "Made in Brazil", and "Made in India" shirts, auto parts, and assembled electronics now.
We might also see a return of Malaysia in the semiconductor industry, as they are now cheaper than Taiwan - great for whoever buys Intel Foundry Services (Penang reax only)
As soon as Malaysia gets anywhere near a significant capacity of semiconductor manufacturing they’ll also get increased tariffs. Or, the the tariffs will end and it will return to Taiwan.
Stability is necessary for any big shifts to be worth taking.
> As soon as Malaysia gets anywhere near a significant capacity of semiconductor manufacturing
You mean since 1971 when Intel opened their OSAT in Penang?
Malaysia was THE hub for electronics manufacturing until 20 years ago when China became cheaper.
In fact, it was the same businessmen in the Penang electronics industry who largely invested in China's electronics industry.
Also, semiconductors are exempted so my whole thread is moot about that. Electronics manufacturing though will return (and already started due to most companies China+1 strategy).
But will investors make any long term decision given the unreliability of the US administration? Who would invest in manufacturing in a country if the tariffs could be gone tomorrow again?
Seems unlikely, at least in the near term. These are LARGE amounts of good to be shifting, and they don't shift overnight. Plus, if the tariffs calculations are really based on trade imbalance, who's to say Columbia won't get slapped with more tariffs as soon as they start making and exporting more goods to the US. Pretty risky to be opening up a bunch of factories only to be tariffed to death right after.
> These are LARGE amounts of good to be shifting, and they don't shift overnight
Hence I listed countries where manufacturing in those industries was significant until 10-15 years ago or where investment has largely moved beforehand.
> Yes (Edit: not sure now, I'm hearing some say they include the 2017 tariff regime of flat 10% - smh shows how this was just a political ploy that answers for such a critical question are mixed)
I'm a freelance selling software services. Some of my customers are in the US. Am I affected? These tariff don't impact software, right?
Different countries have different tariff. Is there room for arbitration? In which a 3rd party business from a country with low tariff would buy a product in one of the countries with high tariff and export that to the US, taking a small cut.
Services aren't traditionally part of tariffs; tariffs apply only to physical stuff moving across borders.
That being said: I work in a services-oriented business right now "exporting" services to the U.S. and the leadership of that company is seemingly getting very worried, trying to diversify their customer base out of the U.S.
If, in the cycle of retaliatory action, they run out of ammunition with tariffs on stuff, who knows what other crazy ideas will come to the surface: Tariffs on services do come to mind, maybe restrictions around recognition/enforcement of foreign-owned intellectual property,...
Tariffs on services are much harder to enforce. There's point of entry so it's harder to check.
However, some countries have a withholding tax for services provided by foreign companies. The client is responsible for withholding the amount from any payment and paying the government.
And banks play a role in the enforcement if needed.
Usually this is happening where you import "parts" and the final assembly "the product" is "made in" and sold as "product xyx". Then the origin country of the parts do not matter.
I don’t buy the blanket statement that the consumer always pays the tariff. It depends on what alternative companies have. If a company can purchase the same clothing from Chinese, Vietnamese, or Mexican vendors, a tax on China only could make the Chinese vendors lower the price or risk losing the business.
However, a blanket tax on every country, regardless of available alternatives, would leave businesses with fewer options and make it more likely that the cost is passed on to consumers.
For taxes to work in raising money, they have to be paid. So, if the goal is to make revenue from the taxes, then raising costs is expected?
If the goal is to incentivize alternatives, then the tax has to be such that it raises the price above the gap there now. So, even if you do drive people to an alternative source, the new price will be higher than the old. (Unless the thought is that people were choosing to not buy the cheaper source to begin with?)
I suppose you can argue that some suppliers have such a margin that the tax could be an effort to get them to cut into that? I have not seen evidence that that is the case?
> If a company can purchase the same clothing from Chinese, Vietnamese, or Mexican vendors, a tax on China only could make the Chinese vendors lower the price or risk losing the business.
This example implies producers are already in competition with one another, so it's unlikely that any of them can lower the price much. On the other hand, if some producers leave the market due to the tariffs, then there's less competition overall and the other producers can charge more.
The objective reality of the situation is that there is a transaction between a buyer and a seller. That transaction is what pays the tariff, VAT, property transfer tax or whatever vampirical suckage by whatevername.
Both transacting counterparties are robbed.
How that is distributed between them is a matter of which has more alternatives. E.g. if the seller has lots of prospective buyers, most of whom are not subject to the tax, then the market price they demand is not sensitive to the rare buyer who does pay the tax.
If a big fraction of the seller's prospective buyers face a tax, then it makes their product or service look more expensive to a good chunk of the market, which exerts downward pressure on the price. The downward pressure on the price means that the seller effectively pays some of the tax, through lost revenue.
So, the transaction pays the tax as such, but how much of it is distributed between buyer and seller depends on the degree of influence of the tax on the price point.
This is true, but the amount of production in China dwarfs everyone else, and definitely what America can bring up anytime soon, so two consequences:
A. Tariff for Chinese goods will be reflected in consumer prices pretty much directly.
B. Domestic suppliers if the same goods have very limited capacity, giving them the pricing power to raise their prices by the tariff amount, and take it as extra profit.
Take for example cars. We will see American cars go up by the same amount as imports as long as they are oversubscribed on capacity.
Except it seems like the president has more control over tariffs.
Taxes are approved by congress, so this was surprising to me. Does the president essentially has full reign to tariff whoever they want (for whatever reason) until the end of their term?
Maybe this is less about economic independence and more about grabbing whatever power is within reach. If domestic taxes were up to the president and tariffs were up to congress, would we see exactly the same situation with domestic taxes?
An item sold for $1000 say would pay $100 at 10% VAT. The items in the supply chain all charge VAT and reclaim VAT they spent. I think usually this terminates at the import (maybe?)
Factories are not coming back to the USA in large number, for a lot of reasons, at least not until full automation + tariffs makes them economical. But the biggest reason is that what's going to happen is that the average joe is going to suffer a bit, then will vote against these policies in the next election, and that's only 3.5 years away. If it takes a year to build a factory -- and frankly these tariffs could be adjusted again or removed in a few months -- and then they're likely to be fully removed in 3.5 years, I'm just not sure it makes sense to invest in a factory.
My suspicion is that Trump will declare a national emergency and suspend elections at the mid-term if it looks like the Republicans will lose seats in the House.
They’re the most likely to go along. The whole point of the army is following orders. Congress doesn’t have the threat of jail for not listening to Trump.
Want to bet that Trump's argument for a third term hinges on the US being in a recession/depression and needing him to see the economy through the struggles?
This doesn't come as a surprise as we all know it's going to come.
My question is, how does the US prepare to re-industrialize itself? Is the tariff good enough to provide incentives so that factories start to appear domestically? I fear this might not be the case.
The US never lost manufacturing. It just automated it. Those people who know how to run a factory still exist.
However there is no getting around it taking years to setup a factory (less if you can import the assembly line back from China). So nobody sane will start a new one in the next year based on these tariffs - odds are too high that in 2 years the democrats take over congress (the house not flipping would be a shock: typically the out of power party gains a few seats in non-presidential elections and only a few seats need to flip. The senate is somewhat unlikely, but the loss of the house would have ripple effects there).
Even ignoring the above, any few factory would be highly automated. There won't be thousands of new no college required jobs created in any new factory. It will be maybe 100 (probably less), with a bunch more engineering degree required.
The De Minimis loophole is highly significant with 4 Million packages per day (What ?). The clause to address this loophole needs to be stated more accurately - It should clearly define it to be higher / lower of 30 % of value of shipment under $800 or $25 per shipment and not either
This is absolutely shocking. As these tariffs are reflective of trade deficits this administration is taxing the cheapest sources of goods for the American economy in proportion of volume.
This is economic handbrake territory. It will impact every industry that imports goods (as well as many raw materials and components) and will devestate many, if not all SMEs who rely on importing goods to sell to local customers. Fashion retail in particular and drop shippers will have to raise their prices considerably.
While I imagine the ideas behind these tariffs have some sense of justification, the numbers simply don't add up. Manufacturing clothing in the US simply isn't viable at the sorts of scales for mass consumption. For example, you can pick up Levis at Walmart for around $25 that have been manufactured abroad. The Levi Vintage run, which are made within the US, have prices starting at $150. So all this will do is force people will less money to spend an extra ~50% (or $12.5 in this case) on their jeans, as this will still be cheaper than $150. Obviously to entirely succeed at the supposed aim would to create a world where all jeans cost $150 and this would simply mean that most people would not be able to afford jeans.
So has anyone an idea how those tariffs would affect software sales? Say I'm a German guy selling a license for my software to someone in the US. Will this fall under tariffs, too. Or are software licenses somehow exempt? Asking for a friend(me).
My opinion. (Also as a German guy doing a similar thing).
On the first order no. The tariffs just announced are only on goods and are collected at the ports when you physically import them.
On the second and third order. What I think will happen is that the EU will mostly retaliate against US services. And then trump might counter retaliate against EU services. So I would start looking for customers outside the US.
It won’t unless you’re shipping an item to the USA.
I think the eu should look into taxes on u.s. services, instead of tariffs on products. Taxing AWS/Azure/etc +25% would do a lot in getting similar services in the eu expanded.
Out of curiosity, would you still need to pay the full tariff, if the cost of an item that was shifted to a token/smart contract, that only enabled a right to purchase, but reduce the device cost to like a dollar or shipping.
It’d be pretty cool if someone derived a legal smart contract solution. One could argue that, the tech enabled products are two things a digital service, and a manufactured product. Those costs could be potentially be seperated.
As a preview of our future, it's now a good time to review the decline of standard of living that occurred when Great Britain lost the privilege of having the World's reserve currency, the Pound Sterling.
My estimate is we're in for a 75% haircut to our personal standard of living as the US Dollar loses it's place, and we actually have to pay for everything we want in hard currency or real goods. Trump killed the golden Goose, and threw it into a wood chipper.
Yep what many people overlook is that this deficient just means the rest of the world is financing the US overconsumption. And the only reason they are happy to do it is because they are happy to hold USD and are happy to invest in the US economy.
This is basically the Kim Jong-Un approach to foreign policy:
Kim: threaten a nuclear war, see if people will pay you to stop
Trump: threaten to crash the world economy, see if other countries will pay to stop you
He doesn't care that this will shrink the global economy, or even, at least in the short term, the US economy. If other countries submit in order to negotiate tariffs down then he has his "win" politically, if not then he has someone to blame.
1. On the face of it, this looks horrible. I won't rehash the many arguments against it here, though. This page is already chock-full of those arguments.
2. Robot labor could make ultra-low-cost manufacturing possible in the US, to the point that many things become cheaper to make locally than to ship from abroad, tariffs or or no tariffs.
3. If any major country/region negotiates lower tariffs by fully opening its market to US products, every other country/region will be forced to do the same, expanding free trade everywhere.
>Robot labor could make ultra-low-cost manufacturing possible in the US, to the point that many things become cheaper to make locally than to ship from abroad, tariffs or or no tariffs.
That's not a solution to anything though. All it does is ensure your money goes to Mr. I-own-the-robots instead of to Foxcon's Mr I-own-the-people
The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we make.
If you no longer want the trade deficit that means payments of fealty by those who trade in dollars, which countries aren't likely to tolerate, or abandoning the USD as a global reserve currency, which would be disastrous, truly disastrous. Our debts would suddenly become existential because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy. I don't think many truly understand just how disastrous it will be.
This isn't America's liberation day. This is Russia's and China's liberation day. While America was once able to check their power, America is no longer in a position to do so, we will barely be in a position to satisfy our own military's logistics requirements.
This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies. It is not only a de facto soft blockade of American trade, but it is an attack on the mechanics of American hegemony. Politicians already ask for money instead of votes or actions. That means if foreign governments spend money, they can elect their preferred candidates. America's own government was a result of french support. We institute regime change in other counties, and I see no reason to believe we are immune.
If trade stops occurring in US Dollar, which is a consequence of the stated goal of our current ruling regime, that would be the coup de grace on this country's hegemony. It is the definitive end to it, and the birth of Chinese hegemony.
What still baffles me is how people act like this was some kind of thoughtful decision.
When you put someone incompetent in charge of a country, a company, or a sports team, collapse is inevitable, no exceptions. We’ve seen it play out over and over again because of stupid choices only driven by ego.
For extra sauce on the "they're barely even thinking about this" cake someone figured out where those crazy "Tariff Charged" numbers were coming from, they're taking the trade deficit and dividing by the total imports from that country.
edit: The White House deputy press secretary posted their formula and it is just trade_deficit/2*total_imports per country just dressed up with a lot of fancy language to make it seem smarter but the two extra terms are constants.
I just asked ChatGPT with a lazy prompt: "Come up with a formula to impose reciprocal tariffs that will reduce America's trade deficit to zero" and it came up with basically the same formula.
Oh man if people in the White House are just using ChatGPT...
The Terminator franchise had it that the AI has to nuke humanity and fight a giant war including time travel to take over.
Nah, all it has to do is offer to be "helpful" and do stuff for us and we'd be like "sure, go ahead, take over, here let me cut and paste your advice right into a policy document."
I don’t understand what you’re trying to say. What rtkwe described is literally what they are? They didn’t say the tariffs are random (unless the comment changed, which would explain why yours makes no sense to me), they said they aren’t what the White House is claiming they are.
If you think trying to balance out the trade deficit with every single country without any other nuanced consideration whatsoever is a good approach, that’s one thing (a lot of people would disagree), but there’s no getting around that the information around this is either misinformed or deliberately misleading.
I'm objecting to his characterization that "they're barely even thinking about this." He makes it seem like they picked this formula out of a hat. But there is an ideological rationale to scaling tariffs up with the size of the trade deficit, as described in the article I linked.
The "idealogical rationale" is not coherent or even consistent with the papers that the administration cited:
From one economist who was cited in the rationale:
> It is not clear what the government note is referencing or not from our work ... But I believe our work suggests a much higher value should be used for the elasticity of import prices to tariffs than what the government note uses. ... The government note uses a value of 0.25 for ‘the elasticity of import prices with respect to tariffs’, denoted with the Greek letter phi. But our estimates found a value of 0.943 — very close to 1 — for this elasticity.
From another:
> this is where the discrepancies between our work and the table that President Trump showed arises ... our results suggest that the EU should not be tariffed, and yet they set high tariffs against them. Finally, our range of optimal tariffs is substantially lower than the ones the Administration just announced.
But it does provide a convenient fig-leaf rationalization for the class of over-confident economically illiterate folks to cling to, so it seems to have succeeded.
I notice he seems to have a GPT-level understanding of issues, offering a thin justifications of his viewpoints, and then just completely ignoring any substantive discussions and instead only engaging in threads where he is "winning".
IIRC he is a lawyer, a field where strategically deploying intellectual dishonesty is particularly advantageous.
That's why I’ve stopped feeding the troll — I just downvote or flag when necessary. It’s a shame because, years ago, he was one of the better commenters on HN.
I've seen this comment a couple of times. What would be a better way of doing it? Also consider that if they would've had a more complex formula, what would be the cost of needing to explain it publicly? Would they then need to start defending the fairness of each tariff vs doing it the simple way and having a single formula across the board?
By looking at where things are made rather than by using hedonic adjustments to multiply up INTC revenue until it hides the problem (or whatever the strategy is today now that INTC is flagging).
Assembly is one example of manufacture, so that distinction isn't really the one you think it is. Output is tracked by value added, so the mythical "car comes missing a single bolt which gets added in Flint" doesn't really show up in the output numbers, if that's your worry.
US industrial output is much lower than it has been relative to our consumption. We should mostly make in the country the industrial products we consume.
We are a consumer nation because we are more prosperous than our peers. It's the same reason you buy your food at a grocery store.
Generally, the clamoring for domestic production comes down to:
1. Employment. But because we are more prosperous, our employment is aimed elsewhere. We have jobs for people that are less dangerous, less manual, and better paid.
2. A fear that without domestic production, we're at a strategic or military disadvantage. But it's not that we _can't_ produce in an emergency, we can and have historically (see: oil in the 1970s). What protects us most is hegemony, which is threatened by things like across-the-board trade wars.
3. Nostalgia for the good ol days. Look, if you want to work in a factory, we have lots of them here, still. Nobody will stop you from putting on the hard hat. But in all likelihood you have a less stressful, less dangerous, and better-paying job today.
There really isn't an argument for this. Our trade was - as all trade is - mutually beneficial. Right now we're pushing the glass to the edge of the table when it was perfectly fine where it was.
One other important note: there are things we literally cannot produce domestically due to lack of natural availability (food products, certain textiles)
I think people look at "national debt" as though we're buying trillions of dollars of stuff and not, fundamentally, two things:
1) mandatory saving for future, like a Social Security for the country (which is ironically also comprised of Social Security)
2) investments made into the future of the country. People buy T-bonds because they're reliable returns. Low risk, relatively low reward. If suddenly our future looks less bright, our debt will slow, but it will be a pretty telling canary in the coal mine.
It's baffling to me that people generally don't grasp this. They treat it as though we're just ... buying stuff on a credit card.
Manufacturing as a share of GDP is bound to fall. It is inevitably going the way of agriculture.
The US is in the envyable position of having developed a globally dominant service sector. Putting that at risk of retaliation by imposing tariffs on all imports, including the lowest margin stuff like screws and bolts is utter insanity.
> We should mostly make in the country the industrial products we consume.
You state this as fact that we should all agree on. Why should we do this? Why not rely on our allies and friends to do what they do well, while we continue to do what we do well? Is trade not the basis of peace? If we stand alone, we must ask why we must.
I'm curious, are you personally volunteering to work in the factories? Or is it a situation where we need industrialization to come back but you personally are not willing to see it through?
I mean, is the poster in question a senior robotics engineer? Because that's whose going to be working in any factories that open. Maybe they'll have some security guards and janitors, I guess
Interesting, so basically no growth since 2007 if you exclude computers, even with increased productivity. And the drop in employment is insane and it's no wonder that there is a huge political movement with fixing that as a pillar. Not even to mention regional problems that have been going on longer in the Rust Belt. Yeah I find it pretty disgusting when workers in service based industries like here have no sympathy for the workers in these industries.
That it's relative share in GDP is down during that time means that other sectors were growing even faster (think Google, Netflix and so on, so services instead of things). That the service sector gains in relative importance is actually a sign of an advanced economy, every modern economy looks like that, not just the US.
In the end, the problem is that China manufacturing output is $4.6 trillion according to those numbers while the US is $2.5 trillion, while it was around the same back in 2010. This, along with its decline in percentage of GDP is causing the perception, and it also is causing decline in employment in manufacturing. The perception matters ideologically and the employment issues matters materially, and so we have these tariffs as an effort to bring manufacturing back to the US.
It is. But it's really a lousy conversation to have you two going back and forth several times, with each of you asking the other to substantiate their position, and neither of you actually doing so.
Jobs is not the same as production. Many of the jobs are lost due to automation. If you bring manufacturing back to the US you’ll be “hiring” a lot more robuts than humans.
Um, by picking and choosing what goods need protection in the long term?
Like, we can't make more fish. Avocados take a few years to grow new trees. Steel mills don't just appear in Ohio.
The worst part is that, even if you believe Donny, he's so mercurial with these tariffs that no one is going to give you a loan to do anything about any of this. This Katy Perry doctrine [0] he's established is just poison to any sort of capital investment. You've got no idea if any of these tariffs will make it to Monday, let alone to the time it takes the mortgage on your t-shirt factory to be paid off. And then you've got a new administration in four years and no idea if they will keep that protection for you either. How are you going to plant a whole vineyard and get it profitable in 4 years when grape vines take 7 years to mature to fruit bearing?
There's no point to any of this, even if you believe him.
[0] 'Cause you're hot, then you're cold
You're yes, then you're no
You're in, then you're out
You're up, then you're down
You're wrong when it's right
It's black, and it's white
We fight, we break up
We kiss, we make up
Overall I agree, but I'm not sure there's literally no point. American primary producers will likely benefit - people who own mines, oil wells, farms, etc., and some American manufacturers too as long as they source enough of their raw materials from within the US that the price hikes on resources from overseas don't bite them too much. Still an overall loss that will be borne by American consumers, but a small section of the population who are already wealthy will greatly benefit...
I genuinely thought his cabinet was at least competent, they have credentials like they are at least, but then fucking Signal happened and made it obvious what they actually are:
The exact same kind of fail-upwards, born on third thinking they hit a triple, grindset grifter, loser mid-level management nepobabies.
Huge swaths of midwestern farmers will go bankrupt if tariffs are imposed. Subsidies and exemptions are being specifically added to prevent the complete collapse of multiple red state economies due to the harm from the tariffs.
Even things like oil and mines aren't guaranteed safe, because of complexities around where refineries are, loss of export market, or weakness of dollar offsetting any nominal gains when looking at actual purchasing power.
Exactly, tariffs may be a wise way to protect parts of your industry that need protection and investment. The Chinese for example have been using this tactic for decades. But you need to choose which sectors to invest in. The way Trump is doing is nothing more than an instant devaluation of the dollar purchasing power.
The problem is it's economically illiterate. Trade deficits aren't bad in themselves - they can be a sign that you're getting a good deal. Consider the case where a country with low wages exports raw materials to the US, and doesn't buy back as much from the US. This is the situation for lots of poorer countries who are exporting cheap raw materials to the US, and the US gains from these situations. Trump's policy simply makes all these raw materials more expensive.
Another way of reducing trade deficits would be to make Americans so poor that they can't afford to buy things from overseas. Eliminating trade deficits in itself isn't a rational economic goal.
Having said that, American manufacurers on average will likely benefit (though maybe not if their raw materials are too much more expensive), but this benefit will only come at the cost of American consumers, who are denied cheaper options from overseas by the tariffs
You’re calling Trump “economically illiterate,” but what you’re saying will happen is exactly the motivation of Trump’s policy. He just thinks it’s a good thing rather than a bad thing.
Trump’s bet is that the upsides will be borne disproportionately by his base, while the downsides will be borne disproportionately by Democrats’ laptop-class base. It’s not irrational to think that will be the result.
How much do production workers get paid in China? How will our production goods be affordable at American labor rates? This strategy just makes everything more expensive - nothing cheaper.
Exactly and even if it does work to reshore factories (which will take years and we'll just ignore the question of where all the workers for these factories will come from, and that the goods needed for making those factories are also being tariffed) they'll only be competitive in a protected market so they're only really producing for the US market which will be stunted because costs would have inflated through the roof!
Not to mention these are blanket tariffs, not protecting specific American industries. So anything that's not feasibly produced here will be more expensive anyway.
Yes everybody, we are taxing all of your groceries - but all of those American coffee and banana farms (!) will be protected.
I mean, a large point of their campaign was that price increases were a major national concern, right? Can we agree that they repeatedly made that point? I recall many lawn signs to that effect.
So given that, I would have assumed that this administration would focus on making things more affordable. Instead, I'm seeing people try to explain to me that, actually, raising the prices across the board is a good thing!
To put it plainly, it seems like the administration raising prices is, in fact, not a good thing for Americans. And I don't see how American labor can produce things that are more affordable than what we can buy now. So it seems like a net negative, because ultimately they are choosing to make everything more expensive for consumers.
Trump did decent in the rust belt. Many of them have lost their good paying manufacturing jobs. If, and this is a big if, we can bring back manufacturing in the US they can get their jobs back.
If I'm company leadership, I'm not doing anything but trying to limit damage while this guy's in office. His tariffs can turn on a dime- his petulance is business poison.
I was just talking last night about how ironically the things Trump is doing fall not to far from what Bernie bros have dreamed of. Heavy tariffs and no income tax is pretty much the conservative version of liberal hand outs.
What do they expect to happen if the heavy tariffs either move the manufacturing of those products to the US or make the imports expensive enough that consumers switch to domestic manufacturers?
That tanks the revenue from the tariffs, which would make them an ineffective replacement for income tax.
I mean he's gone bankrupt 6 times including managing to bankrupt a casino a business where on average people give you money to get less money in return... He also confuses simple economic terms like equating trade deficits with tariffs.
Consider actual tariffs? A trade deficit isn't a tariff or trade barrier it's just the natural flow of commerce from them selling more stuff than they buy. They're dressing it up like these countries are charging US imports these crazy tariffs but they're not at all, especially not across the board.
That's imminently doable but would require more work than plugging in 2 numbers from the US trade delegation website so we get this complete lie instead. Trump has had it in his head for ages that trade deficit == tariff (or is lying about that to make his supporters swallow this as the US just fighting back) and it's a completely broken understanding of trade.
> Consider actual tariffs? A trade deficit isn't a tariff or trade barrier it's just the natural flow of commerce from them selling more stuff than they buy
That’s just defining what a trade deficit is, it doesn’t explain why trade deficits arise. For example, other countries have cheaper labor and laxer environmental regulations. Simply looking at the country’s tariff rates on U.S. goods doesn’t account for the whole picture.
Other countries also have different population numbers. To take a random example, why would e.g. Uruguay (population 3.5M) buy as much from the US (population 100x) as the US is able to buy from them?
Besides, if the trade volume is what determines the tariff, why would any country want to have a trade surplus with the US? The best solution for other countries is to artificially limit their exports, or find more reliable trading partners.
On the face of it that sounds reasonable, but then you look at say China with a 35x population over Canada yet Canadians don't just buy as much from China as vice-versa, they buy CAD$65 billion more. So I don't think the argument that larger countries necessarily have a deficit against their smaller trading partners holds water.
I do agree that this madness will only encourage other countries to conduct their trade elsewhere.
> Other countries also have different population numbers. To take a random example, why would e.g. Uruguay (population 3.5M) buy as much from the US (population 100x) as the US is able to buy from them
Because the U.S. can buy from Uruguay only as much as 3.5 million people in that country can produce.
First we don't import any where near all of Uruguay's exports, in fact we're only about 8% of their actual exports which should tell you this isn't the reason we buy more from them than they do from us.
Next that's always going to be imbalanced because they produce goods cheaper and can't afford as much as the equivalent chunk of people in the US.
GP said other countries, not "Europe". And Europe does have cheaper labor. Even in western europe you can find a 5x-10x difference in certain salaries especially in white collar industries.
> cheaper labor and laxer environmental regulations
So we've exported our worst paying, most environmentally damaging industries? I mean the rivers catching fire was probably exciting but I'm not exactly pining to bring that back...
Tariffs can only set those industries up for internal markets, other countries will just continue to buy from the cheaper source so the protected industry has to continue to be protected.
Additionally who's going to work these labor intensive industries? We're already at 4.1% unemployment, there's not vast masses of people waiting for low paying work as seamstresses and one of the other major prongs of the Trump ideology is reducing immigration drastically so we're going to squeezed on that end too.
Finally we've done mass tariffs before and it always ends badly. Remember Smoot-Hawley? it deepened the Great Depression because people thought they could turn to protectionism to prop up and bring industry to the US. It just doesn't work when broadly applied.
It’s been our turn for a hot minute. Republicans have been blowing up the status quo since Reagan, and the Democrats enforcing austerity since Clinton. American corporate leadership is excellent at hitting quarter-after-quarter KPIs for bonuses and share price growth, but there’s ample data it has all come at the expense of workers - increased precarity, decreased wages, increased costs of everything, as the country is plundered down to its core and sold off piecemeal.
Post-Carter United States (and South Korea, and Japan, and the UK, and much of the developed world in general) is a prime example of the follies of prioritizing numbers-on-a-spreadsheet growth in the short term, over a balanced and robust domestic economic engine that ensures a healthy, happy, stable populace that wants to have kids (since they have the money and time to be good parents).
Clinton was the last fiscally responsible President, using a strong real economy to pay down some of the debt which had service costs equal to the costs of US federal debt today. You can't criticize that given how high the debt was in the 1990s.
> Clinton was the last fiscally responsible President, using a strong real economy to pay down some of the debt
The Clinton social program cuts combined with the Bush II tax cuts is what gave us the poor distributional effects of the 2001-2008 expansion, which both set the stage for and magnified the impact on all but the narrow slice at the top of the Great Recession; while they seemed harmless in the unusually strong boom economy they were implemented in, monentary nominal budget balance acheived that way has had massive adverse long term effects.
It also, contrary to your claim, didn't pay down any of the national debt, which increased by at least $100 billion every year of the Clinton presidency.
I can when he did so not through raising revenue, but by gutting social safety net programs.
If you have a debt problem, you need to both raise income and cut unnecessary spending. Clinton - and every Democrat since Carter, really - only ever did the latter, and always targeting the working class for spending cuts as opposed to the corporate or wealthy classes. God forbid we curtail subsidies to fossil fuel companies or sugar producers or big box stores with a disproportionate amount of workers on government assistance programs, god forbid we stop bailing out failed banks or bankrupt private enterprise, let’s instead make sure poor people can’t have housing and children can’t have three meals a day.
Throwing large numbers around without examining how those numbers were achieved is what politicians and despots bank on the populace trusting, because once you know how those figures are reached, you’re confronted with how the system really works and suddenly have a distaste for it.
> What still baffles me is how people act like this was some kind of thoughtful decision.
I'm no economist, but I can see that there are second order effects that this addresses that other systems would lack.
1) Tit for tat on tariffs doesn't work because of other barriers to trade such as currency manipulation, subsidies, regulations, etc.
2) We've learned from games such as iterated prisoner's dilemma that strategies that succeed are ones that clearly communicate how they'll act and respond. A clear formula such as deficit/imports accomplished this. Countries know exactly what they must address in order to access US markets.
3) You can end up playing whack a mole with countries in that they can set up shop in other countries to bypass tariffs in their own country. By applying a consistent formula to all countries, you no longer have to play whack a mole.
It seems thoughtful if you or your children or your friends are heavily invested in crypto and think removing the USD as the primary currency of trade is a good idea.
I know it's a Republican joke to blame evil meddling globalists for the US's problems but it sure seems like a bunch of people looking to ruin the US for their own global ambitions are running the show right now.
This is what forced me vastly curtail my news consumption for the most part. I can only take so much breathless reporting about the "strategy" of the Trump administration, when it's plainly sheer incompetence with the winds of malice in the background. There is no actual plan to "make America great again", it's non-stop incompetent pandering to a base that just wants others to suffer.
This has been termed "sane washing" and is extremely irritating: smart media people reverse engineering a vaguely plausible logic from the regime's actions when on closer inspection they never gave said logic as their reasoning.
In this case it's much much worse than just incompetent. You're looking at someone who takes an evil delight it doing the opposite of what smart people say to do, and destroying stuff.
Also you were outvoted because the Dems didn't have a reasonable alternative. Mrs Harris was incompetent. She was a poor public speaker, which further made her look incompetent given her previous role as a prosecutor. Further, the Dems didn't offer her as part of an open primary. They forced her on everyone.
The US presently suffers from future shock and stilted political process. We need more parties and better voting options both in the HR department and the mechanical process like ranked voting.
Since both parties benefit from the status quo, we shall see no change.
Paragraph 3 is a cynicism I don't yet fully buy: There are enough liberals and so-called Democrats that care about this country that perhaps they will be open to ranked-preference voting and the opening of our "political markets" to save the country.
Partial on paragraph 1. Biden should have left a lot sooner, and Harris, loyal to the president and unable/unwilling to break with him on anything of value, should not have been the "pick".
But she was and is infinitely better for this country than Trump in every manner, unless we're into accelerationism. I don't think she is incompetent. She was unwilling.
There’s been many people opposed to free trade for decades, on both sides like Pat Buchanan and Bernie Sanders. You can think those guys are incorrect in their analysis, but calling it “mindless” is just ridiculous.
This tariff regime is simply a “minimal viable product” aimed at the idea of reducing structural trade deficits.
My theory is that it actually has nothing to do with trade at all--why else would the story changes so much when they are asked to describe the methodology or rationale?
This is how they cut taxes without cutting taxes. They've even said as much: "We'll do this huge tax cut and revenue from tariffs will pay for it." But tariff revenue IS tax. It's just a tax on spending versus income. It's quite clever because a tax on spending disproportionately impacts the poor and the middle class (who spend a much higher percentage of their income).
Sanders might impose tariffs, but he would be smart enough to realize that if trade deficits need to be reduced what matters is reducing the deficit on the aggregate trade, not reducing the deficits individually with each trade partner.
Trump is treating each country as a separate issue and wants to reduce the deficits with each of them. That's completely stupid because even if every country got rid of all trade barriers and protectionism there would still be deficits with some countries and surpluses with others because different countries need to import different things.
For example say country A needs some natural resource that they have no domestic supply of, so they import that from country B. A uses that to produce goods for their own use and for export.
Country B's biggest need is some other resource that they lack, so they use the money they get from selling their resource to A to buy the resource they need from C.
In this scenario A runs a trade deficit with B and there is nothing whatsoever wrong with this.
The whole freaking point of money is to make it so you can trade for goods without having to have goods of your own that the other party wants.
Just posting something doesn't make it true. Don't be disingenuous by making it seems like Sanders supports this idiotic "plan" just because he spoke out in favor of certain tariffs or against parts of free trade in the past.
In fact he called these tariffs along with Trump's plan to cut taxes on he wealthy an absurd transfer of wealth:
> Trump's absurd idea to replace the income tax with a sales tax on imported goods would be the largest transfer of wealth in U.S. history. If enacted, taxes would go up by over $5,000 a year for a middle class family, while those in the top 0.1% would get a $1.5 million tax break.
Many agree, most polls have Trump far underwater in his handling of the economy.
> Respondents gave Trump poor marks for his handling of the economy, which 37% approved of, with 30% approving of his work to address the high cost of living, an issue that also dogged Biden.
Again, just because Sanders would support some protectionist policies doesn't mean he supports the tariffs going on now. He's on the record saying they're a regressive sales tax benefiting the wealthy.
Which is why I was pointing out your comment is disingenuous by insinuating Sanders would support the tariffs because it's anti-free trade.
You're really driving home this "Hey everyone, Trump is just doing exactly what Pat Buchanan and Bernie Sanders agreed to do".
This is the equivalent of saying that any anti-war protester is instantly a complete ideological pacifist. It's illogical.
I challenge you to find a policy paper endorsed by Sanders that said "let's do universal tariffs on the entire planet by taking the inverse of our trade balance - and leave Russia out of it".
Everyone knows tariffs are a tool, often meant to encourage domestic production (when applicable and feasible) or to protect against unfair foreign trade practices.
They do not work as a permanent source of revenue in the modern era, and they can never operate as both a strong source of revenue AND a tool for repatriation of production. If they work as revenue, that means production stays foreign. If they work as incentive, they will diminish in revenue.
Nothing about this makes sense unless your goal is to tear down the US and the USD as a global economic power and global reserve currency. This is not about making America strong.
Yes and: IIRC, their intent is to bolster the US dollar as the reserve currency.
Not that I understand it, cuz am noob:
Admin thinks US dollar is too strong. So they want to devalue it. Which will then trigger a sell off of US Treasuries, further devaluing the US dollar.
I have no idea if this is the Admin's actual plan, the merit of such a plan, or if there's any realistic hope for achieving the intended outcome.
If any one can make any of this make sense, please chime in. TIA.
I'm really do appreciate all those on HN who comment either for or against these tariff measures by including cogent arguments and relevant facts. As against ...
> What still baffles me is how people act like this was some kind of thoughtful decision.
I'm afraid it is. An unholy coalition of capitalist-anarchists and ultra-conservatives is the driving force behind it. They both want to reduce the influence of the government to a level as small as possible. That can only be done by dismantling the current federal government.
The next step is to cut income tax for under $150k/yr earners. Tariffs raise prices by 20%, tax cuts let you keep 20% more earnings.
This would make the federal government dependent on tariff income, and, as the theory goes, diminish the funds the government has as American industry grows to avoid tariffs.
Probably not going to work out as it is only a first order effect view, but that is the idea they are chasing.
Trump has explicitly stated he wants to eliminate income taxes for people earning under $150k.
Ironically (but not really if you can clearly understand his platform, any why so many bernie bros became trumpets), Trump is doing a lot of ostensibly good things for the uneducated working class at the expense of American "elite" class. The autoworkers union president literally spoke yesterday at Trumps event cheering the tariffs. A union, cheering Trump.
The stock market is off a cliff, but how many factory workers actually have an appreciable amount of stocks? Poor middle America doesn't give a fuck about that. They give a fuck about having a place to go to work and make a good living.
Trump is doing what he was elected to do. Whether or not it is possible without making things much worse seems like a long shot, but his core base has a "I don't care if we destroy the system, the system sucks!" attitude, awfully similar to Bernie bros.
Capitalist-anarchists are certainly opposed to tariffs - after all, tariffs are just taxes that expand government influence. Protectionism is a left-wing, big-government policy.
The goal would be dismantling the state, and hence (national) tariffs, for good. The people behind it are quite well off, and can bear the tariffs for now. And it's not just capitalist-anarchists. This is a cabal of spiteful people with different goals, but some shared ideas about the scale of government, prepared to use as much force as necessary.
> Protectionism is a left-wing, big-government policy.
It isn't left-wing. Just check the US history of protectionism. Or Germany's. Or the France's. Even the UK's. Or even simpler: look at what happened just now. How can you call Trump left-wing?
Reagan’s administration was very corrupt. So that law and order evidently didn’t apply to them. It was also very profligate. So that fiscal conservatism didn’t apply to them. I don’t see a lot of difference between the actor Ronald Reagan and the actor Donald Trump. Maybe in degree but not in kind.
I’ve been a left liberal my whole life. We haven’t gone anywhere.
How do you get libertarians mixed in there? Libertarians want freedom from government, not the consolidation of power nor levy of new taxes (which tariffs are). Apart from downsizing select government organizations, what the current administration is doing is the exact opposite of what libertarians would want.
Tariffs are only part 1 of the plan. The next step is cutting income tax entirely for most people. Trump has said this, and even yesterday called on congress to pass his "Big Beautiful Bill".
This would severely hamstring the government, and make it incredibly difficult to reverse (you would need to re-implement income taxes, while removing tariffs, and hope to god that trading partners have mercy and forgiveness (unlikely))
Peter Thiel most definitely wants a form of kingship though he professes to be a libertarian
I believe it means libertarian in the context of present systems. In their new system, they no longer need to be libertarian. Just absolute ruler. King is even the wrong term.
Anarchism is not just “no government”, but rather “no rulers”.
Leftist anarchists are acutely aware that power and capital accumulation go hand-in-hand.
Extreme libertarians are perfectly fine with the unfettered accumulation of capital and seemingly ignore that that results in unchecked power. Or they have faith that a “truly” free economy would somehow check itself before becoming effectively neo-feudalistic or dictatorial. As if the lion would fear the zebra.
Leftist-anarchists want to keep power to an absolute minimum. Usually relying on a combination of culture and group action to wield just enough power to prevent the growth of unchecked power in the hands of a few.
In my mind, culture is the key element. The capital-worshipping, me-versus-all culture we live in would fit quite well into extreme-libertarianism and then it would devolve into defacto rule by a few. (As seems to be happening anyways. Because, again, capital accumulates, protects itself and takes power where it can when no one is willing to or allowed to work together to stop it.)
Leftist-anarchism requires a more mature, selfless, introspective, cooperative culture. Anathema to the “United” States of America.
> Leftist-anarchists want to keep power to an absolute minimum. Usually relying on a combination of culture and group action to wield just enough power to prevent the growth of unchecked power in the hands of a few.
Most anarchists, just like hard-line communists, seem totally opposed to the idea of private capital at all. To me this seems just as bad and unworkable as allowing unchecked use of capital accumulation for political gain.
They are opposed to private capital such as the private ownership of the means of production, eg land and infrastructure.
They are generally not opposed to personal property, especially if the property is actively used.
Extreme libertarians, “anarcho-capitalists”, do not distinguish between productive and nonproductive property. And so they ignore the end result of private ownership and accumulation of the means of production: new rulers in some form.
Opinions on money and currency vary.
Similarly, opinions on wage labor vary, but generally they expect a laborer to receive their full worth, ie wage labor would not see profit extracted from it.
This is a very strange view of it. Anarchism is extremely far from liberalism. "Anarcho-capitalists" are more or less just extreme libertarians, they share no history or ideology with any other anarchist movements, no other anarchist movements recognize them as anarchists.
The far left and the far right are not the same either where do you even get that! A far left party in the american context is something like democratic socialism, or sure why not actual marxist-leninism. While the far right is proud boys, groypers, literal neonazis, christian integrationists. You may have equal distaste for both but that doesn't mean they share anything else.
"no other anarchist movements recognize them as anarchists."
Once you go down the rabbit whole of trying to define 'anarchist' , there are actually dozens of definitions, and they all argue about who is really anarchist. So, that they don't agree that some other group isn't 'really anarchist', I take it with grain of salt .
These extreme Republicans want to get rid of government. I'm using the highest level gloss over, that No-Government is Anarchism.
I'm sure in reality, humans would re-coalesce up in communes/tribes/feudal groupings, and thus re-form local groups, and is that still Anarchism? At what point of organization do we stop saying something is 'anarchism'. I'm just saying, when the US breaks up because there is no government, it will be anarchy, and that seems to be what Republicans are shooting for..
> Once you go down the rabbit whole of trying to define 'anarchist' , there are actually dozens of definitions
Which is why I avoided providing or using any definition of anarchism, instead describing the actions of people who consider themselves anarchists.
> and they all argue about who is really anarchist.
Yes, but there is only one group who consistently considers themselves anarchists but who exactly zero other anarchist groups recognize as anarchists. All other anarchist movements have at least one mutually-recognized peer movement. I'm not saying this is an absolute or the only definition, but it's very useful in this context. There is something different about ancaps.
> These extreme Republicans want to get rid of government.
They do not! They are not proposing an elimination of the military or police departments or prisons, for example. They are using the DoJ to pursue political enemies, the executive branch to enact and enforce tariffs. In fact exactly the parts of the state that are used to create and enforce hierarchy. I do not know any anarchist movements, other than anarcho-capitalism, that has this goal.
I understand why your view of it is alluring, I find it to be so as well. But I have found that it simply has very little explanatory power for this situation.
The only thing the far left and right truly share I think, is radicalism. By which I mean an intention or acceptance of rapid and comprehensive change to the dynamics of daily life for the whole population. But the actual changes they want have virtually no overlap.
It's because the far left and the far right are both made of up of people deeply disaffected by the status quo, and when those people talk they often find that at the very least many of their grievances overlap.
In terms of today's landscape there is a list of things like LGBTQ issues, race, gender equality, abortion, religion, etc., and if you avoid things on that list you'll find a huge overlap between the views of the far left and the far right. Both are broadly opposed to what's popularly called neoliberalism, the post-Reagan/Clinton post-cold-war order, and the reasons for this opposition overlap quite a bit if you again avoid the topics that I listed. From that perspective, blowing up the system is the goal. When they see trade policies like these crash the present system, they view that as a success because they think the current system is such a mistake that it must be smashed.
(I am not making a judgment in this post, just explaining the landscape.)
Correct. The left and right seem like a circle because Pat Buchanan and Bernie Sanders long had a large overlap on issues that have become highly salient today: immigration and free trade.
It’s not “anarchism” it’s simply rolling back the bad parts of Reagan’s legacy: free trade, immigration/amnesty, and foreign empire.
When Democrats embraced free trade and globalism with Clinton, most of the liberal Reagan republicans and neocons became Democrats. What MAGA is today is what the bulk of the GOP has always been: a coalition of social conservatives and business owners.
Isn't competition in free markets something Republicans believe in anymore?
Because forcing Americans to buy inferior locally-made products at a premium through artificial restrictions surely isn't that.
Free trade and globalization are also a pacifying force, by creating mutual dependencies between countries.
> What MAGA is today is what the bulk of the GOP has always been: a coalition of social conservatives and business owners.
I'm skeptical of this historical analysis.
The two major political parties fundamentally realigned during the civil rights era of the 1960s. Before then, Democrats controlled the south. Strom Thurmond switched from Democrat to Republican in 1964. George Wallace ran for President as a Democrat 3 times before he became an independent. Robert Byrd was a Democrat until the end. Who were the "social conservatives"? Both Ronald Reagan and Richard Nixon (Californians, by the way) made their names as staunch Cold Warrior anti-Communists during the McCarthy era.
I don't think there's any such thing as what "the GOP has always been", or what the Democrats have always been, for that matter. I'm old enough to have seen the parties change several times, and the definitions of "conservative", "liberal", "left", "right" morph into something unrecognizable to former adherents.
> The two major political parties fundamentally realigned during the civil rights era of the 1960s.
This is an incorrect analysis looking at the wrong causal factor (civil rights rather than economics). Even in 1976, Carter did great in the deep south. The realignment happened in the 1980s, due to economic growth in the south. The south went from being poor and agrarian in the 1930s to being newly industrialized in the 1980s.
> Who were the "social conservatives"?
The 19th century GOP was a coalition of religious conservatives and protectionist industrialists. MAGA is a coalition of religious/cultural conservatives and protectionist industrialists.
> Even in 1976, Carter did great in the deep south.
Carter was a southern conservative, deeply, overtly Christian, whereas Ford, the accidental President, was a northerner and social moderate.
In any case, Presidential elections are not necessarily the best indicator of political alignment. After all, some were blowouts, such as 1972, 1980, and 1984. On other other hand, note that Lyndon Johnson lost much of the south, except his home state of Texas, despite winning big elsewhere in the country. But for political alignment, you also have to look at local elections, such as state houses.
> The realignment happened in the 1980s, due to economic growth in the south. The south went from being poor and agrarian in the 1930s to being newly industrialized in the 1980s.
This makes no sense, because first, the south is still poorer, and second, the political correlation you're implying simply doesn't exist. Why would wealth and industrialization turn a state Republican when that doesn't appear to be the case anywhere else in the country? To the contrary, at present the rural areas are solidly Republican and the urban areas solidly Democratic.
> The 19th century GOP was a coalition of religious conservatives and protectionist industrialists.
I can't say I'm very familiar with the 19th century GOP, and neither of us was alive in the 19th century, but I don't think you've correctly characterized the 20th century GOP. Moreover, I don't think you can characterize "the party of Lincoln" as socially conservative either.
No, I agree with you. My point is that Democrats embraced it in the 1990s as well. So the Republicans who were otherwise liberals but just in the GOP for the cheap foreign labor switched sides.
The clearest evidence of incompetence for all to see is Trump's cabinet from his first term. If they're actively speaking out against him, something is seriously wrong.
> Rex Tillerson on Trump: ‘Undisciplined,’ ‘doesn’t like to read' and tries to do illegal things
Sadly, people didn't vote for Trump so much as they voted for "anti-woke." Or: I am tired of being looked down on and this is my revenge.
You could not have designed a more effective version of a “Manchurian Candidate” in my opinion.
In fact, this administration has been so effective and brazen that if you were to try and write this as fiction, the scope and scale of what is occurring would be deemed unbelievable and would require toning down for the audience.
Are we just going to start throwing "treason" accusations whenever a political opponent does the wrong thing? Being anti-free trade? Hurts US hegemony and makes US consumers pay more. Treason. Being pro-free trade? Sells out hard working americans while enriching corporations. Treason.
The best thing about your comment is you could be referring to Trump, or the GP. 9 out of 10 people who read your comment will say "hell yeah" and think you agree with them whether you do or not.
He didn't add sanctions on Russia, but on people dealing with Russia - that's a different thing.
But notice how people talk now - Trump might say he is "planning" something against Russia and people take it as a proof that he is not an asset. They forget about concept of sacrificing something to gain advantage. If heat turns to much on Trump, they might let him disrupt something and then run propaganda that Trump isn't bent. Until he makes next move massively benefitting Putin.
Seems like they can be doing this over and over and general public will see it as Trump just navigating difficult geopolitical landscape and that we should "trust the process". etc.
I am not sure why you are calling this out seeing how many people are hypothesising what is going to happen in this thread (economy destroyed, USD no longer reserve currency, etc). At least we have actual words to base what I wrote unlike all the other theories being thrown out in this thread.
I can fully understand how people on both the left and the right could have ideological differences with Trump, how they can hate the way he interacts with people, think he's picking unqualified cronies for high level jobs, etc. I disagree with the last one but I can at least see how a reasonable person would get to that conclusion.
"Trump is committing treason because he is instituting tariffs" or "Trump is a Russian asset" is not a position any reasonably intelligent person can come to without being blinded by partisanship. It's simply not a serious position to have.
If Trump were a Russian asset, what could he possibly do to advance their interests more than what he is already doing? Hell, he is running Putin's playbook on Canada and Greenland. Did you vote for that?
NATO is already over because none of our allies can expect Trump to honor our treaty obligations.
Regardless of what his intentions might be which are all speculations as far as I'm concerned, he managed to convince Europe to rearm in 1 month, which is a net positive for Europe and America (assuming America still sees that as a positive) and a massive blow for Russia.
By that I mean he did it, briefly, then probably got a lot of push back internally and rolled it back. The whole event seemed like a chance to drum up an excuse to drop support for Ukraine, but ultimately wasn't enough of a reason to present.
I don't really see another way to take that. Have you watched the full exchange on it?
And I mean his first impeachment was because of his impounding of aid to Ukraine.
Acting like he hasn't been working towards killing support for Ukraine is ignoring his actions and his own statements.
> If Trump were a Russian asset, what could he possibly do to advance their interests more than what he is already doing?
Rhetoric is a poor substitute for actual evidence.
Many moons ago, the fringe right used a similar argument to imply that Barack Obama was pro-ISIS. After his hasty withdrawal from Iraq, ISIS filled the power vacuum. Their "caliphate" grew for years and years, with no significant intervention from the US! At the time there wasn't a great answer to the question "If Obama were pro-ISIS, what could he possibly do to advance their interests more than he already has?". Yet (hopefully) we all know that this was simply bad faith, conspiratorial rhetoric. He was obviously not pro-ISIS, and there was no evidence whatsoever that he was. So how could people possibly have entertained such an idea? Easy--they already hated Barack Obama, so they were willing to give the conspiracy theory the benefit of the doubt.
Do yourself a favor and apply the old tried and true standard: extraordinary claims require extraordinary evidence. It'll save you a good deal of embarrassment.
Trump and his administration do spread Kremlin falsehoods and talking points. This was a major sticking point in Gabbard's confirmation. For instance, she spread the false claim that Ukraine was developing bioweapons that are a threat to Russia. Trump himself repeated the false claim that Zelensky has a poor approval numbers and is preventing elections because he's a dictator. Trump also said Ukraine started the conflict. In his last admin he said that "Crimeans want to be Russian".
Trump quite reasonably called Zelensky a dictator. Ukraine can legally skip elections while under martial law, sure. But seeing as Zelensky has the power to end martial law at any time, he is single-handedly preventing Ukranian elections, depriving the people of Ukraine of their voice during what is potentially the most pivotal span of time in Ukranian history. Surely you still call Putin a dictator, even though he attained his status without directly violating the constitution?
> Trump also said Ukraine started the conflict.
Are you referring to that time Trump uttered the words "you never should have started it" in one of his word clouds while speaking to a journalist? That is evidence that he is in thrall to the Russians?
> In his last admin he said that "Crimeans want to be Russian".
The vast majority of them are Russian, ethnically and linguistically. All polling prior to the 2014 invasion showed that a significant majority would support annexation by Russia. Don't worry, you can know this fact--and even repeat it out loud!--without the bad men in the Kremlin gaining control over your mind.
> But seeing as Zelensky has the power to end martial law at any time, he is single-handedly preventing Ukranian elections
He doesn't. The president of Ukraine can only propose the imposition or termination of martial law to the parliament. Nothing happens unless the parliament approves the proposal. In February, the Ukrainian parliament even adopted a resolution to remind the dumbasses calling Zelenskyy a dictator of this fact.
> All polling prior to the 2014 invasion showed that a significant majority would support annexation by Russia.
Support for joining Russia was 23% in a 2013 poll, down from 33% in 2011. The majority opinion (53%) was that Crimea should remain as it was, an autonomous region within Ukraine.
In your opinion, what should the status of Crimea be? 2013 2011
----------------------------------------------------- ---- ----
Autonomy in Ukraine (as today) 53 49
Crimean Tatar autonomy within Ukraine 12 4
Common oblast of Ukraine 2 6
Crimea should be separated and given to Russia 23 33
Don't know 10 8
With the tariffs in Asia (Vietnam: 46%, Thailand: 36%, Cambodia: 49%) it feels like a good opportunity for China to increase their trade/influence in the region as well.
Sri Lankan here. They just slapped 44% on us (higher than on China). The country is just trying to recover from the economic crisis and the sovereign debt default of 2022, so we have very high import duties on certain items (e.g. vehicles) to discourage dollar outflow. Looks like the US just saw that as hostile and decided to strike back.
Take the US’s goods trade deficit with any particular country, and divide it by the total amount of goods imported from that country. Cut that percentage in half, and there’s the US’s “reciprocal” tariff rate.
All countries tested against this theory are correct within 1-2 percent.
This is interesting. I don't know the details of Trump's tariff policy, but if this is correct, it would follow that the policy should have some mechanism to reduce the tariffs as the trade imbalance is reduced.
Not sure why? It’s an irrational policy not based on any kind of sense. I don’t think I’d expect it to be logically consistent. Besides, what do you do with a country where US is a net exporter? Provide subsidies for imports?
It’s all drunk monkeys driving a train… there is no economic theory to expect consistency from.
It’s not “irrational.” It’s crude, but it’s based on a logic that, on average, trade deficits should generally reduce to zero. And I strongly suspect this is about our large, diversified trade partners (EU, China) and is simply being imposed across the board for appearances.
There is no “logic” that any two country pairs should have an equal trade balance.
“Belief” or “dogma” or even “idea” would work, but there’s no logic in that claim.
There’s not even a policy goal. If the intent is to convert the US from a net importer to neutral or even a net exporter, it means our cost of production needs to be about average. Which means our populace’s quality of life needs to be about average; wealthy countries are more expensive to produce in. Mix in the supposed interest in economic and social liberty, and you’ve got a country trying to destroy its own wealth in the name of controlling what its freedom-loving citizens buy
There is no logic here. It’s drunk monkeys all the way down.
Imagine the classical triangular trade. Three countries can have entirely balanced trade, yet each country has a 100% trade deficit with another country. Everyone benefits, and no one runs a trade deficit. Throw a huge tariff in and a country’s trade, imports and exports, will collapse.
Unless they think that because it came out of an Excel formula, there's a logic behind it - and honestly, I wouldn't be shocked if these folks have that insight.
> Besides, what do you do with a country where US is a net exporter? Provide subsidies for imports?
In this instance, I believe the thought pattern is: "we're being smart here".
I'll be damned, I had no idea and I still got it right.
Once people accept that this administration is very much like the Russian regime, where everyone is the type of person playing to an aesthetic, you see this stuff coming miles away.
It does nothing with "hostile". For China, yes, but for most other countries tariff is simply ($USA-import - $USA-export)/$USA-import. That simply, numbers are check for many many countries. I'm sure, USA imports a lot of tea from Sri Lanka and some fruits and wood/furniture.
(Freshly made Sri Lankian tea is the best, IMHO! I mean, proper tea, not all these grasses, berries and synthetic aromas which are named "tea" in modern western world).
Unfortunately, no, as I've changed country of living year ago and still can not find way to good tea in new place. Also, I'm not sure, that recommendations from Europe is actual for you even if I have one.
But really best "black" tea of my life (and I spent most of my life in country with strong tea culture, where loose tea and teapots are still very popular, and not, it is not UK!) was bough at random tea factory in the middle of nowhere in Sri Lanka, packed in simple 1kg vacuum bags. No brand, no name, only date of picking (two days ago) and packing (today at the day of bought) :-)
As a local, the brand called Dilmah is just a regular supermarket brand for us, but I hear it's quite popular in places like Australia and New Zealand.
> it feels like a good opportunity for China to increase their trade/influence in the region as well
influence for sure. But trade? Vietnam/Thailand/Cambodia already have ~40% of their imports from China and 5% or so from the US, I don't think this tariff can realistically increase trade between China and SEA countries much.
China has been trying to build up domestic markets for the past several years. With the US imposing high tariffs on Chinese goods it stands to reason that they’re not in a position to import from Vietnam, etc. because there will be domestic overproduction.
Is that from a decrease in demand, or an increase in supply from other countries? I'm curious what the price elasticity of demand looks like for Chinese imports.
My interpretation is: it’s domestic overproduction because China isn’t exporting as much to US so it will consume domestically and then not have need for imports from the other SE Asia countries.
My question is more about where the US is then importing from. I assume some goods are more elastic than others. So will the US simply stop buying, or will it shift to buying elsewhere with lower tarrifs?
Could be, but China's imports from the US where not much (6% of their total) and cannot be easily substituted from SEA countries, as they were mostly importing
a ton of agricultural stuff (soybeans, corn) plus fossils.
I understand 6% of china may be a much higher percentage of, say, Vietnam's export, but I just don't think Vietnam can produce that much more of that, quickly.
Non-monetary tariffs:
- Regulatory hurdles that prevent import (eg. CE requirements)
- Currency manipulation (eg. RMB)
- Domestic industrial subsidies (eg. export tax credits).
... you have a lot to learn about international trade.
Would it reduce the share of exports that US sells? If they decide to buy directly from China over the US given the higher price of everything in the US (keep in mind the raw components dont all appear out of nowhere).
For most things, they already produce better and cheaper products. And they can buy from obter countries, It is just in US that Trump tarifs are applied.
> Despite this, according to export data from the World Bank, the US imported US$1.4m (A$2.23m) of products from Heard Island and McDonald Islands in 2022, nearly all of which was “machinery and electrical” imports. It was not immediately clear what those goods were.
In the five years prior, imports from Heard Island and McDonald Islands ranged from US$15,000 (A$24,000) to US$325,000 (A$518,000) per year.
Maybe someone has accidentally uncovered some kind of tax evasion scheme here?
Bizarre, tax/tariff evasion or "Mistake" does seem like the most likely explanation - yet US$1.4m is too little to bother evading tax on really. I mean that could be a refit on a boat or something -- $1.4Mn is literally nothing.
In the case of Norfolk Island, it was apparently some mislabeled shipments from Timberland (based in New Hampshire, NH <-> NI) and from two companies based in Norfolk, UK.
For Heard & McDonald Islands, it was mislabeled machinery that actually originated in Austria and Germany.
Now it is 1.4 mln, in future this could be 1000 more, if this will help with overcoming tariffs. Check what happened with Germany export to Kazakhstan in 2022.
> Check what happened with Germany export to Kazakhstan in 2022
Can you elaborate? Tried searching for it, all i found is that Kazakhstan reported 500M exports to Germany, when it was actually 7B. But you were talking about Exports from Germany to Kazakhstan, which I wasn't able to find.
Of course, several of these islands with 10% tarrifs are ex-colonies of various EU countries. Of course any french manufacturer will send goods to the islands (0%) then from there to the US (10%) rather than pay 20%. It's obvious, then the US will notice and the island will go to 20% and so on. It's all completely hateful.
I saw a post on X which said it was "vibe tariffing" and I think the person was speculating that the tariffs were probably generated using an LLM and saying "make me a tariff chart with ALL the countries and each one about 25% but randomize them."
That's the only plausible explanation I can see. A human with any brains wouldn't put tariffs on islands only populated by penguins.
I think it's basically reciprocal adjusted for trade deficit, with a floor of 10%.
So obviously you'll end up with 10% on all sorts of places where you actually have a trade surplus and no tarrifs on your goods, or, yes, islands inhabited only by penguins.
> these are all internal territories of Australia. Why they get separate tariffs is weird.
Probably because they had separate entries in a "list of countries" which they picked as a base for their list? I don't really think there was more thought put into that, especially not for the countries who "only" got the "baseline" tariff of 10%. Interestingly though, Russia seems to have been completely left out, while Ukraine gets 10%.
The Orange Emperor has a huge hard on to make Ukraine suffer ever since it led to his first impeachment. Zelenski didn't kiss the ring so down they go.
If you look at the full list (available e.g. here https://www.newsweek.com/trump-reciprocal-tariff-chart-20545...), some countries (most prominently Russia) are not on it. Whether that means anything is debatable, but Mexico and Canada, who were explicitly "spared" from these tariffs (but have other tariffs "tailor-made" especially for them), are also not on the list.
Which might explain why the British Indian Ocean Territory - population, one US military base - has such a high tariff. The BIOT, aka Diego Garcia, has the ccTLD .io.
Then that list is wildly inaccurate. Norfolk Island hasn’t been an external territory of Australia for some time (about a decade) - it is literally part of the Australian Capital Territory and they vote in the electorate of Bean.
The Trump admin couldn’t arrange a pissup in a brewery.
It's what you get if you let people which don't know what they are doing make decision about things they don't really understand without being open for consulting because they know better using only oversimplified statistics which often don't tell even half the story.
Or at lest it looks a lot like this, honestly from its patterns it looks a lot like the decision making done at a previous employee where someone who was expert in one field got a lot of decision power and decided they now know better in every field and dear anyone says otherwise.
Isn't this just common sense? I mean, if there are no people/production/imports in a certain territory, it doesn't mean that all of this won't appear there literally tomorrow, especially when tariffs on goods from these territories are zero.
That doesn't seem likely, because they separately listed parts of France that are wholly in the EU (Martinique, Guadeloupe, Réunion and French Guiana, separate tariffs there are as meaningless as having separate tariffs for Berlin and Munich) but they also did not list those that are NOT part of the EU (EDIT one list I found does list French Polynesia, but not New Caledonia[0]) even though they are the ones where a separate rate would make the "most" sense (if any of this makes sense anyway).
There is trade today between New Caledonia, or French Polynesia, and the US. They are probably going to be tariffed at the rate for France, which is probably going to be the one for the EU, but who knows, neither New Caledonia nor France itself are listed.
It is really apparent that there is no understanding behind this half-assed list.
If that’s the thinking, they forgot Antarctica, the Marianas trench, and the Moon. Someone could, theoretically, take advantage of the lack of tariffs.
I’m all for being charitable but at some point Occam’s razor says it’s just ChatGPT mistakenly including these places.
If there are no people there is no government to trade with, no customs, no regulations.
It takes a lot longer to set all of that up than it takes for Trump to just raise another tariff if that happens. So nobody would invest in that. It would only be a loophole for a week or so.
So why bother doing this pre-emptively (even if that was the reason)?
Same clowns who made blanket cuts to every Federal dept and then had to walk a bunch of them back. There's no nuance or forethought, or realization of the long term damage they're doing.
If this made any sense to begin with, then not excluding any region at all would make sense. Why leave some area which would become a theoretical middleman in trade just for purpose of tariff evasion? At least they'd be covered from the simple workarounds.
Is that commonly done on uninhabited islands? Wouldn’t the shipping cost offset any gains? Where do you even make these small changes if there’s nobody there? And what does the export paperwork look like?
The problem is that the truth, that this was some haphazard nonsense thrown together at the last second using some ChatGPT prompts, is hard to believe, so people try to insert rationality where it doesn’t exist.
It probably already exists and I just can’t find it, but there’s some kind of law here about how some actions are so insane that they compel people to invent elaborate explanations to avoid the discomfort of recognizing insanity.
To add to the comment: If you want to be the capital of an empire, you have to act like it—like Troy, Rome, or Constantinople—meaning you run deficits and play buyer of last resort. When you are no longer that, the empire has indeed collapsed.
"The golden prize for America's enemies is to remove the US dollar as a global reserve currency."
I would argue that for this to become even remotely possible, America's list of enemies must not automatically become everyone else's enemies too.
that is to say: the USA's secondary statutes have to become ineffective.
To do this, the EU's blocking statutes (to ignore secondary sanctions) have to be effective. Right now Europe's own companies just ignore the statutes to keep their US trade.
To make the blocking statues effective, the EU's own research recommended fines/sanctions/bans/… on licences for foreign (read US) banks, and companies that ignore the statue and don't serve EU companies trading with sanctioned countries.
But to do that, the EU would need alternatives to American services.
Europeans have a lot of alternatives to American services, including building out their own.
What Europeans truly lack is the ability to defend itself without the U.S. They have the technical know how and can build the manufacturing capacity but that will take a decade at least.
Also, European financing is just not as strong.
However, with the U.S. voluntarily walking away from its role as the center of the world, this may not be a problem for too long.
Tech is the easiest service to replace considering American tech workers by insisting on WFH have already largely eliminated the geographical advantages American tech used to have.
Between three and five members of the EU could become nuclear powers complete with delivery systems within a year if there was political will. A couple of them in significantly less than a year. If the EU is truly responsible for its own defense, then it gets to choose how to go about that. There is only one way to do that in the time frame in which it will become necessary.
Nuclear is a bragging tool, but only useful in real war if things are going bad enough that you decide to end the world.
What will take Europe most of a decade is the combination of all the things you really want during war so you are not forced to end the world. Air defense - they have some but not near enough without the US. 5th generation fighter jets. Bombers. A navy - they have some great things but are missing many useful ships. They seem to have enough tanks, but are missing many other parts a modern army needs. And all of the above needs ammunition - they cannot provide Ukraine what is needed 3 years into that war - means they can't scale up to their owns needs if a war were to break out.
Fortunately war with Europe seems unlikely right now, but that can change fast and you need to be ready. Never has a battleship started during a war seen battle in that same war. (I don't know how to verify that claim, but it seems reasonable anyway)
> Nuclear is a bragging tool, but only useful in real war if things are going bad enough that you decide to end the world.
No, it's a deterrent. This is why it's so important that the systems are in place and functional. So they can actually be used, to make sure they never have to.
You don't need a huge navy to battle Russia. It's navy is pretty small (they don't even have a functioning aircraft carrier) and there is anyway a land connection between Europe and Russia.
For fighters I don't think 5th gen is the magic number, you can do well against Russia with more 4th gen, and the generation counter is pretty imprecise anyway, rafale and Gripen are continuously modernized with new software and electronic warfare
Europe has Aster which is a replacement for patriot with similar characteristics. Since the technology exists it should be a small thing to scale up production.
And ammunition has been scaled up since 2022 and every shell used in Ukraina is a shell that does not need to be used in the rest of the countries.
Most of the Iowa class battleships took less than four years from launch to commissioning, so in WW2 your last statement would have been challengeable had the USN not realized the folly of building more BBs.
They were all started before WW2. The Montana class was abandoned - maybe it could have seen service if it was continued but it wasn't. In WW2 battle ships were still king of the ocean - airplanes were showing promise but not yet good enough to replace them (though if the war had gone one just a couple more years they would have)
You mean started before the US involvement in WW2.
And the battleship was definitely NOT the king of the ocean. Carriers quickly took over that role, and aircraft quickly made mincemeat of the best battleships ever built, starting with the destruction of Force Z near Singapore and culminating with the destruction of Yamato and Musashi.
The TikTok case in US might be a good playbook for the future. Require markets that US based companies have a near monopoly and require them to divest on EU and onshore operations. You solve tech hegemony and tax evasion in no time.
China has goods and services, but don't underestimate the language barrier for services. Language is a barrier between EU member nations providing each other services, even though machine translation is OK between those languages and most of us learned one of the other nation's languages in school; The gap between Chinese and Latin-Germanic languages is much larger.
I'd give an example, but every time I have previously shown an example of machine translated Chinese to demonstrate that AI is bad at translating English into Chinese, the responses miss the point of the example — criticising the translation whose very errors are meant to demonstrate how bad current AI is.
> Right now Europe's own companies just ignore the statutes to keep their US trade.
If it’s the trade keeping EU companies in line, isn’t the destruction of trade that these tariffs are intended to achieve precisely the kind of thing that will then prevent them from staying in line in the future?
If its like last time, European strategy (ex France maybe) will rise no higher than "let's just try ride out the next four years, then things will go back to normal".
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade.
This is just one facet of a broader point. When people talk about a "trade deficit" what they are really talking about is what's known in Economics as a "Current Account deficit". When discussing international trade and Balance of Payments, there are two accounts - Current Account (goods and services flow) and Capital Account (asset and liability flow). By definition, the two must net to zero. That's not an equation, it's an identity. If you have a Current Account deficit then you have an equivalent Capital Account surplus. It works in both directions. For example, foreign direct investment into another country in the form of a loan leads to a flow of funds into the country (Capital Account surplus) and then those funds are used to buy things (import) from the first country or other countries, leading to a Current Account deficit.
I was just thinking about this and I'll bet you anything that Trump is 100% hung up on the word "deficit" and that's about it. If we said "net importer" or "goods taker" or something like that we would not be in this situation.
It's more likely to be related to culture and political structure than education is my guess. Unless, maybe, we want to use a different definition for education than just degree attainment. For example, Finland has lower attainment rates for bachelor degree equivalents than the US. This would seem to disprove your point.
The real issue is the two party split and urbanized distribution. The way the voting works and the structure of the houses means that once you reach about 85% urbanization the rural areas won't matter. We can see this at many state levels that mimic national political structure. We have multiple nations within our county, with the biggest divide probably being between urban and rural. So all you have you have to do is promise the rural group who feels they are increasingly marginalized a candidate who will look out for their interest. The specifics of those promises don't really matter because in the 2 party system it's us vs them more than actual policy positions. You will find a much bigger difference looking at the urbanization based metrics than you will at the roughly 10pt difference in who people with bachelor degrees voted for.
> For example, Finland has lower attainment rates for bachelor degree equivalents than the US. This would seem to disprove your point.
In Finland, most university students go for a master's degree. A bachelor's degree is often seen as sort-of a safety valve, if it turns out you didn't have what it takes to complete the full master's degree. So you get at least some sort of degree from having been to university rather than just having your high school diploma as your highest official educational achievement.
Even if we look at just masters, Finland is only slightly ahead a 16% vs the US 12%. But using this sort or logic, then why not compare doctorate degrees, for which the US has 2% attainment vs Finland's 1%? To me it seems like drawing random line to fit the narrative when I don't see anything in the degree metrics that points to Finland being more educated. We could use different metrics, such as some sort of test, or test scores at the secondary level to say Finland has a better education or education system (we'd have to see the numbers to verify, but I wouldn't be surprised).
I have no interest in a one country vs. another country pissing match, just pointing out that (arbitrarily) selecting the bachelor degree as some kind of metric might be highly misleading, at least in the case of Finland.
Except we just looked at the numbers and showed it doesn't appear to be misleading. I was merely responding to the person stating they would bet that Finland would be the last democracy to decay due to education. But it seems the educational attainment is roughly equal. I also called out that other metrics might be better indicators, both if we were using education and if we were looking at other factors like culture.
My only issue with your comment is it seems to blame a two-party system. It is my understanding/belief though that a two-party system is just inevitable in the U.S. When a 3rd party has risen it acts only as a spoiler to the party it is most aligned with.
With increased granularity of representation, you can have more parties. Breaking The Two Party Doom Loop discussed details.
Our country has not increased the number of representatives sufficiently to allow local issues to reach national stage, so instead we all worry about national issues over local ones, for one example.
Most local issues shouldn't be handled nationally due to the diverse perspectives. That's pretty much the whole point of the (largely ignored) 10th amendment.
A third party has never had enough support to really be viable. Nor have we had multiple alternative parties with viable support. Right now it's all or nothing. If you had multiple new options with nuanced positions (even just filling the quadrants of social/fiscal conservative/liberal), then people could have real options. I admit this is unlikely under the current structure. However, it could take shape with structural changes to the voting process. Yes, even with some of its negatives, ranked choice might be one possible road to multiple mainstream parties.
> A third party has never had enough support to really be viable
The republicans were a third party. Granted the old Whig party was seeing significant troubles, but they still were a third party and thus prove you wrong. 3 parties are not viable, but third parties are.
Sure, I should have qualified in the past 100 years, or modern times, or whatever. The political environment, the modes of information, types of issues, and even the culture has drastically changed since the Republicans surpassed the Whigs. It's not really an applicable example to the modern scenarios.
Why does that make it inaccurate to blame the two party system? The two party system causes the problem, but that doesn't mean something else can't cause the two party system.
Yeah, not inaccurate ... maybe loaded? I wasn't really refuting the point, merely responding to why OP may have been getting downvotes. Sometimes words can suggest a bias and people may respond to that.
> It's more likely to be related to culture and political structure than education is my guess. Unless, maybe, we want to use a different definition for education than just degree attainment. For example, Finland has lower attainment rates for bachelor degree equivalents than the US. This would seem to disprove your point.
The university educated are the top. Politics is not about the top few percent, it's about the masses. At this the US education system is really bad, especially in poorer areas.
Overall, I believe the number was something like 46%+ had a college degree of an associate or higher. So it's not just the top few percent. But I do agree that many areas of the US, especially in specific subjects, are lacking. But that sort of ties back to my comment on culture since the voters and locals have some influence on what is taught or what is not.
Don't know why the disagree, but this is a real problem and plagues the House of Representatives which then allows actually incompetent but loud candidates like Greene and Boebert to vote on important and serious legislation.
If these individuals are exceptions and the rest are competent, then there should be minimal impact beyond creating a side show. As a tiny minority, they wouldn't have any real sway in the bill construction within their party, especially if it has any chance of passing. The split between the parties is usually narrow, so the representatives with the most potential to influence passing legislation are the ones near the center margins as they may vote against party lines and provide a bigger base of support. The reps near the outside margins tend to have less influence. Even if they sway some stuff during the creation of the bill, it's stuff that likely has to get ripped out to find enough support to pass into a law.
But if things are passing by only 1 or 2 votes anyways, where anyone 1 persons vote is a major deciding factor, that's an indication of a bigger issue. Such a divide means that half the country feels they are getting screwed and there was little compromise to include their concerns.
How do you think that would work out? I would guess the less populated states would leave if they feel disregarded. I mean, that lack of representation was the basis for the revolution.
Switzerland. Power is extremelly distributed between municipalities, cantons and, in the Federal Government, there are 7 equal ministers. The system is not only robust by definition, but encourage dialogue and citizens participation in politics at every level through popular vote, educating people during centuries.
Germany.
The country was designed to be incredibly hard to takeover from the inside.
Central government is weak, even if AFD would takeover the chancellorship there are few measures that would immediately allow them to intervene in the federal states or „Länder“, much much less than in the US e.g. unless there is war there is no way to use the military to force compliance.
You would have to take over the country 17 times, and since the elections are not synchronised you would have to convince everybody all the time that this is good idea.
Individual German federal states could be taken over much easier, Thuringia probably will be the first in 2028.
The biggest weakness than is that the legal prosecution on German federal state level is under control of the executive and could be used to prosecute political adversaries.
But if this goes to far the remaining parts of the country could vote to takeover the executive if there was a breach of the constitution.
His analysis complements the crucial discussions elsewhere in this thread about the economic details (reserve currency risks, the tariff math) and specific geopolitical impacts, by focusing on the political drivers; the nature of post-truth populism, underlying societal weaknesses, the challenge of maintaining civic coherence in the midst of it all, etc.
Doesn't matter how intelligent or educated or homogenous culturally the Finns are...if Russia were to decide to invade.
Domestic political antifragility means nothing if you're not anti-fragile in terms of the outside world.
It's called the anarchic global system for a reason. The only thing enforcing norms is power and the fear of it.
Antifragility would be the EU finally forming a real union. As someone living in Finland, I'm not holding my breath that happens in our lifetimes. If you take a sample of average, non-cosmopolitan Europeans, they can barely even communicate with each other in the same language. Let alone come to agreements on who's going to pay for each others bloated social welfare expectations.
The EU is the very definition of Fragility. While Finland has made far more rational decisions than its EU neighbors (having correctly prioritized energy security, military, and technology), it doesn't matter because size is more important.
Our diversity is not fragility. It makes things harder to arrange but it also keeps them fair. There is no chance of some president/party getting voted into office and making unilateral decisions that screw everybody. Like you know, the US. Or the UK with Brexit. In Europe the diversity keeps that from happening.
It also combats exceptionalism, that "Our nation is the greatest ever!" kinda stuff. Because in Europe we know we're not a nation but an alliance. That we need others to survive.
And remember that Finland didn't even bother joining NATO until Russia invaded Ukraine, if they thought it was so important to be together as a big bloc, this would have been the first step.
Ps: if the other countries in Europe didn't agree with Finland's smart decisions, how do you think these decisions would come to pass if Europe was one big country? Because the people wanting those would be in the minority. You would have very little input to the whole. And no chance to decide them yourself as you currently do.
“Diversity” is a nice positive spin on what is an extremely fragmented/disjointed/nonexistent energy policy, military strategy, technological cooperation, consumer markets, etc. Like I said, the average European cannot converse with his/her neighbor even at a 1st grade level in a common language. These are obviously not strengths in the context of the current international order, and to try to brush that away with platitudes is to live outside of reality.
If the EU had a cohesive strategy on these things, you can 100% guarantee Russia wouldn’t be starting wars along its borders. Russia is a small, weak economy compared to a theoretical unified EU (the irony of that phrase!)
Also, the reason Finland didn’t join NATO before is not because Finland felt they were so strong on their own. It’s because Finland didn’t want to piss off Russia in the slightest way and end up like Ukraine. An inability to make formal alignments comes from a position of weakness, not strength.
> “Diversity” is a nice positive spin on what is an extremely fragmented/disjointed/nonexistent energy policy, military strategy, technological cooperation, consumer markets, etc. Like I said, the average European cannot converse with his/her neighbor even at a 1st grade level in a common language. These are obviously not strengths in the context of the current international order, and to try to brush that away with platitudes is to live outside of reality.
I don't think we should be a geopolitical strongman like America though. The world has seen enough of America oil police. Blowing up half the middle east under the guise of 'freedom' and leaving power vacuums that caused nasties to bubble up like ISIS. Which hurt Europe a lot more than it did the US (think mass refugee exodus, attacks etc). They caused these problems.
I think it's great that Europe has more ideals than just money. We still care about all our citizens, not the top 0,01% that has all the money.
> If the EU had a cohesive strategy on these things, you can 100% guarantee Russia wouldn’t be starting wars along its borders. Russia is a small, weak economy compared to a theoretical unified EU (the irony of that phrase!)
Well especially because we don't have a good nuclear deterrent. And this is nothing new. Putin has been massacring ex-soviet states during all of his career. Checznia, Georgia etc. But nobody gave a crap in Europe. Part of this is that the EU had their designs on Ukraine also and this is why we suddenly care. I don't like this expansionist EU. Yes, I do think the Ukrainians should be helped and they should be free to choose who to align with. But it's a bit hypocritical that we didn't help the others before them.
For the nuclear deterrent we should have worked on that more but America was always against that and they assured they would protect us. Clearly now we can stop trusting them. Even after Trump I don't think relations will ever be the same because we know there can always be another Trump.
But with a deterrent we will be fine. Putin is not going to invade Poland if he knows Moscow will be nuked the same day.
> Also, the reason Finland didn’t join NATO before is not because Finland felt they were so strong on their own. It’s because Finland didn’t want to piss off Russia in the slightest way and end up like Ukraine. An inability to make formal alignments comes from a position of weakness, not strength.
So, in other words appeasement. Which is something that you are accusing the EU of now.
I just don't think you can expect the strongman EU to emerge and there are many people like myself that don't want that to happen.
Also, military blocs (NATO) and economic (EU) are very different things. After NATO we should just form a new military one.
I would argue everything else sits downstream from those things. It would be quite an understatement to say they are...somewhat important...in the continued existence of a country.
So objectively, there is a correct way to prioritize those items if we're talking about being antifragile. People like to forget the Russian invasion of Ukraine actually started in 2014.
But again, the inability of the EU to agree on even a common set of values is why we never have to worry EU countries will start seriously integrating with each other. We will remain disjointed sitting ducks as we are in love with our early 1900s romantic ethno-nationalist movement stories of who we are.
You are right, but the problem with turning the EU into a real union is that it is very difficult and risky. The creation of new nations and new identities more often than not leads to violence - and they are often formed by war.
Yes, the EU is fragile, but I think trying to fix it that way would be worse.
I think 1) the rich democracies in Europe are unlikely to go to war with each other and 2) have good reason to unite against common threats so I think a military alliance is military alliance makes sense.
Yes, we already have NATO but the US is going to be ever more focused on China, and Russia is not the threat the Soviet union was so a new military alliance focused on Russia and securing the Atlantic (the latter in cooperation with the US) makes a lot of sense. Obviously different countries have different interests (the Atlantic is a lot more important to the UK than it is to most others) but also enough in common.
You can look at countries that have remained democratically stable for a long time. The UK and Switzerland come to mind. I live in the UK and we have an odd system that I used to consider a bit of a gimmick for the tourists to take photos of but appreciate more these days. Basically the fact that we have a king but with severely curtailed powers delegated to the elected folk makes it very hard for one of them to appoint themselves effectively king, especially as the military all swear allegiance to the actual king (or queen).
It's partly effective because they system wasn't really designed but evolved out of a lot of bloody power battles, going back to at least 1215 https://en.wikipedia.org/wiki/Magna_Carta
I used to think it was silly but if you look at rival European powers they had Russia with Stalin, Hitler in Germany, Napoleon in France, Franco in Spain, Mussolini in Italy etc. The UK is one of the very few which avoided having a dictator.
[Edit - I was kind of talking about the wrong thing - avoiding dictators rather than Trump types]
With Brexit and now this I've been thinking that if someone out there is intentionally trying to dismantle the 5 Eyes they're doing a bang up job of it. Step 1 appeal to their nationalistic or even imperial senses to make sure they piss everyone else off, step 2 stoke some internal grievance politics, step 3 get them to unload an entire AR15 magazine into their leg (to paraphrase Dril).
It’s been known since the 2000s that it is in Russia’s best interests to weaken the UK-EU link. Russia was a major contributor to the Brexit cause, but it seems this topic quickly gets swept under the rug by British parties, red or blue.
That is because both were manipulated and ashamed of it. Russia is too sophisticated to play just one side. They have centuries of experience playing various ethnicities within russia against each other to maintain control. In the 2016 US election, Russia would have had a strong plan either way, what the alternative would have been and if would have succeeded, who knows, but it is note worthy how many members of the US administration, including its head, were formerly democrats.
Brexit and Trump are both proxy wars of subversion, with traitorous support from a cadre of extreme reactionaries in both countries spending huge sums on social and trad media to manipulate public opinion in a self-harming direction.
It's very impressive in its way.
Although the winners won't get to enjoy their victory for long, because climate change is going to roll right over everything over the next few decades.
Yes, extreme reactionaries like the United Auto Workers union who showed up in some quantity at the tariff show last night.
The reality is "left wing" parties have completely abandoned their traditional working class demographic - both through encouraging manufacturing to be offshored and allowing in mass unskilled labor to compete with them. During the Bush era I thought working class folks were voting against their self interest when they voted Republican. That's not the case anymore.
It's convenient to try to play this off as some kind of foreign influence thing, but the Democrats did this to themselves.
While there is a lot of good thoughts about what the democrat party did wrong to lose the last election. I feel your comment places all the blame on them. They did not force republicans to go down this road. This is not the inevitable outcome of a broken democrat party. The republicans went down this road, and so did their voters. They chose this, many times. There were many opportunities for the republican party to rid itself of this ideology but they chose power.
So yes, the democrat party has had many failings over the past decade if not more, but that doesn't make this a binary choice between Trumpian policies and democrat failings.
The UK has a monarchy with severely curtailed official powers. But it's a front. The UK is effectively run by the Crown, and the aristocrats have huge land, property, and investment/financial empires, own all the main media outlets, and set policy through their clients in the political system.
The aristocrats are narcissistic, shockingly racist, and often rather stupid - good at tactics like manipulating elections and news cycles, but contemptuous of most of the population, and clueless about how to build an economy based on growth and invention instead of rent-seeking and extraction.
It would also help to have a population without a deep-seated beef going back to the civil war. You arguably have two separate 'America's split down that historical line that might not ever see eye-to-eye and, just like the US itself has installed dictators or favourable governments by funding disruption abroad, it is open to be exploited the same way.
It's not really split down the historical line of north and south. What you are actually seeing are urbanization rates, with more urbanization in the north east (this was true and a factor during the civil war too). You can look at the county level voting maps to see this exists in the north too. If you look at only state level maps, then you lose that precision. It's not a north vs south thing, it's and urban vs rural thing.
I think there might be something to it: if you look at the correlation between commitment to maga beliefs and affection for the confederate flag, my guess is it would be fairly high
You might be surprised how many confederate flags are flown in rural Union states. You'd probably have an even higher correlation with the Gadsen. Weak correlations are everywhere, we're looking for the strongest, which appears to be urban vs rural.
Albion's rotten seed was never unified as one. Seeing the civil war as some unique historical genesis of the split-- instead of a national shotgun-wedding of sorts is completely backwards.
It wasn't much of a shotgun wedding. Yes, it was a common enemy/cause during the revolution, but then took years of debate for the constitution and years more for the bill of rights. Over time, we've forced more and more homogeneous (federal) laws. The more laws you pass, the more likely people are affected in the outgroups under the splits you mentioned and it compounds. All the concerns about states rights and small states being less powerful are still concerns for some groups of people today. We've essentially been eroding the initial status quo that had been agreed upon.
Personally I think calling it a shotgun wedding is one of my best metaphors of the week and perfectly evokes what I was going for. Contemporaries from like Lincoln's 2nd inaugural of course would call it finer things, like a national baptism etc. but shotgun wedding captures the borderer element, too. I like it and stand by it.
To be fair this strategy will work if other countries cannot tolerate tariffs for long enough to come up with non-USD trade that is accepted by everyone. Which to be fair may take them a very long time.
If they fold and remove tariffs on the US (so the US can drop the tariffs on them) before coming to an agreement because the economical pressure of tariffs is too high, then this will result in the largest market expansion the United States has ever seen.
My point is: yes lots of negatives can happen, but let’s also look at what happens if it works out so we are intellectually honest about what’s going on here.
The issue with this is the "reciprocal" tariffs that were announced are not related in any way to tariffs imposed by other nations. According to the administration, they set the tariff rate for each country as (trade deficit / (imports * 2)). Obviously the country in question cannot undo this even by zeroing all tariffs with the US, because none of this is based on tariff rates.
It's not really only about tariffs. It's about the net effect on all barriers of trade, such as currency manipulation, subsidies, regulations, etc. The formula (trade deficit / (imports * 2)) means that countries actually have to address the root of the problem and prove it before the US reduces their tariffs.
Having a trade surplus doesn’t mean you’re cheating.
If I make products better/cheaper than you, I’m going to sell more to you than you are to me.
Ditto if I have some valuable resource you need that represents a large share of my economy. The fact that you need my germanium more than I do doesn’t mean I’m ripping you off.
I agree that a deficit could be healthy and fine and doesn't mean that the other country is cheating. The problem is how some countries have ruined it for everyone else by exploiting the current system. For example, after the first round of Trump tariffs, Chinese companies began moving factories to Mexico in order to take advantage of USMCA.
A thought experiment. Imagine a small poor country far from the US, of 1 million people, where the average income is $3000 annually ($3 billion total household income). Imagine a factory in that country that produces shoes beloved in America.
Those shoes are so popular in America that Americans buy $1 billion of those shoes every year. In order to address the problem as stated, this hypothetical country would have to spend a third of its household income purchasing products produced in some of the highest-cost conditions in the world. To do so, they would have to shut out their local trading partners from whom they currently buy goods at prices they can afford. This would have the effect of making them even poorer.
If you make an exception for this hypothetical country, then countries such as China would come in and build factories there and bypass their own tariffs. You're back to playing whack-a-mole.
I’m not talking about making an exception. I’m suggesting that a trade deficit can arise for reasons that have nothing to do with manipulation.
Also, the administration created the loophole about which you worry by creating a 24% tariff gap between China and the new 10% baseline for most countries.
Except that because the rule is clear, China will anticipate that doing this in another country will result in eventual increased tariffs. They will be able to see ahead that it's not worth making a big investment for that purpose. The optimal strategy changes to do more business with the US and/or build factories in the US.
That would require other countries trusting the promises of the current administration, yes? How much credibility does the Orange One have on the world stage?
Part of the problem is that Trumps's definition of tariffs doesn't make any sense. VAT isn't a tariff but according to Trump it is.
Does he seriously expect other nations to just get rid of VAT? Or somehow replace it overnight with some other system all just to appease the US? Because that's the only way you can lower 'tariffs' to zero.
It just won't happen and we'll be in a continual standoff until Trump concedes that trade barriers are not in fact a good thing for anyone. He'll never admit it, but it wouldn't surprise me at all if the illusion of a 'deal' is struck in order to save face and reverse this mess once it becomes clear it's not sustainable unless you want to shrink your economy and destroy others at the same time.
As these countries move away from the dollar, there becomes a glut of US dollars in the world, triggering inflation like we have never seen before. Ignoring the barriers to trade that the tariffs represent and what that will do with our productivity. Ignoring the additional cost of an uncertain market future (because all decisions are made from the gut and could change tomorrow). The massive stagflationary impact of foreign countries unloading the 75% of US dollars they hold would effectively kill them US economy. The tariffs wouldn't even matter because you effectively couldn't give US dollars away -- they'd be worthless internationally. No one that is not rich could afford to import anything.
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
I think it is misleading to speak in terms of enemies even if that plays to the fears of US isolationists. It is good rhetoric but I think it obscures the truth, There was a time when the stability and strength of the US made the dollar a good choice for friends and enemies alike. The world is changing and the current US administration is accelerating some of those changes. China is going to play an increasing role as the US turns inward but I doubt they will ever replace the US dollar as a reserve currency. The Euro is the second most held currency after the dollar and there are probably a few others ahead of China.
> Our debts would suddenly become existential because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy.
Can you elaborate on this? Every other country does not have the luxury of having its currency be the reserve currency but still manages to both inflate that currency when needed and import good just fine.
If India buys a widget off Brazil it will probably be paid in dollars. Therefore, people need to own dollars. Thus a demand for US debt. This lowers the potential interest rate. Other countries who's currency is not a need for people to buy, their debt is purchased by the attractiveness of its offering (i.e interest rate). If US dollar is no longer required than government bonds have to be attractive. Also, not all sovereign debt is issued in the home countries currency, which means that the printing press doesn't help. US debt is very large, interest repayment are close to military spending. Without the reserve currency that would get worse. Something like 68% of world holding is dollar 17% Euro, nothing else of note.
The other side is that as there is a demand for dollars. The value of the currency is higher than if it wasn't which increases the price of exports and reduce price of imports. Trump might want to weaken the dollar.
> Foreign countries buy US dollars so they can trade with other people
Who are those other people and why do they want to be paid in USD so badly instead of their own currency in which they presumably pay their employees and taxes? I never understood that.
In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? Way back in time, US Dollars were one to one based on gold in fort knox. Right? But no country has a gold reserve now. Most countries have a dollar reserve to back the paper money they print themselves. This is the main reason the dollar hasn't collapsed already.
[edit] someone who graduated college with an economics degree please come and correct the following vague and possibly totally wrong perceptions I have as a subject of the American empire /edit
The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve. Only the US gets away with having no actual reserve ...because a combination of military might and cultural strategic dominance has allowed it to BE the reserve for everyone else. This is why it somehow makes sense for America's economy to be based entirely on consumption rather than production.
OP is right. Whichever superpower controls the levers of global trade is the one that can sell debt and enforce the currency regime.
Some of us think that it's a lucky thing that it's been America, rather than a more authoritarian power, who had held that control for the past 80 years. Europe would not have recovered from WWII otherwise, and be living behind an iron curtain. Anyone who controls global trade after America is likely to be worse from a human rights perspective.
It seems that other currencies have their own peculiarities; for example, when Russia sold oil to India for Indian rupees (to show that they don't want dirty American currency), they found out that you cannot transfer them outside of India or convert; you need to spend them locally.
I wonder can China use this to make Yuan a new world currency (we all buy Chinese things anyway) or they cannot do it or doing this is not beneficial to them?
China maintains a soft peg on the yuan in order to keep their industrial output cheap.
Part of the way they do this is with heavy currency controls. Those currency controls make it difficult to do international trade with the yuan.
But worse from Chinas perspective you can’t maintain a peg if your currency is used to trade goods, particularly fungible commodities because the commodity itself becomes the medium of exchange and derails the currency peg.
That would be disastrous for their exporters and their economy is not in a position to sustain that currently.
It's likely not beneficial to them, for a couple reasons.
First of all, they can print Yuan. They want people to buy those pieces of paper for something of value. It doesn't do much good to have people send all that paper back in exchange for phones and tablets and stuff. Then they would've just got back some paper they printed in exchange for something that took time and resources to make.
No, they need something physical or at least valuable for that paper. Such as local labor. Then their own population can spend the paper internally, because it's in theory exchangeable for something external. When China buys stuff from the US, it spends dollars. Which it buys from the US not with Yuan, but with computer parts. It pays its own people Yuan to make the computer parts... but the Yuan is only valuable because the government holds dollars and euros to buy stuff that their citizens can then buy for Yuan.
This is why Trump's overall foreign policy and particulatly his tariffs scheme risks destroying America. If at some point enough countries decide that the USD is too unreliable, they may look for the next best paper to trade. That would be catastrophic for the US which may deserve it in any case, but it would be truly terrible if the alternative were a currency privately owned and manipulated by the leaders of a dictatorship. Perhaps the world isn't stupid enough to do that, but the size of China's economy compared to anything else would make it tempting.
I'll stipulate right now that if China were a democracy with civil rights and a fair legal system, I would have no problem with it taking over world trade from the US. But currently it's a repressive authoritarian state.
> I wonder can China use this to make Yuan a new world currency
I suspect a strong precondition for this is to switch world oil trade away from the dollar, and that is currently enforced by a combination of military power and "winner takes all" network effect mechanics of the trade.
The fishermen will get paid in pesos but the company will be paid in dollars. And the company will probably put their dollars in a bank outside the Philippines, which only accepts dollars, euros or swiss francs.
If the fishermen could be paid in dollars, they would probably prefer that.
And the fact that they'd prefer that to being paid in Rubles or Renminbi is the underlying guarantor of American economic power... which, if it goes away and was replaced by Chinese power in the south china sea, would be catastrophic for the fishermen as well.
Where does the Russian company get its Philippine Peso from?
Russia overall may have exported some stuff to Philippines but it’s a huge country. The specific company would now need to find a way to acquire a highly illiquid currency available in tiny numbers which would be expensive.
Instead, they simply buy dollars which are highly liquid, available in huge numbers, until now absolutely reliable, and accepted by everyone.
Trading in dollars was at the end of the day cheap.
but it's not easy to come by large amounts of Philippine pesos in Russia, cause no-one wants to hold significant amount of foreign currency they can't use for anything else. In some cases it may even be legally problematic.
That's why international trade uses "strong" currencies, which are very liquid: you can generally get USD/EUR and then trade them for anything else with a limited spread. Good luck converting Hungarian forints to Lao kips.
Being cut off from USD is why news of Russia resorting to barter[0][1] have occurred in the news since they got cut off from the US trading system
For this the Russian buyer would have to previously sell something to the Philippines and accept pesos. Why would they accept those pesos if they are not generally accepted elsewhere?
> The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve.
I think the simplest way to think about it is simply supply and demand. Currently there is constant high demand for USD due to its reserve status as you said (supply is also growing btw , deficits, printing of money etc). If demand goes down, there will be too much supply so the Dollar will naturally weaken against other currencies.
As far as I know the fact that one USD equals 0.95 Euros (or whatever) is simple market forces of supply and demand.
> In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars?
I can easily see why Rubles would have been unacceptable several decades ago, but nowadays with the speed of financial markets why not set the price in the seller's currency and at payment time the buyer can trade enough of their currency for the seller's currency on the currency markets to get the payment?
The challenge is that for a lot of countries, the forex markets for their own currency aren’t deep enough to settle all of their international trade.
Consider a country that has a large trade imbalance—they import a lot of goods and have very few exports. When a business in that country tries to import goods, say from the Philippines in Pesos or from Germany in Euros, the business will have to go to a forex markets and sell their local currency to buy the foreign currency.
Who’s going to take the other side of that trade? Normally, if a country exports a lot of goods, then foreign businesses will need to buy the country’s local currency to pay for them, and that provides a market for exchanging Pesos and Euros for the local currency. But the country doesn’t export very much, so other businesses in the Philippines or the Eurozone don’t have much use for the business’ local currency, and that means that there isn’t a large market of people selling Pesos or Euros to buy the local currency.
This example is a bit of an edge case where this fictional country runs a trade deficit with all of its trading partners. In reality, you’ll likely have a trade deficit with some partners and a surplus with others. If you decide to denominate some of your international trade in US Dollars, then you’re able to use the excess dollars coming in to your country from your exports to finance your imports. It’s a lot easier than hoping that you can sell enough of your local currency or the currencies of the countries you’re exporting to to buy enough of the currencies of the countries you’re importing from.
In some ways it’s similar to the hub-and-spoke model of airlines. If you want to get from small town A to small town B, there might not be enough traffic in both directions to warrant a direct flight. But if there’s a hub X, then there might be enough traffic between A and all the other flights into X to make it worthwhile to fly from X to B and vice versa. There might not be enough balanced trade between two small countries for there to be a deep market in their currency pair, but if you have both imports and exports denominated in US Dollars then you can generate an internal market in your country for exchanging your local currency for USD.
Power abhors a vacuum. No such thing can exist without some state eventually dominating 51% of it. We've just tested this out since 2009 and it's already obvious that no crypto can escape state control, because the ingress and egress points are already under state control. Short of establishing your own colony on the moon or Mars, this ain't gonna happen.
Luckily, it's still possible to change governments. Sometimes, in some places. Maybe not for much longer. But the idea that crypto will free us is a fantasy that at this point is mostly being peddled by secret police agencies in name-your-country.
This is a gross misunderstanding of what a currency actually is.
A currency is a social construct. It has no inherent value beyond what people who trade in it place on the currency.
As a result people don’t want a currency whose rules of trade are defined once and it’s unable to respond to actual world events.
If you have a currency that is indeed responsive to changes in the world then there needs to be someone who you entrust with making those changes.
At that point it doesn’t matter whether that currency is digital or cash based. I mean, in actuality even the USD digital trade is order of magnitudes greater than its physical trade.
The U.S.’s monetary institutions and its role as a trade promoting superpower is what makes the dollar stronger. Now that those institutions are not as reliable anymore and the U.S. is clearly not a trade promoter anymore, the dollar is definitely at risk.
A currency is a social construct but it doesn't just come down to people who trade in the currency in a decentralized sense: the US govt imposes taxes on economic activity, and demands those taxes be paid in dollars (as other states do in their respective currencies), and this is enforced by the coercive power of the state, which is ultimately based on its military strength, since that's the ultimate guarantor of the continued existence of all the other institutions of the state.
Of course, there's more to it in the complex system of the global economy, but the power of the state is still an important central factor in a currencies' strength - it's not just about collective perceptions of value.
don't get me wrong. I'm writing everything I'm saying because I desperately do not want America to go on a trajectory where it loses all credibility and becomes as bad as all the other human rights abusers.
I think most Americans have no idea how much power their country wields. And it's horrific that they're susceptible to the kind of small thinking jingoist nationalism that doesn't befit a country so large built on an idea of cohesion.
This is easy. We're sitting here texting on an American platform and both willing to say that the imprisonment rate in America is abysmal, that in its history America has supported awful dictatorships and racist regimes.
You can't do that in China or Cuba or Russia. You can't even mention it or you would be black holed and your family would be taken away in the night.
I'm in America and I have no fear of telling the authorities what I think.
As awful as some of the things America has done in the past 249 years are, you really can't compare them to the actions of non-democracies and authoritarian regimes. To do so is an insult to the people who struggle every day as prisoners under those regimes. You can hate America with all your heart, but you can't reasonably compare its foreign policy to that of Napoleon or Hitler or Stalin. You can't say that America ever attempted a Great Leap Forward leading to the starvation of 40 million people, or the Holodomor, or the Holocaust, or the Rwandan genocide or even the current genocide against Uighurs by China. Even the British empire looks incredibly cruel by modern American standards.
Is it still a big world power dominating other smaller countries? Definitely.
America has acted as if it were a global empire in its own self interest. But it's probably been the lesser of most evils, certainly throughout the 20th Century. What it is or may be now, it's harder to say, and we'll find out. But comparatively speaking, only a person who hadn't been to the countries you listed would make the claim that it was worse to have America running the world.
The entitlement in that statement is jaw-dropping. No, no one needs to run the world.
And I definitely, definitely can compare US actions to Hitler and Stalin. Vietnam alone, over fifty years ago, ignoring everything that's gone on since was 1.4 million deaths, more than Auschwitz, about a third of the Holodomor.
In the 20th century, leaving aside WWI and WWII, America fought its native population, and in Mexico, Cuba, Nicaragua, Haiti, the Dominican Republic, Korea, Puerto Rico, Vietnam, Lao, Indonesia, Lebanon, the Congo, Bolivia, Cambodia, Granada, Libya, Panama, Iran, Iraq, Somalia, and the former Yugoslavia.
These are troops on the ground wars, in the twentieth century alone, which are a matter of public record. We're not even at the War on Terror, small scale secret stuff, or counting the viscous regimes the US has propped up. Or sanctions, or internal repression, lynching, assassinations and the like.
We don't have a body count as the US stopped counting in Vietnam, but I'd wager if we took all the deaths for which the US is directly responsible, it outstrip would outstrip Nazi Germany and the Soviet Union combined by an order of magnitude.
[Breathes]
To the initial point, and speaking from somewhere where one's political views can definitely get one locked up. The (debatable) free speech of Americans means nothing to those not protected by US law, which is most of the world.
The American human rights record may look passable from the inside, but from the outside it's just another monstrous empire.
Previous to the current unipolar hegemony of the US, it was the bipolar days of the US and USSR, otherwise known as the Cold War. That gave us Vietnam, Afghanistan part 1, Korea, and the Greek, Lebanese, Nicaraguan, Angolan civil wars. Before that it was a multipolar system of competing empires, fighting and carving up sections of the globe, which gave us both world wars, and countless wars before that. Unipolar hegemony provides stability and reduces interstate violence. The idea that Russia, China, and the EU competing for power and influence is a better situation does not ring true for me. The war in Ukraine is the first major interstate territorial grab since the end of the Cold War, and that is only the beginning in a multipolar world.
Right. Next question being, of the current contenders for crown in a unipolar world, which one would you want to live in - and which would you think your children and their children had a chance of improving and being free in, rather than being slaves? Because if there's a better option than America, I'll move there.
Everything changes. The America of 20 years ago is different from the America of today, and will be different in 20 years again (I have no idea how). Likewise for Europe (either individual countries or the EU). Will Argentina finally get of the constant ruin from decades of unchecked leftism and become a world power in 20 years - who knows. Some of the changes will be good and some bad. There are things to like and dislike about every option. So far I'm holding out hope that the US and Europe both overall remain good choices. 20 years ago I was expecting China to become a good choice, but now they are not. I didn't even think of Vietnam 20 years ago, but they have some good signs (I'm not sure if there are enough). There are a few countries in Africa that are doing good things even though the continent as a whole is a string of one bad thing after another.
Unipolarity has however also seen considerable brutality, in the places the empire cares about (Iraq, Afghanistan, Libya) and the places it doesn't, like Rwanda.
My point was made in frustration at the flippancy of the parent comment. The attitude that "someone has to run the world so it might as well be us" is precisely the source of the misery that the US, and every other empire, has inflicted on the world. It's a justification for untold evil and had to be challenged.
I'd further argue that the war in Ukraine isn't the first interstate territorial land grab, far from it. What else was the War on Terror?
The main characteristic of the (pre-Trump) US empire is that it doesn't incorporate territories, it plants bases and friendly governments. With varying degrees of success.
>Unipolarity has however also seen considerable brutality, in the places the empire cares about (Iraq, Afghanistan, Libya) and the places it doesn't, like Rwanda.
We should probably view these in context to alternatives. Just looking at Afghanistan, the 20 year “War on Terror” is estimated to have killed approximately 200,000 people in Afghanistan and Pakistan. In contrast to the Soviet Afghan War, which was half a long, but resulted in between 1.2 and 2 million people killed, an order of magnitude more bloody.
Your comparison of the US and “every other empire” and equating Ukraine to the War on Terror is the same lack of context argument. The US “soft empire” of economic pressure, military protection, and clandestine regime change is not comparable to empires that literally would invade, conquer, and rule over other countries. The US does not own land in Afghanistan, did not annex and take control of oil or other natural resources in Iraq. Just because something is bad, doesn’t mean it is equivalent to other bad things and I think it is very clear that the US has been much “less bad” than the previous alternatives.
I'm sorry, but going back to my very first post on here, staying in living memory, the US has a vast litany of egregious human rights offences to its name. This is an objective fact of record.
The notion that it's any better than a hypothetical does not address the core point that the US government, has in actuality caused more suffering, to more people, in more countries, over a longer period of time than any other since the end of WW2.
I don't want to see another empire, but the world won't be sorry to see the back of the US.
> going back to my very first post on here…address the core point that the US government, has in actuality caused more suffering, to more people, in more countries, over a longer period of time than any other since the end of WW2.
Lets look at that.
>Vietnam alone, over fifty years ago, ignoring everything that's gone on since was 1.4 million deaths
This ignores that the USSR was on the other side of this war, so those deaths are shared equally.
>Cuba, Nicaragua, Korea, the Congo, Cambodia, Lao
These are all Cold War proxy wars with the Soviet Union, a direct result of duopolistic fighting.
> the former Yugoslavia
The Yugoslavian wars were internal/civil wars over nationalism and involved extensive ethnic cleansing. The US stepped in and ended the wars after a fairly short bombing campaign.
>We don't have a body count as the US stopped counting in Vietnam, but I'd wager if we took all the deaths for which the US is directly responsible, it outstrip would outstrip Nazi Germany and the Soviet Union combined by an order of magnitude.
Mao’s Great Leap Forward is estimated to have caused 30 to 45 million deaths. Stalin’s Great Purge murdered between 700,000–1.2 million. Stalin also forcibly deported 15 million people as part of his Dekulakization, and cause 20 million deaths total. This claim that the US has killed orders of magnitude more people has no basis in fact.
A majority of the wars were proxy wars, and as horrible as they were, they were less destructive than wars of conquest they replaced. The Napoleonic wars killed 6.5 million with muskets and cannons. Meanwhile, the Iraq war, the worst US war since the fall of the Soviet Union, resulted in less than a third of the deaths in Korean or Vietnam wars.
Listing the United States Superpower misdeeds only sound horrible when you ignore the context of what the other Superpowers were doing. At it ignores the amount of violence in a unipolar US world compared to duopolistic and multipolar worlds.
What would have happened if the US hadn't entered WWII or hadn't remained in western Europe to stop the Soviets, or hadn't responded to the invasion of South Korea?
Presumably, someone or something besides what we politely call liberal democracy would be running those places, mmm? Probably in the manner in which either Germany or the USSR was run at the time, or in which North Korea is run today?
Perhaps after murdering all the intellectuals and landowners and shop owners, they would have come to some phase of neo-communist authoritarian capitalism like Vietnam or China now, (or if the Nazis had won, maybe their kids would have agitated for free speech and minority rights!) although it's debatable whether a Stalinist or Maoist country could get there without an evil capitalist villain to push it toward perestroika.
I'm not defending America sending troops hither and yon to defend banana companies.
But you say it's breathtakingly entitled to simply state that someone is going to run the world, and I think it's just a plainly obvious fact. By someone, hopefully you understand that I mean a polity and not a person, and ideally a group of nations with a commitment to the rule of law and civil rights. That would be as good as it has ever gotten in the long dark history of the world.
FYI I'm writing from a former Soviet state and need no lectures and whatifs on matters of the USSR.
A US-led unipolar world existed between 1989 and 2025. Multipolarity is the norm, even the British empire was truly top dog for like 50-100 years at best.
Attempts to control the world are what lead to the sort of acts of barbarism, exemplified by the US, that are the subject of this conversation.
The US is, once more, the greatest human rights abuser in living memory, in large part because it believed it should run the world.
The main learning from WWII, which America has consistently eroded over its period at the helm is that on a global scale, multi-state governance based on mechanisms like the UN, the international criminal court etc should be the mechanism for global governance. Not some state with a manifest destiny complex's self interest.
> on a global scale, multi-state governance based on mechanisms like the UN, the international criminal court etc should be the mechanism for global governance.
The UN is not for “global governance”, it is to prevent the nuclear holocaust that would be WWIII by giving super powers a place to resolve conflicts. The international court at the Hague is only able to try war criminals, for example from the Yugoslav Wars, because the countries were not powerful enough to just ignore it. Just because we were able to try and convict Slobodan Milošević, doesn’t mean that China or Russia would ever extradite a former head of state for trial.
Unfortunately the world bodies like the UN are overwhelmingly stocked with dictatorships ranging from Angola to Russia which have no interest in civil liberties or human rights. While they frequently claim the US to be the world's greatest human rights abuser, as you have, they perpetrate mass murder on their own citizens. The living memory of my family from Odesa, who survived the holocaust, who survived the famine, to see the invasion of Ukraine and the butchery of Hamas, while the culprits and murderers themselves run the United Nations and ICJ, and while people trying to survive are told they are the worst war criminals in history by the people whose history is one of ceaseless murder tells me that it's better to be American and, if necessary, spit out all those organizations for their lies.
Ok. Name a country 249 years ago that wasn't a conquering power, that didn't commit atrocities and that didn't have slavery.
You can't. They didn't exist.
Name one that opened its doors to immigrants, has the most diverse population in the world, progressively enhanced civil rights and enshrined freedom of speech, built a rule of law into its practices, and most importantly, name a single country that has had a peaceful democratic transition of power for more than half that time.
The US's atrocities and slavery happened much more recently. And kept happening while other countries moved on to modern social democracy.
And are still happening today, under the thin disguise of for-profit prisons and no-work = no-healthcare.
The US has a long history of murdering people who are too politically progressive and/or get in the way of corporate profits.
Racial segregation was still considered normal in the 1950s. There's still a huge swathe of the population who can't cope with the idea of anyone who isn't rich and white, ideally a man, with political power.
As for immigrants - there are some people in El Salvador who won't agree with you.
> Name one that opened its doors to immigrants, has the most diverse population in the world, progressively enhanced civil rights and enshrined freedom of speech, built a rule of law into its practices
I'm pretty sure that Brazillians would raise their hand here.
> most importantly, name a single country that has had a peaceful democratic transition of power for more than half that time.
Does Australia, New Zealand, Canada, and UK count? Probably we can include France, Netherlands, Iceland, Denmark, Norway, and Sweden. I'm sure other people here can name others.
Comparing that last list of countries, I do not think any has as strong protection of free speech as the US has. On the other hand the UK seems to be a LOT less racist - I think the other countries are some where in between the US and the UK.
I definitely disagree about the UK. We have nothing like the constitutional protections the US has.
The other country I know well, Sri Lanka, is fairly bad, but has got a lot better in recent years and that does not seem to be reflected in the change (I cannot see a history so maybe it got better and fell in the last year) and I find it hard to believe it is really just a few places away from the likes of Yemen or Belarus.
Looked at it. It is really an index of press/journalistic freedom, not free speech in general with is far broader (private individuals, right to protest, etc.)
The quantitative part will have issues with data quality, and it focuses entirely repression of journalists and the media. It will be heavily distorted anywhere there is prevalent self-censorship.
Well, given that countries are a relatively new thing, that's a question that's complex to answer.
I think what you mean to say is name a European country that wasn't doing all that stuff, because most of the world wasn't. I can name a European one actually, Ireland.
That last bit doesn't sound so great to the non-US ear. Immigration, seriously? Ask MLK or Mahmoud Khalil about free speech. Democracy in America is a whole long conversation, but let's say it's at best of debatable quality.
whew. Well, I and almost everyone I know are the sons and daughters of legal (and some illegal) immigrants to the US. Among us, a small group: Irish, Austrian, Persian, Jewish, Russian, Mexican, Filipina and Haitian. I've actually only met a few people in my life who claimed their family had been here more than 3 generations. My grandparents were illegal aliens who were granted amnesty. As such, almost everyone I know is very pro-immigration. We're all aware that there are nativist forces out there who think America is just a white christian nation, but I don't run into them much.
As far as deporting visa seekers who lied on their forms and are shilling agitprop for terrorist organizations? sure.
Ireland wasn't a country until what, 1916 or something. That's like saying the Czech Republic never invaded anyone. It's not quite clear it was due to any moral high standing, obviously when you're not in any position to do so it's easy to say you never did. What Ireland did excell at was terrorism, (er, anti colonialism) similar to the early anti-British forces in Jewish Palestine, although you wouldn't know it since the IRA went off to train in Iran.
Do you know that showing ANY anti-war symbol in Russia against the invasion of Ukraine will get you arrested?
Do you know how many Tibetans put their lives on the line to organize resistance in Tibet, now, against the genocidal CCP?
Do you know anything about the civil war in Sudan?
So
if the worst human rights abusers in your mind are America, the UK, France and Germany, is that because those are the only countries you can name? Or because you don't understand what the rest of the world is?
It's scale. North Korea is mainly abusing North Korean human rights, the US has brutalised many more countries, not incidentally including Korea.
Yes, I'm very familiar with the Russia situation, but are you trying to say all arrests in the US are completely justifiable? Despite their apparent arrest-happiness, they've a much smaller prison population than the US.
China, I know less about, but let's call the Uighurs and Tibet equivalent to say, Iraq and Libya, the US has done far more besides.
Having worked in the aid business, I'd say I'm sadly a little familiar with Sudan. For example I know they've been victims of US sanctions which have created and exacerbated the famines and economic misery paved the way for this war. The US even lobbed a cruise missile them once.
This sounds obvious: No country extends civil rights abroad that they don't extend to their own citizens. If Russia or China can't even give their own citizens a fair hearing for exercising their opinions against the government, what hope have their colonial subjects?
The US has dominated the western world for 80 years, much of that in battle against adversaries who were much more brutal to their own citizens. Which by extension means more brutal toward innocent bystanders who fell under those adversaries power.
It's a form of confirmation bias to assert now that all the world's maladies and wars stem from American interventionism. One can easily imagine a counter-history in which any of the forces America fought against had run over neutral countries without opposition.
The very fact that South Korea and Taiwan, Germany, Japan, France, the UK, Norway, et al, are democracies with relatively decent human rights records and not, like, slave states subjugated to totalitarian regimes... does that fact not put hundreds of millions of human lives lived in dignity and freedom on our side of the ledger? Unless you think those lives would have just as well have been spent in a concentration camp or a gulag.
> One can easily imagine a counter-history in which any of the forces America fought against had run over neutral countries without opposition
There are examples of that. Tibet, North Korea, Vietnam, Afghanistan, Warsaw pact countries.
On average the US side was MUCH better. There are examples that go the other way (e.g. Afghanistan) and that were bad enough it might have been better with the other side (many South American dictatorships)
South Korea was torn apart by a brutal US-led war; Japan nuked, twice, by the US. For every country where US barbarism has led to stable, peaceful societies, there are countless ruined shells: see Iraq, Afghanistan, Syria, Libya for recent examples.
As far as the outcome of WWII is concerned, I'm presuming this is what you're referring to, Europe owes just as much to the Soviet union in the fight against the Nazis, they gave many more lives. Does that go on the Russian ledger?
> It's a form of confirmation bias to assert now that all the world's maladies and wars stem from American interventionism.
At no point have I claimed this. My claim is that I struggle to think of a country that has a worse human rights record than the US, which I'd lightly tweak for living memory.
What rights does Russia give its citizens? Any? I suppose they're allowed to live as long as they speak not a single word against their boss, and are perfectly obedient slaves...
What rights does Russia give to Ukrainian civilians? Not even a right to live.
Why do you believe everything the western media tells you as they lie about everything relating to Israel and Palestine?
Your North Korea info. America is the one that didn’t allow free elections and invaded (yes I know you will say North Korea invaded. I know what people who repeat every western talking point say).
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How do you think Africa turned out the way it did? Which people in the late 1800s decided to carve up Africa? Which people continue doing [neo]colonialism?
Why is Sudan a country with its borders? It’s the west that did that. A country can’t be free when colonizers draw the borders. Even if you try to bring in the Arab states screwing Sudan up, those states are also a cause of western colonialism.
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Tibet was a slave society and part of China for many many years.
Most Tibetan people speak their native language. How about native Hawaiian or indigenous people in continental US?
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Like I said in another comment. If Xinjiang had been in Europe or America. The Muslims would’ve been genocided. Thank god my people were in Xinjiang China and not elsewhere.
I’d advise you to read Manufacturing Consent and learn more about the world before saying the most typical western talking points.
Supposedly Zimbabwe's new currency ZiG is gold based. Not sure how many people would trust them though. They don't have the best experience with currency...
Absolutely crazy when we see countries like China not be close to as bad as the most evil empire ever, the US. And yet somehow the thought is the US isn’t the worst with human rights.
When I was in my early 20s in Thailand I hated America under George W Bush. I had a conversation with a Tibetan guy who was on his way to sneak into China to help his village in Tibet which had been invaded back in the 50s, then colonized. He was going to help dig wells.
I said to him: "America is just as bad as China! We're becoming the same thing!" This was during the Iraq war.
He stopped me short. He said, "no you cannot compare them, at all, ever. You don't understand. I went to school at [ivy league college]. America is still a democracy. You have no idea how dangerous it is in China."
He was right. I didn't...I was a spoiled kid with good intentions, and no understanding of how much evil there was in the world. You don't have the reference point of experiencing pure evil either to say what you're saying.
Tibet was a slave society. What are you talking about? Tibet was also a part of China for many many years.
America is a liberal western democracy. Just because you disagree with the democracy of China does not make it true.
You know in Tibet, 90%+ of people still speak their native language. Do you know how many indigenous people in Hawaii or the continental US speak their native language? Not close to the same.
I am Muslim. I see what the west does to Muslims. I have looked into Xinjiang. If Xinjiang was near Europe or in America, the Muslims would’ve been genocided.
Because you can easily and cheaply convert USD to any other currency, and because it is the usual currency for international trade you can use it to pay someone else.
Suppose a British company imports tea from Sri Lanka and Kenya, blends and packages it, and exports it to retail chains in multiple countries. If all the buyers pay in the same currency used to pay the suppliers the British company does not have to convert more to GBP than required to meet its costs (and profits!) so loses less on converting currency at all. The usual currency used for this is USD.
we have customers currencies -> USD -> suppliers currencies.
Edit: I have not explained very well in the bit immediately above. The point is that the British company will not need to convert the currency at all as they will be paid in USD and will pay in USD. In most countries you get better rates converting to USD, and its easier to hedge this way. Even more so if there is a longer supply chain as then you get
There are a few wrinkles on this in that customers may already have USD accounts, and suppliers might keep some money in USD, but obviously customers will be paid by their customers in their own currency, and will pay their staff and most other costs in their own currency.
Hard reason: Oil was traded in U.S. dollars. This was basically built off America’s status as the only open superpower and its military strength.
Soft reasons: U.S. political stability (yeah, it’s hard to understand that now after the past decade, but generally the U.S. has been extremely politically stable with Presidents largely maintaining their predecessors foreign policy even if they didn’t agree with them), US company culture which is much cleaner than the rest of the world (American companies are far less likely to bribe, for example), and strong financial institutions like the independent Fed and the publishing of reliable and open data.
Other currencies are not always great: for example, being under sanctions Russia sold oil to India for Indian rupees; then it found out that you cannot simply take rupees abroad or exchange and you need to invest them locally [1].
But I also wonder what's wrong with other currencies and why they are not used more often.
But of course, current US move will greatly help recent Russian efforts in persuading other countries to switch the trade from US-controlled dollars.
>But I also wonder what's wrong with other currencies and why they are not used more often.
I think that they are less stable and more controlled by their countries of origin. The US has, relative to the rest of the world, an exceptionally stable political system, little control over the dollar, and a huge economy.
And you are more than welcome to use the internet if there are terms you don't understand: https://en.wikipedia.org/wiki/Eurodollar (Edit: I see you found d the article, will leave the link for other who are in doubt :) )
If I'm Romanian and my currency is leu (RON) and you're Mexican and your currency is pesos (MXN), you don't want my RON since you can't use it for anything except for imports from Romania and I don't want your MXN since I can only use it for imports from Mexico.
If we both agree on USD, I can go to any other country which wants USD (all of them) and buy whatever I want.
Trading in USD means that all your transactions become known by a third party (US). That is why everyone should be interested in cutting out the middle man.
God damn you nailed it. All the stupid wars for nothing. Rarely do I see anyone talk about these shenanigans as the mechanism to end the reserve status of the $ and the end for influence and affluence. It will breed a lot of resentment from some Americans thinking the world is against them. They could be used for war.
One thing I don’t understand here, genuine question: If, hypothetically, US manufacturing was to become so competitive that the trade deficit would go away, would that have the same disastrous effects for the US dollar as a trade/reserve currency? Or how would that work?
It's impossible for both things to be true. For the dollar to be the reserve currency countries need to accumulate dollars. They can't do that unless more dollars leave the US than come back.
The problem is that countries don't just take the dollars and sit on them. We're on the third iteration of solving this intractable problem:
Try 1 was gold. The US was running out of gold and Nixon had to end redemption of dollars for gold.
Try 2 was assets (think the Japanese buying everything in the 80s). That was unpopular and the Plaza Accords put an end to it with significant damage to the Japanese economy
Try 3 is government debt. But it's the same fundamental problem. The US isn't ever willingly going to give back assets for this debt. Everyone agrees with the polite fiction that the US will and so things are fine. But if they ever expect actual stuff for that debt it will all break down again.
US manufacturing is better than it ever has been by all measures except number of people working in them. This means that there isn't much need for someone to get good at putting a nut on a bolt and other such mindless work that is skilled only in that with a lot of practice you can get really fast as doing it. People who don't want to spend a lot of years in school are thus not doing very well because there isn't much need for people who don't want to use their brain.
It's typical Empire Hubris: thinking you can get away with anything because you are special.
Trump doesn't really know what he's doing. He surrounded himself with yes-men that know perfectly not to contradict him.
The global Dollar order was built to American advantage. Trump is dismantling it for no reason. If the dollar order crumbles, the US will discover it has much lower productivity.
There is no American exceptionalism: it's just Dollar exceptionalism. No Dollar, no exceptionalism.
I agree, losing reserve currency status would make American gdp / living standards to come way closer to Europe for the simple fact it won't be able to permanently increase its debt deficits.
However its far from clear losing reserve status is going to happen, sure some countries will try to diversify but others are probably too tight inside the American umbrella (for defense for example).
But yeah, surprises can happen so interesting times.
> would make American gdp / living standards to come way closer to Europe
Why are you making it sound like EU is a third world country? Are you aware that living standards are higher in many European countries than the US, right?
> Are you aware that living standards are higher in many European countries than the US, right?
If we measure the total pie then its much smaller in Europe than in the U.S (I mean total wealth/gdp per capita). Only small countries like Norway or Switzerland have high gdp, in France or Germany its almost 50% lower than in the U.S.
Now the pie does not distribute equally in the U.S that's true, but still, there are tons of millionaires in the U.S and I mean pretty regular people (doctors, finance, software devs etc) that had they lived in Europe they would have been comfortable and nothing more. think something like 100k Euro a year (at best) instead of 3-5 times as much which is what they make in the U.S. If the U.S loses reserve status there just won't be enough money to go around for those salaries, or if there will there will be a horrible inflation, either way it just wont be sustainable.
P.S - lots of middle class people in the so called rich European countries like Germany or the Netherlands cannot afford heating anymore. So no, it is definitely not third world but its also not particulalrly rich. The main advantage though is Europe has mostly free healthcare and the U.S is an absolute mismanaged mess in that regard.
No. They’re not, anywhere in Europe. This is a mystifying talking point based on wishful thinking and vastly overestimating the non-monetary value of a larger social safety net. The median US citizen is much, much richer. The first quintile US citizen is fairly comparable to first quintile Europeans in income and in-kind transfers.
But it is certainly the case Trump is trying to bring US income down to something closer to EU levels, which will hopefully cause Congress to get its spine back.
> others are probably too tight inside the American umbrella (for defense for example).
The UK is reconsidering. If the bloody UK is not confident, who else would be? They might be too tight inside for now, but that is a strategic weakness and it will only go one way. Short of the US making it a satellite, it will only loosen.
But a large degree of the exception was being excepted from being blown to smithereens during WW2, which is the kind of opportunity that doesn't usually come around twice.
> which is the kind of opportunity that doesn't usually come around twice.
On the contrary, it most definitely did come around twice (hence the 2), and those same geographic advantages are still at play, barring thermonuclear war. It wasn't pure chance that Europe combusted in WW2, Europe had been on fire off and on for hundreds of years. Its geography just lends itself to large scale conflict.
The recent period of peace is an exception, but it's not the first exception and there's good reason to suppose this one won't last forever either.
I could say the same about the period of peace in the USA which is only from 1865 (Edit: 1865 is the civil war, but thought hey let's look, and it seems there were conflicts with Indians up to 1924!) . It is an exception, because before that it was "the wild west", with various conflicts around.
And not sure how this will play out long term, I don't get an impression that USA states are so aligned on everything.
Since you edited to reply to my comment I'm stuck leaving a second reply: the conflicts with Indians were not at all the same as the kind of total war we're talking about with the wars of religion, Napoleonic Wars, and the World Wars. The subject of this thread is wars that lead to mass destruction of national power and lead to other countries taking the lead.
For future reference, it makes for much easier reading if you just reply to me instead of editing your comment to respond. This isn't a Notion doc, it's a forum, and I'm not leaving feedback on an artifact, I'm engaging you in a discussion.
> I could say the same about the period of peace in the USA which is only from 1865
You can't really compare a period of 160 years to a period of 80, especially given that there's war in Europe once again so the streak is already broken.
80 years is actually shorter than the gap between the Napoleonic wars and WW1 (~100 years), and only represents one generation that lived and died without a local war. On the other hand, 160 years out of 249 is 64% of the existence of the US spent in one continuous period of no widespread local conflict, and represents 5 generations that were born and died without any war on their doorstep. How is that an exception?
> Europe had been on fire off and on for hundreds of years.
The point was that armed conflicts also happened on North American soil (even if consider only USA soil) for long time, so not so different for what happened in Europe. The last period of peace is as much an exception for one as it is for the other given a significant part of the history of the continents.
Also, if we think of countries, there were various European countries that did not participate in or had fights on their territory, during neither WWI or WWII (Ireland, Sweden, Switzerland, Portugal, Spain) and some of those did not have a war on their soil for similar as USA ...
> The last period of peace is as much an exception for one as it is for the other given a significant part of the history of the continents.
But... it's not. 160 years of straight uninterrupted time without total war out of 250 makes no-total-war the norm, not the exception. >50% of the last 250 years have been spent in one continuous period of people not having to wonder if bombs would be falling on their heads today.
That's totally different than Europe, whose longest gap between total war was the 100-year gap between Napoleon and WW1.
> Also, if we think of countries, ... some of those did not have a war on their soil for similar as USA
Yes, but those are each the size of a US state, so unsurprisingly didn't lead to them taking the place of world superpower.
If you're going to be criticizing my argument it would be helpful to keep in mind that I was replying to this:
> But a large degree of the exception was being excepted from being blown to smithereens during WW2, which is the kind of opportunity that doesn't usually come around twice.
You're taking things in totally different directions that aren't relevant to the question of how often the US will continue to be the largest Western country with no threat of total war on domestic soil.
Although it now seems as if that was massively inaccurate, things were very near to turning out completely differently in the first days of the war: https://www.youtube.com/watch?v=QlttS0N7uVA
>Not anymore with many nations not all that far behind.
Nothing has changed. The dollar simply has no alternatives. The EU? After the freezing of Russian assets? Uncompetitive. BRICS? Even worse, you have one dictator literally controlling all monetary policy. Gold and bitcoin are too volatile.
By BRICS I've mean China and the Yuan. And in China there is exactly one person, who is deciding how reasonable or unreasonable any policy will be tomorrow.
And they're backing down on just enough woke stuff due to the concern about the lack of participation of checked-out-of-society White men in said (world) war.
Everyone puts taxes on some sectors. It's economic policy. Trump is not doing economic policy. He's using a simple formula to ideologically reduce trade deficit. No matter the consequences!
Trust the experts: America will be poorer because of these tariffs.
Why don’t you show some data supporting a more clearly-stated theory? All countries use economic policy, but there’s usually some kind of strategy involved - for example, the EU has a tariff on American steel and aluminum because that was retaliation from Trump’s earlier tariffs. Similarly, a lot of the EU agricultural duties are both protecting local industries but also enforcing quality or safety standards (this is also the reason for the Australian beef imbalance the President mentioned: they have a strict mad cow containment plan American producers dont follow).
The American action doesn’t follow a discernible strategy other than the fantasy that we can somehow “win” every trade relationship. That’s why you see massive taxes on poor countries we buy a lot of raw materials from - Madagascar can’t afford to buy the kind of expensive goods we primarily make, but we love to buy vanilla, so that trade “deficit” is both voluntary and to our mutual benefit.
"because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy."
You can't inflate your currency to payoff a debt that's due in in a different currency. As soon as you inflate your currency, the exchange rate changes.
The US issues debt in dollars and repays those debts in dollars. The purchasing power of dollars can change due to inflation. If you suddenly increase the global supply of dollars by 2x, dollars that existed prior to the increased supply will be able to purchase less.
That's true for domestic public debt. But in the scenario given by the parent where the dollar falls out of favor, it is assumed that we could be issuing public foreign debt in foreign currency. Even if it was still domestic currency, the FX rate would matter to the foreign investors. Interest rates matter. So does inflation. Money supply is less relevant than the actual inflation it generates. Most debt instruments rely on the interest rates that fluctuate based on monetary policy to combat inflation. Eg your interest on debt will increase as your inflation rate does. Even the world bank will jack up your interest if your currency has issues, such as rampant inflation.
> it is assumed that we could be issuing public foreign debt in foreign currency.
That isn't how it works. You issue bonds, denominated in your own currency, and promise to pay the bearer of the bonds a coupon (interest) and repay the full amount (in USD) at the end of the bonds life.
There are multiple structures for foreign debt instruments, of which your definition is one. Even using your example, the "(in USD)" is the part that might change if USD falls out of favor as the context of this chain is discussing.
> If you suddenly increase the global supply of dollars by 2x, dollars that existed prior to the increased supply will be able to purchase less.
I don't think this is true. The US issues currency in two forms:
1) Deflating dollars
2) Treasury notes
At the time you've issued a T-bill worth $1B, the effect is pretty similar to printing $1B. If interest rates are in-line with inflation, it's a safe way to maintain foreign reserves. If interest rates are higher -- long-term, the US has a problem, and if they're lower, the foreign government has a problem.
But issuing treasury notes is not too dissimilar from printing physical dollar bills.
This comment is good, yet it also reflects a lot of what I dislike about political discourse online.
You've identified a potential severe negative consequence of a change or new policy, but you write as if this is a guaranteed logical corollary and there is no scenario where this consequence does not materialize. This creates an alarmist rather than genuine and analytical tone.
Describing tariffs as a "decapitation strike" feels hyperbolic and even perhaps conspiratorial. Saying this guarantees Chinese hegemony is exaggerated and ignores all the other equally (if not more) significant factors influencing both American and Chinese trajectories. Applying Dalio's broad thesis to tariffs specifically is a stretch -- tariffs may exacerbate tensions Dalio describes, but they aren't necessarily the coup de grace to hegemony.
Basically, you're highlighting real risks and issues, but packaging them in language that overstates their likelihood and doesn't take into account any other factors at play simultaneously. If your goal is to paint a doomsday picture of the future, this works well. If your goal is to understand the impact of tariffs on the world, there's too much emotion and speculation and not enough hard analytical work here.
Yeah, the whole "decapitation strike" talking point betrays a serious bias. It also implies something which no evidence is provided for. The idea that foreign actors got someone elected, then managed to get that person to implement a specific strategy that rapidly destroys the dollar as a reserve currency, all for the benefit of the foreign actor, is quite the stretch.
The Euro is already a reserve currency and makes up about 20% of worldwide reserves. Which is of course not as much as the dollar which is about 60%, but these numbers could of course shift.
The new reserve currency won't be a single country's currency but a basket of currencies, where the ratio contribution of component currencies gets adjusted every once in a while.
BRICS has been proposing a sort of basket mechanism. Bitcoin is not yet thickly enough capitalized. The historical standard was gold for 3000 years, and that's what backed the dollar until that was "temporarily suspended" in 01971. That's the default.
Bitcoin would be the most fair choice for a new reserve currency. It has equivalent properties as gold but is more practical to use, and there's no geographic inequality to mining it.
No government could benefit from manipulating it. How cool is that ?
Apart from having access to cheap energy which is collocated with... specific geographic features like geothermal / hydro energy which not all countries have access to.
Gold was the reserve asset for most part of human history and was less spendable than bitcoins (harder to divide some gold than to send a fraction of a bitcoin).
Who keep it stable ? Well, who keeps gold stable ? Once an asset becomes the reserve asset, it becomes the standard and other things are priced in that unit, or in units derived from it (here's a kilogram of beef, I'll sell it to you for 2 British pounds which are worth x units of reserve asset)
But maybe you're talking about the stability of its inner properties (its supply, for instance). That for sure is not as stable as gold's. But is its distributed consensus stable enough ? That's a good question. So far, so good.
The Chinese yuan is not a viable reserve currency. Why? Because it's pegged to a basket of other currencies. It should really inflate in value but Chinese government policy is to undervalue it to aid exports. Exports are ~20% of China's economy. It would devastate the economy if the yuan was allowed to freely float, or at least float with the level of central bank management that other developed nations' fiat currencies have.
China has repeatedly tried to activate a consumption economy (like the US) but the Chinese just save and buy real estate, in part because there is no retirement benefits so they have to self-fund that.
So what currency? Currently, there is no viable alternative to the US dollar. It is backed by the largest economy in the world AND the US military.
You might find people who talk about BRICS like it's a real thing. It is not. It's just a group of randomly selected countries meant to sound nice (literally, South Africa is only there for the S sound) with no unified policy or currency.
It's not the euro either. Europe ultimately is still dependent on US defence and beholden to US foreign policy.
>It's just a group of randomly selected countries meant to sound nice
Source? Pretty sure BRICS is comprised of the largest regional economies that specifically aren't in the first world, that make for useful alliances for Russia & China specifically.
Africa for a long time didn't have any serious economic contenders for something like BRICS other than South Africa. Nowadays Nigeria is a closer contender on the continent. And of course you have long histories of South African politicians having spent their time in exile during Apartheid in places where they learned to call each other "comrade" even to this day in their political parties. It's not an out of the blue arrangement.
Brazil as far as I'm aware seems to be by far the most economically active in South America too?
India seems like third fiddle to Russia & China in this arrangement as a large economy in Asia.
I’m past the point of thinking people are just being crazy or paranoid. Any baffling move this administration makes, I just ask myself: what would Russia want?
And without fail, it explains the unexplainable. This move is a prime example. This doesn’t help the billionaires in America, it doesn’t help ANYONE in America, but is sure is a massive bailout to a Russian economy that was on the verge of collapse.
I agree tariffs are harmful and counterproductive, even if they're applied by the other side. My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.
It is interesting to note that none of this panic applied when US trading partners imposed tariffs on US.
But if this is part of a larger shift in terms of funding the government, I would be somewhat open minded. For instance, if instead of taxing income, we had tariffs that play a role of basically a sales tax, I think that has some benefits. For one, I think tax policy should encourage productive work (income) as opposed to consumption (sales). So a shift from income to consumption taxes would be a positive development. You can make adjustments so that its progressive (i.e. tax credits to cover the first N dollars in consumption tax). The big problem is the geo-political effect less trade might have and the effect on the markets.
> My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.
The thing is that we don't. That 39% Trump claims Europe is levying on US goods? It doesn't exist. I've heard they include VAT in this which makes no sense because it applies to all goods including those made locally. That is not a trade tariff. It's just internal taxation.
However I've also heard they calculated it with the trade deficit (which in itself makes no sense, it's not a tariff) but in the case of the EU that makes even less sense as Trump always quotes the deficit on goods, but ignores the deficit on services (eg IT) which is highly in favour of the US.
Also when I hear people say "they don't buy American cars in Europe", we do have American brands like Ford and Tesla. Ford just sell smaller models designed for our market here. Those big SUVs and pickups are not suitable for our traffic or environment.
The average effective tariffs on US imports to the EU are 2.7%, whereas for EU imports to the US they are 2.2% (i.e. weighting the various tariff rates by their respective trade volume). So there is a minor imbalance, but imposing 20% (and claiming 39%) is ridiculous.
I agree that if it was part of a grand bargain it wouldn't be so large, which makes me think its either just an insane opening play or it's being used to change how the US funds itself (the second part of my response)
> It is the definitive end to it, and the birth of Chinese hegemony.
I think you’re spot on about the risks of the tariffs (I’m not really sure where I stand on them today), but your arguments don’t produce this conclusion. China is far more protective of its markets, nobody has or will have any interest in trading in any Chinese currency, and tariffs from not just the US but other nations will continue to exacerbate existing problems at home for China.
Companies like Temu came into existence because global pullback on purchasing Chinese manufactured goods is resulting in job losses, and instead of having factories go under the Chinese government would prefer to sell products that very quickly fall apart or are built extremely cheaply or with very poor environmental practices to at least get some money.
Further, while these tariffs seem questionable and everyone is piling on Trump (which is deserved, with prejudice, in my mind), let’s not pretend that the EU, Japan, and others are saints here. They do enact trade barriers to protect their own domestic industries as well. On the tech side for example there’s simply no argument that the EU is fining US tech companies just because they happened to enact policies and rules that the US companies break all the time. Some portion of that is a shakedown or a form of a trade restriction.
That's an over-simplified answer. There are many people who share in the blame. Him for doing it as a visible catalyst, everyone who voted for him, presidential advisers who recommended these disastrous policies, and those who sat idly by and let the country be destroyed without acting to prevent it, especially those with greater-than-ordinary power who failed to act.
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade.
But then they sell it back. What you’re describing is not a trade deficit. To produce trade deficits they need to actually trade with the US. Buying forex does not do that.
> If trade stops occurring in US Dollar, which is a consequence of the stated goal of our current ruling regime, that would be the coup de grace on this country's hegemony. It is the definitive end to it, and the birth of Chinese hegemony.
Nobody will use Chinese currency because it doesn’t float and it’s subject to tight capital controls. Nobody in their right mind would switch to that from outside of China.
You can argue that China could become a hegemony anyway, but that is because everyone wants to trade with them, not because they want to use their currency in 3rd party transactions.
Foreign countries buy USD through trade. Japan needs dollars for international trade so the US Treasury prints dollars and gives them to Japan and in return Japan gives the US Nintendo Switches or whatever. Those dollars go into the international trade system and some of those dollars will just circulate internationally indefinitely and won't ever make their way back to the US, hence the perpetual trade deficit. This is a great deal for the US because at the national level they effectively got those Nintendo Switches for free.
The umbrella could already be gone. There are big question marks over how much the in-practice umbrella looks like the Ukraine war where the US State Department provokes something then Japan gets flattened in the crossfire. How much should they be paying for that?
People are coming out of the 90s mindset where the US was substantially more important than its competitors. It was easily worth paying for US protection then because it was obvious the US could back it up with muscle. Now the calculation is a lot less clear.
This is "broken window fallacy"[1] territory. In economic terms defense spending is mostly waste because a lot of it doesn't get used (hopefully) or gets used to blow other stuff up causing net damage. The fact that it creates jobs is better than nothing, but spending the same money on infrastructure would increase the future productivity of the country.
The defense budget is a social support program that conservatives will agree to. Rather than just providing people a basic income and healthcare directly, they add the hoop of holding down a job to access it.
It also is meant to keep American industry active (to some degree) in case it is needed.
No one else can project conventional military force anywhere on the global like the US. China is getting there but not quite yet. India and Russia are still regional.
The Europeans couldn't deal with a few land pirates practically in their backyard.
That’s not how that works. If Japan needs USD it goes to the forex market. That market represents a massive trade flow.
It doesn’t matter which currency you pick in that world apart from capital control. As long as it’s reasonably stable you flow through it with many billions of dollars a day with ease. The conversions are effectively free because the spreads are tiny.
Using the US dollar to trade between two countries that are not to US does nothing to the the currency. It just shifts a deficit.
People trade in USD because the US is the largest of large economies. Everyone trading in USD understands already that the US can manipulate its own currency. But they take a low-risk bet that it probably would have far less incentive or inclination to do so than an authoritarian state like China or a small economy like Argentina. Capital flows to the US because the dollar has been "safe"... it inflates, but predictably slower. The Chinese regime is more than capable of opening the illusion of free markets and making 50-year promises not to interfere with free trade and capital, tempting foreign investment, only to break those promises with an iron fist.
Regardless of the response from China, America is showing that it is irrationally willing to cede its incredible advantage for no decipherable reason beyond that some logarithmic curve of population idiocy has crossed the already absurd hockey stick of its own national wealth. It's a realtime lesson in the ancient rule dating back to the fertile crescent, that civilizations destroy themselves from within before they're conquered from without.
That doesn’t matter. In modern forex markets you can convert 50 million yen to USD. Do a trade with another country for EUR or whatever. Then convert it back to USD the same day.
These markets are extremely liquid and the longer term trends of the USD value are irrelevant because players can move in and out so quickly. They can even preemptively take short positions or buy options on futures markets to completely derisk an event while holding USD.
This is why “petrodollar is good” analysis in modern forex is completely off-base. At this point it’s become a great flag to indicate someone who doesn’t understand forex and trade at all.
Of all of the things valuable to the US, the petrodollar is about as far down as renaming the Gulf of Mexico the gulf of America.
I think you’re somewhat missing the point, which is that the collapse of the dollar as the reserve currency around the world will eventually lead to default of US debt, which has cascading consequences domestically and internationally. This is the direction the US is heading if it really continues to alienate its allies and try to “fix” its trade deficit.
However, the OP was wrong about the fact that China will become a hegemony, for reasons like you mention, and so what’s likely happening isn’t the change of hegemony, it’s the beginning of the end of the era of the American Empire and to a likely a multi polar world. It’s going to take another world war, in some form, to create enough of a vacuum to give us another superpower/hegemony like we have with the US currently.
Software is easily pirated. It is official policy in Russia now to pirate the software used by enterprises (like SAP, Autocad etc), to own the western libs.
Something tells me that both China and Russia know all this and yet, the US administration is completely blind to it or are naively playing into their hands.
I'm convinced Trump is 100% sincere in his belief that his economic ideas are brilliant and will lead the US to a golden age.
I think his (and much of the far right's) mind is characterized by:
- a deep incuriosity and unwillingness to learn about the world
- extreme overconfidence in his own judgment
- an understanding of the world as being pervasively zero-sum (shared with Putin); your loss = his win
- obsessive preoccupation with the dynamics of humiliation: he feels an extreme need to be perceived as strong and to humiliate his enemies, and he greatly fears being humiliated
I feel like these characteristics explain most of his policy. The idea of tariffs arises from his zero-sum mindset: the only way to gain is by making someone else lose. This is of course factually wrong, but he's too incurious to learn from history or economics. And, of course, he's massively overconfident, so the thought that someone else could know better does not occur to him. And once the ball is rolling, his fear of humiliation will ensure that he has to stay the course. His perceived enemies (which is everyone) have to come crawling to his throne, begging to have their tariffs reduced while praising his brilliant policies, and then he might consider it. So if that doesn't happen, his only options are (a) perpetually retaliating with ever-increasing tariffs, disregarding the consequences entirely; or (b) capitulating in the trade war (lowering or abolishing tariffs) while not admitting that it's a capitulation ("don't worry, my brilliant policy fixed the mass influx of fentanyl and illegal immigrants from Canada, so now we can drop the tariffs on Sri Lanka" or something similarly incoherent).
He’s a spoilt brat who’s never been told no. That’s all it is. He grew up rich. He’s never had to develop himself or face adversity. He’s even been able to fail, over and over again, and still come out on top.
That only explains part of his behavior. Something peculiar to Trump's mindset is the pervasiveness of zero-sum thinking. There is nothing about growing up spoiled that necessarily creates this mindset; in fact I'd expect the opposite (by which I mean, I wouldn't expect people who are never forcibly confronted with scarcity and zero-sum competition, to be obsessed by scarcity and zero-sum competition).
That may be true, but I’d argue that’s just plain stupidity. Animals and toddlers exhibit similar behaviour - not understanding that collaboration and sharing can lead to overall better outcomes.
Due to lack of adversity, his theories have never been tested, only reinforced. He thinks he’s been flying the plane his whole life when really it’s been on autopilot.
Stupidity is a necessary but not a sufficient condition for believing in Trump's particular delusions. You can be stupid and not delude yourself into thinking that others must lose for you to win.
What this analysis is missing is Project 2025. The Heritage Foundation and a hundred other conservative thinktanks, as well as half of Congress are all in on a singular plan to transform America into a backwater shit hole. Trump might earnestly believe these things, but he is not the source of most of his ideas. They are spoonfed to him.
I agree that Project 2025 broadly sets the agenda, but when it comes to tariffs specifically, I'm under the impression that Trump is singularly obsessed with them and the conservative think tanks are, even if they're pro-tariff, uneasy with how far he's going with it.
Don’t forget Curtis Yarvin and his band of billionaire Silicon Valley VC adherents.
People are arguing about the economic rationale here and forgetting the philosophical.
They’ve broadcast a desire to send as much of the world to a new “dark age” as possible so they can sweep in and “save it”, reforming it as they desire. Vis a vis Prospero
There are those in the States who want to devalue the dollar as a pathway to greater industrialization and domestic productive capacity. The idea is to make the US labor force competitive with the rest of the world.
Problem is, reigning in wages for labor after decades of encouraging rampant consumerism and being in the middle of a cost-of-living crisis especially for housing seems like a political earthquake in the making.
Like many of Trump's ideas, maybe they could work if carefully managed over a long period of time so as to give the economy time to readjust but these are not careful managers and patience is not their virtue.
I’ve mentioned this on HN before and I agree. Going backwards will not result in the US going upwards, doing the things that made the US successful until are not the same things that will make the US successful in the future.
Many factory blue collar jobs left the US two decades ago and most of those aren’t coming back yet somehow Trump is infatuated with this idea too.
> There are those in the States who want to devalue the dollar as a pathway to greater industrialization and domestic productive capacity. The idea is to make the US labor force competitive with the rest of the world.
> Problem is, reigning in wages for labor after decades of encouraging rampant consumerism and being in the middle of a cost-of-living crisis especially for housing seems like a political earthquake in the making.
My guess those people are fine with basically converting most of the American labor force into indentured servants but normally politicians wouldn't go for it. Trump probably assumes he is immune to any reaction, let's see.
> This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies
Decapitation Strike seems to be not a general principle that is applying here, but the title of a specific polemic against the Trump administration. Just mentioning for clarity, as it sounded like a general thing warned about in past times that's applicable here.
When the history is written I think the Citizens United decision might be pegged as the end of the American republic. It allowed endless amounts of dark money including foreign money to pour into US elections.
In any case, I think we're seeing the beginning of the Chinese century.
1) Chicago-school interest groups successfully putting people on courts and in the legislature to all but completely eliminate anti-trust enforcement, starting in the '70s. TL;DR policy used to be that a company holding too much market share was per se bad for the country and that the government could act on it, the shift added more tests making it slower (so, also more expensive) and harder to successfully enforce anti-trust, so much so that we all but stopped doing it.
2) Failure to send Nixon to prison.
3) Loss of the Fairness Doctrine under Reagan.
4) Failure to send a whole list of Reagan's folks (and maybe Reagan) to prison over Iran-Contra and other misdeeds. And those same names keep popping up, making things worse for the '90s and '00s. This was a huge mistake.
5) The Democrats totally surrendering economics policy to a newly farther-right [edit: more accurately, a set of policies championed by a certain set of pro-capital right wing interests—we recently saw this totally overthrown by right-populist policy, when Trump took over the party in 2016, which was the most remarkable development in US party politics since the '80s] Republican view, in the '80s, and adopting basically the same policy. This set the stage for the current backlash, because this all-in neoliberal shit was never popular, but persisted because both parties supported it.
6) Loosened media reach ownership rules in the early '00s.
7) CU
8) Nobody at any point finding a way to dismantle the Heritage Foundation and Federalist Society (if you're wondering "how", it seems the NRA had been doing all sorts of illegal shenanigans for a loooong time—I'd be absolutely floored if these two don't have some big ol' skeletons hanging around)
9) We all watch a coup attempt live on TV (re-watch some of the news footage if your memory is fading, it remains shocking) and then the Biden administration dicked around during the six months or so when it might have been possible to go after the leaders of it.
10) The Internet putting intense pressure on the news media, leading to even more profit-focus than before (and see also the loss of various controls above) with nothing done to try to mitigate that.
11) Extreme centralization of control of the narrative online under a handful of platforms (and the narrative is "whatever gets us more eyeballs", see again #11) and nothing done to fix that.
My long term wish is in 40 years, after civil wars/world war and rebuilding efforts, that we discover a better alternative to democracy; we have gone all in on it the past 200+ years and is utterly exploitable in the information age, as the populace gets less informed and more malleable to any malicious actor. It is a pretty fatal problem if the success of your government model depends on citizens not being total idiots.
My anarchist wish is that we figure out that large states have large benefits but also very large downsides. A country as big as many Western countries have simply no business existing, as they are unworkable. How is it realistic to have a functional government for 300 something millions souls and an area the size of the United States?
I assure you that the fantasy of this being a band-aid rip-off moment will turn sour when the sore becomes infected and you're living through a depression.
I believe that's Trump's plan. According to the Triffin Dilemma, the source of US budgetary deficits are due to the USD being the world's reserve currency. Once that's not the case, trade should rebalance to a healthy surplus.
There's no reason to believe that Russia will not continue to be a declining, stumbling, brain-drained backwater hawking a nuclear arsenal over its current borders, Belarus, and The People's Freest and Greatestmost Republic of Donetsk-Luhansk.
"Allies and historians say that his admiration of tariffs is one of his longest and most deeply held policy positions."
In the 1980s, Russia still had a state-run socialist economy, and China was just beginning to grow (albeit quickly) after its 1978 economic reforms. These countries did not purchase Donald Trump's policies.
If you're concerned about foreign influence and foreign money in American elections, you should be much more worried about Australian Rupert Murdoch, for example, who founded Fox News, or South African Elon Musk, who just spent a whopping $250 million to elect Donald Trump and is now personally dismantling the US government (although Musk's money didn't help in the local Wisconsin election), or Israel, which has had one of the most powerful and well-financed lobbies in Washington for decades.
The Pax Americana died during the first week of the Trump administration when he proceeded to turn on practically every single one of US' long standing allies and dissolve NATO for all intents and purposes. All the soft power disappeared right there.
Perhaps the world will be better for it in the end, but it's definitely a turning point. A new world order will emerge and America won't be at the helm.
I'd feel a lot better about it if more countries held values of free speech and democracy. If mainland China were like Taiwan, great. Unfortunately I fear those might just end up being viewed as instruments of America's decline.
I don’t get why it matters what currency people use - all currency is exchangeable, isn’t it? What does it matter if you buy something for dollars or pounds or euros or yen?
If I’m buying 1 barrel of oil for $100, does it matter whether I convert my USD into 150 of this currency or 50 of that currency, according to the current exchange rate, before I pay? I still get 1 barrel of oil, and the seller still received an equivalent to $100 in exchange?
>> Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we make.
This is called Triffin Dilemma- And in many lies at the core of the most basic question every power in history has faced.
That is- You can either be a Geo Economic Super power or a Geo political Super power, You can't be both at the same. You have to chose to be one. China seems to be chosing the former. USA chose to be the latter, but can't seem to be sure about its choices so far.
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD
I'm not convinced it works like that. When a foreign country buys something from another foreign country using USD, the seller country then receives that USD. The seller country then use those dollars do buy something else from a third country - unless they have imbalanced trade and keep accumulating the dollars, like China does. But, in general case, there's only a need for a limited number of USD in circulation to serve as "working capital" for all foreign exchange. There's no need to keep getting new dollars, as the old ones get recirculated.
It is not correct that an Asian business doing business with a Italian company first exchanges their currency to USD by selling the US goods then using that USD to complete the transaction.
I agree with you that the current situation in the world really benefits the US and the current policies seem to undermine that.
> It is not correct that an Asian business doing business with a Italian company first exchanges their currency to USD by selling the US goods then using that USD to complete the transaction.
The only way around that is the EUR. Otherwise, most countries have very little connections to one another. Even neighbors will trade with USD and settle in New York.
If I understand Trump correctly he wants a weaker U.S dollar to make American exports more attractive. I'm not sure though he wants it to become THAT weak that its on longer the reserve currency.
However, simply abandoning the Dollar will prove quite difficult for many countries because there is no clear alternative (the Euro perhaps but it has a tiny market share currently) and also I'm certain Trump will threaten to remove American military support from anyone who dumps the Dollar - so Europe will probably stay, Australia, Canada, Saudi and quite a few more.
It's not "dumping the dollar" that would be a concern. It's bumping US federal treasury bills (the US debt) which are mostly held by China, the UK, Luxembourg, and Canada. If the latter three just dump their T-bills in retaliation (and do nothing else) the dollar will bottom out. Also, the likely buyer is China. End result: China owns the US and the RMB becomes the new reserve currency.
> and also I'm certain Trump will threaten to remove American military support from anyone who dumps the Dollar - so Europe will probably stay, Australia, Canada, Saudi and quite a few more.
Europe already has the mindset US military support is no longer a given. Europe is already re-arming. I wonder if additional threats by the Trump administration are going to make much of a difference. Even though it will take atleast half a decade to re-arm the main adversary, Russia, is currently in no shape to launch any kind of new offensive against a European country.
> I'm not sure though he wants it to become THAT weak that its on longer the reserve currency.
Intentions aside, with big moves like these the question will be how much control he has over what happens next.
> Europe already has the mindset US military support is no longer a given. Europe is already re-arming.
As you said it will take at least half a decade (which sounds quite optimistic to me actually to go from barely any forces at all to independence) and then there are many more unsolved questions like where does Europe get all its energy from - Russia again? It will have to be a mix of U.S LNG and the rest I suppose from Arab/African countries.
Or you could be right , and everyone will dump the USD - I think not though. Europe isn't in good shape as it is, I'm expecting more carefulness going forward.
BTW - I'm not advocating for anything here, I have no personal skin in the game and I think Trump is a horrible bully. I'm just not certain he's a complete idiot yet.
The entirety of this scheme, in its soft and hard power forms, was financed by the parasitic impoverishment of the US populace. Everything the commenters on this site complain about: Runaway inflation, unaffordable housing, extreme financialization, excessive military budget, enrichment of the top, unaffordable healthcare, unjustifiable wars, all of it has partial or total roots in the money printing, artificially low interest rates, colossal trade deficits, and military adventurism that underpin the global US dollar reserve scheme.
I think it apt to boil it down to a binary choice: Either we give up our global empire and allow the multipolar paradigm to emerge for the chance at domestic prosperity, or we grip the iron to the bitter end and force the entire country to become the dystopic open-air homeless cities of the west coast.
Why is it a binary choice? This is just reductive. The idea that we couldn't maintain American hegemony and return more of the benefits of it to the middle/lower classes seems silly.
This is about tearing down a system / world order that a lot of people are angry about, with little thought to how to replace it and make it work for the citizens. The global economy has changed, manufacturing capabilities in the west will never be competitive again for a wide variety of products, and those jobs are not ones that regular Americans want anyway. Just like they don't want the farming jobs that illegal immigrants are doing.
This vision to essentially return America to a idealized view of 1900 is in for a rude awakening.
A wild claim, and then zero explanation as to how it would work, plus the same old tired talking points. If you're trying to convince the populace NOT to democratically give up the global empire, this is a poor attempt.
My on-the-ground experience visiting Portland, Seattle, and LA in just the last few years showed me all I needed to know. I'm not being hyperbolic. Compared to the rest of the country, it's not even a contest.
>The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Its also the golden prize for America's victims, it has to be said.
We can't keep propping up the USA as a moral position to aspire to, when that state continually gets away with mass murder and human rights violations beyond the scale of any other peer.
The USA is the worlds #1 funder of terrorism, and violator of international law on the subject of war.
So its not just about 'enemies'. Its really about victims.
I certainly wont disagree with the US not representing any moral heights especially now, however do you have sources for the US being particularly egregious in relation to its peers in its actions?
Anyone who has been paying attention to the body count since the illegal invasion of Iraq in 2003 can tell you that the rest of the world has a long, long way to go to catch up with the atrocities committed by the American people across the globe, from Iraq to Afghanistan to Syria and Libya, Pakistan and Somalia and Yemen (which the USA and its partners were mass-murdering for 15 years already before the current conflict), and now .. Gaza .. for which the American people are very definitely responsible as major funders and supporters of that particularly vile act of mass murder.
But if you want to inform yourself, follow https://airwars.org/ and look for reports on the matter by trusted sources, such as the Physicians for Social Responsibility, which has produced casualty reports for all of America's illegal, heinously irresponsible wars.
This report for example, from 2015, demonstrated the magnitude and extent of the crimes committed by the American people in Iraq alone - and things have gotten a lot, lot worse since then:
Russia is the number one war criminal in the world. Of course now that Russia owns American leadership, we can partially blame them for American human rights abuses.
That is correct, and this is a terrifying fact to any American nationalist who believes their country can do no wrong, as evidenced by the downvotes of an absolute truth.
>Russia is the number one war criminal in the world.
This is absolutely incorrect by sheer statistics, alone. Anyone making this claim is simply utterly ignorant of the actual statistics, and I challenge you to overcome that personal limitation.
Russia has a long, long way to go to catch up to the +million murders done in Iraq, alone - where the USA has murdered 5% of Iraqs population with its wars (including the continuing deformed baby deaths as a result of the widespread distribution of depleted uranium all over Iraq).
The USA is a major funder and supporter of the mass murder of Gaza - Gaza is just another Mosul, just another Raqqa .. Israel would not be getting away with mass murder if the USA hadn't set the precedent for war crimes and mass murder in multiple other theatres. Russia, too, follows the USA's lead and uses the USA's own prior inculpability for multiple illegal wars to justify its actions.
This is why it is just so dangerous for citizens to allow their nations to commit war crimes and crimes against humanity, and allow those politicians responsible for such acts to go unpunished. This is why it is so irresponsible for the American people to allow their nation to degrade the capabilities of the International Criminal Court, and to fail to prosecute their own war criminals.
Because, if you let your nation do it, you are giving carte blanche to any other nation in the world to do it too. And that is precisely why states such as Russia and Israel are wilfully committing mass murder - under the cover of the prior unprosecuted crimes of extraordinary magnitude committed by the American people and their representatives.
If you want to do something effective about Russia and Israel, Americans, you must first prosecute your own war criminals and establish the international precedent for those prosecutions which can be used against Russian and Israeli war criminals, also. Leaving your own war criminals unpunished gives a free ride to all other nations, who will gleefully follow you into the madness - and have done so now, for 25 years of the utterly atrocious "war on terror", in which the American people gave themselves the ultimate right to destroy any state their callous rulling class - factually fundamentalist racists - decides is inferior to their own.
I agree that the US bears significant responsibility for the ~5% civilian deaths in Iraq. These were through:
1) Direct combat fatalities (~15% of casualties)
2) Failing to stabilize Iraq post-invasion
3) Enabling conditions for prolonged conflict
However, attributing all excess deaths solely to the US oversimplifies the role of insurgent groups, regional actors, and preexisting sectarian tensions. The invasion’s destabilizing effects created a chain reaction with shared accountability.
Furthermore, calling it murder is disingenuous. Murder requires both premeditation and deliberate intent.
A lot of people fundamentally misunderstand why trade happens in USD and what creates demand for USD.
For example, you hear people say that the US invaded Iraq because Iraq was threatening to denominate oil sales in the euro. This particular conspiracy theory used to be more popular ~20 years ago for obvious reasons. Even if true, it's absolutely no threat to the petrodollar. You could sell oil in euros and what would most sellers then do? Immediately convert those euros into USD.
Trade occurs in USD because there's demand for USD not the other way around.
What really underpins the USD is the US military and the US still being the largest economy. So the USD will remain the global reserve currency up until the US collapses and/or another power rises to displace it, which really means the same thing at this point. That might ultimately be China but it's not yet and the Chinese yuan is wholly unsuitable to be a global reserve currency currently.
> until the US collapses and/or another power rises to displace it, which really means the same thing at this point. That might ultimately be China but it's not yet
I imagine the Euro is a contender also even though the EU it's not one homogenous power.
> and the Chinese yuan is wholly unsuitable to be a global reserve currency currently.
Curious why you say this? I was considering holding some EUR and CNY in the event that one of those becomes a replacement for USD
1. Europe is still dependent upon the US military and, as a consequence, is beholden to US foreign policy; and
2. No unified fiscal policy.
As for the unsuitability of the yuan, there are several reasons:
1. The yuan was once pegged to the US dollar. It's now pegged to a basket of currencies instead. This, by definition, makes China a currency manipulator because you wouldn't need to peg the currency otherwise;
2. The yuan is undervalued by this manipulation. It should really be more expensive, making China's exports more expensive. China does this to maintain their export competitiveness. If anything, increased demand for the yuan would be unwelcome as it would increase the pressure to appreciate the yuan;
3. China runs a trade surplus. It's basically inevitable that the country with the reserve currency will run a deficit;
4. The US running a government deficit is actually kind of a good thing for maintaining a reserve currency. China, for example, holds trillions in US government bonds. Do you really think they want to upset that apple cart?
The Trump admin wants to devalue the dollar substantially, enact protectionism and maintain its reserve status. I can see them succeed with the latter two, but with these actions, the world has no choice but to move away from the USD as the reserve currency. It will take many years, but whatever replaces it certainly won't be to the US's advantage.
Maybe Russia, that's the only country which has not been slapped with tariffs. Apart from Russia, there are nuances. There are peaceful enemies like the EU, Canada, Australia etc. and there are threatening enemies like the Houthis or Iran.
My take on all this is that everyone seems focused on the U.S. dollar’s dominance, the empire, trade deficits, and exchange rates. And sure, there’s some validity to that, but the real issue, or really the real goal, is getting people back to work.
You might not see it, and maybe I don’t fully see it either, but as office workers, bureaucrats, and technologists staring at screens all day, we’ve lost sight of the fact that America no longer produces like it used to. Yes, there are still people out there working with their hands, feeding the country, and running small industries. But broadly speaking, the U.S. relies heavily on other countries for complex manufacturing — for actual building. Shipbuilding is just one obvious example. A lot of critical industries have withered to the point where they can't even meet domestic demand, let alone compete globally. Meanwhile, other countries are pushing forward in tech, producing better, more efficient, more productive products — and pulling ahead.
It’s not happening all at once. It’s a slow decay. Generational knowledge industrial skills, trades, machinists are all fading. And when those go, the backbone of resilience and self-sufficiency starts to collapse. A nation that can’t produce can’t stand. Export power becomes a dream.
And I think part of the issue is that we’ve become lazy. People don’t want to work anymore — they want things handed to them. Entitlements, bonuses, luxury homes, multiple cars, the works. But someone has to build all that. Someone has to maintain the food supply. Someone has to assemble the vehicles. Someone has to keep production alive. Yes, technology can help fill gaps, and we’ve done amazing things — and still do — but America’s edge in tech? That’s slipping away. China has surpassed the U.S. in key areas of advanced technologies, auto manufacturing, aerospace, and absolutely obliterating in shipbuilding. U.S. industry? Ashes in many places.
So what’s the answer? Unfortunately, hardship. Nobody likes to say it, but raising prices and tightening the belt forces people to make hard choices. And when that happens, the jobs that matter won’t be office jobs or desk jobs — they’ll be builders, machinists, welders, factory workers. Producers. And those jobs will start commanding the wages. People who’ve been unemployed or living on subsidies will be pushed — or pulled — back into that kind of work. Slowly, painfully, maybe, but steadily. And maybe, just maybe, we’ll rebuild that base. Maybe industry will return. Maybe factories and production will grow again.
That’s the end goal here; even if we don’t like how it’s being done. Even if it’s painful. Even if it doesn’t work the way it’s intended. Because maybe we’re not as strong as we think we are. Maybe we fail. It’s happened before — look at the USSR collapse. It was a fake economy built on fake production and apathy. They endured 20 years of hardship, and they’re still trying to catch up.
So yeah, that’s where I think we’re headed. Is Trump the guy to do it? He’s doing it. Someone had to. Is it the right way? I don’t know. Is it going to work? No clue. Will we succeed? Who knows. Or maybe we just keep punting the problem further down the road; business as usual — until it breaks completely.
But either way, the path forward is either a slow crumble followed by a rebuild, or a brutal reset with the hope of rebuilding something stronger on the other side.
Not one single job was moved offshore by a foreign country. Every single one was moved offshore by an American business looking to reduce costs and increase the quarterly bottom line.
Now they're run out of jobs to move offshore and they're looking to the government for the next handout. This time, it's by adding a new tax on Americans on what they buy from overseas.
The people to blame for the economic problems are rich Americans, and the solution is to increase taxes on poor Americans, but the story is that the problem is foreign devils and the solution is to make them pay. The misdirection is working and the magic trick is successful.
> Not one single job was moved offshore by a foreign country. Every single one was moved offshore by an American business looking to reduce costs and increase the quarterly bottom line.
That’s something I haven’t thought about. Is there a 25% tariff on importing knowledge work? In the consulting world that would make onshore teams more competitive. Well you’d need about a 500% tariff to make it close.
> Every single one was moved offshore by an American business looking to reduce costs and increase the quarterly bottom line.
> This time, it's by adding a new tax on Americans on what they buy from overseas.
If adding/increasing tax on product oversees increases the costs of said products, wouldn't American business look to reduce cost by moving back to America?
If I understand correctly that's what Trump is trying to do.
Yes, this is the theory. Also to return manufacturing to the US, for jobs but also for national security. If a major war breaks out, which is more likely than in the past 2 decades, we can't effectively fight without a strong manufacturing base.
US businesses who offshored all the US manufacturing jobs now have their day of reckoning. The government can't really say, "move your jobs back," without some sort of constitutional change, they can only incentivize businesses do so, ergo tariffs on offshore labor / goods.
"A nation that can’t produce [physical goods] can’t stand."
Based on what evidence?
"And I think part of the issue is that we’ve become lazy. People don’t want to work anymore"
Americans work more hours per week than a majority of countries. Low-paying factory jobs are off-shored because they're low-paying.
"So what’s the answer? Unfortunately, hardship."
You probably should do more research on the subject, and successful onshoring regimes that have been implemented by other countries. If you, for e.g., determine that America needs to produce a certain quantity of semi-conductors to insulate from various natsec risks, there are ways to tackle that problem and usually they don't involve hoping an onshore industry magically appears because you've haphazardly shivved trade across the board.
> And I think part of the issue is that we’ve become lazy. People don’t want to work anymore — they want things handed to them. Entitlements, bonuses, luxury homes, multiple cars, the works. But someone has to build all that. Someone has to maintain the food supply. Someone has to assemble the vehicles. Someone has to keep production alive. Yes, technology can help fill gaps, and we’ve done amazing things — and still do — but America’s edge in tech? That’s slipping away. China has surpassed the U.S. in key areas of advanced technologies, auto manufacturing, aerospace, and absolutely obliterating in shipbuilding. U.S. industry? Ashes in many places.
It has nothing to do with "people being lazy" and everything to do with poorly-run companies combined with globalization.
This started in the 70s/80s with American auto manufacturers. The Japanese cars were much more fuel efficient and a much more robust build. The line worker wasn't responsible for that, management is.
Then the global free trade / NAFTA in the 90s. Ross Perot was as popular as he was, because a big segment of the US population saw this coming.
That all seems built on some romantic notion that a job making physical objects ("working with their hands") is fundamentally better than a job providing a service ("staring at screens"). But it's not obvious there is a lot of factual support for the idea, either on the level of individual jobs or the economy as a whole. You could certainly use protectionist barriers or subsidies to try to force industries like ship building back to the US, but would the US really be economically better off overall if you did so?
That said, it's really irrelevant since Trump's current approach isn't looking to support specific industries or outcomes, it's just across the board tariffs on everything. We're not just going to have to build our own ships or cars, but grow our own coffee and bananas. Targeted, strategic tariffs and subsidies on the industries we want to support could be arguable, but this is not that.
The US can use internal policies to support the industries and skills you mentioned. Tariffs as implemented, and greatly damaging longstanding relationships with allies, will have the opposite effect. The existing lead in services will be lost, consumption will drop, and the increase in production of goods due to tariffs won't offset it. I would recommend you read the outcome of the Smoot Hawley tariffs.
I hate this mindset that Americans are lazy, they are usually some of the hardest working people in the globe. The wealthy are greedy, and wealth and power continue to concentrate at the top while infrastructure, working conditions and public services crumble. I don't fault anyone for not wanting to contribute to that, quite the opposite. I don't see how the jobs you mentioned are going to start commanding better wages when everyone has to rush to do them because there are no more options.
Yes... and no. Having own currency as a global reserve currency has its disadvantages too. For instance it keeps value of the currency high, what makes whole USA production noncompetitive. USA exports two things: internet services (all those Googles, Facebooks, etc.) and military equipment.
The problem is that internet services are making rich small group of people (owners, software engineers), military production is a niche, so there is a big group of people who lose jobs, are on low paying positions, as being, say, a car factory worker, does not bring enough money. Those people voted Trump, so Trump is trying to solve their issue by bringing back production back to USA, and the way to do this is twofold: make USD weaker and make foreign goods more expensive.
All this was not a problem till early '00, when USA didn't have much competition (basically Western Europe and Japan), but the times has changed and USA is seeing that. BTW this is not a Trump thing, Obama, Biden administrations were also noticing that and taking actions, like (in)famous Obama reset with Russia to be able to expand trade over there. "Pivot" to Asia - failed Biden project of Indo-Pacific, that was supposed to convince Vietnam and others to follow USA job regulations, what would make their products more expensive. Surprisingly, they told Biden to go away...
Another thing is that for years USA was in a sense donating European industry, for instance taxes on European cars in USA were 2%, while taxes on American cars in Europe (that is European Union) were 10%. Trump puts this to an end.
>Another thing is that for years USA was in a sense donating European industry,
Sure and Europe is not at all donating to US arms industry or to US tech sector? Europe is pretty liberal about letting US dominate those domains inside the EU, without opposing that. Plus in geopolitics it simply follows the US, that's sort of been the deal.
Seems like this US leadership thinks it can both have its cake and eat it.
Tech giants have no competition in Europe and no capital to do so. In some ways, what Trump is doing is a call to arms for the EU to kick their economies into shape.
We've been stuck in 0 growth for years, the UK is in a 0 growth trap since the GFC.
> For instance it keeps value of the currency high, what makes whole USA production noncompetitive.
But devaluation of the currency will hurt people who have savings in this currency, and cause higher inflation, right? On the other hand, paying back loans and mortgages becomes much easier.
More people are in debt than have savings, the government itself included. Populism (of both left and right varieties) is surely associated with inflation.
There is no American hegemony in this current day and age. Probably dead like 15 years ago.
Say what you well regarding Trump, he understands this.
Trump is a smart man to spot problems, but he surely didn't know how to do it in a way that doesn't lead to self harm. He crazes for a bombastic firework that demands for all and any attention.
The US version of capitalistic economy has driven its internal inequality to the point the political system can no longer sustain it, while in the meantime, doesn't have an established social safe net, as major European countries have. So the populace elected Trump to root it up.
It is absurd, it is ridiculous, but deep down it is logical. Weird and dangerous time ahead.
If he isn't a smart man, he can't be US president TWICE. Or being book smart is irrelevant. He didn't talk the way the political class prefers for sure, but it doesn't matter.
I judge things by outcomes, even Trump doesn't lack any credentials.
> If he isn't a smart man, he can't be US president TWICE.
or, maybe those who voted for him are dumber than him!!
Getting a job, aka campaigning in elections, is very different from knowing how to do the job! During the 2024 campaign, he told everyone whatever they wanted to hear—cheap prices on day 1, a reduction in inflation, home loans, and the end of wars. He fooled and lied to everyone. Burnt by high prices, people trusted him. Sure, he could be called "smart" to con the voters, but still too DUMB to understand how the government works especially in the US. Every day, he picks a new fight with someone :-)
This is why I don't get why my EU people are attacking Trump - he singlehandedly gave Europe political capital to rebuild itself as an independent player on the international stage. He created an environment where tighter EU integration might take precedence over petty interest squabbles. For example in what other scenario would Germany making massive investments in military be politically acceptable ? Even talking about military on EU level ?
Framing this as purely a win for China and Russia is very partisan, this has potential for all non-US countries to get away from under US thumb long term and at least for that we should be grateful to mr. Trump, from his foreign policy it seems like he is not interested in those games as he views them a net loss for US.
And the Greenland situation is showing us exactly what happens when you position yourself as leech on US military/NATO.
I don't think anyone has a problem with europe being a more independent player, it becoming a necessity is what people are upset about. I'd rather have germany make massive investments in infrastructure and health reform than its military.
This line of thinking is exactly what got us into this situation. If you want to outsource your defense how can you be surprised when you get ignored in the Ukraine discussions and when the US feels free to just annex parts of your territory. What's your recourse ?
The 'outsourcing' has always been for the benefit of US defence corporations.
There were a number of occasions in the 50s to 70s when the US stepped in directly to neuter world-leading aerospace projects in the UK, forcing the UK to buy from the US instead.
Virtually all of the cost of the UK's Trident deterrent goes to the US.
And it would be unwise to write off the EU, especially now there's a mass exodus of researchers from the US.
>There were a number of occasions in the 50s to 70s when the US stepped in directly to neuter world-leading aerospace projects in the UK, forcing the UK to buy from the US instead.
Exactly, and with the recent moves Trump administration is directly calling out EU to arm - so a good development in my book.
It’s weirder than this though. Why would Europe need to rearm? If it’s to defend against potential enemies, why is the US cosying up with those same countries?
There is no free trade, EU was tariff heavy and protectionist since forever, in fact that's probably the primary motivator for creating it - a single European market where they get to control the imports. Trump is brash and escalating it suddenly but this game is not new.
I'm all in favor of Europe merging more tightly, scale brings a lot of benefits - moves Trump is making are forcing EU members in this direction where they otherwise wouldn't go so easily for petty interests.
> There is no free trade, EU was tariff heavy and protectionist since forever
To add to this as an EU citizen, try and buy any good from the US as a private EU citizen: not only will you be visited with a bill for 25 percent of what you paid, you will also pay a truly staggering "handling fee" to essentially state-sponsored grifters (here in Denmark called "Told") that will ensure you never buy anything from the US again.
The US had de minimis allowing US citizens to buy most anything they could imagine from abroad without additional fees on import, which Trump has now thrown out the window, but I can't help but feel we're getting our just desserts here.
> This line of thinking is exactly what got us into this situation.
This is exactly right and it is insane that people don't see this. The dysfunction that Pax Americana has inflicted upon Europe must go away. A continent that cannot defend itself is not a sovereign continent.
>This is why I don't get why my EU people are attacking Trump - he singlehandedly gave Europe political capital to rebuild itself as an independent player on the international stage.
What a completely baffling statement. It's like saying the left arm should be grateful that the right arm cut itself off of the body because now the left arm has to strengthen itself. Sabotaging the alliance system that has prevailed since World War II leaving both Europe and the United States more dangerously exposed and compromising the safety of our shared democratic values that were once the bedrock of our alliance.
It's so obviously catastrophic that I can't fathom how someone would try to portray this as a win other than out of an appetite for a JV debate team sophistry. Europe is banding together not out of positive diplomatic achievements, but in the same sense that they would band together if a meteor is headed toward Earth and you're asking us to thank the meteor.
Some say many EU politicians are compromised by Russia and China...
I know squabbling is the norm for European countries but I feel there are some recent big own goals. Crazy how we can't get our crap together in such times. (Crazy opinion: UK needs to be in the EU again to be the grown up in the trio of UK, France and Germany)
The UK will need a lot of time to be seen again as a grown-up, after electing a string of buffoons and cutting off its nose to spite its face. Even though Starmer looks more stable, a large part of that look is due to his opposition being in complete chaos and functionally useless.
Because they would prefer functional pro democratic world rather then constant struggle for domination with fascists from Russia and USA at the same time. EU people don't want to become poorer or suffer, not even to "own the USA".
Europeans you talk about see Russia as a threat. They are not fascists themselves, so Germany having to arm itself more because Russia just got new ally is not a good news.
So when you get other people paying your defense bill, don't be surprised when your territory gets annexed and you get left out of the conversation on the Ukraine issue ?
Probably to give Russia concessions in the Ukraine negotiations.
In my opinion Trump is trying to do everything he said he would in his campaign, he is trying to get the war in Ukraine over ASAP and be the peace bringer.
Even in the leaked Vance messages you saw his view on Europe, which I have to agree with in that case. They feel like they are getting screwed in the EU-US relations and they are looking to pull support, ignoring what the OP said about them being the reserve currency/global police. I guess they see that as a bad deal.
I think big picture Trump sees Russia as a regional player and China as US main rival so he doesn't really care about pushing Russia or "winning" in Ukraine. The minerals deal looks like he wants to show he got something for the money spent compared to Biden.
Well, EU did paid and supported Ukraine. EU are not the ones who allied themselves with Russia and tried to bully Ukraine into giving them minerals for nothing in return. America is the only country that took others in NATO into war under article 5. Ukraine was also left out of that conversation, this was just Trump being openly pro-Russia.
>EU are not the ones who allied themselves with Russia
Need I remind you that Angela Merkel set the stage for all these Russia moves by building german "green transition" on Russian "green gas" ?
From what I'm seeing in Trump moves he doesn't care about Ukraine or Russia much other than showing his supporters how he ended the war that "Biden let happen" according to him. And the minerals deal to show he got their money back that Biden was giving away for free. Not really seeing any Russia alliance other than not buying into the Ukraines vision for the outcome of the war.
I did not said they are perfect and prescient and saint. They are not like Trump.
Trump who openly admires Putin. His latest moves were literally trying to steal from Ukraine with nothing in return. Who even declared America free from Russian meddling.
They are just not like the guy who tried to extort the Ukraine to hurt his political ennemies, they are not openly praising Putin, they are not giving concessions to Putin ... while lying on TV in front of Ukrainian president ... and then having complete meltdown when he factually corrects you
Like common ... Merkel and Trump are here completely uncomparable.
Because it's a bit like someone telling you that they're going to burn your house down so you can claim on the insurance and you'll be better off.
It might be technically true in some circumstances, but I still don't want some jackass burning my house down thanks, I like my house. That's why I live there.
Both the French and the Poles are urging Germany to rearm. As well as the EU, actually, through both the commission and the parliament. The whole "European countries are afraid of Germany invading" argument is not really a thing.
For context: the French and the German have been alternatively at war and allies since the times of Clovis and Charlemagne, a millenium before Bismark made modern Germany a thing (in occupied Versailles, in what was perfectly calibrated to be a complete French humiliation). And the Poles were on the wrong side of brutal occupation and a genocide during WWII. So both countries would have good reasons to be very skeptical of a powerful Germany.
The EU is not worried about Germany re-arming, as the world has changed dramatically since WW2 and we have much stronger bonds in Europe than we did when Nazi Germany was around.
Last century there was the big two, World War One and World War Two. If you go back further it’s more complicated, but the short answer is that Germanic states got into wars with their neighbours a lot. The Wikipedia article has categories.
The real traitor is Biden who handed the presidency to Trump and only cared about covering himself and his family asses. I think that was the point where you realize the democrats have just given up and did their part of selling the country. Some people must be now moving Bitcoin, Gold and other valuables out of the country before the big unveiling kinda like what happened with the soviet union.
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Why is the reserve dollar good for Americans? Arguments in favor of reserve currency status make the U.S. economy seem utterly fake. It’s as if the world is paying us to maintain borders frozen in 1945.
It stops them from having to address their national debt, has allowed for incredible spending and the arguably pushed humanity forward with the wonderful inventions. Without it, it will be interesting to see how the future unfolds.
What most people don’t see is that we are basically under “shadow austerity” to correct for the not so hyperinflation we saw post COVID.
It is a combination of post WW2 Britain (China is the US in that analogy) - this helps to explain the Canada and Greenland issue; and Volcker era stagflation economics. It will not get any better in the short term, but there is likely to be substantial growth in the long term as a result.
What that means is the fed likely won’t reduce rates, and it may reduce its rate decrease to 1 this year, if even that. It is entirely possible the rate doesn’t come down at all.
Expect Layoffs to come, as the fed doesn’t seem to care about unemployment as its target is on inflation. Many zirp era businesses and funds will fail. Less cereal and eggs for the same dollar.
I am really hoping we don’t start to de-anchor from 2% inflation as a result of all this. I wonder how various US infrastructure projects can and will be financed. Reduction in entitlements. Possibly some type of mandate to hold treasuries.
Are we surprised? If anyone watched the presidential debates VP Kamala Harris told us about this.
From September 2024:
"What Goldman Sachs has said is that Donald Trump's plan would make the economy worse. Mine would strengthen the economy. What the Wharton School has said is Donald Trump's plan would actually explode the deficit. Sixteen Nobel laureates have described his economic plan as something that would increase inflation and by the middle of next year would invite a recession."
Emphasis on that last line:
would increase inflation and by the middle of next year would invite a recession.
btw the US Congress can stop this anytime they want.
Inheriting a strong economy beating all expectations that was just about to end its fight with inflation and burning it all away in a pump and dump crypto scheme fashion, while doing nothing (or even working to expand) unprecedented wealth inequality. Good luck, going to need it. The world reserve currency status is faltering, and so will the benefits it allowed US economy.
The economy has not been 'strong' since at least 2019.
CPI is a joke that just subs out everything when it gets more expensive. Oh food is only up 3%, let's ignore we were pricing beef and eggs and now we're subbing in chicken and tofu.
Inflation has been borderline runaway from 2019-2024. Just ask anyone who isn't rich.
That's the part where "unprecedented wealth inequality" comes in. By most metrics, 2024 was an excellent year and the US was far ahead other developed countries [0] in growth, labor market, consumer spending, net household wealth, and much more; the fundamentals were solid and no figures could point to a major economic downturn at that point, certainly not in a predictable manner. In 2025 the 90th percentile accounts for over half all consumer spending, the median household hasn't reaped the same benefits high-income, high-spending ones have. There is no indication this will change, and may get worse with the current and proposed policies.
If there is a deficit at all. Looking at the monetary flows it seems most of the deficit outflows where just flowing back into the US through the stock market.
> If American consumers or the American government borrow to consume, what you say is right
Consumer borrowing is paid back, so it does not contribute to inflation. Government just issues more debt to pay off the debt, and that leads to collapse.
> US monetary policy for decades now that the deficit doesn't really matter
AKA kicking the can down the road. The bill will come due.
The US economy was not strong in 2024. Cost of living was literally the most important election issue, and it is what decided the election undoubtedly.
It's partially because elites said 'the economy is great! look at my stocks!' while consumer goods had increased in price by 100% or more in only 4 years.
My dumb ass invested money in usa stocks when trump got elected because trump is pro business, right ? Should have invested in Asia, today china is the usa from 40 year ago.
China would be very risky. Trump in his previous term declared a trade war with china, and there is every reason to think he would again. China is also make geopolitical moves that give a significant chance of war in SE asia. I wouldn't invest there.
Now investing in Brazil or something might make sense.
Side concern: how impactful must the tarrifs be to make a noticable dent in global trend, and a noticable dent on climate change ?
(I mean, it would not be noticed by the USA anymore, since they're not into that whole "science" stuff, but I heard that Europeans have learned how to make a couple satellites on the side.)
The way I see it, it is more like a very-high initial negotiation position. From here on, each country will be dealt with individually. You accept our terms and get 5% discount on tariff ! Every country has a set of red lines. Fewer the red lines better they will be placed in one-to-one "trade agreements".
EDIT: Someone from white-house explicitly declined tariff to be a negotiation. Next few days will be interesting.
Maybe if the US would clean up their production to what people actually want to buy it would help.
EU does not just randomly target US products. No EU company would be allowed to sell food with the same processes (GMO, prohibited additives, medication traces, ...)
The US is just running into these restrictions more than others because of their (lack of) health and safety standards being at odds with other markets.
So, if the tarrifs lead to the world actually being able to buy something produced in the US with the dollars they were forced to accept, something real besides war equipment and (stale) IP bits, the problem would sort itself.
At least the EU has discovered 'sovereignty', after ignoring it to the hilt for the last 55 years. Ringing up the concept even a year ago was at best met with a shrug and more often with a 'conspiracy theory' label. Sadly I don't even think they mean it, but I would be pleasantly surprised.
Am I wrong to intuit that tariffs against everyone is less bad than tariffs against a few, because now the rest of the world has even more potentially willing replacement trade partners?
Trump really thinks America is in the 1950's. He thinks people want to work at factories doing manual labor. He doesn't understand that we DON'T want to work at factories. Americans like our plush corporate office jobs building intellectual property. We aren't oxen doing physical labor.
And we designed it that way. We pay thousands of dollars to each citizen in our public schools to teach them calculus, literature, world history, and science, so that they DON'T work at factories doing manual labor like we were oxen. We're supposed to be doing more valuable jobs in intellectual property and services.
It's going to be hard lesson to be learned by Trump and his working class supporters when the inflation hits them because our economy doesn't have any workers that want to work at factories, but it'll have to be a lesson they learn the hard way.
The correct economy is to let people do labor they're best at. If a foreigner can make a shirt cheaper than an American can, LET THEM. Our economy is already taken by the people that design the shirts.
Especially given the luxury lifestyle that even the poorest suburban 20-something American male lives in today. They get to play video games all day and watch any movie at home with any food from around the world that can show up at their doorstep of their parents home at a moments notice. The aristocrats of 150 years ago could NEVER imagine such luxuries.
And Trump expects our population of suburban aristocrats to work hard at factories...
Well, the unfortunate beauty of touching the incredibly hot stove of Tariffs is that the pain is immediate and obvious. So assuming that these tariffs go through as is, we'll immediately launch into one of the worst recessions we've seen with price increases unlike anything Americans are used to.
A tariff of some +x% doesn’t cause a +x% increase in retail prices. The ratio is somewhere between 2:1 and 10:1 for most products, depending on the markup, local value add, taxes, etc…
The real damage is business uncertainty, inefficient capital allocation, etc… all of which takes years to fully impact the economy.
Uncertainty will be priced into the price of things moving forward, I’ve already started adding 10-15% to my BoM over today’s prices to account for the possibility of future price increases and I’m definitely not the only one.
This is only true in the ordinary situation of using tariffs. Such as targeting specific markets or exports in order to bolster the local market.
Tariffs on literally everything have an immediate outsized impact as businesses need to rapidly readjust and renegotiate prices on everything. Not only that but there's the second order effects too, such as Trump's interactions with Canada resulting in destroying tourist and seasonal travel from up north to the border states.
Yes. They - or other poor countries - are. And it's their responsibility to grow their citizenry in a neoliberal world. Economics doesn't care about liberal concern tools.
China eliminated poverty through neoliberalism. The rest of the world can, too. This is the benefit of neoliberalism: it lifts the world out of poverty through free trade and self-selected efficiency.
China didnt eliminate poverty, it merely shifted dirty work to other poor countries (other SE asian countries). Just like the US did. Just like all countries will do until they run out of poor countries and the pyramid scheme of globalization collapses.
Not everyone gets to have a cushy intellectual office job. Somebody has to do the coal mining.
So, none of that matters to what I said, since I specifically talked about eliminating poverty. That's what a "straw man" argument actually is, when you decide to argue against something else entirely, like foreign intervention, instead of poverty.
Now you're getting it. Adamantly trying to focus on "eliminating poverty", when my original comment was about the morality of neoliberalism, is a straw man argument. I'm glad that after enough contemplation you have come to understand this.
So, if you'd like to address my original comment, I'm all ears, otherwise this discussion is a complete waste of time. Before you do that, though, it would be prudent to learn about what neoliberalism actually is, and why foreign intervention is directly related to it and your original premise. Once you do that, we'll be able to have a fruitful discussion.
An excerpt from The Divide:
> People commonly think of neoliberalism as an ideology that promotes totally free markets, where the state retreats from the scene and abandons all interventionist policies. But if we step back a bit, it becomes clear that the extension of neoliberalism has entailed powerful new forms of state intervention. The creation of a global 'free market' required not only violent coups and dictatorships backed by Western governments, but also the invention of a totalizing global bureaucracy – the World Bank, the IMF, the WTO and bilateral free-trade agreements – with reams of new laws, backed up by the military power of the United States
You are fixated on a straw man, clearly too ignorant of the subject material to have a discussion on this.
I provided resources. Read them and get back to me, otherwise there is no reason to continue, since your aim seems to be controlling the narrative and not actually engaging in substantial discussion.
This doesn’t sound like you want to eliminate poverty?
You complain I brought up the straw man of poverty, but that's the entire point of neoliberalism: to make people wealthy. It's NOT to start wars or bring disease or famine or whatever. It's an economic system designed to bring about wealth, as demonstrated by neoliberal policies that removed poverty from much of the third world.
This is why I don’t trust socialist: I have never heard a socialist say “I want to eliminate poverty”. And in fact, they seem to take pride in being impoverished while being ashamed of any bit of wealth.
It’s Ok to have nice things. You DON’T have to be poor.
We don't care if people are rich. We are if they are poor, and we believe that's a problem.
And our track record of eliminating poverty around the world over the last 50 years through neoliberal free trade should be celebrated, not discouraged.
Again, I have no interest in engaging with someone who is clearly extremely ignorant about neoliberalism and US foreign policy, and who is fixated on engaging in straw man arguments. Stop embarrassing yourself and let it go.
Instead of congratulating yourself on your sheer brilliance all the time and how you like to declare yourself to be superior, maybe look at why your arguments aren't convincing to others?
I'd recommend you take a point-by-point look at what you're saying vs what I said and see if what you said had any relevance to any of my literal sentences.
Let it go. You're not even discussing the subject matter anymore, and are arguing about the meta. No one is thinking in terms of superiority except yourself. This is a toxic discussion, and it is over. Have your compulsive last word.
Look at what you wrote. Nothing you stated had any relevance to neoliberalism. I talked about neoliberalism eliminating poverty, and you brought up invasion.
Neoliberalism is what I say it is, not what YOU say it is.
Additionally, you have yet to answer why you believe poverty shouldn’t be eliminated.
You said america worked hard to get rid of manual factory jobs and then you gave the example of China as a state that followed their neoliberal example. But China is the Earths factory and they have hundreds of millions doing manual factory work. You contradicted your own arguments. Not sure what you are asking me right now.
I agree with this. People seem to forget that factories and other manual labor positions were hard to fill. No one wanted to do them anymore in America. I don’t remember the timing, but there were articles about the whole situation. Well, those jobs went to other countries.
Bush Jr. was all about outsourcing to India and other countries. The India population were thrilled to take office gigs for Microsoft and Google and any other tech company.
The whole “put me to work” in middle-America doesn’t exist anymore. They don’t want to do that type of work.
I do think a missed opportunity is not increasing defense manufacturing in the US. That could mean a lot of jobs and skill-based jobs. NASA is another failed opportunity where it could be a huge skill and labor opportunity for America. I remember the thousands of workers on the shuttle program being devastated. I’m not saying we need another shuttle program, but the next evolution of NASA, aerospace, and defense would be great for jobs and America.
We have no one left thinking about the long-term big picture for America - and we now have a president trying to destroy America. Any current politicians are focused on just staying in power, more so than they ever have.
I think Bill Clinton was the last president to focus on America.
Even Obama failed to deliver to the American people. He was too focused on drone strikes.
> Even Obama failed to deliver to the American people. He was too focused on drone strikes.
I agree how Obama continued Bush's "war on terror" was a disappointment, but to state that as the reason for his relatively limited accomplishments is profoundly unserious. The Mitch McConnell's strategy was to do anything Obama did for no other reason than to make him look bad, because McConnell realised that Obama had the potential to be the most consequential president since FDR, with broad public support.
They used every trick in the book to hold up votes, to not schedule votes, voting against popular policy they themselves supported just a few years ago out of principle, etc.
I don't know how anyone could have forgotten this; the Republican party was not serious good faith participant in the democratic process long before Trump came along.
Looking forward to the retaliatory tariffs, which seems to be only language this administration understands.
I guess it will eventually be the year of FOSS software, I am only waiting for the administration going back to export restrictions in software as well.
I guess we Europeans have to get our stuff from elsewhere than a nation hostile to the world with an insane unpredictable leader. China may also be authoritarian, but at least they are stable.
The coolest thing to read are american takes that are like "hey this might be benefiting us for that obscure reason", totally ignoring the fact that you betrayed your allies. Land of fhe free my ass. The only ideology the US has is nihilistic greed paired with hyperindividualsm and transactionalism to the point where Americans think if someone else is getting a thing you are hurting.
If the US was a kid it wouldn't invite others over because it wants to eat the birthday cake alone. And then it shits on all the cakes at the bakery because it wants to be the only kid eating cakes. If that is the American idea of how to lead a great life the rest of the world is better of without it.
> totally ignoring the fact that you betrayed your allies
The US is following the example of its mentor, the UK. Perfidious Albion allied with the Germans and Russians to fight the French (Napoleonic Wars), then allied with the French and Russians to fight the Germans (WW1 & WW2), then allied with the French and Germans to counter the Russians (Cold War). Great powers don't have permanent friends, nor do they have permanent enemies, they only have permanent interests. Europeans were simply naive[0], thinking they were the equals of the world's hyperpower for some reason, just because our post-WW2 dealings were executed with substantially more carrot than stick. It's just normalcy bias. Somehow Europe didn't think they would ever end up like the South Vietnamese, the Hmong, the Kurds (against Saddam, in 1991[1]), the Afghans, the Kurds again (against the Turks[2]), and now the Ukrainians. Some argue there is more than a bit of latent racism involved, not expecting the White People Countries to be abused by the Empire the same way Brown People Countries are.[3]
> If the US was a kid it wouldn't invite others over because it wants to eat the birthday cake alone.
This is why I often state that Woodrow Wilson is the worst President in American history. Besides shackling us with both the Federal Reserve Banking System and Federal Income Tax, he dragged us into Europe's internecine bloodshed and normalized that interventionism despite Americans largely being comfortable with sticking to our own hemisphere. In 1913, the US already had the world's largest GDP, with a GDP per capita roughly equal to Imperial Germany and about 75% of the UK's (assuming Copilot isn't lying to me on this data). Imports were only 4% of GDP compared to 15% in 2023. I think the wealthy elite who are siding with Trump are charting a plan to return the US to the same kind of domestically-focused economy, but we don't have the sort of natural resources nor human capital to ensure a decent quality of life on a short timeframe (or perhaps even a longer one) given the "shock treatment" that they are implementing.
> I think the wealthy elite who are siding with Trump are charting a plan to return the US to the same kind of domestically-focused economy
You're delusional, if you think there is any kind of plan going on here. Nobody knew any plan beyond "tariffs" and ideas about invasions coming out of thin air. The tariff numbers are a complete joke.
No, there is no grand scheme, hidden behind an act of absolute incompetence. It's just a short-term money/power grab for the already rich. An attempt to turn the world's "hyperpower" as you put it, into a second-world oligarchy. This may end up in total disaster, that is, a thirld-world oligarchy, if you look at China. But it's hard to actually look at China from the West.
Half the people complaining about Trump's actions say that it's all according to Project 2025, and half the people say what you're saying, that's it all chaotic incompetence with no plan.
I suppose the worst-case scenario is elements of both are true. They've got a fucked up playbook but can't even execute it correctly?
For the record I also don't think they are likely to succeed, I'm just trying to assess what/how they might be planning, or what direction they think they can take the country in. We can agree that they probably won't get the results they want and that America is in for a very rough ride.
> Half the people complaining about Trump's actions say that it's all according to Project 2025, and half the people say what you're saying, that's it all chaotic incompetence with no plan.
I think this is a misunderstanding (not sure if it's on your part of on the part of some of the complaining people): the Trump admin's agenda and strategy are clearly following Project 2025, for the most part. But Trump's tariff obsession does not originate there. I'm quite certain that even the most pro-tariff of the conservative think tanks are uncomfortable with how far he's pushing it.
I get the impression that the zeal behind Project 2025 is not motivated by their economic ideas but mostly by their perception of being in a culture war that they are now on the cusp of winning (they aren't). They deeply hate and resent the "liberal elites" (academics, journalists, etc) who they feel have too much influence on American culture, and the dream that keeps them going is not merely defeating these liberal elites electorally, but utterly destroying them. To "put them in their place", as it were.
One thing that would derail their plans is if Trump lays waste to the economy early in his term, so that he's likely to lose the midterms and a Democrat becomes the next president, and perhaps even making their political movement unviable for years or decades. So even his pro-tariff supporters are uneasy now: the tariff policy is so extreme that it is likely to interfere with their overarching goal.
As if the things the US produces aren't predominantly made in China already. Cutting out the middleman can't hurt, especially if the middleman behaves like a mob boss.
I actually stopped buying from Amazon and went to either the producer's site or Aliexpress. Literally the same products but without the middleman.
I once needed to claim warrantee on a broken charger and after navigating all the dark patters Amazon just referred me to the producer's website. It's not even convenient.
The admin's think is that any negative trade balance is 'exploiting' the US. Logically, the opposite would mean US is exploiting others. So the only 'proper' balance is zero, which requires managed trade. An obvious impossibility in this age. There are ways to rebalance, they require time and patience and thought (the latter seems most lacking).
US says there was an imbalance in trade, and that is true only if we look at goods. If we look at services, I think the picture changes.
What if the EU and rest of the world starts adding taxes to financial and IT services provided by the US? What if Amazon cloud and Netflix start costing 20% more?
And let's not forget US is printing dollars which are being used for worldwide trade and the rest of the world subsidies their inflation and their economy through that.
Let's not forget US exported the 2008 crysis and most of the world payed for that.
I don't think US will like if the rest of the world stops using US dollars, stops using US financial services and stops investing in US economy by buying shares, bonds, securities.
Trump is going for a 1-2 punch. First tariffs and then tax cuts to soften the blow of price increases. It also puts republicans in a choke hold to force the tax cut legislation through, because the fallout of tariffs with no tax cuts would be a death knell for the party.
Maybe in a sim city game this would balance out, but it's a tall order for a real world scenario. Prepare for a bumpy road ahead.
> It also puts republicans in a choke hold to force the tax cut legislation through, because the fallout of tariffs with no tax cuts would be a death knell for the party.
I mean, they could vote down the "emergency" Trump is using in order to obtain the authority to enact these tariffs instead, and that would be so much less work. But of course they won't go against their Dear Leader.
omg do you think elon started playing simcity recently, trying out all these ridiculous things, and now he's advising donald to do same in the real world, because he's convinced it'll work based on the simcity experience?
It’s all a grift for the wealthy anyway. He doesn’t care about the hurting 50k a year worker. Low income MAGA voters are just fodder for Trump to enrich himself and the wealthy around him.
What will happen is the same as when my govt. added GST (sales tax) on all imports with no de minimus exception [1], the overseas retailers will agree to add it on at checkout so their packages will sail through customs.
From a practical perspective I can’t see any other way.
Closing the “GST loophole” as they called it didn’t help New Zealand retailers, but did increase tax revenue and raise prices for consumers.
[1] There is an exception if the retailer does less than a certain dollar figure of exports in total to New Zealand.
I wonder how long it takes until this trade war moves to the digital stage. It wouldn't be surprising to see that software license fees start increasing if this tit-for-tat continues for much longer
I'm European. While it's pretty childish to paint the US and the EU as two human being with a "relationship" it's of course pretty jarring to see a country that has for my entire life been the undisputed cultural hegemony simply check out of the world stage and suddenly treat everyone on "their" side (culturally, politically and economically) like an enemy, or at the very least an abuser.
I'm not an economist, but I don't think you have to be one to realize that kicking the entire global economy right between the legs will lead to a recession -- just look at the supply chain issues that echoed for years after Covid, and the massive "quantitative easing" that had to be done to avoid a recession.
The abandonment of trade partnerships I could live with, I'll make it through a recession and every country is free to elect their own politicians and make their own fiscal policies, dumb as they may be; I don't get my "feelings hurt" by Americans wanting to bring back manufacturing jobs -- although I have issues understanding the reasoning.
What worries, and actually saddens me, is the complete doing away with of values, that I do think have existed in the past. The US has never been a beacon of exemplary behavior, and I understand that "nations have no friends, only interests" -- one needs to look no further than the US treatment of the Kurds for an example of this -- but it's unbelievable to me how so many Americans can not see the American self-interest in making Russia pay for what they've done in Ukraine.
Russia has been the main antagonist of the US for the entire post-ww2 era. It's a totalitarian state and an obvious enemy to the US. Invading Ukraine was a massive mistake, and all the richest country in the world had to do to basically risk-free damage their biggest antagonist, was to keep pressing a dollar-button together with the EU. No boots on the ground, no Iraq- or Afghanistan scale disaster, just military and economic support for a country that could end up being an extremely close ally. There is literally zero chance Russia could win a war of attrition with this dynamic. Instead, it's like the Soviet union in the 70s would have given away Cuba for free and instead threatened to invade North Korea.
In the end, I think what makes me uncomfortable is that I truly do not understand what it is that the average American (or voter) wants, because the actions of the US on the international stage makes no sense to me, yet so many Americans seem to cheer it on.
Quality of life has been going down for most Americans over the past few decades. It's harder to buy a house, raise a family, etc. on a modest income. Increasing cost of goods has outpaced wage increases but there are probably other factors at play too.
Americans lived in a world where all you needed was a decent job and you could have a good life - defined by what I said above. That's not the case anymore and they're upset about it - they're looking for someone or something to blame.
The republican party chose to blame immigrants and the democrats chose to blame lack of DEI. This fractured the citizens into two camps who can seemingly find no middle ground anymore.
Meanwhile, the wealth gap continues to increase and the middle class is shrinking. But neither political party can run on a platform of reducing spending AND higher taxes on wealth. They'd lose their funding sources - so they're stuck with immigrants and DEI.
Meanwhile, Trump sees an opportunity to extract wealth from the working class by reducing government spending and diverting those savings to corporations and the wealthy. Moderate Americans feel a bit powerless given how quickly our long standing legal and government structures seem to be deteriorating.
I was told the average voter wanted cheaper goods (especially eggs). One candidate lied and said you'd get that day 1 (like someone running for class president who promises free ice cream at recess every day), the other was realistic and used coherent words to describe their policy.
My take on this is the right wing media re-defined the word “woke” to create an enemy, and take the propaganda to full blast to convince the average idiot that “woke” is the ultimate threat to society, and nothing else matters. Add to that the vicious religious practices and the false prophets who financially benefits from the brainwashed, to make it harder to question the new paradigm.
That’s what the average american/voter was told to “want”: destroying woke by all means. What “woke” actually means, and the fact the definition is so vague (meaningless?) is the true weapon.
#1 Per our Constitution, USA has minoritarian rule baked in.
There's many anti-democratic choke points: Electoral College for POTUS, Supreme Court, US Senate, gerrymandering effect on US House, long history of systemic disenfranchisement, etc. aka Vetocracy per Francis Fukuyama.
#2 ~6m Biden voters stayed home in 2024.
There's a sizeable cohort of infrequent voters and a huge cohort of non-voters who self disenfranchise. Due to nihilism (voting doesn't matter), both parties are the same, low motivation, whatever.
#3 Like most everywhere else, our information ecology is broken, fragmented.
The audience for "traditional" media's news is tiny, compared to social media. The Dems focus on "traditional" whereas GOP have successfully embraced "social". So for all the billions spent every presidential election (political advertising), most voters don't ever hear from Democrats.
Therefore, US voters are mostly unable to correlate policy positions with politic parties. So mass politics really comes down to marketing and vibes.
#4 Addressing these "legitamacy" issues (government by consent of the governed) is wicked hard when one of our two political parties has been utterly opposed to democracy and effective governance for decades.
Is there going to be a hearing into the stock transactions of any the cabinet related to this news? Seems to me like some people could make some significant money on information like this.
Trump must be a Russian asset. There can be no other explanation. To weaken NATO, remove U.S. dominance by withdrawing forces from bases worldwide, abandon maritime security, weaken the dollar, and implement hostile economic policies that maintain the dollar as the world’s currency, it seems that the final step of “America First” is to make the dollar the sole currency used only in the United States.
So now that the impacted countries will respond with tariffs, are there any chance they might include tariffs on digital services like AWS and Azure, or will they only target physical goods that cross the border?
I don't know how these things usually work in the best cases, and it seems like we're living in exceptionally stupid ones right now.
Foreign countries will probably start taxing Google/Facebook ads if not outright banning US tech companies from operating. When that happens, watch the whitehouse roll back everything
I don't know how I feel about this overall. But I do want to recount something from my childhood.
I'm American. I grew up in the rural Midwest. The truth is that much of this country is a depressing shell of its former self. The town I grew up in is all but dead -- about 12,000 people still live there, though. The nearest big city, previously a hub of manufacturing innovation, has been on a steady decline for decades. Since the 70s, more and more powerful drugs have been flooding into the broad geographic region, decimating entire communities and creating generational cycles of poverty and addiction. It's an absolutely brutal combination that has totally killed almost all innovation and output in huge swathes of this country. Candidly, even if you brought back manufacturing to the area, the local population is so dependent on drugs that you'd struggle to even find workers today.
Today's drugs are so powerful that addicts would rather live in total poverty with drugs daily than have a high-paying job without drugs. Every small business owner in these regions knows this, but the true scope and severity of the problem can otherwise be hard to fully notice and appreciate. It's not possible to operate a small business in these regions without encountering the drug problem on a regular basis.
Do I think tariffs are going to fix this? Honestly, probably not, for the simple reason that Trump is old and won't be here much longer even if he tries to install himself as a dictator. The winning strategy for much of the world is to likely wait this out to some degree -- best case scenario for others is that this will just get reversed or significantly mitigated in 3.5 years, which is the blink of an eye on global timescales.
Nonetheless, my heart goes out to the incredible loss this country has experienced over the last few decades. It's truly heartbreaking and devastating that we've sold out so much of the country for short-term profits to such a degree that we can probably never break out of the cycle without severe pain and sacrifice.
I see the drug problem in my midwest city too, it's literally on my doorstep on occasion.
The country is also not struggling with high unemployment or stagnant wage growth.
Multiple things can be true at once. Tariffs are a solution to an imagined problem.
And fwiw - reshoring has been happening already, through congressional action (CHIPS, IRA), rather than presidential decree, and was doning so without wrecking the economy.
The reshoring efforts you're talking about will not come remotely close to restoring what was lost and what could have been. We're so far behind outside of software and finance it's almost unfathomable. To grasp the full cost that has been paid, you need to imagine a scenario like all of NYC, Seattle, Austin, Denver, Silicon Valley, San Francisco, etc., just don't exist at all. That kind of scale is what we've lost out on -- not in software, of course, but in most other industries.
Fly-over country should have been the site of the greatest industrial and manufacturing innovation the world has ever seen. We threw away one of the greatest opportunities in history to juice stocks for a couple decades.
I think that’s part of what I find so frustrating about this. There’s an alternate history where we’d have a national effort to invest in domestic industry, especially outside of a few areas which are doing well, but that just wouldn’t look anything like this.
A good example I saw was living in New Haven years back, where they were struggling to build businesses around the Yale community. There’s a ton of unused industrial area, especially as you go east, but they didn’t have the right combination of funding environment, local workforce, and infrastructure so in practice everyone went to NYC or Boston, or SF, and the state of Connecticut kept losing out.
Fixing that would be huge, but tariffs won’t do it unless you also invest in those other things and also something like antitrust protection so the key decisions aren’t made by a handful of gigantic companies.
The lack of longevity to these tariffs is part of the problem with them. Why would anyone invest in a factory when everyone knows these tariffs are likely going to be short lived, making any capex wasted. Capital is going to try to wait this out. It's short term pain and long term pain.
This theme of "small town USA" is dying everywhere, even here in Upstate New York. Drugs and lack of opportunity has a chokehold on everywhere in America.
So many people around the world have been hurt by the terrorist US government. This lessening legitimacy will hopefully provide them some sort of justice.
And as tech guys we always wonder if the world is a better place with AI Agents taking over. My guess is that even gpt-3 would have come up with a better solution than this.
I'm wondering how this protectionist trend will impact overseas hires. Will US companies continue to hire talent remotely outside of their borders? Will they be incentivized to only hire in the US?
More businesses will be incentivised to locate in the US, to avoid tariffs, but they'll still be incentivised to hire from outside the US due to cheaper labour (there's no tariff on wages).
Trump is very popular among low-information citizens. If you corralled more of them into voting, he would have won by more. Call me an elitist, but at this point we'd be much better off if ignorant people stopped voting.
The only people who matter in an election are the voters so I'm always perplexed so many feel comfortable blaming non voters for the problems voters made.
This non voter shaming is quickly eroded as soon as you ask voters if non voting is an issue. They will report it that is is a huge problem. Then ask what candidates or parties support mandatory voting and you'll get crickets.
That's because it has nothing do with tackling the perceived problem of non voters and all to do with virtue signalling that you vote.
The US Administration is dead. America is occupied by creatures that simply want to destroy the current world order, sow chaos, and profit from that by means of power and utter hate and disrespect for ordinary people, who live from paycheck to paycheck. Keep advancing AI, so they wouldn't need to employ humans to kill other humans.
White collar jobs will be destroyed by AI/AGI. But the US workforce consists of a large portion of white collar workers.
To replace the coming destruction of white collar jobs, manufacturing and industry jobs must be brought back, along with new resource collection initiatives (e.g. mining). They will be needed anyhow to build robots, drones, and other machines to compete with China and India, technologically and militarily.
Globalization will be effectively dead, remaining trust in the petrodollar will be destroyed, therefore so will Pax Americana. Expect more wars.
There have been rapid recent advances in robotics, both classical industrial robotics (advanced by rapid iteration with digital twins and simulation environments like Omniverse), and humanoid robotics (pushed forwards by Boston Dynamics, Figure and a lot of other recent entrants). So if we really do achieve AGI that would take over white collar jobs, manufacturing jobs will likely too be taken over very soon thereafter.
According to the BBC reporting, it appears that for each country he's charging 50% of the tariff they place on US goods coming into those countries, or a baseline of 10% for some countries like the UK.
A lot of comments have already mentioned that. You can also calculate it by yourself.
For example, in 2024, the total value of US trade in goods with China was approximately $582.4 billion, comprising $143.5 billion in exports and $438.9 billion in imports. [0]
Let's imagine they do come back. Let's say you have a toaster factory in Vietnam, which allows the US company to produce low-cost toasters for about $100. The factory workers earn $1 per hour. Now, due to the tariffs, a toaster will cost $146. And you say, "Okay, they just need to move their factory to the US and then the problem will be solved - no more tariffs. " Fine. Do you really think a US worker will work for $1 per hour? Even if you automate 80% of the factory, you still won't offset the 46% tariff. You will never get a toaster priced at $100. More likely, it will be $300.
This is not a game. Others will not take it as a game, and will retaliate. You can only play the bully for so long before others start treating you as a bully, and stop backing down, even after you have backed down -- as they never know when you are bluffing.
Doesn’t matter if they’re gone in 6 months. The damage is done, businesses will see the United States as too unstable and unreliable to plan long term goals in. We will pay the penalty for decades. Even if you get a new administration, that administration can be gone in another 4 years.
At least I lived long enough to see the liberals who spent the first 55 years of my life bashing the US (often correctly) for imperialistically stomping all over the rest of the world, using its massive military to force its currency and culture on other nations, and meddling in the elections of sovereign nations to create puppet governments (just to name a few of our favorite activities), turn to pining for the former glory of the US empire.
All actions by this administration point to Trump working in cahoots with Putin, which we were told was "a hoax".
The White House dressing down of Zelensky, and this week Russias investment chief in the US, and just scads of obvious daily reminders that Trump has no bad words for his pal.
Odd.
Tariffs on our friends and allies while he speaks of dropping sanctions on Russia and meanwhile levies no tariffs upon goods from Russia, zero.
Odd.
There are secondary tariffs on those countries who buy from Russia and Venezuela or Iran. i.e. if you buy oil from Venezuela, then your export of clothing will invite 25% tarrifs.
Are the two mutually exclusive? Because using the same formula they apply to other countries, Russia would have tariffs as high as 84%. (I confess to using an LLM to get me the data.)
The Hawk-Dove game is a wise framework to consider. When both are Hawks, both get harmed. When one is a Hawk and the other a Dove, the Dove gets hurt, and the Hawk laughs. I hope both can be Doves, bringing tariffs to zero and making all great again.
Autarky is just bad economic policy because comparative advantage is too powerful. Nobody benefits from this. The US loses and everyone else loses. The US loses the most however, both economically and in soft power.
This isn't even the China model. Slapping tariffs on raw inputs guarantees that US industry cannot compete internationally. This is more like the North Korean model.
While there are positives to targeted industrial policy, there are no positives to autarky.
> The US loses the most however, both economically and in soft power.
Yes. It loses most because 10-20% of world trade is for value added in the USA. The one exception is the USA of course, because their percentage is 100%. So USA is 100% effected, the rest of the world is 10-20% effected as they continue to happily trade with each other without tariffs.
I dunno about everywhere else, but in Australia the effects are already noticeable. Trade with the USA is dropping, and trade with Canada is growing.
Well it's positive for various countries that benefit from an end to US dominance over the world. :p
So for the US itself? The theory would be that the tariffs will increase US manufacturing sector. But the cold hard truth is that it isn't the 1830s anymore and last time tariffs were tried happened to line up exactly with the Great Depression.
Even an competent administration would have great difficulty making tariffs to restore manufacturing work in the US, if that is even at all possible. It fails because other countries just put the same tariffs back on the US.
So with the Trump's administration some kinda of serious economy meltdown is almost certainly the result.
Trump is saying the positives are the it will force companies to build stuff in the US, thus increasing our domestic manufacturing and increasing jobs. I don't see that happening in a significant way, but who knows?
But if that does happen, then the huge amount of revenue that Trump thinks is going to come to the government's coffers won't happen, and that revenue is meant to offset some of the tax breaks for the wealthy, so we're kinda screwed either way.
These guys are untrustworthy liars. I assume there are thousands, possibly tens of thousands of carve outs for the tariffs, based on bribing the POTUS or approved affiliates.
Current tariffs for China are 45% because the original 25% tariffs from Trump I never went away and the 20% from Trump II are in addition. Source: have two containers en route from China at the moment, will be paying 45% on them.
I am not an economist but I see two things 1) usa has a huge debt, 2) this feels a lot like VAT applied on a federal level, without calling it VAT. Ok "VAT on imports". Why not.
Obviously this is being sold as a trading surplus BS, etc, but if you look at EU, the surplus is ridiculously low when you consider goods and services (something like 50B).
I don't think it's the worst idea ever, I just dislike the useless hatred that this guy is spreading around and all the idiots believing him. But hey if he hadn't done it, people would have said he is a socialist :)
There has been a lot of speculation about why this is being done, given that even a young child could understand that a grocery store is not taking advantage of you when you exchange your money for goods. Some say that it doesn't need an explanation, because the President has so much power that caprice and a little bad advice from a cabinet member is all it takes. That is not a complete picture, though, because power in the US is spread out enough that while only the President needs a reason to do something, many others must have a reason to allow it.
Here's one idea for a "why are his supporters allowing this," sort of explanation. In the US, educated professionals hold way more importance than the global average, due to the US's status as an exporter of services. They tend to vote for liberal (in the European sense) policies, whether Republican or Democrat.
If you wanted to destroy liberalism in the United States, you would have to drastically reduce the importance of higher education and professional labor. This can be done by placing very high taxes on the import of goods and base resources, so that young people who would have become engineers have to become miners, loggers and machinists instead. While I do not think this is true (blue-collar workers do not live up to the ultraright's "noble savage" sort of fantasy about their preferences and are actually just like anyone else... but if you're an elite you don't know that firsthand), it sounds plausible that enough of the people who are important for a season might believe it, and support it as a plan to remake American culture, not in their image, but in the image of a fantasy they share.
This works together with the strategic need to decouple from trade with a country before invading them, dramatically increasing the number of opportunities for self-aggrandizement through the threatening of war, high-stakes diplomacy, negotiations over individual prices... which also offer some respite for elected officials who would otherwise take an unending beating in the news over consumer data.
Naive question of a foreigner: I see a lot of approval on the youtube comments to Trump's liberation day speech and over at twitter. Now the consensus on HN is diametrically opposed. My question: why do some people think that this is a good idea? Why is there such a huge rift in US society and how do you plan to bridge this gap?
This anecdotal, but I feel like YouTube applies a positive sentiment filter to its all of its comments. Somehow on most videos I watch never see anything critical at the top of the comment section.
One thing I don't understand. US is much bigger than most countries. Why would a country the size of Belgium (~12M people) needs to import as much as it export from the US in order not to have tariffs > 10%?
What I'm saying is that if total exports to the US is a function of the difference between the US and Belgium population size, then why wouldn't imports be a function as well? Belgium has less people buy things to import, but also less people to sell things to export. It's not clear to me what the mechanism is that these two functions should be so different.
My understandings reading some comments.
1. Prices will increase
2. US will need to manufacture things and they will need a lots of workers. There will be shortage of workers because factory pays minimal wages.
3. Factories will have to offer higher amount of salary that will increase price
Ultimately prices increases for everything and working class will suffer more.
Don't forget that you first have to build the factories and somehow resuscitate the knowledge that died a few generations ago. A factory isn't just a big warehouse full of low skilled people, you need machines we don't have anymore, processes we lost, &c.
More likely that prices will go up and wages will stay the same.
Factories take a long time to build and businesses know that Trump is erratic and therefore have no idea how long these tariffs will be in place for. So opening a totally new and otherwise unneeded factory is a big risk. (Some companies have made recent announcements about opening factories in the US but largely these factories were planned to meet existing marker needs, just not yet decided where they would be.)
The price of a product will only go down when the majority of demand can be met by tariff free means. Until then a US company will sell a product at the same price as the imported, tariffed product because that's what they do. Same happened during the recent inflationary spike. Businesses put prices up more than their costs went up as they had an excuse.
Large businesses hate putting up wages and the level of desperation in the US is such that there is a large pool of people to fill low paying factory jobs. The post-pandemic wage increases were noticeable for the opposition to them and that was a very short 12-18 month spike, with wage growth now back to normal.
Yes, either way, the working class, indeed the median American, suffer.
It's a scheme for the top-top to once again, not pay for anything because they pass the cost along. The W2 class gets to redistribute amongst themselves.
Nasdaq composite is down 5.6% at the time of writing this comment.
I honestly think Trump is doing this just to enrich himself and his friends. Stock market crashes always end up transfering wealth from the poor to the rich.
The attempts to force a mineral deal on to Ukraine, and also the attempts to get hold of Greenland, start to make sense if you assume that the Trump administration is preparing for a permanent global trade war.
Higher costs for mineral imports would hurt the US economy the most.
Number one rule of combat is that you need a very good homegrown industrial base. In order to be great country it needs to be combat-ready. If you apply that lens, what Trump is doing will start making sense. He is trying to revert globalisation and free trade in order to make the USA manufacturing superpower again. Not sure whether this will be successful or not, as China already has an order of magnitude advantage in manufacturing.
An interesting observation is that the tariffs are half of what the other country is charging. Does that mean this was a common strategy across the board? Or was strategic importance of goods considered?
>the tariffs are half of what the other country is charging
And that figure is questionable. Read "including currency manipulation and trade barriers". This is the same presidency that believes the "EU was made to screw USA over", and accused them, Japan and practically every other major economy of manipulating their own currency to harm US. It's improbable that rate has any basis in reality, but surely a detailed breakdown of how they came to that number will be published.. not.
Exactly. Calculation for actual figures is based on trade deficit, everything else is just a fat lie. "White House officials said its levies were reciprocal to countries, such as China, which it said charge higher tariffs on US goods, impose "non-tariff" barriers to US trade or have otherwise acted in ways the government feels undermine American economic goals" (from BBC)
Non-tariff barrier usually means regulation US exporters don't like, including data protection, EU not wanting to buy junk food from the US, most of which apply to EU companies the same way anyway... There is no point in asking for a reduction of these tariffs, and will probably never happen.
Let's not forget the biggest of EVILs, Lesotho, with its 50% tariff. Mr Trump has just noticed that they have cornered the US economy. (A strange coincidence, Trump has recently said nobody has ever heard of Lesotho being a country...)
Meanwhile the options level upgrade I asked e*trade for at 8am (before the 4pm announcement) so I can buy puts is still pending at 8am the following day.
TIL one should configure brokerage accounts well in advance of events.
He has talked about VAT, but in terms of how they ended up with those numbers, people noticed that the claimed rates don't have anything to do with the actual tariff/VAT/etc. rates, they're just based on the relative size of the US trade deficit with each country.
The gloss will be "this way captures all the various unfair things they're doing to us that are the cause of all these trade deficits" but that's just, well, gloss.
To go down in history as this great figure who increased American territory and the power of the executive branch while making America this economic giant that doesn't depend on the global economy, because he thinks economic policies still work like they did in the 19th century.
I know he's a very different person with very different interests, but I can think of little worse than spending ANY years having to put on a suit and makeup every single day.
Maybe that applying VAT to imports is done asymmetrically? If, for example, I'm a US citizen importing a european widget, will federal and state sales tax be applied on import?
If they're not, then this might be why they're considered thus.
Not really, because the point of tariffs is that they apply only to imported goods, creating a preference for local ones. If VAT is applied equally to imported and local goods it's not a tariff, it's a tax that consumers pay in any case.
Uhh... Whether you're a citizen isn't a factor. There's no federal sales tax, although these tariffs act as an import tax that will increase the wholesale costs. And state sales taxes don't apply to imports or wholesale transactions, they are retail tax (or also often a use tax if a sales tax wasn't previously imposed).
VAT is not only a retail sales tax, it'll apply anytime the widget is somehow modified (value is added).
No, VAT is actually paid by companies (and also consumers of course), it's one of the subtle differences between VAT and sales tax.
The "thought experiment" you can make is the case of something not ending up being sold. In a VAT regime the manufacturer will have already paid the VAT on the inputs but since the customer hasn't paid the VAT on the finished product the manufacturer won't get their money back on the VAT they already paid (there might be other tax rebates or write offs, but that's a different matter)
In a sales tax regime the tax is only paid by the final consumer so if the manufacturer doesn't sell the product they are not out for any additional tax
Still doesn't change that neither of those are a tariff by any definition
VAT = Value Added Tax. Tax should be paid whenever there was value added to a product/service, and it was sold.
The manufacturer has paid VAT, and will get back the paid VAT from the tax authorities.
It then adds value (value added tax). It has to charge VAT of the full amount. So, the company in the chain pays VAT over the profit of that product/service. For example (assume 20% VAT):
Company 1 creates something with 0 cost, and sells for 100. Needs to add VAT (20) and pay that to the tax authority. 20 has been collected.
Company 2 buys it for the 120, packages and labels it, then sells it for 180 but needs to add 36 VAT. The company will file a tax return of 20-36, so will effectively have to pay 16 to the tax authority. Another 16 has been collected.
Consumer buys it for 216 and doesn't get any VAT back.
Effectively, 20 + 16 = 36 VAT has been collected over time. The tax return can only be done by companies with a VAT registration. In some cases the VAT burden can be inverted in b2b transactions and within the EU. This is there so companies don't have to do cross-border tax returns.
A VAT-registered company is either able to purchase VAT-free or is refunded the amount of VAT it pays (by offsetting against the VAT it has collected, up to getting actual refunds).
Effectively VAT is only paid by consumers.
NB: in you example if the company has paid more VAT than it has collected in the period then it gets an actual refund.
Yes, absolutely, in 99% of cases that is true. But conceptually there is a difference.
> NB: in you example if the company has paid more VAT than it has collected in the period then it gets and actual refund.
Yes, which is what I said as well. But the refund in itself is an additional step on top of the tax system and the money does get paid by the company in the first place. There is indeed a difference in how the cash flow of a company looks like.
That's the entire point of VAT, to make tax evasion harder by making everyone pay at every step and figuring out later the refunds
This is not a criticism of VAT or anything else by the way, as I said, in 99% of cases the company will get the VAT fully refunded and not pay anything on net over the fiscal year
My company pays VAT surplus to government every quarter since the VAT we collect on our products and services is higher then the VAT we pay for our purchases. How are we not paying it?
"Paying" is a bit too ambiguous term. Let's say we go to have a lunch, but I forgot my wallet at the office. You pay my lunch and once we are back at the office, I pay you back. Who paid my lunch, you or me? Your company pays VAT in the technical sense you paid my lunch and your company does not pay VAT in the economical sense I paid my lunch.
You are answering your own question: companies collect VAT from consumers and pass it on to tax authorities.
Then, as the company is VAT-registered what it purchases is either VAT-free or VAT paid can be deducted from the amount of VAT collected from consumers (as you said).
Bottom line: companies do not pay VAT on their own purchases, they only pass on VAT collected from consumers.
Obviously companies do make actual payments to the tax authorities but the point is that these are not from their own funds, they only effectively act as tax collectors.
We used to not pay anything for stuff, for instance I bought items that were dropped shipped from China under a certain value but that has ended. https://www.wsj.com/livecoverage/trump-tariffs-trade-war-sto...
Sales taxes are on a state by state basis and online companies are required to collect it from the buyer and forward/report it to the state. Local purchases all have sales tax paid to state governments, some to city in urban areas. Some food items are exempt. A state can choose to not have a sales tax but most do IIRC. There is no federal sales tax. Until these tariffs which are essentially taxes.
Walton family, owners of Walmart, run the company by exploiting the labor force and social safety nets like welfare. Walmart is the largest company with the most employees on some sort of welfare. Tax payers are propping up their stock. This allows them to retain more of the profits versus sharing them and removing their employees from the welfare system. None of their listed actions have to do anything with globalization to retain their wealth.
Taxing the wealth and redistributing helps. Saw this in the 1950-1960s with building of new infrastructure to replace the aging or expand the supply to offset the demand. Using the money to pay for new training so lost jobs can be replaced where jobs are needed helps too. Even the simple act of ending starvation in children increases their intellect for the next generation and helps support the future. This method will never be perfect. These are band-aid solutions that have actual results.
Reality is that the inequality is a social problem masquerading as an economic problem. Society has moved to from respecting empathy and humanity to respecting greed and power. People mind set is anchored to, “That person is quite wealthy so they should be smart and some god must love them for it.” Reality is that person exploited a labor force to maximize their wealth. They are not more intelligent nor does some god like them better. Look at how many rich people fell for Elizabeth Holmes’s blood testing scam while a person that actually studies blood understands parts per millions in looking for test markers. A vial of blood or more is needed versus a drop.
Want to fix the system? Start looking at the wealthy with disgust and damnation. Demonize them for being the driving force in economic inequality. Move back to honoring and respecting empathy and humanity. Real intelligent people have empty. It lets them be placed in the shoes of others when they will never can experience it themselves.
I would also caption the wealth gab in the USA as modern day segregation. The world happiness index shows that equalizing the rich and poor creates a better sociality. Respecting the wealth and demonizing the poor is the complete inverse of a better society and maximizes soar.
PS. Why do people think bulling trade partners will be beneficial? Say you are store owner or product producer and you keep trying to bully me to by your products. I will not and go the competition, even with higher costs or deem the product or service not worth it. I already started boycotting USA bourbon manufacturers with their arrogant and bully statements during the Tariff Wars.
Do good, demonize extreme wealth. Irony is so many GOOD Christians even ignore Jesus’s statement on this matter with pretending Matthew 19:24 doesn’t exist.
The US particularly has an extremely large population of men (10s of millions) who don't work. Who knows if they'd be doing "low skill" manufacturing if somebody was around to hire them. But if you actually wanted this to work you would have started by subsidizing american raw materials.
You have to go back more years to see the trendline. BLS has a different chart showing the male participation rate dropping while female participation rate has remained fairly constant over the past decade.[1]
By my rough estimation that's ~7M men unaccounted for by simply not participating in the 'traditional' labour force. Keep in mind that it could also 'simply' be that a lot of those unaccounted men are working but in ways that the government(s) at different levels are unable to reliably track.
There have been some articles and attention picking up on this trend over the past few years.[2]
[2] is an interesting article, but it doesn’t go into why male participation rates are going down more than female rates, outside of the fact that men are much more likely to be convicted of felonies which makes work prospects worse.
Anecdotally what I have seen most in men are the shut in NEETs who live with their parents and/or collect disability and play video games all day. Why this is uniquely a phenomenon for men is unclear to me, but on the other side I know of lots of trophy wives who just go to yoga class and salons all day and do not produce economic value, and they are not put under the same microscope as NEETs.
I believe the miscommunication here is that "total people not working" and "total unemployment" represent different subsets of the population. That is to say, there are people who are not working who aren't looking to work and aren't categorized as part of unemployment.
Civilization has always operated on the idea that men must work for it to function properly. When less people willingly work it can be detrimental for future welfare.
The way that unemployment is interpreted by the public now is not very accurate. The gig economy has grown massively since 2020, which counts towards labor statistics, but its arguable to say if they should. The number of small or local owned businesses have grown substantially since 2020 - but is that because of a surplus of opportunity or people looking for ways to make additional money? The quality of the labor matters.
Tesla in Berlin employs 12,000 workers and can produce 5000 cars a week.
The US will need a lot of factories to employ 10s of millions of workers.I also imagine new factories will employ less workers due to increased automation.
There are around 200m working age americans. So 100m working age american men. You are claiming that 20% of working age american men (at least) are playing video games all day (I assume that being in school or raising children or whatever is acceptable activity)? Where are you getting these numbers?
I am not a specialist; but isn't that the most "green" policy ever ? I mean:
- Tariffs will increase the price of virtually everything -> By law of supply and demand; global trade and production will decrease, leading to less CO2 production
- This effect will be stronger for stuff coming from far away (little for Canda / Mexico; more for EU; huge for China). So companies will have a tendency to rely on local producer (even at a higher price). This again will lower transoceanic shipping. Other countries will probably retaliate so this effect will go both for inbound and outbound shipping. Again; less CO2 production
- More money for the government. There more stuff you buy, the more tariffs you pay, so rich pay more than poors. Which again is what green parties are looking for.
I might be very wrong about this; I am not a Trump supporter in any way - and to be honest I ma not a fan of green parties either - but my initial reaction is that if we look at the conclusion of the policies; the results are looking to align quite well. Of course the surrounding storytelling is extremely different; which puzzles me a bit.
If you're into green policies, then tariffs are aligned with what you'd probably want, at least on some level. Though it's more complicated and by no means a slam dunk. One could say that producing things locally in more places is less efficient (lower economies of scale, etc.) which might result in more overhead per item, which might outweigh the extra transportation, etc. General assumption is that an unconstrained free market arrangement encourages system optimizing itself. But then there's a question what is it optimizing itself for, and that's definitely not ecological impact.
A change like that in a global economy has tons of non-linear effects, many of which it need to play over time, etc. Some changes are more easy to predict confidently, many not so much. But barely anyone argues from first principles, and its typically just tribal screeching on both sides.
There's a lot of speculation that the Switch 2 would be atleast hundred dollars less without this nonsense. The Japan exclusive version of the Switch 2 seems to support this, with it's restrictions that insulate Japan, support the notion that English actually isn't needed in Japan (nor any other languages), by releasing a version of the Switch 2 that is far cheaper but only allows you to play games in Japanese.
I think it is a mistake to approach this policy as if it is about other states. One sign that it is not is that it seems to be based on a crude, almost simplistic calculation, something like trade deficit divided by exports, with a ten percent blanket tariff on states with trade surplus or no trade.
Applying the same policy against everyone indicates it's not about them, it's about the usian 'us'. Another way to look at it might be as sanctions, but instead of applying them on another state, applying them at home. And sanctions are usually a means to influence oligarchs and industrialists in a state, which probably means this is a policy directed at those groups in the US.
Why would you want to hurt US industrialists and oligarchs? Because then you can ease their pain in exchange for their loyalty. This is the logic behind castles in Europe. It's a place where the king decides the taxes, taxing illoyal barons or whatever more than loyal ones, and if they militantly disagree, shut the door and have them expend their resources on a hopefully futile siege and then be weakened anyway. Similar policy was common in colonial settings too, if the colony was uppity, tax them harshly.
The world is changing fast anyway, the liberalist hegemony wasn't going to extend far into the future for many reasons, like climate change and the general rise of autocracy worldwide. Having guarantees of loyalty and stability from the state apparatus at home when the world order inevitably crumbles while burning some bridges that would likely fall apart anyway, instead of wasting resources keeping up a charade defending some 'status quo', has a kind of logic too it.
The media has been perpetuating that that tariffs are borne by consumers. This is partially the case, but not entirely: US dairy in Canada is not 3 x the price of Canadian dairy despite the 200% + tariff.
Admittedly without knowing much about our dairy industry and supply management, isn't this flawed logic? If a 200% import tariff means Canadian dairy can also be sold at a higher cost, then it's still the consumers bearing the cost--they are being denied access to cheaper dairy altogether.
It really also depends on how a product is imported. Is dairy imported into Canada as a ready to sell retail product, or as bulk 'raw material' for local companies to turn into consumer products. In the latter case the tariff is less significant to the final price since most of the price the end user sees are local markups rather than the cost of the raw ingredient.
> The media has been perpetuating that that tariffs are borne by consumers
They’ve not done that enough. The title is literally “34% tarriffs on China”. Heh, not __on__ China but 34% import tax on products which come indirectly or directly from China, imported by $country residents or companies.
Since the Nixon admin ended the dollar standard the world has basically been pumping the US economy in so many ways, enabling US imperialism.
1)Dollar standard guarantees countries will absorb US budget costs, since they all have to have dollars they have to accept their money devaluing as the US creates artificial inflation.
2)People buying the US stock market due to no fears of free trade, now why would a Chinese or citizens of certain other countries EVER risk buying US stocks? the trade has become so flimsy if even possible anymore, this is a cold war 2.0 at full scale, 54% tariffs on China are not a joke, that almost kills trade entirely, it wouldn't surprise me if China cut relations at some point now or if it keeps getting worse.
The real reason for this tariffs is a very Thucydides trap moment, ALL these tariffs were primarily targeted to China and countries that could potentially be a "threat" again if China were to "fall" economically, example: Japan, SK, India.
Oligarchs are for it because they want to eventually privatize the stock market and go back into a weird pseudo aristocracy, where they control the most powerful corporations in the world, just like back in the 1800s. (notice how Elon keeps SpaceX, Neuralink and others private?) Since the 90s unlike the rest of the world the stock market has halved in size in the US and the trend will keep going until only a couple individuals control the US economy.
This whole plan however has a flaw, it assume China won't eventually pass the US technology wise, but in the event that it happens, what then? will you not trade with China then? if that happens then you become basically North Korea where you are isolated from the latest technology, as the gap grows you get further and further behind in your standard of living. If that scenario happens it would be catastrophic for the US.
The blue collar workers are fine with enduring a bit more pain for a few months or even years as this pans out. Specifically if the investment classes (who will be most harmed) suffer more. Long term goals are other countries lower their tariffs with the US, more US manufacturing, a temporarily devalued US dollar to more easily pay down the national debt, and a renegotiation of the terms by which the US provides military protection to other nations. People who already had little if anything to lose not being able to buy cheap foreign goods they weren't going to purchase anyways for a chance to see if this works out, while seeing the tech bros, academics, and investment bankers squirm, rage, and seethe? Though I'll get down voted into oblivion, the unmitigated despair and outrage on display in these comments just make my smile that much wider.
Americans would want to have high value-added activities done in the USA, and low value-added activities done abroad. Tariffs are being marketed as trying to achieve that goal.
The five strategic areas/sectors identified as a priority for repatriating activity into the USA are pharmaceuticals, forestry, steel/aluminum, automobiles, and semiconductors.
How is forestry a high value added activity? Are we including furniture manufacturing, or maybe residential housing construction in that sector?
Are we including all of the byproducts of steel and aluminum in the steel/aluminum strategic area? I assume it's not just the raw materials?
Is software included as part of the semiconductor sector?
The bull case for the USA is 1. Reshoring actually happens 2. Other countries actually drop their tariffs/trade barriers 3. A new golden age of Pax Americana/free trade ensues, with Americans exporting their high value manufactured goods worldwide
The bear case for the USA is 1. Republicans get hammered in the midterms 2. Entire world raises tariffs against the USA 3. American factories close en masse 4. USA dollar is devalued and reserve currency status is threatened
Historically, the pattern seems to be: 1. Acquire global empire 2. Promote free trade inside that empire, benefiting high-value added domestic activities and limiting high-value added activities in areas outside the core of the empire 3. Run out of money due to the costs of fighting wars to maintain the empire 4. Military power declines 5. Through one or more wars, another power takes over
Proponents of tariffs argue that Trump is trying to take us back from Step 3 - run out of money to Step 2 - promote free trade. In order to understand this thinking, it's important to understand that your empire's colonies aren't supposed to be allowed to promote their own industries and limit free trade by enacting duties on your own high value exports. To enforce free trade, you then fight wars, you can send gunboats (Opium Wars) or invade (Gulf War). But you can't invade and fight everyone, and rising powers protect their own industries through various measures as they build up.
But power is most powerful when it's not used. The threat of action is much more powerful than the actual action. That's why I'm more than surprised and not too happy that tariffs on a large scale have actually gone forward. Ideally, the threat of tariffs would be used to actually cause other countries to drop their tariffs, and free trade ensues. I'm not sure about historical examples of this working for getting other countries to drop their tariffs. You could certainly try suppress the growth of other countries, I'm not sure how well that works in a global marketplace scenario.
The flip side of that is that if you threaten for too long and never actually do anything you may lose some credibility. But I don't think anyone is arguing that the Americans are gaining credibility by enacting tariffs. It's a big world, and unless Americans have the power to influence their trading partners not to trade with others, then everyone can just trade with each other instead of trading with the Americans.
Matches the expectation analysts have had from December 2024 [0]
"In the baseline scenario, we assume that the US will raise its effective WATR against Chinese goods by a total of 20 percentage points over 2025-27. We expect the effective tariff rate on China to rise by 5-10 percentage points in 2025, owing to the imposition of tariffs related to fentanyl smuggling disputes. Mr Trump will further phase in tariffs from late 2025 with a wider range of excuses and policy tools, eventually bringing the effective WATR facing Chinese exports to about 30% by 2027."
For China maybe, I doubt any serious analysts were expecting this high of tariffs on most other countries, like Mexico, the UK, and Canada.
The methodology of counting non-price barriers on certain goods then applying it across the board on all goods as tariffs is bonkers.
Doubtlessly they aren’t including all the non-price tariffs the US imposes on other countries either.
I’m extremely skeptical the EU has effective tariff rates of 40% on all US goods, and furthermore skeptical that if so the US doesn’t have countervailing effective tariff rates at the same rate.
It is not a conspiracy anymore. Problem - Reaction - Solution.
Start a war in the middle of Europe and Gaza. Tariffs. Recession - Panic - Digital ID, Social scoring, CDBC, Digital dollar, AI governance, tech feudalism.
That's all folks. :)
It’s not like mom and pop stores are equipped to source things locally any better than Walmart. They would also be relying on the same imports from abroad, but would not have the bargaining power that Walmart has.
> aren't their employees on food stamps at some ridiculously high rate?
Welfare like food stamps is a subsidy /against/ Walmart, not for it. You are supporting the employees by paying for their food, which means they can negotiate for higher wages, which means Walmart pays them more.
An example of the other kind would be literal wage subsidies, which are sometimes paid so companies will hire mentally disabled people.
3.5) rescinded/paused [30-61) days. There will be some bluster, and then announcements with the large trading partners like Japan, South Korea, etc., that some new deals have been struck.
This is how a lot of people around the world live their lives. Dubai wisely provides this as a service to surrounding countries, to their great enrichment.
It creates a lot of incentives for corruption though.
It’s not at all uncommon in Latina America from my understanding for wealthier people to fly up to Miami, buy a ton of iPhones for family and friends, then bribe the customs agents to look the other way.
If you bring back goods worth more than $800 it has to be declared and a duty paid.
Judging from the changes (currently paused) to the de minimus shipping rules (also formerly $800) I’d expect the threshold to be lowered substantially. Possibly arbitrarily while I’m on a trip and have already bought the goods.
The risk being if detained by DHS for who knows how long is not worth saving $400 on a MacBook personally.
It is highly unlikely my iPhone or Macbook will be checked for newness when on my person, or the iPads in my kids' hands. I'll just time these purchases around trips to Mexico or Europe.
Anything more powerful I will rent or colocate outside of the US in a rack somewhere, moving bits instead of atoms. In short, unless you spend a lot on tech, or tech that isn't portable, workarounds in some cases are available. Certainly, if you’re trapped in the US (or you need goods that are impossible to import on your person), you’re hosed and will be exposed to the tariff costs.
When I lived in San Diego, tons of people would walk or drive across for better deals - teenagers would even take the trolley and walk over since their money went so much further. I’ve heard that this is also common in Washington and Maine.
If the savings is enough, it’s guaranteed that people are going to try this. San Diego claimed a 158% increase in egg seizures last month, there’s no way you aren’t going to have people try that with iPhones.
~19M people live on the US-Mexico border alone in the US [1]. I am not ignoring nor unsympathetic to those who cannot, for whatever reason, make a trip outside of the US happen, but surfacing it as an option for those who can. When you are trapped within a suboptimal system, you have to find ways to hack around it.
My parents did certainly smuggle a fair bit on their trips. I'm so happy Americans can learn that experience too! :> (I don't. Why are you hitting yourself.)
>25% on South Korea, 32% on Taiwan, 36% on Thailand, 46% on Vietnam
Harley Davidson moved some of its production to Thailand in 2018 to avoid a 31% tariff the EU had on US manufactured motorcycles, announced in 2024 it was moving more production there, and prior to today had plans to sell the Thailand produced bikes back into the US, as the US had a 0% tariff on bikes. Not surprisingly Thailand has a 60% tariff on imported motorcycles.
This tariff jumping is real. I guess we will see how it works out for the US.
It's just going to be a game of whack-a-mole as production and dumping shift to the less taxed countries. In the end, manufacturing won't shift to the US while labor costs are too high for factory workers. And the only way to remedy that is tanking the currency.
It's obviously the only real end game to this policy. Asia needs to divest itself off US bonds, which China has been slowly doing the background of late. No matter how it plays out, it's looking like higher interest rates, inflation, and foreclosures for everyday citizens and SMEs are going to be on the cards for the US, and it's going to take something akin to religious faith for people to tolerate the hardship on the way to this promised renewed prosperity.
Bessent didn't sound too sure in that interview. Given how many members of the cabinet lie on camera flagrantly multiple times a week and how even the numbers on their little poster were total BS pulled from thin air, I'm not gonna give him benefit of the doubt.
This underscores the difficulty companies have trying to navigate through this. Even if Trump doesn't change his mind tomorrow, as he's liable to, he's only around for another four years and for most companies that's not enough time to justify a supply chain overhaul.
What's the actual strategy behind the current US administration slapping tariffs on everything? Feels like they're handing them out like Halloween candy. Is there a long game here, or is it just managed chaos and alienating trade partners for short term optics?
They claim that they are "reciprocal" tariffs, and their chart shows them at exactly half the tariffs they claim are imposed by the target or 10%, whichever is higher. But it is suspicious that the column on their infographic showing the foreign tariffs has fine print indicating that includes other non-tariff things that you can't easily calculated as a neat rate the way tariffs are. And, some people running the numbers have determined that the quoted foreign "tariff" amounts are consistently the US trade deficit in goods with the target country divided by that country's exports to the US, with a minimum of 10%.
So, despite being labelled "tariffs", the actual basis for calculating the "reciprocal tariffs" has nothing to do with tariffs.
A rebirth of mercantilism. Peter Navarro is a huge fan of it, and in his heterodox fever dreams, laments that most of the world abandoned it several centuries ago. In his mind, a net surplus of currency is every bit as important as having a strong military. People like Lighthizer have drunk the coloured sugar-water.
Kill people's savings, might happen. Discretionary spending is about to get clobbered. Restaurants may be at the top of that list, and travel.
I rather doubt Walmart is going to increase the price of only Chinese made goods 25%. I think everything goes up 25% and they pocket the margin as long as they can get away with it.
It doesn't work because it's basically illegal to be poor in America, or rather to live like a poor person in a developing country. Because of theories about gentrification and such we just banned everything like SROs, company dorms, etc.
It worked for a little while in the 2000s because earlier flight from cities had left a lot of empty housing open to gentrify, but none of that is left.
There's a few classes of people left like supercommuters and people who live in RVs in the Amazon warehouse parking lot, but not going to run a big factory like that.
The TLDR is Miran sold to Trump US can Plaza Accord everyone, devalue USD to reindustrialize US, draw down US debt/commitments, keep exorbitant privelege... all by slapping tariffs (Trump's fav hammer) to scare countries into signing (converting) existing US commitments to "century bonds" in US favour while tying them to US orbit for foreseeable future. Is US strong enough to coerce others to sign on? IMO doesn't matter, this seems like plan specifically tailered to Trump preferences and ego, so as long as Trump thinks so Miran gets the job.
E: there is logic to the plan, logic that appeals to Trump -> US strength and monetary manipulation skills can force others to fall in line. And TBH countries have fallen in line in the past.
Yeah that’s not going to work. America is about to find out that the era of bully pulpit is over. Why work with a recalcitrant and quite frankly obnoxious US when you can cut bilateral EU/Asian deals?
I'm on the side of free trade and dont think there is a single policy. The strongest arguments I can think of are:
1) raise tax revenue in a way that partially falls on foreign nationals
2) reduce trade deficits and foreign purchasing of treasuries.
3) Increase relative power if other economies are damaged more than the US. There are situations where zero and negative sum strategies are optimal, like war, where it is better to have a larger % of a smaller overall pie.
Im talking about trade deficits, not budget deficits. Im not convinced trade deficits are a bad thing to begin with, but that is a whole sperate can of worms.
My understanding is that yes, the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue. Would you agree?
> the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue
Not the debt, the deficit. The debt is the card balance. The deficit are new swipes. Nothing in the current policy package is about deficit (let alone debt) reduction.
(Valid on trade deficits. I guess we can run trade surpluses if we give up dollar hegemony. That, of course, means no more deficits.)
> My understanding is that yes, the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue. Would you agree?
Let me see if I am following. The tariffs are ostensibly about spurring domestic industry so that American companies can flourish and we don’t have to pay tariffs on imports of foreign goods in the long term. Is that right? If so, then long term, aren’t we hoping that the “tariff funds” are small? But they are simultaneously supposed to supplement revenue to pay down debt too?
Trump is using century-old misinformation about tariffs to raise tax revenue to pay for tax cuts on the wealthy. In reality, it's an added tax on all spending that accelerates inflation.
Tariffs are theoretically supposed to encourage domestic production, but rely on the false premise that all raw and intermediate materials can be sourced domestically at a cost below the import price. That has generally proven to not work unless tariffs are in the hundreds of percent. But at that level, import taxes tend to poison entire sectors due to supply lag instead of drive domestic economies.
It's a bit difficult to nail down direct citations for what is basic knowledge of how tariffs work in reality. It's covered in AP/college macroecon and U.S. history classes.
Wikipedia's articles on Smoot–Hawley and the Tariff of Abominations both have sections on their effects.
In short, we'll see a brief rise in the domestic economy, then a sharp recession. One of the reasons SE Asia, BRICS, and the EU have been so active to disconnect themselves from the U.S. is they don't want to get caught up in the U.S. economic failure like they did in the 1930s.
Category error to think there's a strategy. Trump doesn't even know what a tariff is. People try to project a strategy because it's probably too discomfiting to believe that the greatest superpower the world has ever known elected a complete nimrod king.
The cost to move these industries to the U.S. exceeds the cost of these tariffs. The market will pass the cost of what are import taxes to the American consumer, resulting in inflation.
True, the shareholders will take a pay cut too, because something less than 100% of American consumers will just suck it up without changing their behavior. But in aggregate, we will all save less.
If inflation takes off again, maybe eventually there's some monestizing of debt. But in less than 4 years these tariffs will go away, which is why companies won't spent billions of dollars investing in state side manufacturing that'll take maybe 5 years to plan and build. Therefore I'm not sold on the montizing debt motivation yet.
Why in 4 years they will go away? Is that assuming the new administration will reverse course? It’s my understanding that generally country don’t lower tariffs voluntarily. They are usually bargaining chips.
We have tried this before about 100 years ago. Supply chains and economies were not nearly as interconnected as they are now. Read the history of the Smoot–Hawley Tariff Act.
Tariffs may not even last 4 months. Trump demanded Powell reduce interest rates, the FRB declined. The might be Trump's way of forcing the Fed to reduce interest rates, by inducing a recession with massive inflation. And then Trump takes the tariffs away once the Fed gives him what he wants.
FRB won't reduce interest rates if there's inflation alone. They'd only reduce interest rates if the economy also slows down into recession territory.
That's the short term view.
In the long term view, they are the biggest tax increase in the history of the country, therefore they are potentially the biggest tax decrease in the history of the country. Political fodder, even for a corpse.
(c) Should any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.
Even the Americans, the State Department has (had?) people whose job is to help with nation building and they'd learned that if you copy-paste the US model you're basically just setting up a dictatorship in advance, the "President" will seize power, whoops.
It's impressive they got to forty odd Presidents with only one civil war so far, but it's just luck and it didn't last.
It depends.. For some goods possible to just immediately raise prices, for others, business will try to compensate from another source.
As example, Daimler stated, they will cut cheapest models from export to US, so some segment will got less concurrent market, and probably prices will raise.
Probably, this is because Daimler have much higher profits on expensive models, so they could just lower profits on them. Other variant, also possible, expensive niches are more tolerant to price raise.
For small countries, tariff raise nearly guarantee prices rise, but US is big country, things are not so simple.
10% tariffs on the Heard Island and McDonald Islands which are uninhabited, and can be reached only by sea, which from Australia takes two weeks by vessel.
And also 10% on Svalbard and Jan Mayen which is also uninhabited. That will teach them not to ripoff the USA!
Both Svalbard and Jan Mayen are inhabited. Jan Mayen only by about 35 people, though. Svalbard has both Norwegian and Russian settlements, but of course entirely too small to have impact on US trade.
Svalbard imports a lot of snowmobiles though, given their population. From what I know a substantial fraction, if not most, are from Polaris so made in the US[1].
Politically it's going to be just like how most everyone fell into line fervently supporting the Iraq War when the corpo media told them to. Then after the unavoidable truth finally seeped in, equivocation and rationalization from "I didn't really support it" to "we were misled". With a lot more visible economic pain, of course.
Then that anger from having been "tricked" will be used as raw energy to drive the next con, and so forth. A broken clock is at least right twice a day, but these low information voters will sabotage themselves every single time.
> but these low information voters will sabotage themselves every single time.
It is generally not cool to blame the voters. There was a ton of misinformation preceding the Iraq war as you point out, but even then there was a massive popular opposition to it. Hundreds of thousands protested against the war before the invasion in New York and Washington DC. Some polls showed that 5% of all Americans participated in a rally or a protest in the weeks leading up to and following the invasion. And despite that popular opposition, among politicians there was a bipartisan support and just a handful of MPs opposed to it. Meaning the public was never really given a choice. In short, the Iraq war was the fault of the politicians and the politicians alone, the voters came nowhere near it.
Yes, I went to a few of those protests. Despite the popularity of opposition, there were still plenty of people arguing in support of attacking Iraq. In fact I'd say that most people were in support of it. "They hate us for our freedom", "fight them over there instead of here", and general reflexive arguments supplicating to power. That's the dynamic I'm talking about.
Whether invading Iraq would have still happened without that popular support is besides the point. The point is there was full-throated support from many people, who would reflexively reject dissent while parroting corpo media talking points, and who then only came to see what a poor idea it had been over time.
The more I think about Trumpian strategies the more I suspect that he got some friends together (or they came to him) and decided they'll short everything, then he'll do this for a while. He and those friends would be able to 'generate billions' that way, by legal insider trading (since we learned that anything he does "in an official capacity" is legal and he can pardon anyone who ever got caught).
Last term he did some tax on bauxite that had a similar effect of costing billions to a whole industry that processes or buys aluminum, but one of the few bauxite mines in the US, run by a Trump ally of some kind, made bank.
Please don't take this thread or any HN thread into even more of a political flamewar hell. It's not what this site is for, and destroys what it is for.
Edit: it looks like your account has been using HN primarily for political battle. That's a line at which we ban accounts, regardless of what your politics are or aren't. See https://hn.algolia.com/?sort=byDate&dateRange=all&type=comme... for past explanations.
If you'd please revert to using HN as intended, we'd appreciate it.
a) Republicans did the math and figured out that a lot of people who vote Democrat didn't have IDs. Old black people, in particular, were not likely to have IDs. Republicans also did stuff like accept fishing and hunting licenses for voting, but not university ID. None of this is a secret. A think-tank called ALEC came up with it. In-person voter fraud, the only kind of election rigging that voter ID laws prevent, is next to impossible in the US system and basically never occurs on more than a one-off basis.
b) A lot of those people who didn't have IDs have either gotten IDs or died off by now, so the Republican advantage of voter ID laws has faded.
c) Given (b), Republicans have moved on to other tactics like voter purges, shutting down registration offices and polling stations to create long lines in urban districts, gerrymandering, and limiting early voting and mail in voting. One of their favorite tactics is limiting early-voting mailboxes to one per precinct, whether that precinct has 1,000 voters or 1,000,000. You can guess which way the crowded urban precincts tend to vote.
The whole idea is just to put their thumb on the scale enough to discourage some small % of voters in the swing states that determine our president every four years. If you live in California, no one cares how you vote for President.
Bus pass is issued by the government though. Student id is issued by the college. I know because I made one at the student union to help with getting into nightclubs (allegedly).
And here we created fake state-issued driver's licenses when I was in college.
(Wish I could find a photo of a giant, fake driver's license on foam core with a rectangle cut out for the person to stand behind when a photo was taken.)
Can we have some numbers/citations on the proportion of democrat and republican voters without ID? Because I've heard that it will benefit Democrats and is a Reoublican own goal.
With how many top tech CEOs lining up behind Trump, I wonder how much of Californian democratic support backed by staunch belief, rather than political expediency.
Stats show that Tech workers mostly vote blue, but as you move up the corporate ladder they slowly start to vote more red because their increasing wealth gradually makes them more and more in touch with the forgotten factory workers in the rust belt and angrier about the handful of trans athletes ruining women's sports.
As a French I used to think too, "what's the big deal", "it has never been an issue here". But that's because we are used to it and getting an ID is easy and almost automatic. Whereas in a country like the US, it means missing several days of work, driving potentially hundreds of kilometers, and their geographic segregation means it's easy to make getting an ID harder for black people than for whites.
As a European I also find insane elections are held on workdays (in France it is always on Sundays), that you may have to wait in line for hours to vote, that voting stations may be hours from where you live, etc.
> As a European I also find insane elections are held on workdays
That's not really an issue, if you have enough polling stations. Denmark typically have elections on a Tuesday (but can technically be any day of the week). We have 80%+ turnout, one of the highest in the world, for countries without mandatory voting. The day of the week doesn't matter, IF you ensure that it sufficiently easy for people to vote.
If you actively try to make it inconvenient/impossible for people to vote, then it doesn't matter if it's on a Sunday. My take is that part of the US political system need as few voters as possible to turn up in order to have a chance of winning, so they will make it as complicated and inconvenient as they need it to be.
I do enjoy the idea of making election days days off, days to celebrate. But yes, it usually takes me about five minutes to vote in the Netherlands, so I don't really need the day off.
In canada, if you don't have an id, you can get someone who knows you (and has an id) to swear an oath you are who you say you are. You can also register at the same time you are voting.
Seems to work fine. I dont think we have ever had any issues with that system.
Even more radical: in Australia you turn up at one of many polling stations with no ID whatsoever and vote.
It works because voting in Australia is compulsory. They must have your name on their list, they cross if off it and hand over the ballot paper. The checks and balances you might expect and done after the event, making it fairly secure.
Only of those checks is you did vote, and a fine follows if you didn't.
> Nearly 500,000 eligible voters do not have access to a vehicle and live more than 10 miles from the nearest state ID-issuing office open more than two days a week. Many of them live in rural areas with dwindling public transportation options.
> More than 10 million eligible voters live more than 10 miles from their nearest state ID-issuing office open more than two days a week.
> According to the study, between 15 and 18 million people in the U.S. lack access to documents proving their birth or citizenship, which can be integral to acquiring other forms of IDs.
This can force circular dependencies: for example, older black or Native American people who were born when they weren’t welcome at hospitals might never have been issued a birth certificate so they first need the travel, expense, and difficulty to get one from the clerk where they were born. Poor people are far more likely not to have bank accounts, so they can’t establish their in-state residency that way, etc.
None of these are insolvable problems but the people pushing restrictions haven’t been willing to put effort into solving them and often make things worse by cutting office locations and hours in ways which disproportionately impact poor and minority voters.
That doesn't explain why democrat run states like California can't have a sensible voter ID law that accepts such identifications?
If they just said "accept more IDs" instead of "stop voter ID requirements" people wouldn't think its a problem, but that isn't what democrats are saying.
The crux of the argument is that voting is a right, and voter ID laws create a unnecessary burden to exercising that right given the extremely low levels of individual voter fraud. Do I need my driver's license to practice free speech? Do I need my passport to be allowed to be an atheist?
It would be different if we were solving a problem with voter ID laws because then you're balancing rights with real pragmatism. You can as hypothetical about it as you want, you can go down the slippery slope fallacy if you want, but the evidence shows us we do not have an issue here.
It would also be different if IDs were easier to come by, because then the burden is not disproportionate to the problem. But neither of these things are true.
Instead we're just enacting barriers to the use of our constitutional rights, barriers to participation in society, not to solve a problem but to enact a political end.
What problem are you trying to solve here? Republicans say the problem is people voting who are ineligible, Democrats accuse them of trying to make it harder for democratic voters to vote.
People using others papers to vote, that is much harder if you must display a photo ID together with the papers you received that says you are allowed to vote.
Voting without an ID is like opening a bank account without an ID, its just dumb. Oh wait, I heard you had that as well in USA, which is why you have issues with identity theft...
Except every analysis has shown people are not doing this. Oddly, the few times there have been real cases, it's often GOP voting more than once or for their dead spouse or some such.
Think of it, if someone is truly not eligible to vote, why expose themselves to additional scrutiny for a single likely inconsequential vote?
Where fraud could happen is at scale, and with DOGE getting access to all systems and dismantling the agencies that guard against voting fraud, I feel that once again we're seeing that every accusation is an admission.
What analysis has shown that people are not doing this? All I have seen is that there aren't a significant number of convictions, but that doesn't really hold wait if you aren't actually trying to catch/prevent people from doing it. If it never happened, there wouldn't be a standard well known practice of casting a provisional ballot if you have already "voted".
When you show your id they check if you are allowed to vote, the id is just to identify you as a person it doesn't mean everyone with an id gets to vote.
I misunderstood what my West Virginian friend wrote me then, from my understanding the new ID laws will require an ID as 'proof of citizenship' to register to vote, which a driver license isn't. Those who vote among his group are a bit mad about it.
Not everyone has drivers licenses, especially poorer folks, especially minorities. The requirements for drivers IDs are now to get RealIDs and some of these folks don't have access to things like birth certificates and other requirements of getting a RealID.
There's also additional requirements of your gender matching your ID (which eliminates many transgender folks), your name matching on all documents (good luck if you're a married woman), etc.
Folks are rightly pointing out that these laws are engineered to suppress votes, and you seem to not be willing to listen to understand why.
> Folks are rightly pointing out that these laws are engineered to suppress votes, and you seem to not be willing to listen to understand why.
Are you saying democrats will engineer these laws to suppress votes? Is that why democrats don't have voter id laws? The GOP isn't relevant here, we are just wondering why democrat states can't seem to do this.
A black woman jumping between three jobs to make ends meet in Alabama doesn't have a "normal" life, then. Too bad for her! And for millions like her, in a country where elections are decided by single-digit majorities.
Most states where voter id is mandatory also have policies where you can get a free ID and even a free ride to a location to get your ID. They implemented that in South Carolina and after the first few years, nobody used it.
Because you have to have an ID to do almost everything else in the country so everybody already has an ID and opposition to voter ID makes no sense.
"Free" ID generally means there is no fee paid to the issuer of the ID. It can cost hundreds of dollars to get the documents that you have to present to the issuer to get that "free" ID.
Also many states have accompanied their stricter voter ID requirements with reducing the number of offices that process applications and with reducing the hours they accept applications so that even if you can get a free ride to an office you might have to take an unpaid day off from work to do so. That can be a significant loss for many poor workers.
> Because you have to have an ID to do almost everything else in the country so everybody already has an ID and opposition to voter ID makes no sense.
Yet many millions get by without an ID [1]. A lot of things you probably think cannot be done without an ID actually can.
For example how can you cash a paycheck without an ID? You need an ID to open a bank account. An answer is you can cash checks using a third party endorsement. You don't need a bank for that. You just need a trusted friend who has a bank account. I'd guess that this is what the 6% of Americans without bank accounts do (23% among those making less than $25k/year) [2].
How about getting a job without ID? First, there are a lot of people who don't need jobs (e.g., the stay at home partner in a household where one partner works and the other takes care of the house). Second there are a lot of job that pay cash and are off the record.
Also there are a fair number of people who once had ID but no longer do. It has been a very long time since I've actually needed to show my driver's license to anyone.
My banking is all online, as is my check cashing (my bank has a great "deposit by photo" function).
When I signed up for Medicare, Medigap, and a Part D plan that was all through ssa.gov and medicare.gov, with no need to show ID. That was apparently all covered by when I showed ID years ago when I set up ID.me as a login method for my ssa.gov account. It will likely be the same when I apply for Social Security benefits. Afterwards all my interaction with SS and Medicare should be through ssa.gov and medicare.gov.
If when I'm older I am no longer fit to drive and let my driver's license expire and don't remember to get a state photo ID then there is a good chance I can live the rest of my life comfortably without ever running into anything where that causes problems.
The simplest way, though, to see that it is possible to get by reasonably well without an ID is to note the large number of undocumented workers that the current administration is trying to kick out. They are able to come here, find places to live, and get paying jobs all without a state issued photo ID.
This makes no sense. You can literally register to vote at the DMV and I know very few adult Americans, of one ethnicity or another, who don't have a driver's license.
You dont know many poor people, or very young people.
I work a furry convention in the Southern US, about 3% of our attendees have some ID related malady - can't get a timely appointment at DMV, missing core documentation, unable to prove residency, etc - nevermind rural voters who may live hours from a DMV.. which they can't get to without a license (assuming they can afford a car) or a ride. No bus service to speak of either.
Its a huge issue, I'd 100% support voter ID if getting an ID was free and easy, without it I'm skeptical.
Yeah, see the article about "RealID" yesterday. The first step is to require an ID, and the next step is to make it harder to get. For example, a married woman without a perfect paper trail of name changes? No Id.
I unironically keep an original copy of those documents in my safety deposit box because of this. In theory I should be able to go to the courthouse and get another copy but if 40 years down the line they've lost them I'm screwed.
I feel bad for the people in states that don't require court orders for this because they apparently have the worst time trying to update accounts.
What state do you live in? I think this argument is very frustrating when people who live largely in blue states (like California) that don't up any hurdles to getting an ID, can't imagine the level of dysfunction that is intentionally executed in other states in order to prevent people from getting IDs.
Yeah, everyone you know has a valid ID because you don't live in a battleground state that is currently fighting electoral welfare. Republicans don't care to put up barriers to getting an ID in California, Texas or New York.
Most people are friends with people like themselves?
The selection bias of extrapolating an entire country (not to mention one as large and diverse as usa) by using your friend group should be very obvious.
I'm just pointing out obvious ways in which you have selection bias here.
FWIW googling, allegedly 1 in 10 people in rural america do not have a license. Or at least that is the claim floating around the internet. So yes, i think figuring out if this is a real issue should include both checking on rural and urban people, along with many other demographics. It is not obvious how this situation differs between urban/rural.
RealID documentation requirements are a PITA. I have a birth certificate and passport and valid DL and it still was a nuisance the accumulate the required point allocation. People without those golden documents can be very hard pressed to meet the bar.
Republicans are trying to make it so that the vast majority of drivers' licenses do not work either. You may have to get a new one, with passport-level paperwork.
>Whereas in a country like the US, it means missing several days of work, driving potentially hundreds of kilometers
Where did you hear this? When I lived in Pennsylvania, it was really easy to get a state ID. Just go into the DMV, show them your documents, pay the fee ($42 now), and you have your ID within the hour. They had centers all around the city, and they're open on Saturdays. Personally, I think this is an extremely weird hill for Democrats to want to die on. Most independent and swing voters think its a reasonable requirement.
I'm from Pakistan, and the solution to 'it's difficult for people to get ID' was so simple even 3rd world poor illiterate country could do it: just go to them instead.
Our ID department has buses with computers and cameras/fingerprint machines on them, they go to remote villages and stuff and take everyone's bio data, then return a few weeks later and give everyone their cards.
There is literally NO valid excuse for NOT implementing voter ID.
NONE.
If we can do it, the richest country in the world can do it.
Such a pathetic hill for American Democratic party to die on.
That’s a government that’s interested and motivated in getting people an ID.
Now imagine the opposite. A government that’s not interested but rather is motivated in denying some people an ID. Why it increases that’s party likelihood of staying in power.
The US doesn't have a national id card, and the people who want to force ID for voting are the strongest block against having one, for religious reasons. What you suggest is impossible in the US.
I think democrats started out with good intentions, helping enfranchise black voters a part of the civil rights act .... but somehow they have made it their morality point and refuse to accept that it is no longer fit for purpose.
They should made no voter-ID a temporary measure and created proper voter-IS systems in the meanwhile.
lets see where this whole thing heads to. May be in the end we will see the birth of a true democracy, which is social and where the strong ones will take care of weak ones. At least it should be .. in a dream :)
The problem is that we don't have those same systems for getting an ID.
There's no "government comes to you" to give you an ID. And, many Democrats would love to make it easier to get an ID, but the Republicans often deliberately make it harder to get an ID.
They shut down offices and reduce hours of locations, so people have to travel farther and take more time off work. They increase the bureaucratic requirements and hurdles, so people are more likely to need to take multiple trips.
I personally wouldn't have a problem with making a voter ID a requirement to vote, if we could also agree to make it as easy as you describe to get an ID. The problem is the GOP wants to require getting a voter ID and simultaneously make it harder to get an ID.
I have been a John Oliver viewer from the first season, and my comment will be the same as what I said 9 years ago: This is bullship.
Start small, but START. Start from Democrats accepting what every LEFT leaning person the rest of the world accepts: Photo ID is necessary, not to reduce voter fraud or whatever, but necessary to increase TRUST in the system.
It's a cost, just pay it. Yes you will lose 'face' to republicans, don't care.
Start small, start with free/cheap photo ID in deep democratic cities (I know local govt providing service, what an idea!).
Once saturation reaches 80% plus, start enforcing voter ID laws to cajole the last 20% to start applying, carrot and stick. Start offering door-step service for those unable.
Democrats pay taxes, don't they? start using them.
Spread to other cities in democratic states. So what if it takes 10-20 year? Times passes like nothing.
And once you have SET the standard of cheap, reliable access to Photo ID... and when democrats in power in the federal government again, they can use that to help implement cheap photo ID elsewhere, but even if Missouri doesn't get voter ID, it doesn't excuse democratic states NOT having it.
The fact that the DMV is only open three days a month or whatever? If it's a democrat led city, FIX it. If it's a republican city, you can come to it later.
But NOT starting, as some sort of fake 'rights' issue? Bullship.
Start. Start Small, Start NOW. in 25 years you won't even remember this.
So democrats should spend all this money, time and resources solving a problem they don’t have. And for what purpose? Nah I will rather my Democrat state focus on human welfare and giving people opportunities to progress in life
The UK Labour government was opposed to Photo ID it was the right wing that introduced it.
It is an Anglo-American thing not to have PhotoID probably related to never been invaded in the last two hundred years.
The issue is that to get back in power the Democrats need votes top overturn Republicans and so the IDs in Republican states matter those in Democrat states do not. So better top show full disapproval as they won't lose any seats over that and can keep some pressure up.
Some people in the UK had the same 'oh no we are being outnumbers' sort of mentality, and without mandatory ID, they had no sane voice in their head to tell them 'don't be silly, we track people with cards'.
It's funny how much the existence of the card gives the masses a weird sense of peace.
And? That's bigotry, a totally different issue from accessibility.
The population WANTS this piece of bigotry, heck our ancestors voted for the damn thing it, it's literally the 2nd amendment of our the constitution.
You can't blame NADRA for including it in their forms, they do it on government demand. Heck, I had to sign the damn thing to get my damn passport, there is no escaping it.
But NADRA also has vans that go village by village providing photo-ID on the doorstep. And THAT is accessibility.
Do I wish this piece of bigotry wasn't in on our forms? Yes. Today Ahmedis; tomorrow Shias; day after who knows, it might be me.
Does it mean CNIC are BAD? NO, they are perhaps the only actually part of cour damn governance, being able to provide ID.
We could obviously do better, but NOT having ID is crazy.
I think the problem there is that in Pakistan where they do this they can reasonably assume that everyone in that remote village is a Pakistani citizen - they probably don't need to see your birth certificate to get you an ID, right? In US they want to see proof that you are a citizen and you are who you say you are, which is what (some) people have an issue with, even if you sent buses with all equipment on them to random american towns people just might not have the right documentation on them to pass the checks.
But yes, I agree, it is a pathetic problem for a 1st world country to have - just sort it out.
> they can reasonably assume that everyone in that remote village is a Pakistani citizen
absolutely not! we have had massive migrations both from India (after independence) and Afghanistan (after the russian occupation). This is NOT a given.
Things have NOT been easy... and in fact dare I say, our ID department is rather dumb and stupid. I personally have had MULTIPLE issues with them.
But we have been doing SOMETHING, and the fact that the US doesn't... is insane.
When a child is born, the parent has to get them registered at the local council office. And then when my first card was made at 18, my dad went with me as verification, he attested that I was child #X as per the family tree, they confirmed someone with my name was in that family tree in their records, and used that as verification for me.
If parents are not available they can use relatives, as long as there is a family tree link. Not sure how they do it otherwise, but there is some system for refugees etc too.
Basically you need very specific letters where your exact name and address must match but those are issued without checking. So if one uses your middle initial instead of your name then no ID for you until you get it reissued.
I'm French too but I disagree a bit: first, voting if important to people, should be a good reason to get an ID, voting without an ID does seem insane, so what are they doing. Second, why black people ? Are they not human too ? They can read, they can work, they can complain, they can... get an ID card right ?
Simplest answer is they don't care, wash their hands off of the whole thing and then democrats complain that it's the requirement to identify voters that block them. But it's not a strange requirement, it's as you say, a completely normal part of being a citizen to get an ID, and a duty for a voting citizen to do what they need to do to get that ballot in.
And even if black people were somehow disenfranchised from getting IDs, it doesn't prevent the non-black people to vote rationally, in the end. So no excuse.
The issue is not that the barrier is insurmountable. The issue is that small amounts of friction become meaningful at scale in elections. Place the friction in the right spots and some people experiencing that friction choose not to bother. If the people who choose not to bother disproportionately vote for one side then there's a small electoral benefit to the other side.
>Second, why black people ? Are they not human too ? They can read, they can work, they can complain, they can... get an ID card right ?
As a black American who had crackheads in my family, I don't know anyone who was totally incapable of getting an ID card. I only ever see the argument brought up by white people on the Internet. Tyranny of low expectations. Heaven forbid that black adults be expected to shoulder some personal responsibility and figure out how to meet the basic requirements to exercise their civic duties, same as white people.
"The white liberal is the worst enemy to America, and the worst enemy to the black man." -- Malcom X
What aspect of this video do you think supports your position, specifically?
My mother's side of my family is from North Philadelphia, same state as the first black woman featured in this video.
I spent three weeks in the US in 2021 when my mother had a psychotic breakdown and I had to put her life back together on short notice. She had lost her wallet and all ID. I got her a brand new birth certificate in Philadelphia and a NJ State ID to replace her Driver's License. This required setting up some appointments either online or via phone, and bringing some documents along, but it was manageable.
Expecting someone to have original birth certificate, SSN proof, and spouse's death certificate is....normal adult document management. I deal with a similar "burden of proof" every time I go to my local Japanese city office, or to immigration to renew our residency.
The next anecdote in the segment blasts Sauk City, Wisconsin for the ID center being closed on most days. According to Copilot, Sauk City is 96% white, with a median household income over $78,000 and a population of less than 4000. So a small middle class town of white people rarely has the ID office open? How is that supposed to support the argument that mandatory ID requirements disproportionately affect minorities again?
The second half of the John Oliver clip focuses on the voting events not the identification acquisition problem so I don't consider that part relevant and won't dissect it.
That would make sense if driver licences were difficult to obtain in US in any way shape or form, and they just aren't - almost everyone has one and it's not a big deal to get one.
So forgive me for being flippant but....how hard can it be?
>>How do people with 2 or 3 jobs do?
I assume they drive to those 3 jobs, so they somehow found a way.Again, sorry for being dismissive, and I appreciate it might be time consuming at costly - but still, 91% of all American adults have found a way to do this, so my point is that driving licences(along other documents) seem like a perfectly acceptable form of ID for voting?
That's because you live someplace where the things described in the various links in this comment [1] do not happen or happen way less than they do in the US.
You've fallen victim to GOP propaganda. They use 'Voter ID' as a reasonable sounding shorthand for a lot of policies that just make it harder to vote. The other responders highlighted many of them.
I don't, but we have a functioning citizen registration system; every voting eligible citizen gets sent a voting card when elections come up. That can only work if you're registered and have a known address. "Illegal aliens" don't have that, so they can't vote. Foreign nationals that are registered / stay here legally also don't get voting rights so they simply don't get the voting card mailed to them.
But also because of that registration, getting a kind of ID involves making an appointment at the county house, filling in a form and handing over a recent portrait photo. It's a bit of a hassle but nothing extreme.
If it makes you feel any better the UK Conservatives tried this under the "we have to stop voting fraud" excuse. Turns out it backfired because the oldies couldn't figure out the new requirements leading to this scandalous quote from pantomime villain Jacob Reese-Mogg:
> Parties that try and gerrymander end up finding that their clever scheme comes back to bite them, as dare I say we found by insisting on voter ID for elections.
> We found the people who didn't have ID were elderly and they by and large voted Conservative, so we made it hard for our own voters and we upset a system that worked perfectly well.
It's a different culture, one which is not used to have and use a national ID, which is completely common in the EU (with the exception of Ireland perhaps?)
The article you posted confirms the 1 in 400 number:
"We found that around 0.5% of all voters reported being turned away at polling stations as a result of lacking ID in the local elections of 2023. We also found that four times as many people (around 2%) reported not voting because they knew they didn’t have the right ID."
That’s not true. I lived there for nearly a decade and you use driving licenses for id and there are other forms for id as well that don’t include the passport.
You need ID to do a lot of stuff just like any other country.
What is not true? A driving license may be a defacto ID, but it is not a dejure, designated national ID card. It's a different system. In the EU countries the ID cards are backed by a more-or-less central civil register.
(as an aside, it would be very funny to me if the they used the driving license for electronic signing of official communication with the authorities like we use it in some countries in the EU).
There is no national id (other than passports; but most people don't carry theirs on themselves in their own country) because driver's licenses (issued by states) serve the same purpose. We don't have a non-DL id (that's popular at least).
Anyway, this is sort of by-the-by. Most adults have driver's licenses, and no one in Alaska is going to reject your Tennessee-issued DL so it is a de-facto national id.
91% of adults have a driver's license, leaving 9% of potential voters without a DL.
In a properly functioning democracy barring 9% of your voting population from voting because they lack an unrelated document (why should a driver's license be linked to ability to vote?) would be considered a major flaw.
You may elect to have your DL as a voting document as a convenience. It doesn't mean you have to have one in order to vote. A state's Board of Elections will issue you a voting document.
40% of the eligible voters sit out every election. No one who wants to vote is being barred from anything. They don’t lack an unrelated document, they lack the proof that they are allowed to vote. We have freedom of expression and yet to purchase alcohol you must be able to prove you are allowed to buy it. We have the freedom to bear arms and yet in many states you must prove you aren’t a nut job to own and carry a gun.
>>why should a driver's license be linked to ability to vote?
It's not, it's just one of many acceptable forms of id - along with a passport, birth certificate, and probably few others.
>>In a properly functioning democracy barring 9% of your voting population
Unless they are stopped from obtaining any document then they aren't barred from anything. Most Americans don't have a passport either but no one would argue that they are barred from travelling internationally, they just have to go and get a passport issued.
> Unless they are stopped from obtaining any document then they aren't barred from anything. Most Americans don't have a passport either but no one would argue that they are barred from travelling internationally, they just have to go and get a passport issued.
Making it difficult (as the article states, this 9% do not have ready access to documents proving their citizenship) is essentially barring with extra steps.
I hate this semantics/loophole game Americans like to play, seems to be quite common in your society to use the "akshually, technically" and going completely against the spirit of something. The spirit is: this makes it more difficult to vote, it will inevitably bar some people from voting, it's just salami-slicing...
I'm not American and I don't know why you'd assume I am - to me the fact that americans don't have ID requirements to vote is insane.
>>as the article states, this 9% do not have ready access to documents proving their citizenship
Again, do they simply not have them because they never bothered to get them, or are they unable to obtain them? That's quite a big difference.
I also hope we're not saying that if someone turned 18 and just simply never bothered to obtain any kind of acceptable ID(and there are usually many) then it's somehow unfair to not let them vote - because I really struggle to see how that would be true.
A lot of people seem to just assume that other countries have less friction (or no friction at all?) for people to vote, than the United States. My friends from other countries would find that amusing.
I get it that some states try to disenfranchise people and obviously that's wrong but the answer to that cannot be "voter id requirements are bad".
Driver's license is the defacto ID used everywhere. Which kind of makes no sense but that's the way it is. Just about everyone has one and arguments that requiring an ID to vote would disenfranchise citizens don't sound believable to me.
>>You also seem to think everyone has a car and thus a driving licence
I don't see how those two are related. In UK driving licences are also used as de facto ID everywhere(you can even get on domestic flights using your driving licence lol), and everyone gets one when they turn 18 because just get a provisional driving licence(identical to a normal one but with an L on it to indicate learner driver), no car necessary. In effect everyone in the country has a driving licence even if they don't drive or own a car. And you just apply by post, no need to go anywhere,
Obviously it would be much better to do it like other European countries do it and just issue everyone with an actual ID when they turn 18, but what UK is doing is close enough equivalent of this. So if the US has the DMV and already has an easily accessible way for people to get driving licences......what's the problem?
This whole thread is gold. People just casually discussing why it is necessary for America to enslave the world AND it is beneficial for the world. The color revolutions were successful in other countries until the DeepState decided to bring that "social engineering technology" to home. Somehow people think they can contain such moral corruption just as plasma is contained using electromagnetic coils in fusion reactors.
The theory here is democrats on average are more educated, wealthier, and in more of a position to prove they are citizens. Don’t have an opinion on that. But it’s something I know many democrats around me have said.
Because of educational polarization and race depolarization, Democrats now overperform Republicans in low-turnout elections. It's been true in every cycle starting in 2018 (and in the special elections before that).
The demographics of the parties have shifted quite a bit with Trump's second term. The Republicans lost much of their educated elite but made up for it by gaining a lot of the poor folks that have hitherto been the Democratic backbone and who are most hurt by voter ID.
Trump lost the $30k–$50k democraphic by 9 points in 2016, but turned around and won it by 6 points in 2024—a 15-point swing! Meanwhile he won the $100k–$200k and $200k+ demographics by ~2 percentage points in 2016, but lost it by 5+ points in 2024 even while winning the popular vote.
It's possible that this was a one-off and not a major permanent realignment, but it's definitely not as clear cut as it used to be.
That Democrats have held both the white house and congress several times over the last decades, and didn't try to put in place some reasonable voter ID laws is really sick.
Basically the law they would need is "states can do whatever voter ID they want, if it's free and easy to get ID and 9X% of voters not just _can get it, but actually actually have it, otherwise they can't". Or they could have made a federal ID and ensured everyone gets it.
But Democrats always felt that even going ner voter id laws were a bit dangerous. It always rang like "voter suppression" to them (and in many ways it probably was). But they missed the chance to make it impossible for Republicans to abuse it as voter suppression - and here we are now, worrying that there will be voter ID laws despite many lacking ID. It's infuriating.
Why the idea of "we'll just make sure people have ID" is so unimaginable is just completely impossible to understand. It doesn't matter that there is no actual in-person voter fraud. Voter ID laws are a good thing anyway - if everyone actually has ID. It adds trust to the process and god knows the US needs a process where people actually believe it's secure, not just one that IS secure.
On the scale of concern, voter ID is way down there. You've already had both "prosecute main political opponent" and "storm the legislature".
Voter ID is very common and sensible. The UK introduced it recently and while it did disenfranchise people this was not to the benefit of the party in power when the law was introduced.
This historical period will be remembered by being a cause for legislation to introduce strict testing for mental illness in government positions.
Ask any psychologist and it’s clear what it is, but they won’t say it publicly because of Goldwater “rule”.
fact is they have the most dangerous and destructive mental illness known, and they captured the power exactly because of their disorderly mindset.
Yet for months and years everyone is observing and discussing what people with a serious mental illness are doing when they are given highest post in power and unlimited money.
This is very different from “lay-diagnosing” every introvert kid as autistic and every jittery kid as having ADHD.
There’s _a lot_ of reliable material from his direct actions over the years to accounts from people who’ve worked or dealed otherwise with him closely.
There’s more than enough of it to make it possible to fill in a DSM-5 questionnaire and see what the outcome is.
This is the equivalent of the "mentally ill lone wolf" rationales given for American mass shootings.
What possible difference would a psychological test make when an pre-existing felony conviction is not enough to keep him from voting, but also to actually sit as head of state?
What is happening in America simply doesn't happen without broad-based, implicit, systemic support at all the important decision-making junctures. In 2017, several of the highest-profile executive orders were slapped down in court within days. In 2025, the government is not even pretending to abide by court rulings on their EOs, and are detaining people without charge and revoking their visas without due process.
Why haven't we questioned the asymmetric high tariffs imposed by the EU on America for decades?
The EU imposed a 10% tariff on US cars for decades while the US only imposed 2.5% on the EU. And this happened while the EU exerted a significant trade surplus against the US on automobiles.
I don't advocate trade wars, but I can understand the case for some rebalancing, given the historic context. Hopefully Trump will only use tariffs as a negotiating tool, and they will soon be lifted. He's a dealmaker.
Of course a lot of the vehicles that would be interesting to the US market are not classified as cars, but as (light) trucks, and have a 25% tariff applied (originally due to a minor tariff "war" in the 1960s around chicken exports). It's just wrong that the US until now has not questioned and acted upon foreign tariffs.
>The EU imposed a 10% tariff on US cars for decades while the US only imposed 2.5% on the EU.
Whose faults?
Someone signed the deal, someone let the deal stand 'for decades'.
Trump could have 'rebalanced' any disparities...er, 'nicely', and been annoyingly victorious.
As it is, nah.
Lost trust.
Not visiting, either.
All the gigabrains trying to be economists ITT don't understand this is a political move for Trump's base. It is not about what is technically best or the most logical according to the academics. It is an emotional decision more than anything. It stems from the working class in America being given cheap crap from Asia that barely works in exchange for shipping the good jobs overseas to the lowest bidder.
The working class has enough TVs, iPhones, and toys. We want secure housing, good education, healthy food, and an opportunity for promotion in life. Those things can only come with good jobs that are accessible to the whole working class, not just the well educated who make up most of the service economy.
> We want secure housing, good education, healthy food, and an opportunity for promotion in life. Those things can only come with good jobs that are accessible to the whole working class, not just the well educated who make up most of the service economy.
What level of confidence do you have that the tariffs are a path to this outcome?
I understand the "and 10% on everyone else" part of the tariffs.
Do you think the media is too dumb to understand that, or are they just playing games when they point out a 10% tariff in someone who does not export to the US?
If we could manage the country using HN experts, we'd be incredibly prosperous. People here know so much more than the actual professionals in the government.
Only a few people pointed out the obvious. Trump aims to bring everyone to table to renegotiate global commerce. Every country's economic strategy today is to have positive trade with the US and that is unsustainable.
A risky tactic, but refreshing after decades of the old tired policies that brought us the collapse of parts of US manufacturing and so much pain during COVID due to a complete dependence on foreign suppliers for... Well, everything.
I don't know if this will work. But I know what we had before wasn't working. We'll see.
This is the most mind-blowing thing to me: a bunch of multi-hundred-billionaries all standing beside a billionaire that shits in a gold toilet and is in charge of the richest country on Earth angrily proclaiming that "Everyone is taking advantage of us!"
> Trump aims to bring everyone to table to renegotiate global commerce.
Throwing the gauntlet in the dirt isn't how you achieve this type of diplomacy, as the world will just form new economical alliances with more predictable trade partners instead of wasting time trying to appease Donald Trump.
> A risky tactic, but refreshing after decades of the old tired policies that brought us the collapse of parts of US manufacturing and so much pain during COVID due to a complete dependence on foreign suppliers for... Well, everything.
By "policies" do you mean US corporations trying to make as much profit as possible by moving manufacturing to cheaper countries?
The result of tariffs, even if manufacturing for some products moves back to the US, will be higher prices for consumers even in the long run as you cannot produce things as cheaply as other countries. In a country where wages have not kept up with inflation the economic pain will keep mounting.
> I don't know if this will work. But I know what we had before wasn't working. We'll see.
Coupled with:
> People here know so much more than the actual professionals in the government.
Is funny to read; If you had those actual professionals in the government, they would be able to show you some serious predictions about how these moves will improve the economy and when you can expect the "golden age" to show up.
That's a bit misleading.
Make no mistake, current US tariffs are UNIVERSAL. Not specific to e.g. chicken or automobiles or purebred horses. They cover absolutely everything.
While you may see 38% or more tariff on chocolate, chocolate export to the EU from the US is hardly an important issue. And for dairy products, the tariff is a fixed euro amount per weight, not %.
I wasn't touching the first two categories anyway, tariffs or no tariffs.
First one because I don't understand why i should risk a milk based product that has traveled for months across an ocean. Or even from another EU country, when I can buy stuff made in a 200 km radius around me.
Second one because afaik it's legal to call "chocolate" something that does not contain any actual cocoa in the US.
> Second one because afaik it's legal to call "chocolate" something that does not contain any actual cocoa in the US.
Well, no. It cannot be called "chocolate" if it is something that consumers would expect to be made from actual chocolate. However, it can contain the term "chocolate" if cocoa or another cacao product is the sole source of its chocolate flavor, and as long as consumers have a pre-established understanding that it is likely to not be made from chocolate. For example, people generally understand that chocolate cake is likely made with cocoa, not chocolate, and so it can be labeled "chocolate cake". If there is no such general understanding, the product must be labeled "chocolate flavored".
(See the US FDA CPG Sec 515.800, "Labeling of Products Purporting to be 'Chocolate' or 'Chocolate Flavored'")
Now if we could just get them to stop calling chocolate products with dairy in them "dark" (I'm looking at you, Hershey...)
Cheese is the obvious one here. I can get a variety of foreign cheeses even at my local big-box grocery. Much better options than most domestically produced cheese.
Irish/Finnish butter (Kerrygold/Finlandia) is also fairly popular here.
If properly refrigerated, milk can last for months especially if pasteurized.
You can also evaporate milk and it will last nearly forever unrefrigerated if kept dry
> But why take the risk when you can have fresh?
> Is that still milk?
Some people just find it things like evaporated milk convenient. e.g, Coffee drinkers who don't want to bother with refrigerating the cream, so they use the powdered stuff.
In the case of European butters/cheeses, they just taste despite the higher cost.
I doubt anyone would actually prefer American butter, except maybe Americans, but it could be the American producers can make it more cheaply.
Careful: The rate mentioned for alcoholic beverages (and confectionery) may include Excise Duty.
Excise Duty usually have the non-discriminatory aspect of VAT : they’re also applied on local production.
So strange to take VAT into account when it's not discriminating between local or import. By that logic the US has a 5-10% tariff on everything too since we have sales tax in like 47 states.
The thinking may be that the asymmetry in taxes itself cause a trade imbalance. What can the country do with the extra tax money they receive compared to the lower tax country? They can spend it to fund infrastructure, goods, and jobs inside their own borders.
Ok. Taking this argument completely in good faith, does it follow that they think no country should be allowed to have any sales tax? Or that it’s an act of economic oppression for any country to have a higher sales tax than our country does? I’m just confused, do they propose every country should abolish all their sales taxes to appease this strange and pretty novel point of view.
I feel like Trump or whoever is running this import tax show has lost the plot on what they’re trying to accomplish.
Interesting that people are downvoting heavily those information. If reality does not match our view of the World, well, let's ignore reality. The truth is that EU kept higher tariffs on US goods than the other way, Trump is changing that and there is an outcry, because it was Trump who did that. If that was Kamala, nobody would even notice.
The next phase is likely geopolitical. Countries will begin negotiating directly with the U.S. administration to secure exemptions or reductions in tariffs.
In effect, it’s the formation of a new American sphere of influence / empire.
I don’t feel like there will be one worth talking about though if the current direction persists. If you don’t care about things like freedom, democracy, free press, the rule of law, free markets, then China seems like a much better overlord to take.
This breakthrough in nuclear fusion energy is a significant milestone, but it's important to remember that practical, commercial-scale fusion power is still likely decades away. Nonetheless, this achievement validates the massive investments and brings us one step closer to a potentially transformative carbon-free energy source.
I'm surprised by how many concerns there are here related to how the tariff amounts were calculated.
It seems like they used a pretty simple algorithm to do it. Isn't that a good thing? Countries were treated the same and the tariff was decided primarily by the trade imbalance (with a minimum of 10%). Would we rather them use a combination of completely incomprehensible calculations and backroom deals?
Its open season for debating whether tariffs will work, or even what the underlying motivations are. Attacking the use of a simple algorithm across the board just feels lazy and either emotionally or politically charged.
Why is it stupid? They claim to be concerned with trade imbalances, and that those imbalances are a problem. Using those trade imbalances to calculate a tariff seems reasonable, assuming the concerns are right.
If tariffs are to be imposed, I'd at least rather be able to see how they were calculated and know it was done the same for every country.
* Punish Ecuador, who uses the US dollar, for being a "currency manipulator", which obviously makes zero sense
* Punish Lesotho, whose population is too poor to ever afford US goods, because they export a lot of resources that we use
* Punish countries like Columbia for being big coffee exporters where there is no hope of building up a domestic coffee industry because that's not how agriculture works
Aren't you cherry picking to make a point though? Certainly there are impacts on other countries though, and they're likely aligned (in theory) with their stated concern that countries are leveraging trade deficits to take advantage of the US.
> Tariff an island inhabited only by Penguins
This would be a great sound bite, but its also entirely useless. If the only inhabitants are penguins then a tariff on paper means nothing, they just avoided having to write one-off exceptions.
It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency.
The flow of goods is balanced by a flow of US dollars to other countries, which are ultimately cycled back into the US financial system - enabling budget deficits and an abundance of capital to invest in high growth industries.
The flip side of this is that it also drives inequality - the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries.
The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
As such, this administration's policies are foolish, 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.
That is something that in the current American political climate seems a nearly impossible sell.
> 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.
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.
> The calculus is pretty complicated. Economies of scale become a factor - is one large global factory more efficient than separate regional facilities?
It's not about efficiency. Companies in the US only build and ship their products from the opposite side of the planet because over there they can abuse the local slave labor and pollute the environment in ways that would never be accepted in the US. Even when they could easily afford to by accepting less profit, they aren't going to move production to the US when it means they can't take advantage of those things.
> 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?
Access to the richest single market in the world ?
> Access to the richest single market in the world ?
How long do they stay the richest single market in the world if rest of the global world are producing and trading at greater efficiency while the US are facing large short term supply disruptions, higher costs and reciprocal trading tariffs on their exports?
The majority of countries have a negative birth rate. The US is doing "OK" (stopping immigration is why I put it in quotes).
This is going to catch up to most countries very soon. The US will be in a small group of the ones last standing.
If the US is planning on stopping the thing that made them OK in the first place, why do you think they would be OK after?
That’s also before you get into the fact that stopping immigration into the US doesn’t make those people disappear * , they’ll immigrate to other countries or stay home may very well cause some countries with a declining population to stop or reverse that trend
* Not en masse anyways, that’s come later as more of a final solution
Thats why I put "OK" in quotes. It remains to be seen if the immigration moves will kill the 'get out of jail free' card the US and few other countries have had. These trends don't change overnight so we have to wait and see. At this time though their population pyramid is pretty good compared to their rivals. It might take years of continued decline to finally destroy the good thing they had going. Meanwhile China had 20+ years to rectify their problems and now its too late.
US: https://www.populationpyramid.net/united-states-of-america/2...
China: https://www.populationpyramid.net/china/2024/
It doesn’t remain to be seen, we know the fertility rate for America isn’t high enough to maintain replacement rates without immigration. Here’s one article but you can find many with google https://budgetmodel.wharton.upenn.edu/issues/2024/3/22/us-de...
The current admin is saying they are going to stop immigration. I don’t find it comforting or plausible if you’re telling me that we have to wait and see because they might fuck up one step of their plan and that’ll make the other steps less painful
How do you think economic turmoil is going to affect the birth rate in the US and how do you justify labelling a birth rate that's been below replacement for 18 years as "OK"?
Check back in a few years, right now its good, and we wont see results for at least a few years:
https://www.populationpyramid.net/united-states-of-america/2...
>how do you justify labelling a birth rate that's been below replacement for 18 years as "OK"?
The US being a nation of immigrants has this unique selling point of attracting people to make up for their woes such as birth rate. Unless we see millions of citizens getting deported, the people "voluntarily" relocating don't move the needle in this metric.
We're already seeing the effects. Many people don't feel secure enough in their finances, or confident enough in the future they'd be bringing children into to have kids. As far as I can tell things will only get worse long before they even have a chance to get better.
If the 1930s are any example, war will follow, then a baby boom after the war
I wonder if the baby boom depends on who wins the war. If people are happy about the outcome, their finances are improving, and they are full of hope for the future it'd be easy to start families. If people aren't happy with the outcome, if they are suffering, if they have to live under more restrictions or a worse economy I doubt as many people will be comfortable bringing children into the world.
I'm in that group. The thing is China already crossed that rubicon 20+ years ago. So the US only really needs to outlast China in this regard. It will create problems of its own and pro America people like Peter Zeihan argue that large generations create more large generations. Boomers -> Millenials -> Gen Alpha. I dont fully buy this though.
Their population pyramid looks good though compared to China:
https://www.populationpyramid.net/united-states-of-america/2...
https://www.populationpyramid.net/china/2024/
I don't think quotes are the appropriate modifier to adjust for the damage from draconian and short-sighted immigration policy. Past tense use of the verb is probably more appropriate since countries are issuing do-not-travel warnings against the US (for the first time ever?). This administration is arrogant fools all the way down. I hope the messages sent by the electorate in 2026 and 2028 are loud enough and the brain drain is still reversible.
But that only works if you compare the US with other single countries. The EEA is similar to the US, China will be larger than the US, India will be larger than the US. Any of those combine and you loose by a factor of 2, etc
EEA, despite decades of EU efforts, is not a single market. China and India are nowhere near in terms of purchasing power or individual consumption and won't be for decades.
> EEA, despite decades of EU efforts, is not a single market.
Huh? It really is. There's free trade and free movement of labour. How is it not a single market?
We have 24 official languages, regulations/legal systems vary from county to county and we don't even have a common currency.
It's a lot better than having to deal with each county individually but still way more overhead than US.
But we don’t have tariff regimes. That what a common market means. It doesn’t mean that you can sell the same product to everyone. It just means that you can move that product everywhere. And even the regulatory regime is overwhelmingly European (that’s why you get manuals in 20 languages)
US is as scattered with ecery state having their own legislation.
Language barriers.
Not currently in Germany.
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Well what do you know, you're a big fat liar :)
Tariffs aren't bans. They still have access to the US market, US consumers are just forced to pay higher taxes for these goods.
It's government eating into your margins - unless there's no domestic substitutes.
If these tariffs continue for 30 years, it's hard to know if we'd still be the largest single market in the world.
That's not going to be true after your facilities are built.
>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.
25% margins are huge. Sounds like that margin is someone else's opportunity....which is exactly what the Administration hopes will happen.
There is an opportunity here: Cozy up to Trump, have him give you a ton of government money and spin up a company that will take those margins.
It is an interesting and somewhat macabre parlor game to play at a large gathering of one’s acquaintances: to speculate who in a showdown would go Nazi. By now, I think I know.
https://harpers.org/archive/1941/08/who-goes-nazi/
That was an interesting read, thank you for the link
The answer to your conjecture is simple Darwinist capitalism.
By whatever mechanism, imports are now more expensive, leading to less demand. Demand for those products actually stays constant, but the demand for imports goes down.
Now we have a niche. If you can produce a good locally for less than the net cost of import, you have an entire continent ready to buy from you.
The reason this has historically gone the other way is labor costs. Factoring the entire global supply chain into your product, it makes much more sense to do the work in a country where work costs less. If the additional cost to import is less than the delta on labor, you've won capitalism or something.
Or, take another angle. If the US can no longer import vital goods, what do you think will happen? Will the goods magically stop being vital? Will we sit on our hands for several decades and wait for the problem to resolve?
Or does the market respond to a need and rearrange itself to provide as profitably as possible?
It seems insanely risky to attempt to fill a niche that only opened up because of these tariffs. If they’re removed, congrats you just spent a bunch of capital to make a factory that is suddenly no longer competitive.
>>Or, take another angle. If the US can no longer import vital goods, what do you think will happen? Will the goods magically stop being vital? Will we sit on our hands for several decades and wait for the problem to resolve?
No - consumers will just eat the cost like they did during COVID.
>> Or does the market respond to a need and rearrange itself to provide as profitably as possible?
You are ignoring the 'Optimus' angle. Maybe Elon's stupid robot can actually do something and he has been whispering this into Trump's ear. That would take care of the labor cost issue. Lets see what happens.
Leaving only the "there is nobody who can afford to buy anything because there are no jobs left" issue.
If you reply with "but surely BASIC INCOME" then I must ask, what are you personally doing to help make that happen?
Hahahaha. Wait. Are you serious? Elon has been promising all kinds of things AI that are "just around the corner" for at least a decade now. It's always in the next year or two. There is no chance they cracked autonomous robots with those puppet bots they were showing off not long ago.
Look at all the braindead moves this administration has already done and we aren't even 6 months in. Maybe they actually believe his stupid robot can actually solve their problems. All we can do is sit back and see what happens.
> 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.
<< Capital knows no borders
Those statements are offered as truism ( and they do sound true enough ),but are they anything more than a hopeful assertion? I won't go into too many details, but I think it is not exactly axiomatic. It may be have been 99% accurate in the post-world war new world order, but, needless to say, that has shifted.
We can argue over whether it is a temporary pit stop or a longer term change that is likely to remain its place, but 'capital knows no borders' has its place along other otherwise useful phrases such as 'bet you bottom dollar that tomorrow there'll be sun'. As in, sure, but it is more of an expression of our wants, not an if/then scenario.
> Those statements are offered as truism ( and they do sound true enough ),but are they anything more than a hopeful assertion?
For the US / Euro, yeah you can just digitally wire say $ 150 million no problem. You just can't physically fly out with a suitcase of $100 bills.
This is not true for something like China [1].
The counter-topic is usually Labor. You very much cannot just go to the US and work but you could from China invest in a US company. So Capital knows no borders while Labor does.
[1]: https://www.tradecommissioner.gc.ca/china-chine/control-cont...
China has capital controls. Chinese can’t just invest in the U.S. an unlimited amount.
> I won't go into too many details, but I think it is not exactly axiomatic.
The Panama papers, the Double Irish sandwich, and the US government pressuring the EU not to tax American tech companies all say otherwise. More prosaically, the average non-resident, non-American has a much easier time registering a Delaware LLC than attempting to get an American work visa.
> It may be have been 99% accurate in the post-world war new world order, but, needless to say, that has shifted.
Trump has proposed a green-card-inspired "Gold Card" for rich Russians^w investors to skip the immigration queue. Lot's of countries have investor visa with fewer hoops to jump than work visa. I don't see this changing any time soon. If you have the capital, and hint that you're interested in investing $1M+, most countries will roll out the red carpet for you.
> As in, sure, but it is more of an expression of our wants, not an if/then scenario.
To be clear I don't want labor to be more restricted than capital.
<< The Panama papers, the Double Irish sandwich, and the US government pressuring the EU not to tax American tech companies all say otherwise.
It is an interesting argument to make. Given current efforts to reshuffle existing system, those may no longer be available. Let me ask you a hypothetical instead: if those 'ways' are gone, is it automatically a given that new ones will emerge? If yes, why? If no, why?
<< Trump has proposed a green-card-inspired
I don't want to write too much of an obvious comment, but.. how is it different from existing pre-Trump green cards sold to interested parties ( with lower price tag, but I am not asking about the price )? Is the existence of the card proof that capital has no borders or of something else? Is it inherent? I am now genuinely curious about your internal world model.
> Let me ask you a hypothetical instead: if those 'ways' are gone, is it automatically a given that new ones will emerge?
It's important to remember those were not the only ways, they just happened to have be the most effective, and became notorious because of it. Tax havens still exist, and we are still far from taxing corporate in the same stringent ways we tax individuals. The fact that governments only chipped at the edges with no systemic changes is telling.
> I don't want to write too much of an obvious comment, but.. how is it different from existing pre-Trump green cards sold to interested parties
You need to be specific about how green cards are currently sold before I can attempt to explain the difference. Further, if there is no difference IYO, then why is Trump proposing something new?
<< You need to be specific about how green cards are currently sold before I can attempt to explain the difference.
I was personally referring to EB5[1]
<< Further, if there is no difference IYO, then why is Trump proposing something new?
Eh, I have a personal theory, but that one will likely need some time to confirm. The shortest, handwavy way I can offer is politics ( and separation/differentiation from existing EB5 ), but I am open to alternative explanation.
[1]https://www.uscis.gov/working-in-the-united-states/permanent... [2]https://legalservicesincorporated.com/immigration/minimum-eb...
<< It's important to remember those were not the only ways, they just happened to have be the most effective,
True, but I am questioning how much some of this stuff will be increasingly challenging to evade. The fact that beneficial owner version in US was effectively scrapped suggests the AML regimes were getting pretty close to the issues you were referring to. And, as always, conversations within the industry players are discussing more monitoring, more data.. not less.
<< The fact that governments only chipped at the edges with no systemic changes is telling.
That is true, but it does not prove that capital has no borders ( original point of contention ).
> That is true, but it does not prove that capital has no borders ( original point of contention ).
Which is easier to execute: legally investing on a goat project on Mongolia or Djibouti over 2 years vs legally living there for 2 years?
It's self evident that there are far fewer hurdles for capital to transcend national borders than people. I am not certain if your argument is that the existence of minimal friction proves that there are borders for capital. If so, I'll concede that capital crossing market and judicial boundaries will encounter some minor bumps - typically from the country of origin. This heavily contrasts with labor, which faces significantly more resistance, and the resistance is from the destination country/market/juridiction. Would you agree with "Countries bend over backwards for capital inflows, including from individual investors"? It's a mouthful, but perhaps expresses the same sentiment.
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.
> you might just need to wait 3.5 days when he changes his mind and reverses the tariffs for some reason.
That reason will be that he and his pals have already bought up all the stocks that are crashing or the businesses that start failing all at insanely low prices which they can sell off for huge profits once the tariffs are reversed and their value returns to normal.
I think this, more than anything else, has been the real issue ( and I even think there was a recent Marketwatch article that basically said the same thing ): 'erratic decision making process'. There is an argument to be made about the direction of the policy, but the crazy back and forth, where it is not entirely clear 'who/how/why' and so on that people who do have to make decisions about future moves are left guessing. No one likes uncertainty.
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.
Why is “global reserve status” more important than building stuff?
It's only one of the key levers of power of the USA. No biggie. You give people money represented by paper but mostly bits/bytes in exchange for other peoples materials and labor. Can you unpack what kind of stuff you're talking about? Are we talking about nascent industries? This stuff, who are you going to sell it to ?
Doesn’t that seem fake to you? To me it sounds like a scam that’s destined to collapse in spectacular fashion.
Fake, no not at all. Look around your where live. Think about who, where, and how those things were made. Scam? From whose perspective? There is only one global reserve currency. For all intents and purposes, that is the crown and heavy is the head that wears it. Sure it feels like a scam for anyone outside of the 1% or the political class or the plutocracy.
The world followed the lead and it just wanted reciprocity (exclude the enemies of course). What seems fake to you and who is getting scammed by who?
I’m saying it seems like a scam when we consume more than we make by giving other countries pieces of paper. Why doesn’t the EU make the world’s reserve currency if that’s so great? Why doesn’t China try to make the Yuan the world’s reserve currency?Why did Angela Merkel cry when Obama tried to get Germany to engage in deficit spending? https://www.express.co.uk/news/world/1084075/EU-news-Angela-...
And why do other countries keep doing it if we are the ones getting the better end of the deal?
Read up on 1900s world history and what path dependency is. The dollar is the reserve currency because the USA won the title of world power near the end of the first of half of the 1900s. It was formalized in the Bretton Woods agreement in 1944. The US helped win the war and gained enormous trust and goodwill around the world which it has slowly been squandering since then. POTUS hit the turbo button just a few months ago.
The PRC has strict controls of their money because that is how they can became the factory of the world. They played the hand that were dealt with and battled adversity and they are reaping the rewards.
The president said today that the US trade partners and allies/friends have been taking advantage. You can easily verify if that is true or false. US capitalists moved production overseas to make more money at the expense of the local workers. That's the scam.
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?
> 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.
> moderately high tariffs at the EU border,
I've this assertion made here multiple times. The LLM's tell me the average tariff on goods coming into the EU is 2-3%. That's not what I would call "high". The tariffs imposed by the current USA administration start at 10%, and range up to 54% for nation it imports most from (China). Now that's what I would call "high", although if you are going to call 2-3% moderately high then you need a better superlative - perhaps "extreme".
> The LLM's tell me
Actual sources of information give you 1.39% [1]
[1]: https://data.worldbank.org/indicator/tm.tax.mrch.wm.ar.zs
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.
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.
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.
> It turns out that manufacturing jobs are better for supporting a family than service jobs,
Why? I hear this implied, or outright said in your case, frequently with no backing for it. It seems like a truism.
https://www.bls.gov/charts/employment-situation/employment-a...
Can you lay out your conclusions since this chart doesn’t have groups matching 1:1 with the conversation
https://x.com/_PeterRyan/status/1907879785151475801 Protectionism is like child rearing. You're trying to protect the young (industry) so they survive to adulthood. The tarrifs are too broad. How the hell are you going to sell goods from HCOL area to the rest of the less affluent world? Even if some countries could afford it, how are you going to get goods across burned bridges?
"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.
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.
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
Greenland? You'd have an easier time growing coffee in Illinois or Iowa
Panama? And do you think if he takes one place that’ll be the last of that behavior?
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.
> 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.
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.
What are they buying it up with? Their buying power takes the same hit in the crash.
billionaires have a lot of money tied up in the market but they aren't cash poor. They typically keep hundreds of millions in cash on hand. Supposedly, Jeff Bezos keeps over $9 billion in cash. Their day to day lifestyle doesn't change one bit when the market drops. They don't have to stop buying the groceries they normally do just because a stock drops by 10%. Buying up some stock while it's down when they know they can sell it back when it jumps back up is just free money.
Even if they somehow ran out of money in all of their accounts (and that's extremely unlikely) and at the same time lost all the money they had that wasn't in stocks they could very easily borrow money.
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.
https://www.usaspending.gov/explorer/budget_function (linked on that page but easy to miss) provides a great visualization/interface for the budget that can drill down deep into each category's sub-categories and beyond.
OTOH they might be asking more specifically for a view that controls for how different tax/income sources might be earmarked for specific spending, thus skewing how income tax dollars are distributed compared to the overall budget distribution - though I'm not sure that's going to change one's income tax dollar distribution much. AFAIK even social security is only nominally funded by social security tax, and the deficit means there's debt filling the gaps everywhere anyway.
That page is a good start. It at least shows the breakdown of % by programs, etc.
However as you point out there are different types and methods of tax which go to different bins. The IRS filings are the most likely place to have all that together.
*value for taxation* is also really difficult to discern. The report needs to help break down where someone's tax dollars went...
But it also needs to help collectively show how tax dollars _benefit_ them. That one not just in the taxes they paid but overall based on where they are and what they're doing.
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.
>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?
Promote the lie down movement in the short term and let the negative birth rate take care of them in the long term. Thats the only way unless the US somehow gets a magical AGI and robots before China.
"let the negative birth rate take care of them in the long term"
There is a presumption hidden in that sentence: namely, that procreation will always be left up to the people and their decisions. That is far from certain. If anyone has the nerve to actually develop and deploy artificial wombs, it is China. And the resulting kids will be simply pushed onto young people to raise - an authoritarian country won't have to ask anyone.
Having kids is one of the last almost-non-industrialized attributes of human lives, most people are still being born in the same way as they used to in the Stone Age. I wonder how long will that situation last.
>If anyone has the nerve to actually develop and deploy artificial wombs, it is China. And the resulting kids will be simply pushed onto young people to raise - an authoritarian country won't have to ask anyone.
We will have to take that info as it comes. I was working off the info we have today. Their birth rate (as well as the birth rate of most of the world) is horrendous. This was a problem they should have started tackling 20-30 years ago.
Hey! That's a new sci-fi idea I think. Citizen, nurture your doughy cuckoo-clone, or there will be measures. I don't think this has been done.
I guess it's a bit Handmaid's Tale.
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?
Some tariffs are fine. These tariffs are a disaster. There are some companies that could eat the increased costs (or at least a large percentage of them) and still make a healthy amount of profit overall, but they won't. They'd rather import less and/or jack up prices until people are priced out of things they'd normally buy. Some companies are fine with turning what used to be common purchases into luxury items available only to a small number of people.
If these tariffs continue for long, it'll mean many more people needing to put up with having a lot less.
> 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.
> 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.
> food is not imported from China
No, but components used everywhere from agriculture to transportation to producing food products from raw agricultural output are imported from China.
But that doesn't make food 35% more expensive.
Stock market is down 10%. Unless you’re gambling with leverage you’re fine. Much of our food is imported.
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.
Yes! "Trade Wars are Class Wars" by Klein & Pettis is the book to read if you want to hear actual economists with actual data talk about this.
For what it's worth Pettis thinks tariffs would be beneficial for the American economy: https://www.foreignaffairs.com/united-states/how-tariffs-can...
I read this and I was quite disappointed that he didn’t talk about labor costs and other comparative advantages for labor-heavy manufacturing to be in a different situation trade market-wise than it was in the 1930s.
He does talk about comparative advantage, though. Extensively. The bit about Ricardo's precondition is absolutely wild and I'm more than a little scandalized by the fact that it wasn't discussed when I took econ in school. Not to mention the history with Alexander Hamilton.
Are you sure you didn't just read the link? If you want a book-sized argument, you need to read the book, or at least listen to it.
Stellar book. Can't recommend it enough. Wanted to chime in on how good this book is.
I just downloaded this and listened to it for the past 2 hours, this is a fantastic book. Thanks for the rec guys!
I purchased this book after seeing all of these glowing reviews for it.
> the upside of this system is felt by the entrepreneurs, investors and high-skill employees in tech and finance, while the downside is concentrated with low-skill workers whose jobs are offshored to lower wage countries.
This is true only if we impose barriers to geographic mobility, which we do via artificial scarcity of housing in our major cities.
If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor.
> the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
We don't need more high-quality education nor do we need to onshore. We need to deregulate the housing market, we make it easier to migrate to the US (funny enough, yes that would help with inequality). And I do agree we need better social systems.
There is no way to frame this admin's policies that makes it look reasonable. It's a Crony Clown Club show.
> If we produced housing like we did cars, all the "low-skill" people would be able to move to the city and find a job in the many other services that require human labor.
Why would they want to do that? Their priorities are myriad, but raising a family, having a degree of autonomy and space to themselves, and remaining a part of their community are all generally on the list.
What’s generally not on the list is living in a tiny rabbit hutch, owning nothing, working a dead-end service job, trying to raise a family in a city (or just not trying at all), and paying a higher price for the privilege.
Because that’s where the money is. The world over people have exhibited their revealed preferences for living in a city, as everywhere continues to urbanize
all the "low-skill" people would be able to move to the city and find a job
That this doesn't work is self-evident. Cities are currently filled with low skilled people. The vast majority of whom find no employment or employment in illegal activities.
Also:
We don't need more high-quality education
The idea that the world, and the US in particular, has no need for more and better education is laughable. Considering the fact that a lack of education is, arguably, what got the US into the current situation in the first place.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
Like... Scandinavia?
As an example, yes.
Yes.
Scandinavia is the gold standard for liberals.
Unless you are talking about immigration, and then no one ever heard of them.
Scandinavia has its problems too, but they're doing a lot better than we are in many measures that aren't "number of billionaires getting richer while the rest of the population gets poorer every year."
People there are happier, healthier, and better educated than they are here.
Sweden actually has a higher rate of billionaires than USA (and Norway).
https://en.m.wikipedia.org/wiki/List_of_countries_by_number_...
Not that that has to be a good thing though...
Sweden has less income inequality and higher economic mobility than the US (Norway does better). Although it's been getting worse, the American Dream is still much more attainable in Sweden than it is in the US.
Scandinavia is using oil and gas reserves as a captive tax base. It doesn't really generalize to markets where capital is mobile.
That is only Norway. Maybe a little bit of Denmark, but Denmark is not considered an oil economy.
And I don't know what you mean with "captive tax base" but Norway just piles up the wealth they are too afraid to use it since it will increase the inflation.
Norway is the one that actually makes it work. Their GDP per capita is slightly higher than the US and more than $30,000 higher than the other Scandinavian countries.
"Captive tax base" means the industry can't move to another country as a result of high taxes. You can move factory jobs to China by moving the factory. You can't move oil and gas extraction jobs to China by moving the oil field.
and a basic sandwich costs 3x that of in denmark :)
That's the premise, isn't it? The local sandwich shop owner, a small business, makes more money relative to the global price of an iPhone or a solar panel so there is less wealth inequality.
The only useful increase in equality is the one that makes ordinary people better off. Making them poorer just to spite the rich by a larger amount is absurd.
The idea behind subsidising re-education is that it benefits the society in the long run. I guess I have no proof that it isn't what makes Scandinavian GDP/capita lower.
It isn't funding education in itself that lowers GDP, it's high tax rates. Investors put money where it gets the best returns. Suppose one country has a 20% tax rate and the other has a 60% tax rate, i.e. they keep 80% of the returns instead of 40%. Then they don't invest in the second country unless the returns are twice as high to begin with, and in most cases they're not.
Governments making beneficial use of tax dollars can counteract some of that, because the investments would increase productivity there (e.g. more educated workforce), but for that to work the government would have to make net positive investments against the losses resulting from higher tax rates. That's notoriously difficult and governments more often fail than succeed at doing it efficiently, and there is a strong incentive for corruption. If any significant amount of tax money is directed to cronies or politically connected constituencies, the possibility of not causing net harm quickly plummets.
Moreover, government spending has diminishing returns. Collecting enough in taxes to have a basic government that can at least enforce laws against violence and provide transportation infrastructure has very high returns. The first $10M you spend on police might cause the number of unsolved murders to go from 1000 to 500. The next $10M you spend might cause it to go from 500 to 450, because the remaining ones are harder to solve, and because there are fewer remaining to solve. At some point additional spending isn't getting enough of a benefit to be worth the cost. And the same for infrastructure and education and all the rest of it.
The exact breakeven point is obviously a matter of some debate, but there is generally a negative correlation between higher tax rates and GDP per capita, implying that most current governments are either taxing at inefficiently high levels because the marginal government program isn't worth the cost, or that there are productive investments governments could be making with the existing money but instead they're allocating it to something else, e.g. because of government corruption or mismanagement.
> There is generally a negative correlation between higher tax rates and GDP per capita
There are lots of reasons for high/low GDP per capita, but I would like to see proof of this to believe it.
Why is Denmark so high up for example, generally considered the country in the world with the highest tax pressure, and without any substantial natural resources. Cherry picking of course, but your claim is very sweeping, so I'd put the pressure on you to prove it.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nomi...
They are optimising different things and the GDP for them is just a means to an end. They are trying to achieve objectives like: healthcare for all, certain minimum standards of living and safe neighbourhoods everywhere. It's natural that if you don't optimise for GDP then GDP will probably not be maximised.
What our objective function should be is of course a very deep and interesting question. We don't talk about it enough. Most people think about solution first like: socialism, liberalism, sharia law, biblical law etc...
That's just Norway.
what you're saying in short is that the US economy has changed from Manufacture-based to Service-based, just like China.
People don't realize this but China is moving toward Service-based, naturally, as they raised their standard of living, thus education.
What's missing is not raising tax on Income but taxing Wealth: the super rich has their wealth sitting and growing unproductively (house appreciating is not productive, buying farm lands and rent it to other farmer isn't productive). Holding Limited version of a Ferrari isn't productive. Feel free to find other Assets.
Once the super rich completed their journey in this world, they will inherit billions to their kids, whose productivity output does not match the wealth they inherited, again, not productive.
Tax their Wealth.
Even if this were implemented, any country taxing wealth would see a flight of capital to other countries not taxing it.
Good, I'll help you pack your factory into your suitcase.
The US wouldn't as it taxes global income.
More generally, you'd probably get the OECD together and make a deal if you wanted to do this.
Not many billionaires will move to the Congo, regardless of how much they are taxed.
So? Less capital chasing after housing means housing prices fall. If the capital was not destined to be used in the first place, then it only serves to inflate the economy
> It's true that free trade is hugely beneficial to the US economy as a whole, particularly with the USD being the reserve currency.
It's true that free trade is hugely beneficial to large cap U.S. companies and their shareholders.
If you are U.S. worker without a lot of equity in the market all you notice is that your job gets outsourced.
This “free money” also inflates housing prices. It’s one application of “trickle down economics” that works; except it’s housing prices.
Even for highly paid Silicon Valley engineers what does it matter if much of that money goes right back to landlords?
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
You are assuming that this administration has the same goals as you, just different ("foolish") methods of arriving there. I'd posit that they have very different goals that these methods are solving for.
Tariffs will probably be bad, but on the other hand the old system didn't really work either in the long run. Perhaps he can bring some manufacturing back and I don't really believe consumer goods getting more expensive will be immediately felt. Could be wrong though.
Well, at least it might get interesting if you like crazy. I don't really believe those crying the loudest that they are particularly interested in combating inequality or are too interested in protecting low income people. Yes, maybe they need industries protected by tarrifs instead of cheap t-shirts. Maybe this perspective is rather stupid though. We will find out if that works or not. Economics projecting the next depression aren't really sources to trust either.
This is a regressive tax that hurts low skill and low wage workers proportionately more since basic necessities of life are going to increase in price - it will be a much larger share of wallet than rich. This will not materially change purchasing behavior of very rich (save maybe waiting to buy a car due to increased pricecs)
It would be beneficial to increase taxes on the massive service economy and use the proceeds to subsidize lower wage industries.
In trumps first term after tariffs affected farmers, they had to subisidize them to keep them afloat. It didn't quite work the way it was intended. The trade war relief program in the first term spent $30bn keeping farmers afloat.
> The obvious solution is... for the government to lower the cost of high-quality education
Not everyone is smart enough to land in the professional class. The US does its young population an enormous disservice by pushing low academic performers to go to college. There needs to be, somehow, a way for people to make a living with their hands, because for some people, that is genuinely all they are capable of.
> ... build out social systems...
The way you build out the social system is by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program. You don't take those jobs away by offshoring them.
I'm not saying I'm against offshoring in general or that I support Trump's tariffs - I don't. But it's not exactly controversial to point out that, since the end of the Cold War, the US prioritized the recommendations of economists over social cohesion and socially harmonious policy. A lot of people were thrown out of work and were left to fend for themselves. Many of them ended up as victims of the opioid epidemic. I'm not convinced that the prior system was completely peaches as cream.
What happened to the information economy? And getting everyone trained on that type of skills? Nowadays education seems to be frowned upon by those in charge.
Edit: looks like this is discussed in a sibling thread: https://news.ycombinator.com/item?id=43573036
The "move" from an agricultural economy to an industrial economy didn't end agriculture being a significant part of the national economy; agriculture just lost relative share of GDP. Similarly, the "move" to an information or services economy isn't necessarily going to eliminate either agricultural or industrial work. China, for example, has its tech giants (Tencent, Alibaba, etc.) but it also has vast industrial capacity (e.g. Shenzhen) and agricultural capacity (e.g. the largest pork production in the world). American education deciding to push children towards information-economy jobs that were a poor fit for their talents, neglecting classes like shop skills that were once common, was a mistake and certainly not inevitable.
"move" absolutely did move a lot of workforce, since farmers are much more productive, not as much help is needed.
> by enabling people in the working class to find genuine work that produces value, not some ditch-digging make-work government program
Like building out clean energy infrastructure?
Modern "ditch digging government programs" aren't necessarily low-skill. Even at the time, the new deal government programs were massively beneficial for society while also providing jobs for folks who needed it, at reasonable wages. Let's not shit on good government programs just because the right has been feeding us propaganda demonizing it for decades.
Building out clean energy infrastructure provides value. That's perfectly fine. There is plenty of need for hands to maintain American road infrastructure that is falling apart and build new infrastructure like high-speed intercity rail and more subway lines to help support additional population growth.
The reference is to how a government can pay people to literally dig ditches then refill them. This nominally increases GDP (due to additional government expenditure) but it does not produce value and, more importantly, does not give people the dignity they would ordinarily achieve through their labor because they know such work is bullshit.
Thanks for your comment, it explains why there seems to be a high degree of support for these measures in some quarters (was looking at the youtube comments to the liberation day speech) vs the consensus here at HN.
Let's suppose these policies are to the benefit of some Americans over other the benefit of other Americans. The open question now is: does it matter? does it really have an influence on the gross profit numbers? Will an isolationist foreign policy destroy the international order and how could this effect the US in return?
As a highly skilled and comparatively highly paid worker, I feel it is outrageous to suggest that I am within the class that needs to give up any reputed "wealth" when I am nowhere near the 1% who hold more than 50% of it. Such a claim just contributes to the wealth making of the 1% misers even more. Class warfare! I have already had to give up significant amounts of college and retirement savings from these tariffs.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education
I'm always skeptical of the idea that we can just educate ourselves out of problems.
As I see it, that would only raise people's wage expectations which would make us even less competitive on a global market?
The need for blue collar workers doesn't just evaporate, and there's frankly only a finite demand for white collar workers. You give everyone expectations of a white collar job, and they end up working blue collar because there's no job for them, you're just setting society up for mass disappointment and resentment.
You give your average blue collar worker today a degree, are they actually more valuable to their current position? Probably not.
Your problem statement is missing "national security" angle. As I understand the current administration sees US de-industrialization as a threat to it and tariffs as a soution.
So basically: the solution is "do more of the same".
I suppose that's the point, people were tired of hearing the same old crap by leftists who fancy themselves as smarter, as their quality of life continued to drop, so they figured "screw it let's try the opposite".
Guess we'll see where it lands.
> As such, this administration's policies are foolish, 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.
Very few people who work as full-time devs are so wealthy that they are totally insulated from general social decline.
You're arguing from a steady state. In point of fact the pain of the at-this-point-seemingly-inevitable recession is absolutely going to be concentrated on the working class. Those of us with savings and work flexibility will do just fine.
Even someone making a first principles argument for a revision of US trade policy should agree that this is insane.
The real pain will hit the working class harder, but the nominal pain will hit the capital class harder. Historically, this is how inequality unwinds. See: recessions, World War II. Let's hope to god that this is "just" a recession and doesn't cook into World War III.
The current spending bill has a 4.5T giveaway to corps and the ultra rich. The goal is to drive prices to the floor and then buy everything up.
What's a 50% drop in value to a billionaire? Most of them would still be a billionaire and the ones that fall from that group still have more money than they could ever spend. No wealthy person will truly feel what's going on. They'll still vacation and eat their caviar. Caricatures aside, it's absurd to compare someone stock sheet numbers going down with people not able to find medical care or feed themselves.
Definitely looks like an intentional precursor to WW3.
- Threats of annexations - Existing conflicts in North America, Middle East, Europe and Asia. (whats up with South America?) - Mass unemployment and poverty in US freeing up able bodied people for some soldiering - Right wing blowhards everywhere
Just crazy that this is essentially because rich people dont want to pay some debts, and some crazy russian guy's ego
I think the quote below attributed to Caesar is applicable here ( not only in the sense that egos play a role in most leader's process ). I am not sure I disagree with you; I just hope you are wrong.
"Go on, my friend, and fear nothing; you carry Caesar and his fortune in your boat."
I think my comment is entirely compatible with what you said, no?
its also assuming there is any plan here do get somewhere, they just asked chatgpt for number, it spewed them out and those became the final numbers.
there's no plan for anything here.
Yes! I've been consistently frustrated at both sides of the issue. It became salient for me when I read about how China had sanctioned three American drone manufacturers that were supplying Ukraine last year, and how it disrupted their supply chains and ultimately the war effort.
It is unacceptable for any other country to be able to do this to any part of the western-aligned military supply chain.
We needed a targeted policy -- I don't care about American cars except to the extent that those factories can be converted to aircraft and tank factories.
But the conversation has been frustratingly reduced to 'reshore low skill work' vs 'save my infinite trough of cheap plastic slop'.
I don't want to hear about tariffs bad, I want to hear about how subsidies are better or about how it doesn't matter anyway because of the structure of the Chinese economy (I saw it claimed without evidence that they depend on imports from places aligned with the west which is reassuring if substantiated).
There's an underlying issue everyone is dancing around.
I don't know why you are being down-voted, I think you raised some interesting points that add to the discussion.
National security / foreign interference hadn't occurred to me, and now I'm wondering what would happen to US economy and manufacturing if it was at war with China and or the EU over Taiwan and or Greenland.
How would US deal with Russian style sanctions? Can China simply ban all exports to the US?
In times of war, it probably is super important that a country and manufacture all essentials.
> I don't know why you are being down-voted
Just give it a few minutes to settle out. Sometimes people tap the downarrow by mistake, since it's 2mm away from the uparrow. It's not always a conspiracy :-)
If I were a third party downvoting my comment I would probably take issue with the characterization of the anti-tariff position as "save my infinite trough of plastic slop". Other countries do have highly skilled artisans. Tariffs are also considered bad on the merits (looking at it from a liberal [economically] world view). It's like vaccine skepticism to economists: an extremely low-status opinion for kooks and cranks. But I am open to being convinced on illiberal economics (this is not the same thing as saying I support it) because I consider military supply chain erosion a national emergency and I don't think "balloon the military budget even more with subsidies" is a politically viable position and "just build it in an allied country we now have to keep permapoor to make the economics work out" is cruel.
> The obvious solution is not to hurt the economy as a whole, but rather for the government to lower the cost of high-quality education, build out social systems, and invest into onshoring select strategic industries by raising taxes at the high end.
You're proposing to tax an international supply chain. To tax something it has to be in your jurisdiction to begin with, and then you have several problems.
The most obvious of these is, what happens when the stuff just isn't there anymore? Suppose the US isn't competitive with China for manufacturing certain goods, e.g. because the US has a higher cost of living as a result of a purposeful housing shortage and then has higher labor costs, or for any other reason. So manufacturing moves to China, not just to sell to the US but also to sell to the domestic market in China and to Europe and India and the rest of the world. No part of those other transactions is in the US, so the US can't tax them and use the money to help the people in the US who used to be doing that manufacturing and selling those products to the rest of the world. Whereas if you sustain domestic manufacturing through some means then it exists and can make products to sell to the rest of the world because the fixed costs of establishing a manufacturing base can be covered by the domestic market and then it only has to compete in the international market on the basis of variable costs.
Next consider the industries where the US still makes stuff. You could tax those things because they're still in the US. But that makes the US less competitive in the global market for investment capital, which is highly mobile. If higher US taxes cause returns to be lower in the US than they are in other countries then investors go invest in the other countries instead, and then the thing stops being in the US. So that doesn't really work. You can see this in the case of e.g. Europe, which has even worse problems with the loss of manufacturing than the US.
Which leaves the activity where it's the other half of the transaction happening in the US, i.e. China is manufacturing something but the customer is in the US. That you could tax without a huge risk of capital flight, because companies can rarely change the location of their customers, but that still leaves you with two problems.
First, either of the countries participating in the transaction could levy the tax. In the case of China, then they can levy a tax (or some tax-equivalent) to only such an extent that it consumes the surplus in the transaction attributable to the competitive advantage of their country. China can do this because they have a lower cost of living etc., which doesn't work for the US. But because they do that, the US can't tax that portion of the surplus, which was the gain from moving manufacturing to China.
And second, a tax on imports is called a tariff. Which the US can impose to tax that portion of the transaction surplus that isn't attributable to the foreign country's cost advantage, i.e. the preexisting transaction surplus where it costs $8 to make something someone is willing to pay $10 for regardless of where it was made. But tariffs are the thing you don't like.
OR use borrowing (e.g. current account deficit). If government spending drives productivity growth then it’s a net positive?
OR tax wealth. If most return on international capital investment is being stored in the US, taxing this effectively taxes profits on international sales???
> OR use borrowing (e.g. current account deficit). If government spending drives productivity growth then it’s a net positive?
That's basically what already happens. The US has been running a huge deficit for a while now.
It also requires government spending to be the spending that drives productivity growth, which most of it isn't.
> OR tax wealth. If most return on international capital investment is being stored in the US, taxing this effectively taxes profits on international sales???
Why would they store the wealth in the US if the US had a wealth tax? One of the biggest problems with a wealth tax is that it has such a strong propensity to induce capital flight.
It's also not just a question of how you structure the tax. Wealth taxes are hard to avoid for things like real estate (can't move it), easy to avoid for things like factories or intellectual property (can easily move it), but the same is true for other taxes that apply to those things. It's easy to impose an income tax on rental income, so you don't need a wealth tax for that. The hard thing is how to impose any tax on all the money the Saudis have without causing them to just invest it in something else, possibly in some other jurisdiction.
It's possible that the US acquires what it wants by simply conquering the producing countries by force. The US gets back it's industrial base by force.
The US is going to conquer China by military force? That seems unlikely when they both have nuclear weapons.
It wouldn't be a solution even if it was possible. If China was a US territory and still did all the same manufacturing, how does that help the people in the rust belt get better paying jobs, or address the single point of failure where some turmoil in Asia can disrupt global supply chains?
The only thing that works is to diversify manufacturing out of that single region, and that doesn't require conquest.
You can’t make everyone above average.
> for the government to lower the cost of high-quality education
Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs. For some reason, with intellectual labor, we are able to pretend that there is no threshold and everyone can do it. It's an idea that makes people feel good but what if it's just not true? Can everyone be made above average in something with enough education?
If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that? How do we maintain a democracy? Sometimes people float the idea of UBI, but that could turn out extremely dystopian with a huge underclass of UBI-collecting people in a state of hopelessness and boredom. That doesn't work much better for democracy than a huge underclass of under-employed and unemployed people.
To make matters worse: the fact that our past strategy works so well for increasing GDP means it it tends to inflate assets, including things like housing prices. The end result is a country that looks, to more than half its inhabitants, like a vacation town where outside capital inflates the cost of everything way above what local wages can support. It might not be a coincidence that San Francisco, New York, and other capitals of high margin high skill industries have real estate prices that lock ordinary people out of even "starter homes."
I absolutely do not support Trump's execution here -- it's ham-fisted, reckless, and badly thought out. If we are exiting this neoliberal model, Trump's exit from it is a little bit like Biden's exit from Afghanistan. Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind.
We can't keep doing that if we want a democracy. If we exclude 50-80% of the population from anything meaningful or any economic stability, we will get one of two things. Either we'll get the kind of totalitarian state that is required to maintain that kind of inequality in perpetuity, or we will get a string of revolutions or a failed state. People will not just sit around in hopelessness forever. Eventually they will be recruited by demagogues. Ironically Trump has been one of the most effective at this. I'm sure more will eventually show up though. There's a big market for them.
> If we're creating an economy where decent jobs only exist for people in the top ~20% of the ability curve, how do we handle that?
The most important thing here is to do something about the cost of living, i.e. the price of necessities.
Housing isn't inherently as expensive as it is in the US, it's made that way on purpose. Healthcare likewise. If you only make $25,000/year and housing is $20,000/year and healthcare is $12,500/year, you're screwed. If you only make $25,000/year and housing is $10,000/year and healthcare is $5000/year, you're not.
I’ve reflected that resource extraction jobs often end up in the high wage / low educational investment category, and I’ve wondered if that motivates the whole “annex Greenland” bit as much as “securing critical resources” does…
Will the US be able to survive as a superpower while severely cutting down the top 20%'s standard of living? They could simply defect somewhere that offers them a similar position in society as the US, similar to what the US has done to the rest of the world.
> Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
You still need education to become a nurse, caregiver, welder or kindergarten teacher. And the right subsidies (free education) allows people to make the switch.
> Devils advocate point, and one nobody wants to talk about: what if everyone can't be a high-skill employee?
Agree with this.
Also, what if there's just not a need for it?
Even if "everyone" in some abstract sense is capable of "high-skill" jobs, how many are really needed? Look at software jobs alone and the onslaught that is the current labor market.
I think there's nowhere near enough "work" ("real" or otherwise) to go around to maintain the level of employment necessary to support the population that we have at the costs that we have.
I don't think any sort of "UBI" (assuming you mean direct cash payments) is a realistic solution, either. People need to "work" in some organized fashion to avoid the common negative outcomes associated with "welfare" scenarios.
I legitimately, unironically, support the kinds of "fake" jobs that were prevalent in years' past (day in the life TikToks come to mind, Gov jobs where people send three emails a week, etc).
I guess in another sense I do support "UBI", as long as it's paired with the illusion of "work."
I understand this seems nonsensical, but just from practical experience it makes total sense to me.
Here's an example.
Years back I worked a software gig at a large non-"tech" F500 company. Much of the programming work there was extremely dull--occasional maintenance of large barely functional enterprise Java messes, writing a few SQL queries a week for wretched multi-table joins requiring all sorts of nasty casting and hacks as "normalization" was an alien concept to the original author and the like. Realistically, folks worked on this stuff perhaps 10 hours a week?
Anyway, I know a few people hit with a layoff that worked there a long time (decade+) and now they're back in the Thunderdome looking for work as "developers". The people in question are nearing retirement but presumably not there, for one reason or another.
Hows this going to work for them? I'm not denigrating them, but having worked with these folks, they're not going to be tearing into broken pipelines, adding React components, configuring Docker builds or whatever--there's a skill mismatch and the workload I've seen at roles lately is just so far beyond the pace, scope, and "scale" that there's no way they'd make it, if they can even get an interview at all.
In this example, would it be best to give them "UBI" payments, or some other slow near-sinecure where they have dignity?
Maybe I'm just soft.
> I don't think any sort of "UBI" (assuming you mean direct cash payments) is a realistic solution, either. People need to "work" in some organized fashion to avoid the common negative outcomes associated with "welfare" scenarios.
That's actually the point of a UBI.
The problem with existing welfare programs is that they're a poverty trap. If you have no job or a very low paying job, you get benefits. If you make any more money at all, you lose the benefits, and simultaneously you lose the time and expenses of taking the job. If that means you e.g. have to buy a car to go to work, taking a job causes you to lose money. Sometimes you lose money even before your working expenses because overlapping benefits phase outs can consume more than 100% of marginal income.
With a UBI, the amount you get is only the amount you need to avoid starvation and homelessness, but you get that amount unconditionally. If you can find any work at all, you get the UBI and your wages, instead of getting your wages instead of welfare programs. Which allows you to work, even if you're only qualified to do low paying jobs, without being put in a worse position than you'd have been if you just stayed on welfare.
I'm of a similar mindset, just look how many software adjacent roles are basically UBI already.
With DOGE the US seems to moving backwards, cutting down on gov busywork for what self-defeating purpose? They just end up flooding the market, or worse, sabotaging productive teams with their meetings and ceremonies.
Pretty ironic, considering that Elon Musk supports UBI.
> Imagine if the highest earning jobs required immense physical endurance and strength. Nobody would argue that everyone can do that. It would be obvious that only a subset of people are capable of doing those jobs.
"pfff it's easy-peasy, just go attend a (literal) bootcamp, you'll be fine, anyone can do it"
----
> Still it is obvious to me that the current system is not working for more than half of Americans. It's fantastic for the top ~20% or so and leaves everyone else behind.
god yes
The elephant in the room here: there is no money for anyone not in the top20%, it all goes into their pockets and they just sit on it, leaving only scraps for everyone else, tax the rich, anyone with more than x% of the median amount of wealth should have everything above that taken away and redistributed to everyone, possibly by means such as UBI/welfare/etc!
But we ain't gonna get any of that without revolution. And honestly it feels like Trump's getting us closer and closer to the brink of that.
This is the kind of side debates you get by framing it as “low-skill” versus “high-skill”. Whether the “~20% of the ability” curve should help the poors from their apparent attraction to demagogues.
> lower the cost of high-quality education
And how do you propose we do that? By giving schools even more money at taxpayer's expense?
> raising taxes at the high end
40.1% of US taxpayers on the low end of income distribution pay no income tax, 16.5% pay neither income nor payroll taxes. Top 1% pays 40.4% of all income tax (while holding about 30.8% of net worth, 13.8% of the total is held by top 0.1%). Top 1% (with the possible exception of a few billionaires) already pays through their nose.
Funding public universities and giving them the mission to keep tuition costs low. Public universities are capable of providing enormous value to students, but over the past two decades their funding has been substantially cut. The result is that those schools became more reliant on expensive out-of-state tuition, which in turn means competing with private institutions for students, which in turn means building more luxuries (awesome gyms) and not focusing on value for money.
So, giving even more taxpayer money to the education cartel, then. Got it. Good luck with that. Over the past several decades staffing in administrative positions has exponentially ballooned all across the education system, starting with grade schools, while academic metrics moved in the opposite direction. Now the question is, do we continue setting even more taxpayer money on fire, or is there a better way?
What people don't discuss about the taxation is that rich people will universally pundit, preach, undermine, subvert, and squirm out of any law to tax themselves more. If you are preaching more taxes thinking it will affect the politically well-connected, it will be unwound and castrated by the politically well-connected. Or just deflected into somebody else's responsibility.
In that case, someone else is going to be holding the bill that you might not have intended.
I hate discussion of percentages, because every percentage seems reasonable by itself. It's the summation of the percentages that politicians have no interest in discussing.
In fact, it should be a requirement of government to sum the percentages of federal,state,medicare,social security, sales, resort, fuel, local levies, internet sales into one effective percentage that a given citizen in a given city has to pay.
Has anyone calculated that number for themselves? I've been collecting all my transactions and taxes to figure out what percentage of my income actually goes to taxes.
==40.1% of US taxpayers on the low end of income distribution pay no income tax==
According to 2022 IRS data, average deductions for those who itemized totaled $43,686 in tax year 2022 [0]. The 2022 bottom two quintiles of income were under $44k [1]. That means in 2022 rich people AND poor people didn't pay income taxes on their first $45k of income. Is that unfair to rich people?
Worth noting, the 25 richest Americans paid an average effective tax rate of 13%, as of 2018 when IRS data was leaked [2].
==Top 1% (with the possible exception of a few billionaires) already pays through their nose.==
"While average effective tax rates barely changed in the US from 1945 to 2015, the average tax rates of high-income households fell sharply—from about 50 percent to 25 percent for the highest income 0.01 percent and from about 40 percent to about 25 percent for the top 1 percent." [3]
If the average effective rate hasn't changed, but the effective rate paid by the top 1% has fallen by ~40%, how is the difference made up? The 99% pay more.
[0] https://www.pgpf.org/article/7-key-charts-on-tax-breaks/
[1] https://data.census.gov/table/ACSDT1Y2022.B19081?q=income+qu...
[2] https://www.propublica.org/article/you-may-be-paying-a-highe...
[3] https://taxpolicycenter.org/taxvox/effective-income-tax-rate...
this glib analysis neglects the part where decades of plans and budgets have been addressing " build out social systems" while simultaneously building crony networks of political appointees, guarding the hen house. Short term pain is loudly announced for the purpose of defeating the political opponent, not addressing the long standing inefficiencies in a swollen and obese wealth exchange centered in the USA.
tons of cynical one-liners from partisans drown out efforts to really examine the impacts over medium and long term. A horrible problem with this move is that it is not entirely wrong from a fundamentals point of view? It certainly creates winners and losers, no question about it.
The political class and plutocrats always wins regardless of the election outcome. The two party system guarantees they come out unscathed regardless of their jousting.
Nope. It's true that free trade WAS hugely beneficial to the US economy as a whole. Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long.
> Now free trade is hurting USA economy
Then why is the economy crashing under these new tariffs when it was recovering nicely just a few months ago?
Free trade is not hurting the economy. American domestic policy impacting the distribution of the produce of the economy is, even in times of strong aggregate economic performance, hurting the felt effects of the economy on large swathes of the population, but throwing up protectionist policies that collapse both the global and local production possibilities curves doesn't help that; it just shrinks the pie without doing anything to deal with the bad distribution which makes people feel like the pie is shrinking even when it is growing. The results you can expect from that should be obvious without experiencing them, but it looks like we are all going to learn about them through painful experience real soon now.
> Now free trade is hurting USA economy and that's why USA play against the rules they were promoting for so long.
Explain how is it hurting US economy?
The deficit is 2 trillion.
Income taxes on individuals are 2.4 trillion.
How much do you expect to raise taxes to cover that gap? You double my taxes and I’m in the welfare line.
Further, and this is not referenced enough - the US must rollover ~9 trillion in treasuries this year. The lower the interest rate to do that, the better. Otherwise it increase the deficit even more.
The only way this ends is one of two paths - a path similar to what we are on; default.
We may not like this one, but default is world destroying because of the broad use of the Dollar around the globe.
The deficit is not in fact 2 trillion. Source: https://www.bea.gov/system/files/trad0225.png (and many other official documents)
Also, this is a false dichotomy.
In CBO’s projections, the federal budget deficit in fiscal year 2025 is $1.9 trillion. Adjusted to exclude the effects of shifts in the timing of certain payments, the deficit grows to $2.7 trillion by 2035. It amounts to 6.2 percent of gross domestic product (GDP) in 2025 and drops to 5.2 percent by 2027 as revenues increase faster than outlays
https://www.cbo.gov/publication/60870
IMO, 5%+ percent of gross domestic product (GDP) in a country with massive trade deficits is not sustainable.
"The budget projections are based on CBO’s economic forecast, which reflects developments in the economy as of December 4, 2024. They also incorporate legislation enacted through January 6, 2025."
Out of date!
Nominal GDP growth was 5% in December. As long as share of GDP is constant things are sustainable.
I think they meant budget deficit, whereas you refer to trade deficit.
That graph shows a 130B monthly deficit. So maybe not 2B but still 1.5B on a yearly basis.
I believe the OP was talking about the fiscal deficit, your chart shows the trade deficit.
The current administration has no interest in reducing the fiscal deficit. Their expressed policies will make it larger.
Taxes should be raised on the rich. Elon Musk alone is worth $330 billion. There is plenty of money to pay for what we need. The question is whether we can muster the political will to do it.
From what I understand, de minimis exemption has also been removed.
That is a huge, huge deal. It effectively means that all goods imported from China will be slapped with a 30% import tax, as soon as said goods arrive the US border / customs.
Usually what happens then, is that the courier will pay that tax, and then bill the recipient later on - as well as charge some fee/fees for the work done.
This is why in some European countries, that $1 item from China with free shipping can end up costing $10, because you're paying $0.25 in VAT or import taxes, and $10 to the shipping courier for doing the paperwork.
If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
(That's just from the most obvious consumer example...then you have pretty much everything else. Goods, commodities, etc.)
EDIT: I found more info here https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...
So it is even worse, you either pay $25 per shipment, or 30% - whichever is higher. Then later it moves up to $50 per shipment, or 30% - whichever is higher.
a $1 item with $1 shipping will end up costing you as much as $52 after June!
> This is why in some European countries, that $1 item from China with free shipping can end up costing $10, because you're paying $0.25 in VAT or import taxes, and $10 to the shipping courier for doing the paperwork.
Not the big China exporters, not any more. They all include taxes in the price on your country specific web site, ship to their warehouses inside the EU, handle taxes and your local courier just delivers.
Now if you're talking DHL yes, they have you fill forms upon forms and charge you for the forms you didn't ask for. But if that happens, no one will have time to process all the forms so private imports from China will simply ... halt for a while. Until Temu/AliExpress/etc sort out for the US the same system they use in the EU.
If in the US, I'd hold on any direct purchases from China for 3-6 months.
> So it is even worse, you either pay $25 per shipment, or 30% - whichever is higher. Then later it moves up to $50 per shipment, or 30% - whichever is higher.
Hah. That's DHL commission territory :) Definitely hold from direct purchases until Temu sorts it out for you.
> Until Temu/AliExpress/etc sort out for the US the same system they use in the EU.
The thing is, the EU specifically set up a structure to make this easier for sellers and transparent for customers (the "import one-stop shop") and I don't see the US government doing any effort to make importations more seamless.
Didn't know that. I'm just a stupid EU sheep.
Incidentally, even Amazon US uses that facility. They charge me my local VAT plus some change ("exchange rate whatever" commission, something under 1%) and the package arrives in my hands via courier without any further interaction.
Even Mouser has set up a warehouse inside the EU in the past years. They went from a pain to order from to a pleasure.
Just to emphasise, this system has been set up for ages because you did need to pay VAT on imports anyway. Even without any special tariffs. And that means a visit to the post office in person.
For reference: https://vat-one-stop-shop.ec.europa.eu/one-stop-shop_en
Yeah EU doesn't have a special tariff per se, but they wanted a responsible legal entity in EU to deal with taxes and customer rights so they created this structure.
US just doesn't want anything imported. Doesn't help to set up US entity. You will have to pay this amount. Though, it helps with $1 orders if they import them and process them in bulk.
Well, the point of the action in the US is to stop imports, not just tax them, so manufacturing moves into the US. The minimum fee per item is clearly punitive.
Not that that matters, most manufacturing will simply never be in the US ever again, and having punitive taxes like this will simply drive up costs massively.
If I buy something from amazon.co.jp or Apple and it arrives from Japan or China with DHL/UPS, I don't do anything at all in Poland. It's all transparent, I just get the package for the price on the website.
From which Apple store? If it's your local store of course they have VAT built in.
Interesting about amazon japan, never tried it. Have you tried amazon us?
Edit: interesting, amazon.co.jp seems to be its own thing. My login works on amazon US and all european country sites, but it doesn't work on the JP site.
Same situation, If I buy something from aloexpress I also never had to worry about VAT and the duty office. It's somehow handled in the background.
From some amount I assume I'd have to go to the post office and fill in find paperwork, but I never had to for the cheap junk I get from Ali.
Amazon is pretty good at handling VAT and all the import paperwork if it's sold as "Fulfilled by Amazon", regardless if it's the local Amazon site, or the US or Japan sites. I've ordered from all 3.
Even eBay has sorted this out now for orders from the US, with VAT and import fees baked into shipping costs. They give sellers the address for their warehouse in Chicago. eBay then forwards as the seller of record.
Fulfilment doesn't have to go through eBay for this.
If I sell a package on eBay.de to a buyer in the UK, I get a customs tracking number to show eBay has collected the required UK VAT. That goes in the form when buying the delivery label and completing the customs (export) declaration.
The EU prepared for years setting this up. It meant all the national post offices updating their systems, and integrating the private parcel delivery companies. It was planned before Covid, then delayed because of the concern for possible disruption.
The USA seems not to have done this planning, and certainly hasn't allowed the months it will take to prepare for it. At least they may have some of the other half of the system, having set that up for exports to the EU/UK.
> Even eBay has sorted this out now for orders from the US
Shit. Telling me that can be expensive. I might check ebay US now for some retrocomputing fun...
I suspect that this $25/50 per item policy is to prevent people from claiming a lower value than the actual price of the item. I've received international packages marked "gift" with a value of $10 that I had paid much more for.
I doubt the US will even manufacture substitutes for most of the things I liked and ordered from AliExpress. People with hobbies primarily supplied by Chinese manufacturing (like mine- electronics, 3D printing, FPV drones) are just going to be paying more for the same thing. There's no way we'll get an American substitute for niche products- all the US chip fabs are going to be filled with orders for higher dollar parts.
Note that the fact sheet says per item, not per shipment. So there doesn't even seem to be a way to make one big purchase of several items to pay a single fee. They will hit you for every item in the shipment.
Quick edit: I also note that the fact sheet makes a distinction between things sent through international post vs. other means. If you send via UPS/FedEx/DHL there will be regular customs fees (34%?), and through post you will have the $25/50 per item fee. So I will definitely have to pay attention to the shipping method for anything bought from AliExpress from now on.
Quick edit 2: I literally have a PicoCalc from ClockworkPi coming in the mail in a few days- I guess we'll see if DHL charges me any extra fees.
I wonder how item will be defined. If I order a pack of 100 tiny magnets from AliExpress, is that $30 or $3000?
To add some color: when I've placed orders like this in the past the small items didn't come packed like consumer goods in a nice box but in something like a zip lock bag or an envelope.
Also people buying stationary stuff from China, how will their pricing be?
I'm not sure how it'll work in the US but in the UK when I'm buying cheap Chinese stuff on eBay there are usually two options - have it posted from China which is cheapest but slow, or order it from a UK distributor who has bulk imported from China which costs a bit more but arrives in a couple of days. I guess everything will move to the latter system?
Realistically, the $25 minimum is to cover the costs of handling the imports (with some premium), so it doesn't make sense to charge it for every item in a batch separately.
Great. AliExpress was the RadioShack of 2025. No way I’m spending $25+ for a strip of SMD resistors, and I expect to never see them available in the US at a price that makes sense as a hobbyist. This isn’t helping anyone, will prevent a lot of prototyping, and just be a bad experience in life. Thanks for ruining the fun of the last 5-10 years of DIY electronics golden age.
I had plans to build some animatronic Halloween decorations for this year over the summer. I’m not going to spend hundreds to thousands of dollars on parts that nominally cost less than $50.
My own pain is minor though compared to everyone I know who uses Temu and other things to basically outfit their life. This will be insanely regressive as they have the least to spend on “on brand” products, which themselves are imported too. This is like “super sales tax for the poor.” Me, I’ll just save my money and wait for the next president to undo the mess. My buddies not as successful monetarily as me? Their quality is life is going down the drain.
People will just ship large quantities and then warehouse them in the US.
Sounds like you have some cool projects planned.... do you have any pics/links you can share?
De minimis exemption expiring has been a planned thing for years through administrations of both parties. Trump admin has been delaying the already planned expiration during the Biden years to use as a negotiating carrot.
Basically it just means Temu/Aliexpress/Etc. will ship their goods to the US in bulk instead of bypassing customs on individual small orders, and distribute from domestic warehouses, having to now compete with US producers who do the same thing.
It does completely kill any business built on dropshipping individual orders from chinese factories without ever touching inventory however.
I'm inclined to believe they're already doing something like this. I don't shop them but my wife uses Shein and Temu pretty often, and commented last year that more and more stuff was shipping from the US rather than overseas now.
In Europe, Alibaba has their own warehouse in the Netherlands. I wonder if that's to be able to do a single "international" import. Could the same happen in the US?
Aliexpress does that as well, with a warehouse in Hungary. They ship the products there, import them en masse as a business, then relabel and send them off to the recipients.
Alibaba is Aliexpress. They have multiple warehouses around europe.
They may be compelled to do that; there's 1.3 million packages from Chinese retailers a day coming in through the Netherlands, but since they're all individual packages, they fall under a threshold for import taxes. There's now calls to drop that threshold so that people pay import taxes for small items as well, and / or to compel Temu and co to stop shipping individual packages but do it in bulk.
The exemption for low value imports was removed a few years ago, see other comments near this one in the discussion.
Purchases from Temu pay EU VAT according to the location of the purchaser, and an electronic system means the money sent to Temu gets to the EU and the package can sail through customs.
FWIW eliminating the de minimis exemption had already been proposed by President Biden late last year:
https://bidenwhitehouse.archives.gov/briefing-room/statement...
Courier will only pay the tax if it's a DDP solution, and then bill it back to the actual merchant. FedEx, DHL, and UPS provide this as an option. If it goes USPS, or no DDP solution is in place, it's going DDU and it will simply be stuck in a sufferance warehouse or at the local post office until the recipient comes in and pays the bill.
Sounds like a good idea, but how are they actually going to implement and enforce that?
Do they open every package? What stops Temu or whatever from just keep sending them? I mean drugs get through so ..
Yeah, the stopping drugs thing is just performative propaganda. It’s really about the money, and the attempt to punish China (which will in fact mostly hurt Americans as much or more, anyways). If it were about the drugs only, there wouldn’t be such punitive measures, and the press release wouldn’t mention the fact that China doesn’t have a de minimus exception.
I had not heard about the de minimis removal. That would be crazy. I assume that would be the end of every dollar store in the country right?
So is AMZN stock up?
Do you expect their annual turnover to go up? They might get a bigger slize of the pie but the pie itself is getting smaller. Pre trade AMZN was down 7%
Down 6% in premarket, will have to wait and see but likely wont help them much as tariffs will impact a significant amount of their products regardless.
Well, given that 90% of stuff on Amazon is relabeled crud from Ali Express...
Yeah, but it sounds like the tariff is a higher percent for single item shipments. That means that aliexpress would sell less to individuals and more to Amazon resellers.
Most of the stuff on amazon comes from China, so I doubt it.
In addition to what everyone else has said, if Europe goes through with the new "Big Tech tax" and/or tariffs on digital services, AWS would presumably take a big hit.
>> If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
All three of those stores are very popular in my part of Europe. So there must be some workaround. Based on your edit I would guess that they would import a bunch of orders in one shipment to make the 'per shipment' charge small per item/order.
Many of extra bills are absolutely not going to get paid.
>> If that is the case in the US, I fully expect total chaos and mayhem when all the Temu / AliExpress/ Wish customers start receiving extra bills for their orders.
All three of those stores are very popular in my part of Europe. So there must be some workaround.
Well, the good news is almost nobody is gonna like this, so I don't anticipate it lasting beyond Trump's presidency, assuming he makes it 4 years at this rate. The bad news is that even after tariffs are removed, it will take years for prices to recover, if they ever do.
Actually one policy that Biden kept in place after the 2020 elections was the Trump Tariffs.
I think we are underestimating how popular protectionism is with progressives, it may turn out to be an unusual alliance between disaffected voters on the far right and left outnumbering free trade advocates in the center of both parties.
I haven’t seen any progressives in favor of this. Disaffected voters on the left want more housing and universal health care, not tariffs on avocados. Disaffected voters on the right just like to see libs getting owned… but they won’t appreciate their wallets being liberated of their money.
They're going to try to make sure we never have fair elections again. I'm not saying they're going to succeed, but they're sure as hell going to try, which is terrifying.
> This is why in some European countries, that $1 item from China with free shipping can end up costing $10
This is what strikes me about these new tariffs... for all the concern about how it's going to impact the US economy (and I don't doubt it will), this is STILL far, far, less protectionism than literally every other country in the entire world. Donald Trump's justification for all this is that the U.S. is propping up the entire world economy to it's own detriment, and I'm not sure he's necessarily wrong here.
Based upon someone's imaginary example?
"less protectionism than literally every other country in the entire world"
I ordered from Temu and it's shipped from China and arrives at my door with my local sales tax applied -- because Temu abides by Canadian law -- but otherwise with no additional fees. Got a pair of headphones and a three timer device yesterday for $10 CAD.
Or you know, Trump's constant yapping about Canada's diary tariff. In reality the US ships 4x more dairy to Canada tariff free than the reverse, and we, by design, do not target sending dairy to the US. But Trump takes advantage of the poorly informed and/or stupid, and it works amazingly.
>U.S. is propping up the entire world economy to it's own detriment
If you're sitting in the richest large country in the world, literally at the height of its economic accomplishment, and you really buy it when someone tells you that you're the victim, you might be profoundly misinformed and with literally zero context of reality.
The US has an amazing amount to fall, and it's going to happen. And when you're working on the assembly line doing extremely low value work, having been ostracized by the entire planet, enjoy how you made the libs pay.
Aside from everything else one thing what strikes me as particularly insane is how it’s not even defensible as a protective measure. My favorite everyday olive oil comes from Tunisia. They now have a 38% tariff on them. There are no out of work olive farmers in the US.
The orange man wanted tariffs, the orange man is going to get tariffs. Now we have to hope the American people aren’t so dumb as to still be convinced only he can solve their issues. I don’t hold out hope for that.
If Jan 6th didn't dissuade people, I don't think anything will.
Additionally, his base will not blame him, they will swallow whichever of the many narratives the propagandists are currently cooking up that suites their fancy.
I disagree with this. Jan 6th didn’t affect 99% of peoples lives directly. It was clearly bad, but few people saw impacts in their own lives.
Higher prices and a possible recession will affect every person in the country and even globally.
His MAGA base might not blame him, but that’s only like 30-40% of the electorate. The other 60-70% won’t be happy if their lives are negatively impacted.
That's the thing, there is an almost impenetrable media wall that no amount of "this is bad" news articles can get through
IMO the only thing that can get through is actual personal consequences for the voter themself
IMO the only thing that can get through is actual personal consequences for the voter themself
Well, yes. And his approval rating has been steadily declining in tandem with the stock market declines he's caused. If/when prices suddenly skyrocket because of tariffs, you can bet his approval ratings will decline further.
Which will be exactly what for the standard middle class person?
CBS published this list: https://www.cbsnews.com/news/which-products-most-affected-ta...
What exactly on this list is a day to day item that is going to adversely affect the middle class/blue collar Trump voter enough to cause them to flip their alliance? On that list maybe clothes and shoes. But even still those are generally bought only a couple of times a year and any increase will be griped about in the moment, but come election time will be forgotten.
There are only four things that will make a middle class voter feel pain enough to re-align their vote. Fuel/energy costs, general food costs, rent/housing costs, and job insecurity. If these tariffs do not adversely touch those areas, they will have little to no impact on switching votes. Also of note, over the last four years those items are the ones that drove Trump back into the Oval Office.
Middle class people also have to buy new cars, maybe want to treat themselves with some foreign alcohol, they still need furniture, coffee is still one of the most traded commodities in the world and americans guzzle it down.
That won't work. WaPo, LAT, etc. have run numerous articles where MAGA voters talk about the consequences of his actions to them or immediate family members (getting laid off, losing medical coverage, deportation, etc.) and they say it's worth the sacrifice because they just know that Trump is actually looking out for them and won't let them suffer for too long.
There are millions of voters who voted for Biden in 2020 and either sat out or voted for Trump in 2024.
Not everybody is part of the cult. Many people simply thought Trump would take the economy and prices back to 2019. If he doesn’t, he’ll be punished.
They will blame left, democrats, immigrants, women and Canada for that.
They will not blame Trump, republicans, conservatives nor anyone who work foe them.
That must be why some people are keying Teslas and even resorting to arson.
Don't expect much. Modi's overnight demonetization of Rs. 1,000 bills back in 2016, caused a lot of inconvenience to almost all the Indians for 3/4 months at-least. Demonetization and flawed implementation of GST caused many small scale companies to shut doors.
With media in their pockets they can get away with anything.
The sheer majority of media has always opposed Trump though.
> It was clearly bad, but few people saw impacts in their own lives.
It did though, they just didn't know how to measure it, and it wasn't felt immediately. It was like the flash of light that dazzles before the pressure wave of the nuclear bomb blasts everything (which in the analogy is this moment, now).
What happened on Jan 6, and in the leadup and response to it, was the erosion of democratic norms. Before Nov 2020 they were stronger, and after Jan 6 they were significantly weakened. Our institutions are essentially built on trust, and Trump in his campaign to overturn the 2020 election spent every waking moment for months attacking those foundations. He purposefully eroded people's trust in Democracy for no reason, because there ultimately the fraud he alleged in that election was not found.
That impacts everyone. They just don't feel it in the supermarket; they just have no "democracy meter" that they can use to gauge how healthy their representation is in government. But the reason he's able to do what he's doing now is he because he laid the foundation in 2020.
One thing worth noting is that congress isn't pleased about the executive branch high jacking the powers of appropriations from them (i.e. imposing a tax on the people in the form of a tariff).
I see no evidence of your claim. A total of 4 senators of the President’s party voted symbolically on a non-binding resolution against his Canada tariffs. The Speaker of the House, who also belongs to the President’s party, won’t even bring it up for a vote. There has been no motion from the legislative branch to undo the President’s direct subversion of the power of the purse by effectively eliminating the staff required to disburse Congressionally-approved funds.
> There has been no motion from the legislative branch ...
Surely you mean there is no motion from those in power in the legislative branch, namely the Republicans. The Democrats and Democrat-aligned independents make motions which are blocked by the Republicans.
People's inability to recognize who is responsible for bad acts leads to throw-the-bums out elections. People are disgruntled, whether based on facts or false beliefs fostered by propaganda. They throw the bums out. They hope for better things.
If we want the government to function better, we need to assign responsibility, not let Senator X and his pals, or Representative Y and her pals, screw everything thing up and then hide in the crowd. "Oh, look what the legislative branch has done! Throw them all out!"
The root cause is the IEEPA (1977) which was vaguely worded to supposedly shrink executive authority under TWEA (1917) which allowed essentially unlimited executive authority "emergencies" to be declared for an unspecified amount of time. IEEPA was used to block TikTok, which still may get blocked, and used to set these arbitrary tariffs. IEEPA needs to be fully abolished. (And we also need to bring back the Tillman Act (1907) and get an amendment to overturn CU.)
I'm sure they are working on a very strongly worded letter about this right this very moment.
What exactly do you expect them to do when voters took away their power and gave it to Republicans?
Since the GOP had its own dissenters on the budget, Democrats could have started by not voting for the budget without extracting concessions.
When Democrats were in power, the Republicans found all sorts of ways to gum up the works.
trump would love a government shutdown, as he has proven. I really doubt shutting down the govt would change any situation when trump is legislating by executive order, and mostly a shutdown would hurt Americans. You're trying to simplify something that isn't simple at all, and blame the Democrats for not doing what an armchair expert wants.
It's not just about what Trump wants. Most Republicans in Congress would like to get reelected.
In the comment above you suggested there's nothing congressional Democrats can do. That is incorrect. Any time the Republicans don't have unanimity, and any time they need sixty votes in the Senate, the Democrats have leverage. They need the guts, and/or the understanding of basic game theory, to use it.
Calling me an "armchair expert" and waving your hands about how things are complicated is not a counterargument.
You recon they've emerged from their slumber yet? /s
But maybe their share portfolio being hurt will bring them to action...
Are they going to actually do anything about it? If not, their displeasure isn't worth a fart in the wind.
Jan 6 was far from many people's lives. It was a philisophical debate at most. When they get to the stores to buy groceries and they are 30-50% higher and their next TV, laptop the same way, they will realize that voting for an Oompa Loompa was a bad idea, and will want him out.
Spoke to a friend who is a big Trump supporter just yesterday - his view is that we shouldn't react to short term impact, these policies and tariffs should be viewed and judged in the long term. These tariffs will remake american manufacturing. I dont know if thats the current faux news talking point.
Yep, that's the talking point. Howard Lutnick has been out there saying this.
For better or worse, though, voters don't judge politicians based on the impact their policies have in 10-20 years. They're going to judge these tariffs in 18 months when they vote in the midterms and again in 2028, long before a widespread shift in manufacturing can occur.
The thing is that Jan 6th was done by part of the "people", so it's now America versus America.
Everything done is done by "by part of the "people""
"If propaganda doesn't dissuade people I don't think anything will."
You accidentally answered your own question.
“The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”
> There are no out of work olive farmers in the US.
Is that because we can't grow olives here, or because we don't have federal subsidies propping up a domestic olive industry that can compete with corn and soy?
I ready don't know the details well enough there, but it feels like this could just be selection bias at play.
You can grow olives in the US and there are some farms in CA. The quantities produced are orders of magnitude off though and given the time it takes to grow olive orchards we cannot replace our imports of olives in a reasonable time period.
There's a lot of examples like this. Coffee, and bananas come to mind. You can only grow those in Hawaii, or maybe Flordia, and there's absolutely not enough land to sate our imports. The whole theory behind international trade is that some countries do things well and others don't. In the case of food the reality is more that others can't.
Hawaii is the only U.S. state where you can grow coffee and their coffee costs a fortune. You need tropical weather and high altitude. Florida won't cut it. Besides, we already have fruit rotting in the fields in Florida because there's no one to pick it.
Want to put tariffs on Chinese electric cars or batteries? Ok, fine. But tariffs on all imports? It's the most brain dead policy in my lifetime. I can't think of any products that are produced 100% domestically without any foreign inputs. These tariffs will drive up the price of just about everything.
Puerto Rico (yes not a state) has active coffee farms.
There are olive farms as far north as Oregon. I visited one a few years ago and bought some olive oil; it was very good.
Surely the null hypothesis isn't "The USA would have a domestic industry for every crop known to man if not for external factors"
Oh that's 100% what Potus thinks.
There's no other rationale for this other than thinking this.
You're assuming he has any rationale at all
Leverage over importers, i.e. all of industry. If you're a captain of industry and want an exemption or a lowered rate, they you approach the deal table, cap in hand, with tears in your eyes and beg like a dog. "Please, sir..."
In return for a minor reprieve, you ensure your factory bathrooms and hiring policies are aligned with the president's agenda, among many other things. This can be a cudgel over the heads of the Apples and Costcos of this country who dare to defy the edicts of POTUS on social policy.
Other popular options are very publicly taking your card of the Party, writing odes and poems to the Great Leader, and give your firstborn daughter's virginity as a token of vassality.
The problem is not so much that people don't like doing such things - they get by - it's that, at some point, enough people will start getting more favours than you do, and you'll start feeling the need to stage a coup, which is a lot of work.
I wonder how it will work out in a world where tiktok is always there as a much less exhausting form of entertainment than revolutions.
Or (more likely) they would not have access to many crops at all.
Personally I don't mind not having strawberries in the middle of winter, but for some they care about that.
Sure, but that's the rationalizing of someone who can't get strawberries in winter. Getting food that's not grown locally much less in the current local season is one of the most QoL-improving parts of the modern world.
Kinda sad to go from that back to "well I guess I don't really need these nice things we took for granted. I suppose I can live off jellied eels again."
Donald Trump, champion of the locavore community. Now I've heard everything.
Let's ignore whether we'll actually get there, that's a very deep question and entirely theoretical for now.
If we could snap our fingers and domestically produce most or all of our own products, would you not prefer that?
Yeah, then every city could be like SF or LA or NYC.
But it's not even worth it as a thought exercise because it completely ignores reality. The reason I live in NJ and pay high taxes is because this is where the high paying jobs and good schools are. Cottontown, Alabama theoretically could be a financial capitol of the world and if you want to base your position on that, then you should probably re-examine your position.
This is called rejecting the hypothetical. Just because it's not worth it for the arguments you care about doesn't mean it doesn't have value as a thought experiment to explore the consequences.
Good question.
No, I would not prefer that. A robust distributed system is less likely to crumble under local pressures. A blight could more easily sweep through a single nation and take out a staple crop or two, where it'd be impossible for that to happen globally. You can't spin up additional global trade quickly after you've shut it down, which could lead to people starving in America. I like systems that can't fail. That's especially true when that system is how I'm able to eat food.
Global trade isn't a security issue, national or otherwise. We don't increase safety or stability by reducing sources of consumables.
Edit; super timely example because this isn't an unlikely hypothetical: egg availability due to bird flu.
> If we could snap our fingers and domestically produce most or all of our own products, would you not prefer that?
I'm not the person you asked, but I would definitely not prefer that. Trade & economic dependencies prevent wars. Wars are really, really bad things.
We've had plenty of wars since globalization came in post-WWII though. Its impossible to know what wars would have happened without it, and how much war may have been prevented due to trade rather than the threat of nuclear war, for example.
Those were good wars, though, apparently, since they bolstered US dominance and the spread of a certain flavor of "liberal democracy" based on progressive politics and consumerism.
I could have sworn they were bad wars when they were happening ("No blood for oil"?), but opinions on that seem to have shifted all of a sudden for some reason.
I don’t think very many people have flip flopped to “actually the war in Iraq was good.” How many examples of this can you point to?
Economic dependencies also start wars. Even if trade exists, sometimes they don't like the terms.
No, I wouldn't; Ricardian comparative advantage is a thing, and the kind of extreme autarky you suggest means sacrificing domestic prosperity available from maximizing the benefits of trade for the aole purpose of also harming prosperity in foreign countries (but usually less sonthan you are denying yourself, because they have other potential trading partners) by denying them the benefits of trade.
Its a lose-lose proposition.
I’m not familiar with any arguments that would lead somebody to prefer that. Maybe to avoid giving adversaries leverage over you, but isn’t that better solved by diversifying your supply chain? Maybe to salve the domestic effects of the trade adjustment, but isn’t that better solved by reallocating the surplus wealth rather than eliminating it?
Self reliance and resilience, at least to certain pressures, would fit. I don't think many people would be willing to give up cheap electronics and only buy stuff we produce here, but those are reasonable goals even if uncommon.
Environmental concerns would actually fit the bill too, if one is willing to consider externalized costs. Its easy to ignore mining damage in other countries and all the oil burned shipping over the oceans. When that all happens at home people would more acutely feel the costs and may be more likely to fix it.
> Self reliance and resilience,
describe how a entirely domestic food chain would be more resilient than one that is global?
Self reliance is a defective meme that breaks down once you want anything other than individual survival. Dependence on a community allows humans to specialize. Humans being able to specialize is the only reason this comment, or this thread exists. More simply, not just the Internet, but modern life couldn't exist without it.
Once you acknowledge that interdependency is a reasonable trade-off for the other nice things about life. A simple infection no longer being a death sentence is a nice thing we've commoditized reasonably well. The only question is, how do you build a robust and resilient system?
EU depends on the US for many things. That was clearly a mistake, and it's now working to work out backup solutions.
Having your government depend on foreign cloud and software was always a bad idea in my opinion, but IT security is not high on the list of the people that make decisions.
Russia depended on Europe, but got wiser after 2014 and certainly after 2022. To the point of having it's own Linux distribution (which I ridiculed along with everyone, and now it turns out they were right). Geopolitics change, friends become enemies and enemies become friends. Barring a civil war, a country will never refuse to work with itself, so it's the most reliable partner possible.
No, research comparative advantage. We actually had it pretty great in the US.
Also a world trading with each other is a world disincentivized from war with each other.
I have, and that depends on whether you are concerned at all with where we externalize our costs to. We had it good while messing up a lot of other places.
Maybe that's fine, maybe its not, but its not as simple as trade makes everyone better off.
No, because it is far more expensive to domestically produce our own products. I would rather not have a huge increase in the cost of living.
I don't want a cost of living increase either. However, this raise the question of what the real cost is. The prices might be cheaper, but is that only because we're exploiting poorer people in markets with fewer worker protections and fewer environmental protections? Is it just because I'm greedy and I'm not willing to pay someone a liveable wage here or go without whatever it is? I'm not sure, but it makes for an interesting thought experiment.
I worry about this, but I started worrying about it less when I read about Purchasing Power Parity. The same stuff costs less in poorer countries.
For some things that's true. For others it is not, or at least not enough to make up for the difference. For example, "housing" might cost less, but the definition of housing might be different. Even if we adjust the standards and built the exact same thing, it would be cheaper, but likely still out of reach for the average person in the poorer market.
Right, and there's a good case to be made for tariffs that are explicitly tied to another country's worker and environmental protections, where the country has actionable steps to improve their worker/environmental protections in order to avoid the tariff.
But the current administration is itself actively opposed to worker or environmental protections, and the result of the current tariffs will just be that the poor people overseas end up even more impoverished and still lacking in protections.
> but is that only because we're exploiting poorer people in markets with fewer worker protections and fewer environmental protections
That's definitely happening, but there are other possible reasons. For example a good could be more efficiently grown or produced in a country because of geographical reasons.
Also, from a pragmatic standpoint, it is simply not the case that all wages and wealth across the countries of the world are equal. Maybe that could be a goal but is anyone talking about that? Either way, it does not follow that the workers in that country are necessarily exploited when paid lower wages compared to the importing country, unless we are using different definitions.
This is not to mention that untargeted tariffs can increase the cost of living _for no gain at all_. If Germany manufacturers some specialty tool (not with slave labor, I would hope!), and no US manufacturer wants to make it, then I suddenly have to pay X% more for no reason at all.
Sure, not every country needs the same pay. Things like cost of living can vary. It seems hypocritical to say that people in one country deserve better protections than in another though. If we aren't creating the same protections as the workers here, it would seem that we are exploiting the less protected group. Workers here deserve real unions, but not in China. Workers here deserve OSHA, but not in China. We've decided as a society that people deserve certain protections, benefits, and even environmental protections. These costs factor into the cost of the goods. To not extend these protections (or the remuneration to pay for them) to the poorer group is exploitation by definition.
Better not pay them anything and they can go work in an even worse sweatshop, right?
Or can hire some child labor in Florida since they already changed the laws there.
If tariffs were being added as a response to poor working conditions, and a requirement of lifting the tariffs was to improve working conditions, that could potentially be seen as a generally positive outcome for the world.
Producing the same good in the US, at anywhere near the same price, requires automation or prison labor (legal slavery in the US) and likely won't result in more manufacturing jobs and likely won't result in higher wages for workers. Florida's approach here is child labor, which is both exploitative and cheap.
If the good is so cheap that we can't get close to it here, that might actually be a good case for a targeted tariff depending on the circumstances. It's essentially similar to anti-dumping depending on the specifics even if it isn't tied to overseas conditions.
"because we're exploiting poorer people in markets with fewer worker protections and fewer environmental protections"
This can easily be overdone. If you stop doing business with poorer people, you all but guarantee that they stay poor. Counter-productive to say the least.
In my lifetime, I saw a lot of countries grow at least somewhat wealthy from extensive commercial contact with the West, including mine (Czechia).
Yeah, you don't want to stop business, but if the price gap is massive, it might be good to ask why. Sometimes it's because something is more efficient in that country. Others it's just people getting taken advantage of.
Shhhh, you're not supposed to ask those questions!
Not at all. We'd be much poorer in that world. Comparative advantage is a thing.
I think my answer to this question would be no? The food example is specific, all food can't be grown here, but for other products that aren't commodities, I want different cultures competing to build the best products i.e. cars, and I want other cultures innovating things that maybe their culture is optimized for (video games, electronics in Japan, in the 1980's?). There are some interesting questions recently about how maybe globalization have turned luxuries into commodities (i.e. all cars look the same) but I think my point still stands.
No, because economic interdependence keeps everyone (mostly) civil on the world stage.
Would the things you produce be as good? As cheap? As available?.
Autarky is very bad.
Certainly the answer to those questions is always "it depends."
If someone only cares about price, quantity, or some specific measure of quality certainly domestic production is limiting.
You'd want domestic production for other goals like self reliance, sustainability, or resilience.
Or, hear me out, you could build relations with friends and allies and not pretend you're Qing China and it's the 1800s.
Are relations and allies impossible to have with trade tariffs? Historically we have had both, I'm not sure why they would be considered mutually exclusive.
1. Why would you make trade with allies harder?
2. Have you seen what the current US administrations is doing to allies at the moment? (the million threats to Greenland/Denmark, Canada, etc).
No, for the same reason I don't try to manufacture my own car in my backyard or build my own house, or grow all of my own food, or ...
This is basic fucking common sense: I'm good at some things and other people are good at other things. We each specialize in the things we're best at, and everyone ends up better off.
You went to the extreme though. I didn't ask if one wants to do everything themselves. In the US, for example, there are still hundreds of millions of people to specialize in various roles.
You aren't clever for re-inventing autarky.
It's a bad idea for the same reason.
The exact growing conditions for olive production aren’t common in the US, so most of the production comes from California - west of Sacramento and south along the San Joaquin river. There are a lot of barriers in bringing specialty crops to market related to know-how and contracting sale of product, so even in other areas where growth may be possible it may be infeasible.
https://www.agmrc.org/commodities-products/fruits/olives
https://croplandcros.scinet.usda.gov/
I mean if you could make olive oil cheaper in America wouldn't someone have done that by now?
The US never lacked for smart entrepreneurs looking for a business opportunity. See wine.
Most likely the answer in many such examples is it needs cheap human labor. US seldom lacks anything in terms of natural resources and always comes down to this.
An olive tree reaches the peak of its productivity after 15 years and can live for several centuries.
An adult tree can be so expensive that there are cases of theft. It takes a heavy truck and a tree puller to steal an olive tree.
Hard for me to believe that even with a surplus of domestic production that comparative advantage of importing still wouldn't be better.
Almost all the olive oil in my local Costco comes from California
US does produce olive oil, particularly in states like California, Arizona, Texas, Georgia, Florida, Oregon, and Hawaii. So you do have a few options:
That said, refusing to support local production out of principle isn’t really a solution.Difficult to move the production of olive oil.
I don't know how much you know about olive oil, but it comes from olives, which grow on olive trees. Olive trees are famously long-lived and, together with the very specific types of land that they grow on, they represent extremely persistent and valuable investments for the people who produce olive oil.
This is not true. Next time you grab an olive oil bottle read the fine print: unless it’s very expensive it will be a blend of oils from 4-8 countries, ie production doesn’t have to be in the same country where olives grow on olive trees, as you eloquently put.
What's your point? The olive imports from these 4-8 countries will all be tariffed also.
There are a few olive trees in my neighborhood. I should plant some too. It would be fun to watch them grow.
> There are a few olive trees in my neighborhood. I should plant some too.
They are nice trees, but beware you won't be eating the olives unless you put a lot of work in. They have to be de-bittered or "cured", which is done by soaking them in things like caustic soda. https://anrcatalog.ucanr.edu/pdf/8267.pdf
So if you are after a nice compact tree that doesn't need a lot of water, then an olive tree is a good choice. But if you want a garden of Eden fruit tree, there are much better choices.
You forgot about
5. Switch to another source of fat, like lard or butter.
Even if there isn't a local industry that produces something, tariffs increase the competitiveness of domestic substitute goods.
US consumption of olive oil is more than 10x domestic production of olive oil. It is not possible to spin up olive orchards in even a medium timespan as the trees take many years to grow. It’s not about wanting to support domestic producers, it legitimately is not possible.
You are right about olive oil. So why did he do it? The trade imbalance with Tunisia. Why is there are trade imbalance with Tunisia? US consumers have money to buy products from Tunisia, Tunisian consumers don't have the ability to afford products from the US. Why can't Tunisian's afford US products? This is the central question for every country in the trade war and it has myriad factors, but two of the biggest are: A higher cost US dollar, suppression of wages in countries like Tunisia (and Germany, and China, etc).
> Tunisian consumers don't have the ability to afford products from the US.
They do use products from the US, just not physical ones. It's weird to read such takes on HN of all sites.
There is this group-think on HN today that services are intentionally left out as part of the US trade balance. That confusion likely comes from tax and corporate structures. Ie all those profits are locked into sub-corps, so Apple-Cayman Islands or Google-Ireland (corporate tax havens) which is why they don't show up on the balance sheet as "trade" into the US (typically those sub-corps buy financial assets with those profits). Read the first chapters of Trade Wars are Class Wars for more depth.
So they are left out, but not intentionally?
It's not a weird take if you reasonably assumed that OP meant: "they don't have the ability to afford the same value of products from the US." Which makes total sense because their income per capita is only a fraction of that of the US.
California produces very high quality olive oil. I buy it at Costco. The Kirkland brand likely comes from outside the country.
California produced 1.94 million gallons of olive oil in 2023. That same year the US used ~98.5 million gallons of olive oil. There just isn't enough space to produce that much olive oil in CA much less produce it profitably or in ways that wouldn't devastate the environment. And all that is ignoring that it takes around 10 years for an olive tree to get to consistent production.
Oh, I agree. I was just pointing out we have some, and it's going to get a lot more expensive now.
> it's going to get a lot more expensive now
why? local producers don't pay the tariffs.
Because they will price their product to be just a little cheaper than the imported alternatives. This has been discussed to death, with citations, and I believe it to be true. We will see, I guess.
And even if they don't raise their prices to below the imported alternatives immediately, the increase in demand means they'll sell out so quickly, they'll raise their prices anyway
Companies tend to just take the extra profit instead of keeping their prices lower than their competition for no reason.
I mean, if their main competitor just got price jacked by taxes, that will push the demand to them. Since they cannot scale up to satisfy the demand, a correct choice is to raise prices. You can argue that this is price gouging, but the easy counter is that this is the market reacting to the taxes and adjusting the going price.
Fair.
Oh look, a Trump advisor who understands nothing.
Maybe we can make British olive oil by getting Tunisian olive oil and putting it in a British bottle? Then it's only 10%.
The whole thing is kind of nuts.
Tunisian here. Tunisians on social media are baffled/amused because olive oil is basically the only product imported by the US.
And apparently the US bought 33% of it
>Onagri data show that Spain is the leading destination for Tunisian olive oil, with 47.4 percent flowing to Spanish ports, followed closely by Italy at 42.2 percent and the United States in third at 33.8 percent.
https://www.oliveoiltimes.com/business/africa-middle-east/as...
Tunisia is so productive it exports 123.4% of olive oil.
Or perhaps I don't understand what they're trying to say in that sentence
This is interesting to me, because Spain and Italy are also exporters of olive oil. And there have been famous discoveries of fraud in the EVOO market as it has boomed. I wonder what percentage of Spanish and Italian EVOO exports are actually blended with (or wholly!) Tunisian imports?
Many Spanish and Italian oil blends do indeed use (unprocessed) olive oil from Tunisia. This is a problem for Tunisia because we’re missing out on the meat of the profit margin generated by the final bottled product.
We have had recent successes with developing & selling our own bottled products directly - Terra Delyssa is one good example that has gained traction in the US market.
Those numbers don't add up.
What is Tunisia buying from the United States?
http://tradingeconomics.com/united-states/exports/tunisia
and imports:
https://tradingeconomics.com/united-states/imports/tunisia
Work with your government to drop the tariffs on the US. Problem solved.
From what I've understood from that chart, the "percentage" is just a difference between imports/exports with the USA. It's not actual tariffs in place by Tunisia ON USA goods. Am I right/wrong ?
Or is Tunisia tariffing the hell out of US Olive Oil in order to protect their local production base
Or just wait for Tunisia to gradually replace tariffed goods with EU and Chinese equivalents. Problem also solved?
They could've done that before.
They’ll do that now.
Are you trolling?
No, Tunisia imposes tariffs on U.S. imports. If they want to avoid our tariffs, they can remove theirs, and we'll do the same.
But Trump hasn't calculated these tariffs based on their tariffs. He's calculated it based on trade surplus.
Why do you think it's a good idea to buy olive oil from Tunisia instead of from California? Are you aware of how much CO2 is released to ship a trivial commodity across the atlantic ocean?
Just a guess as he said his favorite olive oil so could it be one tastes better? I imagine like many other things taste can be effected by the region it is grown in. As for your other point in a perfect world we would all care about global climate change but many are not going to eat something they don’t like to do their part. But really cargo ships are small fish in such a big problem. Ban private jets or cruise ships would be way more beneficial.
Help me understand your viewpoint here - is the assumption that an entire ship is dedicated to shipping trivial commodities and the cargo isn't co-mingled with anything else? At the same time, what isn't counted as a "trivial commodity", and should ships _only_ be used for those items?
It just seems like the only things we should be importing from across the globe are things that absolutely cannot be produced domestically. For example, I've heard that coffee beans only grow in certain climates, so that would be a commodity that makes sense to import.
Pretty much everything else, including this supposed Tunisian olive oil, just sound like luxury goods to me, and should be priced accordingly.
His approval numbers will decrease 20-30% over the next few months. Only the most cultish cultists will stick with him when inflation spikes to 15%.
>> There are no out of work olive farmers in the US.
I'm not sure this is true. I buy olive oil specifically from California. It's niche but could be larger if they weren't competing with lower overseas labor costs.
Not 50 times larger which is what it would need to be to supply the current domestic consumption. California only produced 1.94 million gallons of olive oil in 2023, that same year the US used ~98.5 million gallons of olive oil.
Even if we could snap our fingers and create the orchards out of thin air there's not enough land and water to grow 50x our current production. Then where's the worker population coming from? They're also trying to drive overall immigration to essentially zero.
Don't olive trees take decades to reach maturity?
It takes time to ramp up olive oil production, so it’s way more cost effective to just import olive oil from countries with established crop.
According to Trump Tunisia has to buy olive oil from you for the same amount of money that you spent on Tunisias olive oil. Otherwise one side has a trade deficit and that's unfair!
So, we can and do grow olives here in California, but it is a very small industry compared Spain, Italy, etc.
However, one thing we absolutely cannot grow here in any sort of money-making way, is coffee. So 32% tariffs on imports of coffee from Indonesia.... when we do not even export coffee.
The US has a trade surplus with the UK, and the UK got a 10% tariff :-) Who's ripping off who?
We get a lot of titanium from China. That's because the largest natural Ti deposits are in Eurasia. That is due to geology, not politics, and now US companies who need it (read: high performance transport, medical products) will pay substantially more for it.
There are small olive oil producers in the US. Do they see this as a good thing?
I've put together a directory of olive oil producers from California:) https://www.californiaoliveoil.info/
Why wouldn't they? They can immediately raise prices by however many percent the tariff is. Probably a bit less because higher price causes lower demand. So let's say raise by half of the tariff.
Maybe it will partially offset the increased cost of everything they need to buy and sell olives.
Now when I think of it it might be a wash.
They still probably use equipment, packaging and other materials that come from overseas. Or they work with suppliers impacted by tariffs. Their costs are going up. Everyone's costs are going up, although some more than others.
Olive oil, coffee, chocolate, vanilla, tea, lots of fruits, sugar. These will all be massively stressed.
I would happily pay 38% extra for high quality Tunisian olive oil, it is already super undervalued because it's reputation is lower than it should be.
It's gotten so bad that Tunisian olives are shipped to Italy, pressed into oil, and labelled as Italian Olive oil.
Except none of that 38% extra in price is going to the farmers. It's a tax not extra profit for the producer. Crazy how many people still do not know how tariffs work.
You may want to re-read GP's comment because they did not indicate whether they cared if the 38% went to the government or the farmer. Reading their comment as written, they simply said they would happily pay the tariff to continue enjoying Tunisian olive oil. It's "crazy" of you to imply they don't understand how a tariff works when you're the one mis-reading what they wrote.
I did not misread. He used `undervalued` which implies that there is a difference between quality of the product and its price. Slapping on 38% tax to Tunisian olive will undermine this value proposition without improving the producer or the consumers product experience. If anything the relative price (due to the repetitively high tariffs on Tunisia vs Italy) will ruin the value to price ratio that attracts GP to the Tunisian olive oil.
Moreover, his use of the word 'happily' suggests he is not aware of the negative consequences for both the Tunisian exporter, who may have to lower prices or even reduce product quality standards to compete with the now relatively similar-priced Italian olive oil, and the American consumer, who ends up paying more without any improvement in value.
Why would someone be happy with a price increase if it is not helping the producers of the good (which his comment implies he is sympathetic to) or adding any value?
You misread.
15 dollars for a liter of my favorite Olive Oil is a trade I would happily make. I didn't say I was happy that the price increased, nor did I say that I am happy about the tariff, nor did I say that I happy relative to how I felt about the trade last week.
What did I write that gave you the impression that I don't know this?
If anything those Tunisian folks would have to reduce the price to compete. The tariffs go straight to the US coffers at the customs, nothing to do with the farmers.
https://www.oxfordeconomics.com/resource/tariffs-101-what-ar...
I think you started to form a persuasive argument, but you discredit yourself by saying "orange man".
Yep, that’s the problem. If only people treated the man who mocks disabled reporters with respect then he would have lost.
> what strikes me as particularly insane is how it’s not even defensible as a protective measure
You must not have read many of the comments here. Way too many people are trying to defend this just because they don't want to have to admit that they were wrong on Trump being better for the economy.
> There are no out of work olive farmers in the US.
You should be using America corn oil. /s
Well, no you see vegetable oils are actually bad and we should cook everything in beef fat or butter.
Surely that's not stupidly expensive, right?
Producing tallow is cheaper than producing olive oil in most of the USA.
No offense, but the benefits may outweigh problems like getting your favorite Tunisian olive oil.
The orange man is saying: "Looks like you are sending a lot of $$$ to those olive oil farmers in Tunisia. With my tariffs you now have two choices at your disposal: either you keep buying their Olive oil but then you are going to have to give me $$$ as well to pay for our national debt. You are going to buy less of it; and help your country in the process. Alternatively, you can decide that maybe you don't need olive oil all that much. We have this amazing product called 'corn oil' which is produced locally and is now comparatively less expensive, buy that instead and support your local farmer. Choice is yours".
Maybe you don't like either of these choices; but at the same time; saying "I believe that having cheap access to product produced halfway across the globe is a god given right to American people; how dare you imposing me to make such a choice" is part of the reason why we need 13 earth to sustain the modern US lifestyle.
I am really not a Trump supporter at all. But at the same time the gradual reduction of tariffs has been a key factor of increasing global trade; which in turn is a key component of the increase of CO2 emissions. Finding a way to dampen a bit the international component and making sure that locally sourced products and services are not affected seems not that bad.
The whole "decide that maybe you don't need olive oil that much" thing is what's going to crush the economy in the US. The problem is that demand does not shift to alternative supplies elastically. It takes years and sometimes decades to build an alternate supply chain for some industries. So what you're saying is that an entire generation of children in the US are going to have to grow up materially worse off than their parents and grandparents. And that's assuming that a bunch of businesses magically start overnight to fill the enormous gaps caused by a lack of access to international supply chains. If you look at other countries such as in South America or for example Italy where there are huge protective tariffs, the industries you expected to magically appear didn't. Instead people just have less and work less.
So your dichotomy applies, but it's not some magical ratchet out of globalization unless there's a corresponding push on the federal or state level to build competitive domestic industries to replace the international supply chains we've been cut off from.
> but then you are going to have to give me $$$ as well to pay for our national debt
You realize this money will not be used to pay down the national debt, but rather fund commensurate tax cuts for the very rich?
Their plan for the budget deficit is instead to slash expenditures (see DOGE and what they’re up to).
> I am really not a Trump supporter at all. But at the same time the gradual reduction of tariffs has been a key factor of increasing global trade; which in turn is a key component of the increase of CO2 emissions. Finding a way to dampen a bit the international component and making sure that locally sourced products and services are not affected seems not that bad.
I'm not sure about that part.
International shipping in particular isn't a huge part of the energy cost of the goods that get shipped, so making the same things locally doesn't save much. This is from 2016 so things will have changed since then, but back then it was 1.6% of emissions from shipping, vs. 11.9% from road transport: https://ourworldindata.org/ghg-emissions-by-sector
What trade does increase directly is the global economy, and that in turn means more money is available to be spent on energy; historically the energy has been carbon intensive, but everyone is now producing as much green energy as they have factories to work with, and are making factories for those green energy systems as fast as they have bureaucracy to cope with.
I am from Western Europe and the story that "the majority of the meat we eat is imported from Argentina at great environmental costs while we have farmers unable to make ends meet; this is what's wrong with globalization" is a key story that gets repeated constantly by environmental activists and NGOs. Similarly, there's a big push by the same green parties to "stop consuming pineapple in November, buy locally sources seasonal veggies instead".
I almost never see anyone disagreeing with that, and anyone that does is immediately qualified as "climate change denier". To me it looks like tariffs similar to those introduced by Trump would constitute a step in the right direction (make stuff more expensive = less consumption + if you buy it anyway you have disposable income so you give more to the state) . It feels weird to me that now it suddenly doesn't seem to be so much of an issue anymore; if it's only 1.6% why is it such a key argument.
Similarly; almost everyone agrees that "it's not normal that we depend so much on foreign countries for things that are essential for our future". That idea really came up during the COVID crisis and never left. The EU is launching "big plans" to address this issue (as usual; with barely any impact at all). Again; the reason why we have FFP2 masks made in china is purely because it's cheaper. Make them more expensive; and local options can pop up, naturally. It will take decades; but the ideal moment to begin working on your goals was yesterday. The next best opportunity is today.
There are many many things wrong with the way Trump computes the tariffs rates; the way they are announced, handled etc. But at its core: "less trade, less global & more local" is a key pillar of virtually every Green Parties over here; it's so weird to me to see Trump (!!!) actually do something that looks like it aligns with those goals.
> But at its core: "less trade, less global & more local" is a key pillar of virtually every Green Parties over here; it's so weird to me to see Trump (!!!) actually do something that looks like it aligns with those goals.
But it’s not for the same reasons. Also, the Green parties explicitly want to reduce everyone’s consumption. Do you think American Trump supporters have intentionally voted for being able to afford less stuff, have less variety at the grocery store, etc?
Sounds like a good argument for a carbon tax!
IMHO the idea is that they are ready to accept the suffering of Tunisian oil lovers for the greater good, which is the empowerment of certain type of people like them.
It's basically Europe but hundred or more years ago.
> My favorite everyday olive oil comes from Tunisia. They now have a 38% tariff on them.
"Silver lining:" there's a good chance that oil was either rancid or doesn't pass basic quality tests for the "extra-virgin" part:
https://www.ucdavis.edu/news/imported-olive-oil-quality-unre...
The COOC web site lists California olive oils that they've certified. Last time I checked California Gold Olive Oil was certified, and they even sell it in half and full gallons. That's just one I've tried and liked-- there are a bunch of others listed on the COOC web site. (Edit: there are probably certification trade associations for other countries/regions, COOC is just the one I'm familiar with.)
Here's a csv and google sheet of the data. Turns out they aren't tariffs countries charge us. They are trade imbalance percentages. Unreal:
https://docs.google.com/spreadsheets/d/1xK0OQ5VGl8JHmDSIgbXh...
https://gist.github.com/mcoliver/69fe48d03c12388e29cc0cd87eb...
The bit I love is that countries with which the US has a trade surplus aren't getting the opposite of a tariff (a grant, I guess) on their imports to the US, they aren't getting zero tariffs on their imports to the US, they're getting 10% tariffs.
Heard Island and McDonald Islands, two Australian territories inhabited only by penguins, get singled out for a 10% tariff.
Norfolk Island, an Australian community of 3000 with no exports to the US, gets its own 29% tariff. They're expecting a tourism boost from the publicity.
https://www.theguardian.com/us-news/2025/apr/03/donald-trump...
Interestingly enough the census (which I believe is the source the WH used) https://www.census.gov/foreign-trade/balance/country.xlsx does show trade with Heard & McDonald. Also reflected on the webpage: https://www.census.gov/foreign-trade/balance/index.html#H
Now what the underlying items are that were traded? Not sure. Guessing you can dig it up in AES https://www.census.gov/foreign-trade/aes/index.html but have not been able to figure that out. Let me know if you do.
You jest, but I wonder if this is to stop shenanigans like claiming your business operates from there just to dodge tariffs.
Nah, they just went down the Wikipedia list of places that trade with the US. This is how Réunion winds up on there, despite being actually part of France.
Oh I was assuming they just asked an LLM but this sounds plausible too.
Whichever took less work, they did that.
Norfolk Island is part of Australia. Logically it would be swept up in the 10% tariff on Australia. It has no exports to the US, that being the US government's justification for tariffs over 10%, let alone an individual 29% tariff.
A comparison would be another country putting a 10% tariff on the US, but singling out Rhode Island for its own 29% tariff.
That might be the case with places like the UK which has a trade deficit with the US but still gets taxed at 10%. I feel however the penguins put up an obvious non tariff barrier by only accepting fish rather than hard currency.
Once again they proceed far beyond the reach of satirists
And zero tariff for his dear friend putin. Insane!
It's even worse, they literally got their formula from a llm model (probably Grok?) => https://bsky.app/profile/dansinker.com/post/3llunnyfeoj2v
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."[0]
[0] https://ustr.gov/issue-areas/reciprocal-tariff-calculations
Do I understand this right: The evidence that they took it from a LLM is that all LLMs give the same answer and this answer describes what they did?
By that logic, it looks like Pythagoras got his theorem from an LLM...
It explains why they singled out Reunion from France, it has a separate ccTLD. That type of mistake is the kind a LLM would do, not a human...
I'm convinced. this is fucking crazy.
>It explains why they singled out Reunion from France, it has a separate ccTLD
It also has a separate country abbreviation (RE). You know, like you'd see on an address. The thing that tells you where something, like a good imported in to the United States, is coming from.
This is is why it has a separate ccTLD by the way.
This blue sky thread is just an incredible example of motivated reasoning.
> It also has a separate country abbreviation (RE). You know, like you'd see on an address. The thing that tells you where something, like a good imported in to the United States, is coming from.
Yes, obviously, it's ISO 3166-1 but that's a batshit way of assigning tariffs. To the point I suspect it's a LLM.
Norfolk Island? The island with 3000 people, which in the context of international trade is a speck at the side of Australia. Or the uninhabited Heard Island and McDonald Islands with zero trade?
If Reunion and Norfolk Island are to be considered separately from their mainlands, where are the tariffs for Easter Island (Chile)? It has more people than Norfolk and probably more trade, it's 3700ish km from the administrative region it belongs, so it geographically distinct like Reunion.
Anyone (with a pulse) tasked with calculating the tariffs would see this and think "I have to remove these outliers". So the two options are:
A. Someone took the ISO 3166-1 codes and brainlessly calculated their batshit formula without noticing that HM doesn't produce anything. They did not instead do the more natural thing, go from highest imports to lowest which would've eliminated HM and most anomalies. They didn't even check their work.
B. They asked an LLM, which calculated this in the most naive way possible one-shot.
I dunno governor, this looks like vibecoded Excel spreadsheets.
If ChatGPT was available back then, sure.
Its worse than that. Its like saying you must have used chat gpt because you answered that 2+2= 4 and gasp so do the LLMs! Nevermind that its just the obvious answer to the question.
Lets see the prompt. The prompt further down in the thread that reproduces it was asking how to use tariffs to balance trade deficits with a 10% minimum. Is there any other answer then set the rate such that the deficit goes away or 10%, whichever is greater? No. That's just the answer to the question and is why ALL LLMs give the same answer.
LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.
Are you implying there is a very small chance that if someone posted in 2018 reddit "We should tariff Algeria at 35% because X", the LLM that the administration may have used would have agreed with random redditor?
It's good at compressing information from the internet, usually not losslessly.
> Me thinks this just means that this tariff idea exists on the internet
Probably from some random genius on reddit.
It is really silly to say that because an LLM gave a similar approach a single time and someone took a screencap of it without full context, that Elon and Trump are sitting in the whitehouse asking Grok what to. This level of hyperbole is why reading about anything to do with the two of them is really exhausting.
>It is really silly to say that because an LLM gave a similar approach a single time and someone took a screencap of it without full context, that Elon and Trump are sitting in the whitehouse asking Grok what to.
A similar approach to a close-ended question.
The original screenshot doesnt show the prompt. The one reproducing it asks for a tariff policy to eliminate trade deficits with a 10% minimum. Umm... hello? There is only one answer to that. The greater value between 10% and a rate based on the deficit. Of course the Trump policy and all 4 LLM answers agree. The answer is determined by the question.
Its like accusing little Timmy of cheating on his math homework because he said 2+2=4 and -- GASP -- so do all the LLMs!
People are saying they literally used the trade deficit and the formula they published that they claim doesn’t do this multiplies that value by 4 and then 0.25. Yeah… that is what we are dealing with.
> Elon and Trump are sitting in the whitehouse asking Grok what to
Not perhaps Elon or Trump themselves (doubt Trump can actually use a computer), but it could very well be one of the teens like the so-called "Big Balls" that apparently have their hands in everything.
> This level of hyperbole is why reading about anything to do with the two of them is really exhausting
Almost as exhausting as their daily actions / tweets / rants.
Wow. So they came up with zero-effort estimates of the tariff rate which would balance the trade deficit. The method is like something you'd be asked to criticise in A level economics.
Then they incorrectly labelled these numbers as reciprocal tarrifs implying this is what other countries charge the US.
The worst of it is that all of this misinformation will be happily accepted as truth by so many people. It's now going to be almost impossible to have people realise the truth, especially those people who support Trump. Ugh.
> It's now going to be almost impossible to have people realise the truth, especially those people who support Trump
NOW? It's been this way for close to 10 years.
Are we factoring in digital/service trades? For example, Netflix is in Vietnam. There are many Netflix subscribers in Vietnam. Does that get factored into the trade deficit? Or is it only physical goods that get factored in?
Vietnam uses many US services such as Microsoft Office, Netflix, ChatGPT, Facebook ads, etc. This is revenue that directly go into the pockets of American companies.
No services, only goods. This is according to @JamesSurowiecki on Twitter, one of the first to reverse engineer the equation for how they’re coming up with the numbers. So Office, Netflix, etc wouldn’t count against the deficit.
This is where the calculation is extremely unfair to a country like Vietnam. They export low value physical goods and import high value services like ChatGPT, engineering consultations, etc. They're getting screwed by this tariff plan.
Any tariff based on trade deficit needs to account for services.
Well the U.S. gets screwed too, the admin just doesn’t realize it.
You shouldn't put tariffs based on deficits period because it's a brain dead way to think about international trade. The whole idea is flawed from the jump so there's no way to make it rational, it's inherently irrational.
No it doesn't. Trump's whole issue here isn't making more money for the federal government. His issue is that the American economy no longer works for you if you are a blue collar worker.
The services we export are performed largely by white collar, college educated people. A good number of whom are here on H1-B visas. What service can an unemployed factory worker export to Vietnam? We have to end globalization of industry or wealth inequality will just continue to spiral.
There are ~600k H1B visa holders in the US. the tech sector alone has ~10M workers, and professional workers are ~9x that again. That boogeyman represents < 1% of the relevant workforce.
“White collar” work is the majority of US employment. It’s unclear to me if you’re proposing sacrificing white collar for blue collar jobs, but that’s not a trade our economy overall wants to make.
Relatedly, the unemployment rate for US factory workers is 2.9%. This is a very low unemployment number - 5% is generally considered “full employment,” and anything below that indicates a labor shortage. So your hypothetical factory worker should probably just go get another job.
I don't understand the nostalgia for manufacturing jobs. My mom worked in a factory putting pickles into glass bottles. It was not her dream job. I can still remember how she smelled after a shift. But it was the only employment she could find in that village.
Things got better when we moved after a few years and she shifted into a healthcare job. White collar if you will.
His issue is actually that Putin told him to jump, and so he has to jump. You're utterly delusional if you think Trump gives a single diaper filled with shit about the "blue collar workers"
I'm glad I read your comment because I've been wondering the whole time whether services are factored in. It's absolutely insane that the administration is ignoring the exported value of some of the biggest companies in America that all these countries are buying services from.
Wow, everything's computer!
>Are we factoring in digital/service trades?
???
Of course not. The entire time Trump is railing against the deficit, he's talking only about goods. He wants to bring back manufacturing to America, didn't you hear?
No one asked him this shit on the campaign trail?
There is a dedicated article in an Austrian newspaper about that: https://www.derstandard.at/story/3000000264129/das-verrueckt... They essentially call it batshit crazy.
Funny how Russia is absent from the list
They’re sanctioned up the wazoo
> U.S. total goods trade with Russia were an estimated $3.5 billion in 2024.
Among European Union members:
> The total bilateral trade in goods reached €851 billion in 2023.
That makes no difference to who should get tariffs by the administration's own logic. They're cozying up to Russia. No other explanation is feasible.
I can think of at least a dozen reasons but I'll give you one: We are in delicate peace negotiations with Russia _right_ now. There is good reason to isolate all foreign policy decisions with that country to those negotiations. It is called doing more than one thing at a time.
We are also in delicate peace negotiations with Ukraine right now, but we still put import taxes on them. If you think that the administration would put more import taxes on Russia after the negotiations are done, then at least you're consistent. I need your other 11+ reasons to be convinced.
Ukraine is party to those same delicate peace negotiations. Why weren't they excluded, if this is the reason why?
You mean delicate play to dismantle Ukraine, sell it bit by bit to Russia and steal the remaining resources?
You can’t possibly qualify this shitshow as "peace negotiations"
I'm not sure Krasnov will do anything to offend Russia.
If we were in delicate peace negotiations then we should put more pressure on them. Tell them extra tarrifs will be removed if they agree. The main reason there is still war is Putins stubbornness in admitting he started an unwinnable war. More pressure is helpful
Ukraine has around $1.2 billion and still got 10% tariffs.
So? Let’s not give it too hard to poor Russia?
Considering Russia has been disobeying orders and Australia and Japan have done almost nothing to the USA, then why not give it to them a bit harder?
Current US sanctions on Russia make trade a moot point, that’s why.
Total trade with Russia in 2024: $3.5bn
Total trade with Ukraine in 2024: $2.9bn
https://ustr.gov/countries-regions/europe-middle-east/russia...
So, Ukraine will get an exemption, too, right? Because their trade is even a mooter point, right? Right?!
This is down from $23B in 2019, and is basically just fertilizer and minerals used to make fertilizer.
Fertilizer is not sanctioned due to the fact it’s needed for food security in the EU (surprise suprise, the EU is not just insecure domestically in terms of military and energy and technology, but also in terms of fertilizers needed to grow food, fantastic governance they have over there…leaving potash mining or nat gas extraction to other countries does look good for those domestic net zero calculations though!).
EU peace is assured by inter-locking trade within the block. Countries within the EU are gently encouraged to trade essential goods with one another instead of producing them themselves.
This policy dates back to the end of WW2 as an attempt to prevent one country getting too aggressive and hence starting another war.
Since the fall of the wall, Russia was seen as a legitimate trading partner for the block and, in the long term (just as Türkiye), as member of the block.
Hence sourcing fertiliser from Russia was taken to be a strategic positive since it tired Russia to Europe.
> Hence sourcing fertiliser from Russia was taken to be a strategic positive since it tired Russia to Europe.
And you still defend this as a strategic positive?
I think we should be aware of history, that does not imply acceptance nor agreement.
Instead had I said this ten years ago, the majority of politicians in the EU would have been d’accord. What does that imply about our political systems?
There have been a bunch of alliances in Europe over the centuries, none have been permanent.
This reply makes the mootest point of all the moot points.
I don’t see Ukraine on the list at least. But I do see this as a win for Russia in the destabilization of the Western economy.
It's on the list. They have to pay 10%
I stand corrected
The administration placed tariffs on uninhabited islands. I don't think they gave a rat's patootie about the volume of trade.
They tariffed uninhabited land, countries that export nothing to the US, and countries for which the US has a trade surplus.
All those circumstances also would have made the point moot... yet they all still made the list.
There is still more trade with Russia than many countries in the list. Even Syria and Iran got tariffs.
Didn't seem to be an issue for the penguin islands.
Besides the sanctions, the G7+EU hold something around 300 billion $ of funds so far owned by the Ruzzian central bank. Not enough to rebuild Ukraine, but it will be a decent start. https://en.wikipedia.org/wiki/Confiscation_of_Russian_centra...
Stealing the assets of countries like Venezuela and Russia caused this to happen by making the rest of the world move off of the dollar to secure their asses. Doing more of them is the dumbest idea that can be proposed.
Stealing? Don't start a war against neighbours or other neighbours might get angry.
I don't see much movement into other currencies, just the usual fluctuation: https://en.wikipedia.org/wiki/Reserve_currency#Global_curren...
"Other currencies" gained two percent point, I guess that's the Rupees the Ruzzians sold their oil for.
At this point, Trump could hoist the russian flag at the white house and republicans would still turn a blind eye.
https://en.m.wikipedia.org/wiki/Mercantilism
lol when I saw him hold up his piece of cardboard I thought, “yeah that’s definitely random numbers he invented 2 hours ago”
Does this mean that software worldwide gets a boon since:
1. It’s not affected by these tariffs 2. It wasn’t used as a basis for the calculation
It seems more likely that the EU will retaliate by taxing (or prohibiting) US services.
The Eu will take care of that by slapping taxes/tariffs or regulations, and the rest of the world will also do the same. Play stupid games, win stupid prizes.
Here's the official source for the calculation: [0].
Also, there are some hints this might be from a LLM [1].
And an official statement that it's about trade imbalances and not reciproc tarrifs [2].
And they ask the affected country to "not retaliate" [3].
IMHO Trump tries to lead the US like he managed his businesses. And here I'd like to refer to the three casinos he owned that are now insolvent [4].
[0] https://universeodon.com/@cryptadamist/114272481124239587
[1] https://universeodon.com/@henryk@chaos.social/11427313249281...
[2] https://ustr.gov/issue-areas/reciprocal-tariff-calculations
[3] https://edition.cnn.com/2025/04/02/business/liberation-day-t...
[4] https://www.nytimes.com/2016/06/12/nyregion/donald-trump-atl...
What’s the actual tariffs other countries are charging the US then?
I see how the tariff numbers may have been calculated. But why is it done that way? What is the rationale behind such a calculation? Is this a way to balance the existing trade deficits? How does it work?
Would appreciate you (or anybody else) shed some light on the economics of the thing.
The label "tariffs charged to the US" is just straight-up wrong, either due to incompetence or malice (likely to justify the high tariffs).
But basing the tariffs on import/export ratio makes sense if your goal is to be a net exporter with every country, as it discourages imports until that's the case. It's still somewhat arbitrary though; my guess is that the White House is pursuing that goal mostly for political, not economical reasons.
It's because he thinks trade deficits are somehow a subsidy. He has literally used the terms interchangeably. He's just dumb.
I would love to hear the plan on how the US can be a net exporter of coffee with, say, Indonesia (32% tariff). Perhaps we can take the funds from the tariffs and build mass greenhouses?
Why do you think the plan is to export every single good? The calculation is clearly on the total import/export balance.
We do not have to be net exporters of coffee - Indonesia can buy US cars, corn and wheat for example to balance trade.
Ah yes, all we have to do is drive US wages so low that Indonesian wages can employ Americans just as readily as our wages employ Indonesians.
You can see the report here: https://ustr.gov/issue-areas/reciprocal-tariff-calculations
Given that both elasticities were set to cancel each other, that's why you get a flat trade deficit/imports calculation.
This is, sadly, the way a freshman econ student would calculate tariffs.
If he used real numbers the tariffs would be so low that it wouldn't make any sense.
Suggestion that the admin is vibe governing: https://bsky.app/profile/amyhoy.bsky.social/post/3lluo7jmsss...
Thank you for posting this, the misinformation is clear as day. But lying is without consequences if people are dumb or lethargic enough, it seems.
This will get very interesting.
Interesting. While I think these tariffs are a bad idea, I'm not qualified to fully pass judgement. However, knowing Trump, when I saw the numbers I instantly suspected they would be wrong.
This won't bring home manufacturing but let's say that it will...
The US doesn't have the people to do the actual manufacturing. I saw a video recently explaining how sectors like the military, construction and the automotive industry each have 100K+ positions that they are unable to fill. A return to manufacturing adds to that shortage.
Apparently there's some 7 million young men of working age that are...missing in action. Self-isolated, gaming, addictions.
In construction, for every 5 people that retire, only 2 enter. And it's been like that for over 10 years. The people aren't there nor is the motivation.
I'm sure you'll have Apple investing in a mega plant where 50 educated people push some buttons though.
This is precisely the problem.
Plus, even assuming there existed lots of people to fill the gap, why would they sign up for manufacturing jobs? They pay like crap. Unions and worker rights have been gradually chipped away at for years and now they're straight up chainsawing them. Why work a monotonous job that pays at or just slightly above minimum wage, has skills that aren't really transferable should you decide to change careers, is rough on the body and doesn't even provide proper health care or sick days to rest, and employers will call you in during natural disasters with the threat of firing you otherwise and then leave you to literally die while pretending it's not their fault when you do die? [1]
It's companies and the government saying, "We want everything, and in exchange, we'll give you nothing. And you will be happy." No American sees their kid growing up and thinks, "I hope my child will one day work long hours at a factory." People in some countries do, and it's because those jobs are a step up from the current standard. Factory jobs in the US are, in many cases, a step down and that step keeps lowering. High tech/high skilled manufacturing can be an exception, but the bulk of the jobs they're hoping to bring back aren't that.
[1] https://www.npr.org/2024/11/02/g-s1-28731/hurricane-helene-t...
> Plus, even assuming there existed lots of people to fill the gap, why would they sign up for manufacturing jobs? They pay like crap.
Maybe that's just you talking from a position of relative privilege (e.g. as someone who's likely an extremely well-paid software engineer or some adjacent profession), and not really understanding other people's situation. Not everyone has a pick of the perfect career that ticks every box.
It's very well document that there are lots people bitter those manufacturing jobs got off-shored, and lots of communities that wish they'd reopen "the plant."
It isn't just "reopen the plant" - it is "reopen the plant and match economic conditions in the time period from the 1950s-1990s".
Just reopening won't bring back the comparably high wages from that time period.
> Just reopening won't bring back the comparably high wages from that time period.
It's a start though. If the plant stays closed, those "comparably high wages" certainly aren't coming back. If the plant opens, there's a chance.
There's a lot of "letting the perfect be the enemy of the good" protecting a shitty status quo: "don't do that because it doesn't fix X," implicitly requires that one solution fix everything perfectly all at once.
I'm not saying it has to be perfect.
I'm saying that this outcome will never exist because more has changed than just the plant closing. If we coupled "reopen the plant" with "the plant makes entirely new things" and "the plant trains local workers to take these jobs" and "the plant pays above local service/construction wages" and "the plant will be successful in geopolitical competition" and "the plant can do 10x the amount of business due to advances in automation to get to the same level of employment" and on and on.
We could solve _each_ of these problems, absolutely - but they are all interlocking parts of a wicked problem. Blowing up the economy and threatening a global recession won't actually solve any of these.
> Blowing up the economy and threatening a global recession won't actually solve any of these.
But neither will the status quo.
Do you assume it can't get worse? Or that 10 other things could not get worse?
Like, much much worse?
> Do you assume it can't get worse? Or that 10 other things could not get worse?
> Like, much much worse?
It will at least afflict the comfortable, otherwise they wouldn't be so opposed.
And that's fine. We've been running on a twisted "win-win" logic in this country for a long time: no policy can be pursued where the working class "wins" unless the well-off also "win" (because if they don't, there will be much whining), but if the working class loses it's "Who cares! They've got to suck it up and adapt. Be more grateful and go fill the holes in your life with cheap shit from Walmart."
Enough of that, and a lot of people rightly stop caring if things can get worse. Trump is the chickens coming home to roost. If people didn't want this outcome, they should've gotten together to fix the problems with neoliberalism.
Are there problems? Sure! But "fixes" that just makes everyone* worse of helps.. nobody.
> Enough of that, and a lot of people rightly stop caring if things can get worse
I get the feeling, but it's still dumb: "My neighbor is playing loud music, so I'm going to burn down the block. Ok, so I don't have an apartment anymore, but at least hes not plying loud music anymore!! Win!!"
* well, not the rich. They will be fine, at least in the short to medium term
That's a helluva defense of nuking our trade relationships and sparking a trade war.
Like it wasn't perfect but it sure was preferable to what's about to come.
We could have kept that and implemented policies that were far less painful and far more likely to increase wages.
> We could have kept that and implemented policies that were far less painful and far more likely to increase wages.
Yeah, but we didn't, so this is what we get.
That's why, ultimately, I blame Democrats for Trump. They had many opportunities to improve things, but they chose to ignore the trouble and prioritize other stuff more amiable to their increasingly upper-class base. The root cause was their neglect of the building pressure, Trump is just the explosion. They keep claiming they're the competent and responsible ones, but they are just irresponsible in a different, more subtle way.
You'll find many leftists that agree. The flubbing of so many social issues while moving with the exactitude of a striking cobra to maintain their stock-trading rights, disrupt upstart progressive campaigns, and shield financial markets from the concequences of their own actions, has lead many to recognize that we might be getting KSed. They walk the walk, yeah, just a different one from what you figured just a moment ago. Duckstep? No, the other fowl play.
Yes, the hard part is convincing owners to part with their wealth in order to fund better pay. This is partly because they themselves are wrapped up in a massive obligatory apparatus; call it "the financialization of the economy." I'm by no measure a Trump supporter, but I do hope that what we're seeing is a proper crash that wipes out some of these folks. Once defaults are rampant, you'll have destroyed a lot of wealth, but also a lot of the obligations that necessitated all of this shifting of wealth upward in the first place. You'd also have a lot of very sophisticated people in the clock-in line, suddenly very interested in pay equity. That's one of the happier scenarios, at least.
I'm from a very poor Appalachian town. My only option to better my life was to get up and leave.
People from my hometown do talk about the good old days. People worked at union factories and my grandfather worked a well paying railroad job. My no-name town of 1000 people had a train station that made it possible to go to NYC. My grandpa got paid a handsome retirement from the railroad company. When he died, my grandmother was able to receive his benefits.
My hometown votes against building railways. The station has long crumbled. They vote against unions. The factories are long gone. They've voted against any sort of retirement benefits. The elderly are struggling and depending on churches handing out food.
Even if those factories come back, they'll be paid less than my ancestors did. They'll never have an affordable link to cities hours away. They'll never get the retirement benefits my ancestors had. And if you mention giving them these benefits, they yell and say they don't want them. The youth in my hometown who worked hard in school (we somehow had a decent school, all things considered) used their education as a ticket out. Now the people there are pissed and they're coming for education next.
These people don't want "the plant." They want to be young again, without understanding that their youth was great because my ancestors busted their asses to give us great opportunities. They squandered everything that was given to us.
I'm sorry to hear that. That's genuinely painful to read, but it's a reality that I've seen reflected elsewhere.
I tend to think about Feynman's Challenger commission report whenever I come across stories like yours, "For a successful technology, reality must take precedence over public relations, for nature cannot be fooled."
For a successful society, reality must take precedence over public relations, for nature cannot be fooled. And yes, nature will come for us all be it pestilence or disease, or a storm that washes it all away. Nature never stops.
We created civilization and society as a way to escape nature's wrath. To become something more, to rise above the muck, and when we degrade that we will inevitably go back to the muck.
32 years after my father died, I still only get 1.9x the pay he used to get for manual labour. Given that inflation goes roughly double every 20 years, its clear I am getting less pay then he did. I also had to leave my village, because there were simply zero good opportunities to work in IT. The young leaving rural villages are pretty much common, and has almost nothing to do with how people vote. Neither in which country they actually reside. Its a downward trend, everywhere.
My background is very similar. Grew up in a small, poor mountain town that once boomed with industry but today is crumbling to dust as the population becomes increasingly elderly and young people either leave for greener pastures or abuse substances in order to escape their reality and succumb to addiction.
The industry that once fueled the town is long gone and isn’t ever coming back, and as you say even if a new industry moved in the jobs it’d open up would be so grueling and abusive that it wouldn’t be a net improvement to anybody’s lives, thanks to all the worker protections stripped away over the years.
It’s not enough to “just” make jobs available. They need to be good jobs with proper protections and support that allow people to thrive.
This is very telling. The American Empire didn't even work for Americans. Who really benefitted? Just the Elites? Why should common people care about propping up an empire if the people in power don't bother about them. For context, read this thread.
https://x.com/yishan/status/1906592890845028405
> Why should common people care
because, like Yishan is saying, they don't even realize the 'empire' _is_ working for them. We sit around in absolute physical security, awash in cheap goods, able to travel anywhere, finding our cultural and technological products in demand across most of the world, ...
We only feel want in areas like medicine and education where protectionism and prejudice have prevented us from fully enjoying the benefits of that position.
Many if us can’t read threads because we don’t have accounts there anymore.
https://nitter.net/yishan/status/1906592890845028405
> The original architects of American global power did something very clever that no other empire had ever done before: they deliberately hid the instruments of their power.
> Specifically, they institutionalized the hard power of the post-WW2 American military into a "rules-based international order" and the organizations needed to run it.
> ...
> The reason they did this is because repeated use of hard military power is fragile and self-defeating: it engenders resentment and breeds defiance.
I think a similar thing happened to the people with the ideology of markets: they're presented as some neutral, optimal thing, but they aren't. They encode biases and preferences that suit powerful interests, which can take a lot of effort for a common person to discern. But since there's no leader or decision-maker to point to and defy, so it's hard to organize people about the problems, and then it's hard to point them at the right root cause/solution.
Spot on. “The market” is presented like it’s some state of nature, some law of the universe like physics. It’s been said Slavoj Žižek, Mark Fisher, and Fredric Jameson, but it appears Jameson was likely the first:
“It’s easier to imagine the end of the world than the end of capitalism.”
They squandered the sacrifice of their parents, and now they're asking their children to sacrifice for their benefit.
Since you grew up there, what was their rationale for repudiating pro-labor policies at the ballot box?
The guys on TV told them the people who supported it were communist and unions are for lazy people and welfare queens. They were told by the people on TV that if they vote against this, then those people will have worse and they'll have it better.
45 minutes down the road was a town with a large black population. When people talked about "those people in (town name)" being lazy or "those people" getting jobs or "those welfare queens" somehow benefiting from anything, everybody knew what they were talking about. It was better to be racist instead of caring about the future of their children
Now, decades later, it's still the same. "Welfare queen" isn't the word that's used much anymore--everyone knows it's used as a substitute for various racial slurs and it's hard to deny it. Instead, they complain about DEI and woke. They replaced the word, but the meaning is the same. They still deny that it's meant to refer to "those people", but they always mention "that" town name when talking about it.
"If you can convince the lowest white man he's better than the best colored man, he won't notice you're picking his pocket. Hell, give him somebody to look down on, and he'll empty his pockets for you."
- Lyndon B. Johnson
Reminds me on 'the town' in the book Damon Copperhead.
I worked in a factory. I agree with gp. Don't you dare speak for me.
> Why work a monotonous job that pays at or just slightly above minimum wage,
If you torpedo the economy so people have no other sources of income, raise the price of all goods, and cut of all social supports and programs, people will have no choice but to take jobs they would have turned their noises up at before.
Draining the swamp is winning!
This. It’s the primary feature of the long term plan.
>They pay like crap.
Then raise the wages. Yes that means products get more expensive, but so be it. The economy will find a new equilibrium. White collar workers will see their purchasing power decrease, but factory workers will see it increase.
>No American sees their kid growing up and thinks, "I hope my child will one day work long hours at a factory."
Maybe its just me, but I think theres something seriously wrong with society if people have existential dread over the thought of having to produce the things they consume. If the production of it is so unethical, it shouldn't be consumed at all.
> Then raise the wages.
The same people proposing bringing back all these factories also want to lower wages.
The dread isn't over production. It's about the conditions they face while producing them. Americans dream about having a small farm and doing their own woodworking and blacksmithing or doing so with a small community. They don't dream about working on a factory line and being fired if they miss a day due to being sick. But at the same time, if someone else says they don't want this, they call them lazy and say the kids don't want to work these days.
It's an odd paradox.
And high skilled manufacturing still exists in America. That work is often paid decently and people are fine with working those jobs. The problem is tariffs being made to bring back low skilled manufacturing, and the desire to make the standards of employment lower in the US so that it's feasible.
> Americans dream about having a small farm and doing their own woodworking and blacksmithing or doing so with a small community. They don't dream about working on a factory line and being fired if they miss a day due to being sick.
They dream about being treated better than that, but this is a big cultural gap. There are a lot of Americans who do, genuinely, dream about working somewhat hard factory jobs. They feel proud and fulfilled that they work in the steel mill just like their dad and grandpa and great-grandpappy, and they want to make sure their son will have the same opportunity.
F-Them... I want a future of Star Trek replicators that can molecular print most of the stuff I want. Heavy engineering seems to still need at least some high energy refinement though. (Or at the very least, replicators with different composition.)
The tariffs are high, but not 1,000% or whatever. If the alternative is "build new factories in the US, substantially raise wages and benefits for employees to encourage them to leave service positions for these roles, and then spend time training them" then the furniture from Vietnam with a 50% tariff is still going to be cheaper.
the good production worker's wages came from the unions. the GOP is fervently anti-union (with the exception of the police union maybe). they also oppose minium wages. there is no reason to think they'd support wage raises.
> Then raise the wages.
Then no one will be able to afford the products the plant is going to build.
They were able to in the 50s/60s/70s. So why not now?
Everyone in the United States was much more well off in the 50s/60s/70s as they had just won a huge war that left most of their competitors factories completely destroyed. There's no economic boom today.
The triumph of conservative ideology has broken the unions. No individual factory worker has the leverage to negotiate a better compensation package against the professional management team at Gap or Deere.
The 80s was a period of explicitly designing for this condition; it's just taken a while for the ramifications to be acute. Although it's been obvious for decades that we were headed here.
Wealth inequality. Increases in productivity are going to the top, not the worker. It's also why social security is going broke. It could be funded if you remove the cap. Removing the cap wouldn't be necessary if there weren't such a wealth inequality problem.
The ultra wealthy are hoarding wealth then telling the rest of us we can't afford things we've afforded for over 50 years.
You mean back when rich people paid serious taxes?
> "They were able to in the 50s/60s/70s. So why not now?"
Because the 50s/60s/70s was the post-World War II economic boom for the US. Unless you're volunteering to endure World War III so that the next generation can enjoy that kind of boom, that is not going to happen again.
The line must go up.
Because there was a shift to shareholder capitalism. Everything is done to increase shareholder value.
It's a vicious cycle. But at the end of the day it's the _company_ that has to entice workers.
The _company_ also has to stay competitive to make money.
Won't even have a product if you can't convince people to work for you. Believe it or not, its actually the workers who do most of the work.
I don't understand this line of reasoning.
If you build a product that is too expensive to be competitive, nobody is going to buy it. You will not earn money and will not be able to pay workers salaries.
What is controversial in this statement?
Wow I guess that WEF quote was true but just within boundaries of USA.
> rough on the body and doesn't even provide proper health care or sick days to rest
That's why I'm bullish on human shaped drones controlled with full-body trackers. If you could do most physical jobs without being physically near the area you'd open them to more women (so widening the potential workforce) and improve on-the-job accidents statistics.
and (of course) the company will record the data so that the robots will be able to learn via imitation learning ASAP
I don't know that I agree with this. The US is too large a market to ignore, and this is effectively raising the profit margin for local production. Foreign companies will either move some portion of manufacturing to the US (for the domestic market), or cede the market completely, and I don't know that they're prepared to do that (well, maybe Chinese ones are). Factories have a long lead time, so even if this is abolished at the end of his term, they'll be locked in with sunk capital costs. The main reasons not to do this are a) abandoning the market, as mentioned, or b) you think you can hold out long enough until the political landscape changes.
If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages. Pay enough, and someone will do the job. This is especially true for low-skilled work. There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
And even if these jobs aren't in running these factories, they've still got to be built. Money is a powerful motivator, so I have no doubt they will. Companies will bleed because of this, but there are clear benefits for the US working class even if they're paying more. The gamble is obviously that the benefits outweigh the negatives of higher prices overall. Modern economics says no, but modern economics also believes in service-based economies, and that countries should only produce what they're good at, which, eventually, becomes a repudiation of the nation state. No country wants to buy bullets from an enemy, even if they're cheaper, and the web of infrastructure and industry necessary to maintain a defense industry mandates that at some point, you abandon the theory. Which is to say: I don't know, but I'm also skeptical that economists do.
> If the people aren't there, wages will rise until they show up. [...] There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
While this might be in a theoretical and pedantic way true, sometimes you do not have the economic context to provide those larger wages, so there will technically be no "shortage" - but just because the jobs themselves will disappear.
If you look at poor countries or regions, there is garbage, dirt and dilapidation everywhere. Clearly there is - in a practical way - a need for cleaners, but by your definition there is no "shortage" - because they cannot afford to pay anything for those jobs.
> effectively raising the profit margin for local production
This is the sad thing for US consumers.
If there is now a tariff on Product X that means instead of costing 100 it will now cost 125, I will guarantee you that the price for a locally produced competitor item will be 124.99 The local producers are not going to leave 25% profit on the table.
Why would it have to be that way? Are you imagining a monopoly on all locally produced goods? Why wouldn't there be competition with a healthyish margin? Seems entirely and 100% cynical.
The point of raising a tariff on a $100 imported good to make it cost $125 is because the US provider cannot profitably sell for less than $125. The tariff doesn't magically fix the domestic provider's cost basis.
If the US provider was able to compete close to the $100 level (as they already have incentive to do!), there would be no complaint and no need for the tariff in the first place.
Well taking that 34% number as reference. You could have been brought from 0% margin to 34% with a penstroke. US manufacturers were ground down just to the level of being unprofitable for the last 4 decades, of course they are close to the break even level.
Let's leave aside for a moment the notion that there are any significant number of US manufacturers making stuff for 0% margins.
So you suggest that increasing the tariff allows the US maker to increase their margin. We're not talking about them reducing input costs (in fact, the opposite in many cases), so the only way you could mean for them to increase their margin is by raising price. And to get the full benefit, you suggest they raise their price to match the price of the imports. And yes, this is what will happen, US makers will increase their prices because their low-cost competition is gone.
So you're now kind of agreeing with the poster you initially disagreed with.
(Of course, for many goods there are no US factories here and no reasonable ability to make the goods here at prices that would make sense, even accounting for high tariff barriers. So in those cases, consumers will just pay more for the same goods.)
Yes, but if the profit margin is now higher, it a) permits new competitors, and b) allows breathing room for debts to be paid off, and investments to be made that improve local capabilities. Like most things, tariffs can be good or bad. Yes, they can stifle innovation when there's no additional impetus for improvement, but they can also be necessary to protect local industries that are of strategic importance.
All industry exists in a web, and you can't just excise parts of that web without affecting the whole. The US has de-industrialized while its rivals have grown, and its global dominance is predicated on its technological and military lead. This de-industrialization was purely a function of financial incentives, whereby companies could juice their profit margins by seeking cheaper labor elsewhere, and skilling up foreign populations. But the bill for that is coming due now.
No-one will move any manufacturing because people don't expect this to last long enough for it to make sense.
The congress can remove Trump's authority to determine tariffs at any point by declaring the crisis to be over. The Republicans have a knife-edge margin in the house and the most consistent two rules in American elections are that the party with the president loses some support in the midterms and that bad economic times means that the opposition party gains.
It would take years to move production, and next congress is 20 months away. There is no world in which this ends up good for the USA. Even if you believe that this is a situation where short-term pain leads to long-term gain, there is no way this will continue long enough for that gain to ever materialize.
Yep, there will be a lot of promises for factories that should break ground in ~2028.
The White House has already demonstrated repeatedly it can't stick to its guns.
> If the people aren't there, wages will rise until they show up. Most labor shortages aren't an actual shortage of labor, unless you genuinely can't produce that skillset domestically, or your labor market is so tight that no one is unemployed; rather, they're a shortage of wages
I don't know about this in the US. Sure, we're not at full employment, but I don't know how factory jobs are going to change that. My impression is that there is already a deficit in labor willing to work hard for good pay (construction, trucking, etc.,) and tightening immigration policies will make this even worse.
The definition of good pay is relative. Increase wages enough, and people will leave other industries, and new workers will join the workforce straight out of high school rather than going to university. Those jobs will be filled.
Op is implying that there's excess labor lying around that with moderate prices (say, what you make in fields like construction, electrical work, etc.,) would be picked up. This isn't the case, or they'd already be taking the jobs in those fields that are relatively in demand.
I agree that if you paid people as much as software engineers to work in a factory you would certainly see disruptions in the labor market. I don't know what the market clearing price would be for factory labor sufficient to meet the US demand, but I don't think it'll be pretty.
To what benefit though? People in the US currently provide advanced services such as software sold to people everyplace, and people in developing nations are manufacturing cheap goods, sold to people everyplace.
After tariffs, people in the US are (maybe) manufacturing cheap goods, sold mostly only here, and developing nations continue to manufacture cheap goods for the rest of the world, and fewer people are providing advanced services such as software.
Overall, the world just becomes poorer and has fewer useful services provided. Yes, the US becomes less dependent on the rest of the world, but the rest of the world also becomes less dependent on the US. Material wellbeing of everyone is worse off.
But that's assuming all went to plan. In practice, it's hard to see how they would even achieve bringing manufacturing here through tariffs. Crashing the stock market is a sure-fire way to ensure the next administration (3.5 years away) will revoke them. You could install a dictatorship, but that makes it even less likely for companies to invest in the US. In practice, this will likely just make Americans poorer, but not bring any meaningful amount of manufacturing jobs back. Pretty much the epitome of "cutting off your nose to spite your face."
You say foreign companies will move manufacturing to the US or cede the market. You leave out the most likely option: everything will stay the same yet you pay more for your imports.
There probably isn't enough labour to onshore everything like you're implying.
The US currently consumes about half of its goods from domestic manufacturing. There are about 12 million people currently employed in manufacturing, and 7 million unemployed people. Matching the historical all-time low for unemployment rate would give around 4 million unemployed still.
> There is not, and never will be, a shortage of cleaners, for example, because anyone can do it, so as long as there are unemployed people and the wages are good enough, someone will do the work.
I mean, by that logic there's never a shortage of any profession. But in practice, I've seen what happens with a shortage of cleaners in a popular tourist town (my wife used to run a cleaning business) - it becomes nearly impossible to hire cleaners because everyone's salary in the area is inflated and people would rather work at an easier job. You run into persistent performance issues with your remaining cleaners - they're dishonest, simply stop showing up to work without notice, etc. You can't hire anyone from outside the area because there's no housing available other than dingy, overpriced basements. Holes get blown in the budgets of schools, hospitals, etc. because they have to contend with cleaning rates that are effectively set by the competitive market for cleaning AirBnBs.
I heard a great story from a colleague that worked in fashion development in the UK. There's a big push for "Made in the UK" clothing and consumers associate it with quality, but the items are lower quality, because the UK lost its garment manufacturing skills 50+ years ago. Meanwhile Asia has gained those skills, so if you buy clothes from China they are likely higher quality than you'd get here and cheaper.
This is not always the case, Italy still makes high quality leather goods, Portugal is still making good shirts and trousers etc, but for the most part as economies have moved away from manufacturing into services they have lost the skills and to force manufacturing to happen there means accepting higher priced, lower quality products.
This has probably little to do with skill being lost, and more with how little one gets paid to do this kind of work. Skilled people can get jobs in other fields that earn a lot more.
No no, it's the skills. My colleague worked for a very high priced fashion brand who were able to pay high rates (and indeed did for this and other parts), but they couldn't get the quality they needed.
At the low end, sure, it's obvious you'll get more for your money abroad. The point here is that the skills are lost and you can't pay any amount anymore, at least not at scale (there will always be artisans who can produce extremely low volumes but these don't affect the market much).
Skilled people are still mortal and after a couple generations, they do pass away. They won't be replaced by new skilled apprentices if the industry hasn't been hiring.
Skilled people don’t just appear out of thin air. Skilled people need years of practice, and advice from a network of adjacent skilled people to become skilled in a particular craft.
You can be skilled at Excel and be 10 years away from knowing how to make even mass produced low quality clothing.
> The US doesn't have the people to do the actual manufacturing
The core issue is that, historically, experienced workers have passed down their knowledge to new generations, ensuring a steady accumulation of expertise. However, when factories close and seasoned workers retire or move to other fields without training successors, a vast amount of valuable knowledge is lost. Rebuilding this expertise is both difficult and time-consuming. Subsidies will be required to support local production - initially yielding lower-quality or significantly more expensive goods - until the Western world relearns how to manufacture at scale.
Furthermore, if you want to build something, you likely won’t do it by hand. You’ll need machines to automate the process or enable complex material operations. Rebuilding this capability from scratch will take time, as existing manufacturers lack the necessary capacity. Additionally, similar equipment is produced much more cheaply in China, creating another challenge that must be addressed. What’s likely to happen is that Chinese manufacturers will establish companies in the United States that replicate their production facilities elsewhere (e.g. mainland China). They’ll ship in parts, and final assembly will take place in the U.S. This approach allows them to bypass trade restrictions while maintaining cost advantages. I already know of several cases where this is happening.
A lot of that experience isn't needed though - automation replaced a large part of the expertise needs. I used to work at a factory, it produces as much as it ever did (though with a lot of modern innovations), but today only about 200 people work in it, compared to over 2000 in 1950. The CNC laser cutters replaced 70 people running saws with just 3.
This isn't uniformly true in all industries or throughout all manufacturing. Not to mention that you need qualified people to operate and maintain these machines and the machines themselves.
> They’ll ship in parts, and final assembly will take place in the U.S.
i thought new the tariffs also applied to parts (with a few exceptions)?
They'll just lower the price of the parts.
No people, no supply chain, and no total lack of environmental regulations mean most manufacturing jobs are not coming back no matter what the tariffs are. It's not just one reason that the manufacturing jobs have left, but a conflation of reasons.
Unless… well, unless you eliminate the EPA, invade Canada and Greenland and take their raw materials, and make people so poor that they take up factory jobs again.
didnt you listen to the 70 year olds planning this? we're just going have the robots do it.
you know how people said putin was surrounded by an echo chamber and thats how he got stuck in ukraine? Thats the us now but with billionare VC's and 2nd tier 1980's NYC real estate developers. Look at their numbers and listen to them talk, they're genuinely not grounded in reality as whole group and theres no fixing that
> The US doesn't have the people to do the actual manufacturing.
A usual lack of high qualified low paid workers?
People in the US dont want to work 14 hour shifts for 50c a day for some reason.
No, this is the effect for the last 50 years' usual "I will have my high paid cushy job while some other country somewhere manufactures products for me, taking on all the negative effects. Only positive effects for me. Yes, you should use our currency and take part in our inflation. Or we'll invade you. We will print 6T USD[1] in 2 years and you need to absorb that along with us."
Thankfully, this is coming to an end soon. No tears anywhere.
I know a version of this is what happens in every human age, not singling anything out, but don't get onto the moral high ground of "I am just trying to ensure everyone is well paid".
[1] additionally, 80% of all US dollars added to the supply were added in the last 5 years.
This is the part that confuses me too. The US is in an enviable position where a lot of the "shit" jobs are outsourced and in return we get cheap stuff. Why is this a bad thing?
US is good at bits and bytes but not in actual atoms i.e. manufacturing. That role has been outsourced to China. Without real manufacturing in control of US, it is beholden to what China says which is bad for American empire and its power projection.
This is wrong. The US still has an excellent manufacturing industry. Just because you don’t make sneakers over there anymore, doesn’t mean you’re not good at manufacturing.
Frankly the US makes some amazing things.
This is such an important point. Lumping all "manufacturing" together obscures that some production is low-cost goods like matches and socks. Other production is 787s and F-150s.
What the administration is suggesting is that we resume manufacturing low-cost goods. I'm not sure where they would plan to get the labor for that.
Slaves. Also known as prisoners in the United States of America.
Supply chains still originate outside US.
My interpretation is that today other countries are less willing to take on the role the US would like them to. So, the chosen solution in the US now is to wind down this approach, and try to bring back production to the country. I don't know enough to comment on the effectiveness of the method they are using to do this, but that they are doing it is clear to me.
China is not going to play this role anymore as has been made clear over the last 2 years. Them being the largest country playing this role for the last decade has fueled this recent revamp in the US.
Russia has not really played that role for a long long time.
India(me being an Indian, I might be biased) is way way too slow to be depended on to sustain the sheer scale of US' requirements. Also, compared to china, it's actually getting more and more difficult to get "shit jobs" done here, which might be surprising. It is for all the wrong reasons though, so not much to celebrate as an indian. However, india has enough domestic potential to be self sufficient, so nothing to worry about either.
A few years ago, I thought the next "dump yard country" for the US would be africa. But their progress to the required level is clearly multiple decades away, so that's out of the window in the short- and medium- term. Europe is already finding it difficult to get much out of Africa, despite still basically controlling multiple countries there. Thus, they are having to resort to immigration from the middle east (some 10 years back, it was all from africa)
Needless to say, "freewheelers" (for lack of a better word) such as western europe and australia&oceania were never under consideration, and will never accept this role.
Eastern Europe/SEA are "up for grabs", but the former is already saturated playing this role for western europe/russia (and the two fight for control of the same) and the latter is thoroughly saturated playing this role for china. You saw this play out recently with the attempt to get ukraine's rare earth industry serving the US. Russia invaded them for similar reasons.
The upper middle east clearly will not play this role, preferring to live in substandard conditions and submit to terrorist organisations instead (and who can blame them?) China seems to love supporting these lot too.
Saudi Arabia/UAE are options, and the new US government has made good use of them (atleast on paper) with the new investments. However, they can only do so much given their size, geography and demographics.
I never thought they would allow it to happen, but even LatAm is slowly being "lost" to china.
And suddenly, you've run out of countries! Maybe we'll find some martians though, they can do the welding for the starship.
Strangely, the US is also seemingly losing its ability to maintain an edge through intellectual property. The whole hype in non-technical circles when Deepseek came out was a reaction to this. 20 years ago, it would have been protected better. The IP from 20 years ago is protected well... even today! See: semiconductor manufacturing. Some people say this is because you're now needing to import people too (and so, the knowledge leaks). Some people probe further and say that this happened in the first place because of worsening education in the US. I am inclined to agree with this, since over financialization/trade/empire-building and increasingly poorer education was also what killed medieval india, which I have more knowledge of. However, I might be making more of the symmetry than there is.
It isn't a bad thing - unless you don't have a job/have been stuffed with the idea that meaning and good pay could be yours if not for those foreigners.
If that's really the case, then these tariffs are the cure.
If outsourcing labor overseas is cost prohibitive, wages will have to rise.
Or standard of living can fall. Which is quite likely
Perhaps, but equality would rise in labor starved economy with low standard of living and high costs.
No it wouldn't, it would end up in even more inequality as the middle and lower classes would be able to afford even less while the rich would just see their assets rack up in price. We had that problem in my small European country.
Nevermind the improbability that a decrease in living standards would actually compress the distribution of living standards - Are you seriously arguing that's desirable? That it's better to reduce everyone's lots so that we can be more equal?
If you asked me a couple years ago, I would absolutely oppose it, but now I am seriously entertaining the idea that it may be better to live in a poorer but more equal society.
It seems that the majority cares far more about comparative wealth than absolute wellbeing, and is willing to destroy the system if they don't get what they want.
I'd actually agree that, at any level of living standard, the more equal society is probably happier. I'd question whether that'd be an effective _intervention_ though. Actively reducing the median standard of a relatively well-to-do society to compress the overall distribution does not seem like it would lead to a net increase in happiness.
Why? Who is looking at the societies of countries where manufacturing is happening and saying “we want that”?
Manufacturing used to be great for the US because other places couldn’t do it, either because they hadn’t developed enough or they’d been ravaged by war. It wasn’t “manufacturing physical goods” that was great for the US, it was “having industry that others don’t”. Now, other countries have manufacturing capability. America’s uniquely exceptional industry is now tech - mostly software, but also hardware design, and design of tech for other industries. That is what we should be focused on - supporting the industries that set us apart from other countries.
I don't see how that follows. It's not a step up to be forced to work in a factory, compared to before when not working was an option because costs were lower.
This essentially amounts to subsidizing industries that aren't competitive. It's like choosing to bake bread at home for $5 when you could buy it for just $2.
Or it could be interpreted as putting a higher value on self-sufficiency and domestic production capacity than standard free trade economic theories value those things at ($0).
Standard comparative advantage narratives don't really account for production "webs" being ecosystems that get big synergies from colocation. They do not account for geopolitical risks either.
True, it keeps wealth circulating domestically, fostering local economic activity. However, drawbacks of this system are higher costs for consumers and inefficiencies in production, so it needs to be balanced.
> This essentially amounts to subsidizing industries that aren't competitive.
That's not a bad thing, especially if they are "not competitive" because foreign workers can be exploited more (and not some real competitive advantage).
There are more desirable things than the few neoliberalism optimizes for.
This is basic economics that the administration refuses to understand.
Trade allows you to consume beyond your nation’s manpower and resource constraints.
And it’s even stupider when you’re putting tariffs on raw materials like Canadian lumber. So not only do we need to magically find millions of workers to work in these new factories we also need to find a bunch of lumberjacks and start cutting down our own trees? We’re at 4% unemployment, who’s going to do this work?
We literally don’t have the people to make this work.
Well they can always go back to child labor like Florida is planning to - https://www.cnn.com/2025/03/25/business/florida-child-labor-...
I recently listened to an episode of the Search Engine podcast where they showed how hard it is to manufacture something completely in the USA: https://www.searchengine.show/listen/search-engine-1/the-puz...
(Spoilers, the problem they had was that even when they found companies to manufacture their bbq scrubber, it was harder to find someone in the USA to make the parts that are used to make the parts.)
Simone Giertz said on her channel her company approached multiple factories in the US, EU and China about manufacturing a product. None of the US factories even replied.
Suppose you even find those workers. How are american products going to compete with cheaper chinese / european ones. People over there are used to much lower wages / purchasing power. You can look at Tesla vs BYD prices as an example
More likely the goal is for foreign companies to set up factories in the US for the domestic market. The US market is too big for most industries to ignore, and as they move manufacturing there, they skill up the US population.
Industries don't exist in isolation, and you need to be able to make simpler things in order to cultivate the know-how to make complex things. If China makes better phones, it won't be long until they make better drones. This is as much a strategic initiative as it is an economic one.
And BYD should be a wake up call that the US cannot compete in high value goods anymore.
>If China makes better phones, it won't be long until they make better drones.
They already do. China makes the best drones. Most of the drones in the world, most of the drones use in wars, etc. are manufactured in China, or are comprised of mostly Chinese parts.
I'm referring to the ones that carry a Q designation, not the DJI kind. China hasn't yet caught up in that domain. Electric drones are seeing a lot of use in Ukraine and other conflicts, but they aren't helping to establish air superiority.
China has direct copies of our Reaper drones, they aren't some advanced technology, they are very simple craft actually, and descend from essentially target drones and some toys the navy put together in the 80s.
>but they aren't helping to establish air superiority.
A reaper style drone does nothing for air superiority. It's not meant to. It's a surveillance and ground attack platform. It has no means of equipping or targeting actual air to air munitions meant for Air Superiority.
Why did you believe the MQ9 was relevant to air superiority? Or some special machine that China couldn't make?
Reapers aren't the only military drones, and yes, there are drones that do help establish air superiority, either on the reconnaissance and logistics side, or (more recently) directly on the combat side.
China doesn't have the same level of sophistication in stealth tech, and they still struggle to make decent jet engines, because they don't have the required materials technology for certain components. There's also decades of work in signals processing, which is at least as important as the platform. Not to mention sensor packages, but they almost certainly have a lot of that down. A drone is simple until it needs to fly close to the coffin corner, do air-to-air refueling, land on a carrier, be invisible to radar, be hardened to jamming, act as a wingman to a human pilot... You get the idea.
And since it apparently wasn't obvious, I'm not really talking drones specifically, I'm talking about all defense hardware. China doesn't have anything close to an F-22, and as far as we know, their tanks aren't as good. They can't build carriers that can compete with US ones. But they're already outcompeting the US when it comes to building civilian vessels, and they're taking over the electric car market. How long until they can build a decent carrier or tank?
In real life, people are spending years looking for jobs making enough to barely survive. I should tell them about your video you saw, if only they know.
Eh. This always gets presented as a, "Why don't Millennial/Zoomer/Alpha men want to work?" Lack of training? Maybe. But I see that as more of a subset of the actual issue, which is two-fold: work conditions and compensation. So many jobs suck, and pay less than they should, and provide no real opportunity for growth. Let's break it down:
Jobs that suck: bad hours, bad bosses, bad processes that create inefficiency and stress.
Jobs that don't pay: can't afford a house, can't afford to date/get married/have children, can't establish a stable lifestyle .
Jobs that don't allow for growth: masters don't pass along their skills, managers don't promote (and, eventually, step aside), employers push employees out with stagnation and the hoarding of opportunities for nepo-hires or outsiders.
And why are we in this situation? Essentially, because someone likes the way things are. Managers and seniors don't want to change their work styles, even if those styles are dysfunctional. Employers don't want to pay. Older workers don't want to leave, or jeopardize their marketability by training juniors.
Every young worker can tell you about their experiences with older workers who promise to train and won't, managers who promise advancement and don't, having to be in the office at an ungodly hour or the warehouse or factory late into the night. And for what? Nothing of the American Dream, at least without putting up with the more ridiculous end of the job spectrum, or having been born into money, or having been lucky enough to rub shoulders with someone born into money.
It's Japan's hikikomori problem, transposed. Japanese authorities constantly blame the shut-ins, but outside observers recognize that the problem actually lies with the "functional" side of society, and its unwillingness to confront the way it alienates and produces perfectly reasonable, if dysfunctional, responses in these men (and women).
Agreed, the root of the problem is that America has relatively zero modern manufacturing infrastructure and manpower, especially compared to China. Those MAGA folks just don't know this. Offshoring happened not just because of cheaper price; China already had a much better environment even 20 years ago thanks to billions of people.
> sectors like the military, construction and the automotive industry each have 100K+ positions that they are unable to fill. A return to manufacturing adds to that shortage.
Feel free to offer higher wages than the previous stagnant wages.
If there was a real labor demand shortage wouldn't there be actual wage growth though ?
But if wages increase so does cost of manufacturing in the US, making US goods less competitive not more?
> The US doesn't have the people to do the actual manufacturing
I am willing to move anywhere in the US to do any manufacturing job if it means that I will be paid enough to afford a house with two bedrooms and basic living expenses. I have a bachelor's degree and have been unable to find such an arrangement. So where exactly are all of these unfilled jobs that you speak of? Are they unfilled because we don't have the people, or because they're trying to pay in peanuts? Unfilled because we don't have the people, or because HR departments are filtering away qualified resumes based on voodoo? This outlandish claim you're making that we don't want to work is offensive to a lot of people who are aware of their own existence and know that you're spouting bullshit to trick people into more wealth inequality.
Your 7 million young men aren't 'missing', you're just refusing to hire them. The jobs don't exist.
Good thing we're deporting so many people then.
Actually there are people who are ok to do physical jobs but they are getting deported now.
If this is true, why are US wages stagnating?
What's up with the corresponding 7 million young women of working age?
>Apparently there's some 7 million young men of working age that are...missing in action. Self-isolated, gaming, addictions.
And you never wondered why that is?
The only question is how to get them employed where our economy needs them. Honestly I've worked in Manufacturing and it is fucking gnarly. Clean factories don't exist. Many of the men I worked with had some sort of mild mental disorder tending towards aggression. Constantly short serviced machines and price gouging by any contractors involved. There is a lot to figure out and before you end up with a hospitable work environment. I'm doubtful tubby mcgamesalot is going to hold down a job stamping metal parts all day getting his lunch eaten or pissed in.
Speaking as such an unemployed Tubby McGamesalot (well, minus the gaming) I'm pretty sure we're all aware, and would rather starve than work in manufacturing.
Well, if I had to guess based on my own personal experience, it's easy to simply be... forgotten. Nobody asks you to do anything, and you don't have the will to do anything of your own accord because everything you want feels hopelessly out of reach.
Don't vaguepost. If you've got a point, state it.
No one will want to do lower income jobs while the cost of living is high and continues to rise. Wear and tear on the body is also not compensated, not to mention healthcare being expensive. Meanwhile, I do CRUD apps and work remotely 20/hours a week with no bodily harm (on the contrary, I have time to work out and make bad posts on HN)
No one in their right mind is going to choose manufacturing over what I have if they can do both, and most people could honestly learn to do CRUD apps. Even if my salary were to go down by 5-10% yoy due to people moving in, I'm still in a better position for the other reasons mentioned. I'd have to be below manufacturing and blue collar wages to get me to switch.
The only sensible explanation is that they're trying to force people to have to take these jobs by crashing the globalized parts of the economy because they are obviously better than starving and dying homeless.
All this assuming that Trump isn't just intentionally trying to destroy the country.
Can you blame the new generations for not wanting to work their asses off doing arduous manual labor, payed a minimum wage that is barely enough to afford a single room?
Republicans made work awful. I've heard some wanting to get rid of minimum wage too. Do you think this will help?
> Apparently there's some 7 million young men of working age that are...missing in action. Self-isolated, gaming, addictions.
perhaps we'll see something akin to "forced conscription", except for industrial work
> The US doesn't have the people to do the actual manufacturing ... I'm sure you'll have Apple investing in a mega plant where 50 educated people push some buttons though.
I feel like this could be used to steel-man the Trump administration's plan, though, should you want to. The best-case outcome here for America is it forces large capital investment in automated manufacturing facilities based in the US by making manufacturing that relies on cheap overseas labour expensive enough that the investment is worth it.
I'm doubtful, but, in the unlikely event it works like that, and this comes online in the next couple of years without causing a catastrophic wipeout in the mid-terms, Trump will look like a genius.
IMO it would have been much smarter to explicitly incentivize this with tax breaks and start with small tariffs that would ramp up a little bit each month, if it's the plan, and not just incoherent policy making.
The best option would be to close the gap with immigration but alas...
Why is that the best option instead of raising wages until those jobs are attractive to domestic workers? There's this weird back and forth where people bemoan stagnating wages for the working class but at the same time cheer on importing labor that is willing to work for those stagnant wages.
In any other market, the balance of supply and demand is reflected in the price. But for the labor market the perpetual solution put forward seems to be juicing the supply side so that the price does not move up to a new equilibrium.
Who is pushing to raise the wages and power of labor? It sure isn’t the party that is pushing tariffs and the return of factories.
Both would have to happen. There's very little slack in the labor market to absorb anything. Even if legal permanent residents take up manufacturing jobs, they'd have to give up whatever jobs they have now creating a shortage. And given then even most undocumented people are working, someone needs to fill those jobs.
Or just free trade. Like we had...
The US has recently loosened laws regarding child labor. It’s how other countries produce items cheaply, why not the US?
That El Salvador prison could also come in useful.
That was Florida. Child labor laws are mostly set by the states.
Fair point, but does it change anything? You don’t need factories in all states.
Florida has 19% of children living in poverty, which to me sounds very high. That’s a large and vulnerable group of people.
Is Flordia not in the US?
In the same way that Berlin is entire Germany.
Florida is the US of the US.
Do you think if children were going to be harmed in The USA then maybe the federal government should introduce a ban of that kind of shit federally?
I've heard it all now...
> Do you think if children were going to be harmed in The USA then maybe the federal government should introduce a ban of that kind of shit federally?
I'm not sure the federal government can. There are powers reserved for states that the federal government can't circumvent. They have supremacy, but the jurisdiction of that supremacy is restricted.
I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities. These securities mature at varying intervals and require continuous "rolling" or refinancing to pay off old debt with new borrowing.
Significant rollovers are expected from April through September 2025, with additional short-term maturities due by June.
Higher interest rates significantly complicate US' ability to refinance. The cost of servicing this debt — paying interest rather than reducing principal — is already a major budget item, surpassing Medicare, approaching Defense and Social Security levels.
If rates don't come down soon it locks in higher costs for years. The country is at risk of a debt spiral.
How can rates come down? The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
Treasuries are considered safe during such crisis. Increased demand for Treasuries pushes their prices up and yields down, effectively lowering interest rates.
What are the flaws in this thinking?
The flaw I see is centered around this paragraph.
> How can rates come down? The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
Rising prices due to tariffs won't pressure the Fed to lower interest rates. It will increase inflation and worries of inflation, which will actually pressure the Fed to RAISE interest rates. A slowing economy won't stop inflation... We are likely entering into a period of "stagflation". The way out last time was very high interest rates and short term economic hardship.
Prices rising due to tariffs isn't "inflation" in any traditional sense. It's not driven by consumer demand, and therefore the logic for raising rates (i.e. slowing economic growth by reducing money in the market) doesn't apply.
> Prices rising due to tariffs isn't "inflation" in any traditional sense.
Yes, consumer prices rising is inflation in the traditional sense (since, unqualified, “inflation” refers to increases in consumer prices.)
> It's not driven by consumer demand,
Inflation is not restricted to demand-pull inflation, which is why the term “demand-pull inflation” has a reason to exist.
Tariff-driven price increases are a form of cost-push inflation.
> and therefore the logic for raising rates (i.e. slowing economic growth by reducing money in the market) doesn't apply.
The existence of cost-push inflation doesn't change the short-term marginal effects of monetary policy on prices, so of you care just about near-term price levels, the same monetary interventions make sense as for demand-pull inflation.
OTOH, beyond short-term price effects things are very different: demand-pull inflation frequently is a symptom of strong economic growth and cooling the economy can still be consistent with acceptable growth.
Cost-push inflation tends to be an effect of forces outside of monetary policy which tend to slow the economy, so throwing tight money policy on top of it accelerates the slowdown. This is particularly bad if you are already in a recession with cost-push inflation (stagflation).
The good thing, such as it is, about cost-push inflation where the cost driver is a clear policy like tariffs, is that while monetary policy has no good option to fix it, there is a very clear policy solution—stop the policy that is driving the problem.
The problem is when there is irrational attachment to that policy in the current government.
You're just using new terms ("cost-push inflation") to disagree without actually disagreeing.
> so of you care just about near-term price levels, the same monetary interventions make sense as for demand-pull inflation....Cost-push inflation tends to be an effect of forces outside of monetary policy which tend to slow the economy, so throwing tight money policy on top of it accelerates the slowdown. This is particularly bad if you are already in a recession with cost-push inflation (stagflation).
Again, you're just saying the same thing that I wrote above, but arguing (?) that it's actually called "inflation".
If your point is that tariffs are bad, fine. We both agree that what you call "cost-push inflation" is not something you'd rationally raise interest rates to counter.
Increasing cost of imported goods will increase demand on equivalent domestically produced goods, which are also often supply constrained. Locally produced goods will increase their prices as much as the market allows (which is somewhere around the cost of the imported good with the tariff). Tariffs cause inflation as a whole.
When the tariffs are dropped, do you think the price of the imported good is going to go back to the original price? If the domestically produced version is priced near the tariff price, they'll reprice slightly lower than the domestic price, ensuring prices stay high.
If a pair of shoes today costs $30, and a pair of shoes tomorrow costs $60 (not saying this will happen, just positing a scenario), from a consumer perspective, there has been 100% inflation in the price of shoes. It doesn't matter that the price increase is due to tarrifs on imports from Vietnam.
I'm an American that owns/operates a design and manufacturing company -- we build customer products in China and export to USA buyers. Let's say we build the customer product and sell it to them for $20 ex-works China. That means USA customer must pick it up at our dock and pay the shipping fee. Lets ignore the shipping fee to keep it simple. Assume USA customer currently sells the product for $80 in USA. If USA customer now needs to pay 35% import tariffs on $20/unit, then their cost goes up $7 USD. If USA customer passes 100% of that cost to their own final end customer, then they need to start selling it for $87 USD. So 35% tariff ultimately turns into a price increase of 8.75% for consumers.
But actually, tariffs have been 10-25% anyway for a number of years. So for existing products, some tariff cost was already included in that $7 total tariff cost. So, for existing products, the cost may go up ~$3.50 and our customer would sell it for ~$83.50 and the actual increase consumers would see is ~ 4.5% increase.
Now, this is a typical pricing scenario for our USA customers, they are selling individual products that cost $20 in China at volume, in USA at retail for ~3x-5x the per unit purchase cost from China, this is quite common. Now, the USA customer must buy ~5000pcs to get that $20 USD unit cost, while consumers get to buy only 1pcs and pay $87 USD, whether or not that is fair pricing given the risks and R&D costs, that's just the reality. Anyway, I'm not sure of the ex-works cost of shoes, but I'm highly confident big brands like Nike sell them for at least 5X the ex-works cost. So the math would be similar.
From what I've seen (briefly worked at a logistics company and would see companies POs), apparels seem to be more in the 5x to 10 range.
If you're directly passing the tariff increase along, without markup, are you comfortable reporting to your stock holders a decrease in margin?
Yes and there will be the usual political consequences associated with inflation; but this type of inflation is caused by a tax and cannot be combated by raising interest rates.
It most certainly can, though you would have to push interest rates much higher than normal to kill demand enough to have an effect.
Why wouldn't a rate hike make a difference? It will lower demand and therefore prices, no? I mean, this isn't really something that we should celebrate or want, since it essentially just means discouraging people from buying shoes because they can't afford it, but it does bring the prices down (or at least slow the rate of shoe price increase).
A couple of things. In practice, most goods are actually priced as cost-plus, with very thin margins, and any response in prices is highly asymmetric.
If the purchase costs for a good suddenly increase, retailers will increase prices very quickly because they would otherwise start losing money very quickly.
If demand for goods decreases, that doesn't affect the retailer's cost of goods at all, and if they were to reduce their prices, they'd eliminate their thin margins. From their perspective, it's better to sit on inventory for a while.
So any downward pressure on prices would happen much more slowly.
BTW, this kind of asymmetry is why a bit of inflation is good, actually. Inflation acts as a universal and permanent downward pressure on (real) prices, in the sense that if retailers and others are unable to justify an increase in nominal prices to their customers, their real prices will drop.
True but that mechanism is indirect at best. Usually high interest rates discourages more borrowing and lowers spending that way.
But in this case the price increase is already due to the government putting its thumb on the scale. The best way to reduce the price is not via the Rube Goldberg interest rate mechanism to shrink spending and thus demand for the $60 shoe, but by removing the tariff and make it a $30 shoe immediately.
It is how it works in all scenarios, though. Higher rates usually cause people to spend a little less which is a reduction in demand.
This is blatantly false. You just have to look at Jerome Powell's reasoning in 2018-2019 and just last month!
It's only inflation if you also double your earnings (tongue in cheek, this takes obviously place on a macro scale). This is about balancing costs. Globalization created environmental externalities that are not sustainable. While you enjoy the $30 pair of shoes, the people by the factories suffer. Almost nobody importing goods is really checking the supply chains properly enough. We have pretty strict EPA laws here that are a tariff in their own way.
But the Fed is not the consumer
But (as I understand it) how the Fed tracks inflation is the consumer price index, which does take things like "the price of shoes" into account.
If the consumer price index, which is a metric the Fed uses, goes up, then inflation has gone up. Every dollar buys you less (less purchasing power), and the nominal price has increased. To me this indicates inflation. Of course, you need to calculate how this balances out in terms of jobs/wages and the flow of investment, but that's really hard to figure out at this point in time.
I'd expect the CPI to go up in the event of global tariffs at a baseline of 10% assuming all things go ahead as described.
Yes, that's fine. But if the acute cause is not consumer demand, raising interest rates won't do anything.
(Note: a sibling comment suggests that it "doesn't matter", because if you slow the economy enough, you'll offset the artificial "inflation" due to tariffs. Maybe so. But that would be cutting off your arm to treat a paper cut.)
Inflation is just a description of price movement, nothing more.
Doesn't expectation of inflation increase consumer demand? If I like apples and expect that tomorrow they'll cost more, I may buy more apples today?
Disclaimer: I don't know anything about economics
It does but only if there's an increase in the expected rate of inflation as opposed to a one-off shock like we're seeing here.
calling 50% tarrifs on all of easy Asia is hardly a paper cut. it's more breaking someone's ribs while giving them CPR
It's more like breaking your own ribs while breaking someone else's ribs, no CPR involved.
It gets extra confusing when considering import/export of ribs.
> But if the acute cause is not consumer demand
But the acute cause is consumer demand. If the consumer reacted by not buying the tariffed stuff there would be no cause for alarm. But no, they continue to buy the higher priced goods. I'm not sure what happens next, but it seems if that is allowed to continue some sort of feedback loops develops leading to inflation getting out of control. We've seen that happen often enough, and the effects are devastating. So devastating governments use the interest rate hammer despite knowing it will likely get them thrown out of office, which is what happened to Biden.
The interest rates hikes (again for reasons I don't understand) effectively suppress demand. But it isn't necessarily demand for the tariffed goods, it's overall demand. Typically what you see drop is advertising, restaurants and similar discretionary spending. Notice they are services - not tariffed goods. This brings down spending to match income, and which somehow keeps inflation dragon in it's box.
In other words, the point of raising interest rates isn't to cure the tariffs. The only thing that can do that is to remove them. Instead it's to counter the effects of the tariffs - which is that they have made the economy less efficient, in the sense in the consumers can purchase less stuff with the money they have in their pocket. The consumers are in a very real sense poorer. The interest rates are just a hammer to ensure they act like they are poorer, and buy less stuff, and bring the economy back into balance. They react to being beaten with that hammer by voting out the party that chose to hit them with it. But it was for the own good, and so the political party deploying it has effectively decided to take one for the team. For all the cynicism our political systems and the politicians cop, I sometimes think they are undervalued. (But only sometimes, and only some of them.)
I suspect Trump is thinking "but the money hasn't been destroyed - I've now got it". And that's true. The effect of the tariffs is to divert trillions of dollars (by Trump's calculations) to the USA federal government. Before the citizens of the USA were free to spend that money as they see fit. Now they have handed over to Trump, and so have have effectively lost a freedom they once had.
If you look at other economies around the wold that have dragged themselves up by the bootstraps by imposing tariffs, like say China of Singapore, they poured that money into infrastructure, education and R&D. Maybe spending it in that way is perhaps more productive than letting Joe Sixpack using it to pay for takeout. I dunno.
Admittedly it's still an open question, but to me it seems the odds of Trump spending the money in that way is remote given he is currently cutting back on those very things. Perhaps even more telling is the USA go to be the most powerful economy on the planet by explicitly not letting government decide on where surplus money should be invested, but rather leaving that decision to it's capitalist economy. As it is, Trump is moving the USA from a capitalist economy to a command economy, with him in command.
Amazing stuff to see. I'm glad I'm watching from afar.
I would be ready and prepared to sacrifice a fair amount of my quality of life for the greater good (of being more self-reliant, more secure, bringing some manufacturing back on shore, etc, etc).
But these guys have basically said "we're all going to have to suffer, and then..." nothing! No huge capital investments into green energy. No workforce retraining. No infrastructure. Nothing. So yeah, you're asking me to sacrifice my quality of life? For what? Ew, no thanks!
Of course, I'm pretty confident I know where this money is going to go: contracts and grants to private corporations owned by Trump's personal network. They are already prepping for this by gutting huge swathes of the federal government. When they say "actually, we think some of these functions were necessary after all, but for efficiency reasons, it's best that private companies take over these functions..." naturally those contracts will go to the right people who are capable of making america great again.
It's actually insane, it has me absolutely livid about this whole situation. Sorry, I do not care how anyone feels about "the libs." These people are going to steal the quality of life -- that my parents built, that my grandparents fought a war to create -- from me and my children. They will use it to enrich themselves. They will burn the this country to the ground to accomplish this.
One way around this might be a twist on Goodhart’s Law: if you come after the people at BLS who produce the CPI [0], and replace them with political appointees, then maybe you can arrive at an “improved” CPI that hews more closely to your political desires. Assuming you’re the kind of leader who privileges optics over high-fidelity data.
[0] https://www.politico.com/news/2025/02/12/elon-musk-doge-labo...
> I'd expect the CPI to go up in the event of global tariffs at a baseline of 10% assuming all things go ahead as described.
A lot of dollars are spent on US goods/services, so the baseline is more like 10% * proportion of dollars spent on non-US goods.
Inflation is inflation.
The fact that we decided allow a massive tax increase by executive fiat is irrelevant. The fact that we’re risking a death spiral from decreased consumer demand via government imposed inflation is irrelevant.
You’re right in that the usual formula of turning the knobs on interest rates to ease economic challenges is unlikely to work. We may have to turn the knobs to prevent a total death spiral, however. Get ready for 16% mortgages.
It doesn't matter what the root cause of increasing prices is. Fed doesn't have any other levers but to adjust rates up to reduce demand. It will work either way because even if demand is not the source, it will reduce whatever demand that was there.
Inflation is definitely going to happen due to tariffs. If I'm paying 20% more next year on average for products above what I'm currently paying that is 20% inflation for me, that is what people will see; they don't care about your purist form of inflation arguments. They also vote against people who cause inflation, especially when they promised the opposite.
That's a distinction without a difference.
Oil price shocks in the 70s caused stagflation, a very real threat now.
The solution then was massive pain (Volker) that seemed to slay the beast.
Actually, price increases caused by tariffs are a type of inflation—specifically, cost-push inflation. This is consistent with standard definitions found in macroeconomics and international economics textbooks.
Didn't stop the Fed last time, when inflation was due to market control letting companies pick their own price (also not "real" inflation).
There's nothing in the definition of inflation that says it needs to be driven by consumer demand.
>> rising due to tariffs isn't "inflation" in any traditional sense.
Perhaps not in an academic sense, but the vast majority of people understand inflation as a rise in the cost of living, no matter the root cause.
Yes, but the point being made above is about the reaction of the bond market vis a vis refinancing the debt, not consumers.
You can’t isolate these things, the Fed’s charter is to try and reduce inflation for consumers not regulate the bond market for the US debt, but their interest rates and repo actions move the bond market.
Coupled with tax cuts?
It doesn't matter what causes inflation. It's always a sign that there's more money than is needed for current and anticipated levels of economic activity. And the correct course of action is always to raise the rates to reduce the pace that the money is printed at.
At least if you care about avoiding hyperinflation.
+1. In my relatively uninformed opinion what trump is doing is accelerating a kind of global arbitration in which the US is no longer the dominant economic power. We are going to have to share our toys. The “3rd world” is developing and it isn’t as easy to bully the globe into doing all our dirty work.
In my imagination, 50 years from now we will have a quality of life more similar to Central Europe: fine, but nothing special. Most people will live much more simply, rent smaller spaces, drive less ostentatious cars that they share. People will live with their families out of necessity and strawberries won’t be available in December.
The logic is very reductive. It's like: "the Fed's job is to cut a snake, so if they see a snake around their head they'll just close their eyes and cut both".
Raising rates does Absolutely Nothing to undo the tariffs or bringing the price down. Fed is not a blind machine.
Since people won't actually have more money to spend, you would expect it to lower the prices of other things like housing or travel. So there should be a negligible impact on inflation depending on the weighting.
This is flat out wrong. The Fed raises and lowers interest rates to stimulate or tamp down demand. Raising interest rates because prices rise while demand drops due to a trade war would accomplish nothing.
The Fed has two mandates: maximum employment & stable prices. If prices go up, the Fed is mandated to raise interest rate.
> The Fed has two mandates: maximum employment & stable prices.
It actually has three listed in the Federal Reserve Act:
* Maximum employment
* Stable prices
* Moderate long-term interest rates
It's popularly called a “dual mandate” because it is perceived that properly balancing the first two will naturally also achieve the third.
> If prices go up, the Fed is mandated to raise interest rate.
No, it isn't, especially if employment is already below the “full employment” level and expected to drop even without the rate hike. Demand-pull inflation in periods of strong employment and economic growth or looming deflation in periods of weak enoloyment and economic growth are easy-mode monetary policy choices (at least as to direction, magnitude may be tricky).
But tariff-induced cost-push inflation in weak growth slowing employment conditions, where Congress and the President decline to remove the non-monetary policy root cause, that’s hard-mode monetary policy, because the usual tools to address either the employment or price problem will make the other worse.
They're mandated to raise interest rates in the event of structural inflation, not in the event of a one-time increase in prices. It would be silly if the government increasing the VAT required the fed to increase interest rates.
Even if the tariffs work as desired, they result in persistently higher prices. Unless you're expecting American laborers to work for less than literal Chinese robots, I guess.
Right, I’m just saying that raising interest rates in response to that doesn’t make any sense. It would be functionally equivalent to raising interest rates as a response to an increase in the income tax rate in order to restore the buying power of your pre-tax-increase income.
That's an odd, fundamentally disconnected mechanism that, I think, would have devastating impacts for Main St.
and it does, and has for many decades. This dual mandate makes little sense in practice
The dual mandate makes plenty of sense when you realize that the Fed and monetary policy aren't intended to be the whole of economic policy, and that the actual main piece of economic policy is with Congress and fiscal policy.
The first sentence is right. The second is wrong, as implied by the first. If raising interest rates would exacerbate a recession and thereby unemployment, the fed will not do it just because prices are rising. You are ignoring half of their mandate.
The Fed has a mandate to keep inflation under control but a lot of leeway to decide if they should increase interest rates or not. If they see a price increase as temporary or structural, and not based on an interest-rate-responsive process, they will not increase rates. Some prices are "sticky", some are definitely not.
So you don't think employers will raise wages as the cost of food increases?
No - because generally there will be a lot more folks in the labor market with less leverage so they will not need to pay more in order to attract the talent they need. This is also why inflation is typically solved by recessions. They reduce labor demand which reduces wages which (generally) reduces the price of producing things overall.
Perhaps, we are mixing 2 things:
1) Economic/Monetary Inflation, which is an increase in the money supply in an economy driven by government or central bank ("print money").
2) Price Inflation, which is an increase in the general price level of goods and services that people typically notice at the groceries or gas and usually derives from monetary inflation, but can also be due to the new tariffs.
Is the Fed going to do the same confusion and use 2 to justify higher rates for longer?
I think they shouldn't unless they're being disingenuous and politically motivated (push just enough to make the entire Trump mandate an unending crisis until Democrats get back in power).
According to monetarist theory these two things are one and the same.
The main source of "money printing" is banks making loans. And this is what the Fed targets when it raises interest rates.
I'm not quite sure whether tariffs really do lead to inflation. It depends on how consumers and companies respond to higher prices of imported goods and to the general sense of uncertainty.
> The main source of "money printing" is banks making loan
Sounds like a similar mechanism as the UK. I'm not aware if the system is exactly the same or not.
It was apparently so poorly understood in the UK that the bank of England wrote a paper (Money creation the Modern Economy https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...) in 2014 to clarify where new money comes from. There's a good summary here https://positivemoney.org/uk-global/archive/proof-that-banks....
It's not something I was aware of until recently, but I was surprised that it was not more under the control of the government and central bank (in the UK, anyway, if it turns out it's different in the US).
>Sounds like a similar mechanism as the UK. I'm not aware if the system is exactly the same or not.
Yes, this mechanism is called fractional reserve banking. It's in use basically everywhere.
Interestingly that paper from the Bank of England makes no mention of "fractional reserve" anywhere, but they do say:
>Another common misconception is that the central bank determines the quantity of loans and deposits in the economy by controlling the quantity of central bank money — the so-called ‘money multiplier’ approach
>While the money multiplier theory can be a useful way of introducing money and banking in economic textbooks, it is not an accurate description of how money is created in reality. Rather than controlling the quantity of reserves, central banks today typically implement monetary policy by setting the price of reserves — that is, interest rates.
>In reality, neither are reserves a binding constraint on lending, nor does the central bank fix the amount of reserves that are available
Anyway, I think I'm digressing from the topic a bit here - but I _think_ what I've learned recently is that in the UK it isn't actually fractional reserve banking, which I was surprised by.
>but I _think_ what I've learned recently is that in the UK it isn't actually fractional reserve banking, which I was surprised by.
The BoE doesn't currently impose a mandatory reserve requirement. They do have more general liquidity requirements though (central bank reserves being one possible source of liquidity). I would still see it as a fractional reserve banking system, especially as these minor differences don't matter for the question of how money is created.
Yeah I think that's a fair shout, the main element being that private banks create the money via loans. Thanks for engaging, I appreciate the discussion. One day I might grok how modern economies hang together, but I've a way to go yet.
>I'm not quite sure whether tariffs really do lead to inflation. It depends on how consumers and companies respond to higher prices of imported goods and to the general sense of uncertainty.
They won't absorb the new costs. That has not happened in the history of capitalism as far as I am aware. Higher costs will inevitably equate to higher prices without an offset somewhere.
Investors don't like unpredictability, which Trump has already shown to be very unpredictable in regards to tariffs (the whole on again off again stance changes for example).
Higher prices also lead to less buying activity. History has proven this out too.
>They won't absorb the new costs.
If you mean that importers will not absorb costs then I agree. They will pass on most of the costs, if not immediately (to avoid sticker shock) then over a period of time.
But the question is what happens to demand for imported goods and demand for everything else. At constant money supply, prices of some goods going up could put pressure on the price of other goods and services, although this seems less likely as the tariffs are so extremely broad.
A lot depends on how people respond. Will they reduce saving to pay higher prices? Will they take out loans to maintain living standards (creating new money in the process)? Or will they cut back on spending causing a recession?
And what will companies do? Will projects be put on hold because the return on investment is too unpredictable? What happens to the dollar? Will Trump cut other taxes to offset his tax hikes on imports? What about the massive budget deficit?
I think this is all highly uncertain.
Consumers will pull back, if not right away it will show up with 18 months, though early indications suggest they already are to brace for the price increases as most were already trying to simply get ahead of the last few years of inflation to begin with.
Businesses are already cutting back. My employer has already talked about the impact, I know other people who are saying the same thing. Lots of things going into freeze or slowing down. It will take a minute for this to get through the economy but it absolutely will.
I don’t think this is highly uncertain territory, history has clear examples of what will happen if in doubt. Generally, it’s not good for most, especially consumers or those who have any reliance on foreign material or goods, which nowadays is most businesses and consumers, and the US won’t be able to magically fill that in.
This will result in a recession
> I think they shouldn't unless they're being disingenuous and politically motivated (push just enough to make the entire Trump mandate an unending crisis until Democrats get back in power).
They've been saying since the Biden administration they are going to keep raising rates. If the Trump regime's choices drive us into an unending crisis, bailing him out with rate cuts would be the politically motivated choice. Continuing to raise rates is just sticking to principles.
Not true. The Fed did lower rates leading up to the election, seemingly to postpone a crisis until Democrats got elected (which didn't happen).
https://www.reuters.com/markets/us/federal-reserve-expected-...
That’s a speculative article that was wrong. I was also somewhat misremembering JPow saying he wouldn’t cut rates after the inauguration as him saying he was going to raise them. Rates changed a small amount in September, then they did two big cuts after the election. Not really evidence of political bias in any case.
The article does not say that....
The gist is that Republicans are going to blame the Fed of playing politics when I terest rates are lowered, and blame Biden for when interest rates rose. Rates go up, Bidens fault, rates go down - politics. That is the republican talking point. The article ascribes no direct motive but says the reduction in rates is due to the fed claiming victory on inflation. Which, was wel down and approaching target when the fed started cutting rates.
It is ironic that an article that says (paraphrasing) "here is what the political talking point would be", be used as __evidence__ for that talking point.
> I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities. These securities mature at varying intervals and require continuous "rolling" or refinancing to pay off old debt with new borrowing.
No one is mentioning this because no one cares, least of all the guy who just signed massive tariffs.
What you're describing is the end result of 30-ish years of Republicans implementing "Read my lips: no new taxes" and this country refusing to have to a mature conversation about revenues. Also, over that period, wages remained stagnant, meaning more people look to the government for assistance, which then costs money in the form of deficit spending. The numerous expensive wars didn't help, either.
There's no good fix to this other than some serious revenue raising through taxes on people who can afford it. Of course, those people are of the opinion that they're entitled to net worths that measure as a significant portion of a trillion dollars, and will simply push the costs onto consumers in order to maintain share prices since that's what most of the net worth sits in.
You have to break those people of that idea. Talk of interest rates, Treasury securities, Federal Reserve policy, it's all just noise. The money going in must be a larger portion of the money going out, and significantly burdening the average American with more tax debt isn't going to solve the problem before causing social upheaval.
> I don't see anyone mentioning that the United States needs to manage its massive national debt, currently in the trillions, by issuing Treasury securities.
It's very hard to even assume that's a concern of the current US administration, based on not only the fundamentalist goal of radically cutting taxes and regulations, coupled with the fact that it's purposely pushing a recessive economic policy that defies any logic or reason.
The very least that you'd expect is a progressive tax policy that didn't excluded corporations and mega-rich. You're not seeing any of that.
Put clowns in charge and you'll get a circus.
Öküz saraya çıkınca kral olmaz. Ama saray ahır olur.
Translation: When the ox goes to the palace, he does not become a king. But the palace becomes a barn.
Some of you may die, but its a sacrifice I'm willing to make. --Farquaad
> Öküz saraya çıkınca kral olmaz. Ama saray ahır olur.
I like the saying, but why Turkish? It's known in English also.
I'm sure it has a lot of sources, but it was popularized more recently as a mistranslated Circassian proverb, which caused a Turkish journalist to go to jail and then was picked up by various English news outlets.
A crown on a fool's head does not make him a king.
The whining about how social security payouts was going to sink America while at the same time handing out tax cuts for corporations hints at a ideologically driven agenda.
Tariffs increase prices. This tends to cause a wage-price spiral, and indeed that's one of the stated objectives (increase US wages by onshoring manufacturing). The increase in prices and wages is inflation. This will cause the Treasury to raise rates to force contraction.
Now, so far rates have indeed spiked downwards, but not a huge amount: https://tradingeconomics.com/united-states/government-bond-y...
The next consideration is: what is the budget actually going to look like? Is it going to cut spending and leave taxes where they are, resulting in debt paid down, or is it going to be a huge tax giveaway to the top few % while increasing the deficit? (personally I'd bet on the latter)
Then the consideration: other players also get a move. What do the retaliatory tariffs look like? Does cutting off the ability of other countries to earn dollars negatively impact US exports?
Devaluing the dollar against other currencies will also force up rates by the arbitrage principle.
S&P down 4% so far today. Do we think that indicates the measures are good or bad for US industries?
I know there is a crowd that talks about debt alot and these are all legitimate concerns
However they could also raise taxes on capital gains and top end income brackets - which are at ludicrously low levels for folks of significant wealth - which would go a very long way here. Some estimates suggest it could put the US back in a surplus quite quickly
edit: I'm saying there is an argument for raising taxes. I don't think its off the table like some people suggest. I know it may not be popular with some but we could discuss the merits.
Cutting fundamental government services feels wrong too
The problem is that raising top end rates don't go far enough. It's a start, but we also need to raise the lower rates to solve the problem. That, or dramatically cut benefits.
I don't think broader tax increases are off the table either, but we haven't even attempted to simply close up the loopholes used by corporations and the ultra wealthy and raise taxes in kind. Once that happens, I think its fair to reassess what to do with any lingering problems of raising revenue.
That isn't necessary, we know how much revenue that will raise.
It's been argued a lot that such a move would cause a good portion of American billionaires to just pack up and move to another country. Rich people are mobile in a way that poor people are not.
The US is unique in levying taxes on its nationals wherever they are in the world.
Although you've just made an argument for capital controls. We could call them "dollar export tariffs".
Believe it or not but there are Americans who relinquish their passport precisely because of this reason. Patriotism is automatically assumed but we live in a globalised world.
The US is fairly unique in imposing an "expatriation" tax precisely to avoid this situation. The IRS taxes all of their assets as if sold on the day before expatriation.
Of course collecting taxes internationally is difficult, but anyone wealthy enough to meet the criteria will probably need to visit the US at some point.
Did you know that US has tools to claim part of your wealth even if you relinquishment the citizenship. Google "exit tax" for us citizens.
The US exit tax is a tax on your worldwide assets. The tax applies to all property that you own on the date of renunciation
Most of the times I've heard of it happening it's someone who's net worth is well below the threshold for this (indeed well below the threshold where they actually need to pay any income tax to the US government), but because of the headache of needing to file the paperwork and the fact that a lot of banks don't want to deal with US citizens due to extra requirements imposed on them by the US government (via its financial system).
Maybe the reason you haven’t heard about it is that you don’t know any billionaires?
That, and that the US is a tax haven for the super rich, so they have no reason to leave.
That seems very likely, but I'd like the names of a few billionaires to verify.
The USA is not unique but member of a very exclusive club. The other member is the enlightened dictatorship of Eritrea. And, IIRC, Trump promised to abolish this taxation during his campaign. I'm not holding my breath.
I don't think its that simple and is overly simplistic. If it was all about getting a better deal why wouldn't they have all left for Switzerland by now? Objectively, its a better deal than what the US offers - even on tax rates.
Just within the US you could ask why wealthy people aren't all moving to states without any income taxes more frequently. Plenty do move to certain low tax states but network effects, infrastructure, stability, well-understood regulations, etc., seem to often play a bigger role.
Everyone has their own tipping point. Just as salary isn't the only reason to move job, taxes aren't the only reason to stay. But at some point, people move. And the US makes you pay tax overseas anyway, so you can't just move and re-domicile. You have to emigrate and gain citizenship elsewhere.
You still have to pay an exit tax if you give up citizenship. The tax man gets his cut.
So where is the wealth of the rich stored?
Where does their income come from? (e.g. investment growth, etc.)
Can't you basically tax their income, and quadruple that tax if they move abroad and want to move their money out of the U.S.?
(I'm guessing it's not easy, but I also guess the reason it's not done is because the ultra rich have so much influence on the politicians and tax code... not for whatever other logistical reasons might exist.)
Good riddance. They can go interfere with someone else's government.
this argument is along the lines of "if theres global warming why is it cold outside today"
The rich prosper precisely because they are in the US.
Plus, if you do that you're a frigging communist. On the other hand, it's so much better to call neighbors, allies and everyone else people pillaging/raping the country. People like drama :)
Sure, they can leave, but if their companies want access to the US market they have to pay taxes. Capital flight is a red herring.
If the billionaires pack up and move to another country, then those who are willing to pay their due taxes and operate with a lesser profit margin would take the place they left in the market. There is no need to oblige sociopathic profiteers because they threaten to leave.
And, where will they go, really? There are considerable taxes in every country that billionaires would consider. And if they choose to cram into some small island tax haven in the Caribbean, the US can easily pressure that tax haven to do anything it wants.
> Rich people are mobile in a way that poor people are not.
Yet it's poor people that you see migrating most.
Poor people migrate. Rich people... just travel a lot.
> What are the flaws in this thinking?
That the national debt matters.
A) The Fed & Treasury have the ability to buy back the securities at any time if they wanted, since they can basically poof the currency into existence. And t-bonds are as good as cash anyways, so that money is basically already in the economy.
B) The country's national debt is also our citizens' savings accounts. Every major company in the country (and the gov't itself) holds an absurd amount of t-bonds because its the best place to store billions of dollars for safe keeping. Paying off the debt means this capital needs to go somewhere. Should it go to China? The EU? Canada? American real estate?
The national debt is probably the most misunderstood concept in the country. It's denominated in USD, unlike other countries, whose debt is borrowed in currencies they don't control. And "paying off" the national debt risks capital flight and/or asset bubbles - both of which are detrimental to the economy.
The system we have in place is a good one.
Thought experiment: consider what would happen if the US Treasury decided interest rates are negative. That is, you pay $10,000 for a bond and receive back $9,900 after 10 years. What do you think this would do to the economy?
Now ratchet up that negative rate to 100%, that is, you pay $10k for a t-bond and eventually it's worth $0 after 10 years. That's pretty much what paying off the national debt would do (in fact, that's probably how the national debt would be paid off, if ordered to do so, the fed would purchase these bonds and the treasury would use the proceeds to buy existing bonds off the open market). It's two sides to the same coin, but instead of prohibiting the purchase of t-bonds, you just disincentivize it.
All I know about this issue is what you wrote above, but it sounds to me like the US taxpayer is paying interest on bonds so that bond holders can earn interest.
I think its perfectly reasonable for the taxpayer to say they would rather not pay interest on those loans. The bond holder could lend the money somebody else instead.
In fact, I think its really unfair that one generation of people can leave debt behind for future generations to pay with higher taxes.
Many critical flaws. Your getting lost confusing the forest for the trees.
For starters you are focusing on the % on the interest payments which is a line item. However when all of your allies stop buying your goods and services you run into bigger problems.
Bonus problem: If one of your internal metrics is that you want to have a trade deficit but nobody to sell to because you have created a hostile environment for trade.
Not all of your allies, EVERYBODY.
An economic crisis will reduce tax income though, reducing the ability of government to pay even if the interest is lower
If the goal of Putin is to destroy the US through illogical fiscal policies by means of using his Puppet, it all makes sense.
In the long term, yes. In the medium term, companies and people liquidating their assets and paying capital gains tax actually gives the state a windfall.
The flaw is that the USD is massively dropping because of the tarifs. This will push up interest rates on US bonds, because bond holders want compensation for the value loss of their bond.
> The flaw is that the USD is massively dropping because of the tarifs.
That's all but certain. Currently it's dropping, but long-term it might as well rise, as the demand for foreign currencies from US importers (and by extension consumers) will go down.
> This will push up interest rates on US bonds, because bond holders want compensation for the value loss of their bond.
How do existing bondholders get to demand anything? They may want compensation for a reduced market value, but nobody owes them that. Fluctuating market values are part of the deal of buying bonds.
Existing bondholders can't demand anything of course. But the bond price is determined by buyers and sellers. With dropping USD, buyers will pay a lower price for the bonds, i.e. the yield will go up.
Your model is missing the Fed, which can buy an almost infinite number of bonds to bring the effective interest rate down to whatever it wants.
You mean, by printing money. Well, if they would do that, the USD would sink even more and thus also the US bonds.
>Treasuries are considered safe during such crisis.
This isn’t a law of nature. The behavior the admin is displaying is exactly the type of thing that leads to your statement not being true anymore.
>The country is at risk of a debt spiral.
The US owes US dollars and can also issue US dollars. There are complications but it's not like you run up a credit card and can't pay.
Well the good news is that there are multiple plausible paths forward.
The bad news is that they're all terrible.
The usual not terrible, not great solution is to keep the debt kind of constant and eventually it gets inflated away.
We mostly abandoned the long-term viability of that in the Bush years with the tax cuts plus expensive wars, and doubled down in Trump's first term (more tax cuts). That exhausted our margin for responsible emergency debt spending, and we had two crises on top of it (as always happens from time to time) so we were down to just playing for time and hoping for a way to spread out the pain rather than let it hit all at once.
We now do not appear to even be playing for time and are rushing toward the "all at once" thing.
Exactly. The Zimbabwe model
Can totally happen when the people in charge are economically illiterate and surrounded by sycophants or crooks (I'm not sure which Mugabe was), demanding a wealth transfer that can't be funded by the actual economy.
Inflation can also happen when production goes down, not just when money supply goes up.
Now I don't claim to be an expert at economics, I'm just a software nerd like most here and may be wrong so take with a pinch of salt, but the things I've heard that are associated with stagflation include de-globalisation and supply chain shocks (e.g. a trade war with major partners), tariffs, and shrinking labor force (aging population not helped by a combination of low immigration and aggressive deportation).
To even begin to understand Mugabe you have to understand his very long and strong relationship with the Chinese military and the reasons why they invested so heavily in his posse.
Yes, but if they let get into a debt spiral, the only solution becomes devaluation of the dollar to the point of hyperinflation. Only then debt is reduced, but it would be terrible for everybody except a few.
Devaluing the dollar would do wonders for post-tariff prices, and prop up exports.
I say it in jest, but I can't spot the problem with it because I'm not an economist.
Several issues:
- imports will become prohibitively expensive
- doing everything locally is less efficient
- the dollar will lose its world currency status
- then debt will become unsustainable
I don't see any way the actions we've already seen haven't moved up drastic action on the US debt by at least a decade. And it's only been a very-few months.
We were probably screwed when we cut taxes going into two crushingly-expensive wars, and certainly were when we cut taxes again, but now we're rushing toward crisis instead of trying to at least delay it.
A plan like that could backfire, as one of the primary things that the Fed looks at when setting interest rates is inflation. Increasing the costs of imports across the board will likely increase inflation, which would make a rate cut less likely.
But in general, I think this is too complicated. The simpler explanation for all this is the Executive branch is currently held by isolationist.
» The country is at risk of a debt spiral.
This is impossible by definition:
The U.S. dollar is the world's dominant reserve currency.
And as history shows, printing money is a super fantastic way to get out of debt spirals. [Narrator voice: No, it's not.]
Instead of throwing around historically illiterate analogies, let's talk about the real issues:
What are the actual inflationary risks right now given the state of the economy? What are the costs of not spending (i.e., austerity)?
Because history also shows – very clearly – that austerity imposed due to debt panic in countries that could have afforded to spend is often way more damaging than the debt itself.
The "printing money" quip misunderstands how modern monetary systems operate. The Fed doesn't just "print money" - it has only two real tools: buying and selling assets, and raising/lowering interest rates.
How about a higher income tax or 1% wealth tax?
Wealth tax is a nice idea but non-starter in implementation.
It works in real estate (property taxes are wealth taxes) because the land can’t move.
One way to tax the super rich is to tax loans against assets. They don’t sell assets to buy a yacht, but borrow against them to avoid paying taxes and keep future gains. Tax those loans as if they sold assets.
We're clearly throwing all pre-Trump orthodoxy out the window at this point, so maybe we'll see PRC-style capital controls, though with essentially no white collar crime being prosecuted for the foreseeable future, enforcement might be tough. OTOH the threat of being "deported" to El Salvador can be a powerful motivator to stay in line.
> the United States needs to manage its massive national debt,
> The present uncertainty around tariffs and a potential crisis could create conditions that pressure interest rates downward before those Treasury securities mature, by influencing Federal Reserve policy.
> What are the flaws in this thinking?
Flaw #1:
Massive treasury rollovers isn't new.
22% of all Treasuries have a duration of 1 year or less.
The only new thing is that rates have gone up.
Uncertainty is a short term solution to a long term problem.
Flaw #2:
Economic uncertainty and supply side shocks risks a recession.
Recessions usually increase national debt.
Flaw #3:
The right answer to reducing national debt is to ensure incomes exceed outgoings.
The current administration is so focused on extending trillion dollar tax cuts, no amount of tariffs or government efficiency is going to lower the national debt.
Flaw #4:
Treasuries only really go down during a recession.
Recessions are bad, not good.
If you think finding a tech job is hard now, or that your RSUs are hurting, wait until you see a serious recession.
it's true.. the S&P 500 declined ~57% from Oct 2007 to Mar 2009
The flaw is that it's like setting your house on fire because it's cold outside. It may well achieve your goal in the short term, but it won't last, and it's just going to make things much worse in the longer term.
I don't think it's helpful to reply to a specific, well-phrased question with a general analogy. Why is it like that?
It's like when the media would interview Robert de Niro on Trump, and all he would say is variants of "Well, he's an asshole!"
It is like that indeed. It should be apparent to anyone who has listened to Trump that he is indeed a conplete asshole. There shouldn’t be any need to go into details.
Likewise, it should be apparent to anyone with a cursory understanding of economics that tariffs are bad for the economy, and imposing mindless tariffs on the entire world is really bad for the economy. “Crash the economy to address the national debt” is a bad plan.
> Likewise, it should be apparent to anyone with a cursory understanding of economics
Can you explain why countries have tariffs if tariffs are bad for their economies as a general principle? I'm assuming you're not the standard sort who thinks Trump invented tariffs.
> Can you explain why countries have tariffs if tariffs are bad for their economies as a general principle?
Primarily special interest groups. e.g. You have a hundred people, everyone loses 1% of their salary due to tariffs, but one person retains 90% of the tariffs and the remaining 10% is lost. The net result is negative, most people don't care much about the 1%, but the one winner is vociferously against losing his entire income.
To protect local industries which create higher prices. Smaller countries do this to protect jobs from economies of scale but pay a price and have a lower standard of living.
Because people largely believe what they want to believe, and people are flawed, especially politicians. Is that sufficient or do I need to go into detail?
Trump didn’t invent tariffs nor did he invent being an idiotic leader enacting policies that hurt his country.
One thing I am not sure about is how much reluctance foreign holders of US treasuries will have to buy more treasuries. My guess is both foreign government and commercial holdings will edge down quite a bit, even without any reciprocal activity. Just because they will have reduced US reserves, and in effect need for treasuries.
God knows what happens if reciprocal activity starts towards using another currency also for global trade.
> Increased demand for Treasuries pushes their prices up and yields down, effectively lowering interest rates.
> What are the flaws in this thinking?
Not sure why international investors would want to buy more t-bonds when the country issuing them is starting a trade war and their money could effectively be locked abroad.
The key, IMHO, is to maintain the status quo of the USD as the safe haven which also has the ability to destroy other safe havens. As long as the USD is the primary safe have the amount of debt is irrelevant.
The trade deficit is balanced by USD flows, which are ultimately reinvested with leverage into American capital markets.
In many ways the US trade deficit combined with the USD reserve currency status is thus what enables the high budget deficit in the first place.
this SHOULD be really obvious to those in charge, but I think is too subtle for them, or they're willfully ignoring it for the "trade deficit" narrative. I don't see how the end result is not a decline in the global role of the US and a whole bunch of pain for everybody as this all unwinds. All for the hubris of an old man...
If the Trump admin's goal were to reduce the national debt it would make way more sense to use fiscal policy (increase taxes) rather than some roundabout way to force the Fed's hand on monetary policy. The tariffs do basically function as a massive regressive tax increase in the form of a sales tax, but that comes with truly immense risks on the demand side of the economy. Guess what happens to tax revenue during a recession.
There likely won't be any tax revenue. https://finance.yahoo.com/news/trump-wants-eliminate-income-...
I'll believe it when I see a bill pass the House. But this adminstration loves to make bold claims about what it's going to accomplish without gathering the necessary votes in the House, where it could most certainly push a bill through. News articles don't count.
Actually very unlikely unless Congress passes a bill.
Trump is already increasing taxes (tariff is a tax on consumption of imported goods). A recession is inevitable if you need interest rates to go down.
... while simultaneously adding trillions to the deficit to finance tax cuts for the rich.
> The cost of servicing this debt — paying interest rather than reducing principal — is already a major budget item, surpassing Medicare, approaching Defense and Social Security levels.
Military ("defense") expenditures are always understated. Over $180 billion in veteran's benefits were paid last year. This is not counted as military expenditures. Also the debt you talk about is to not only pay for the money sent to Israel and the Ukraine last year, but still for the adventures in Afghanistan, Iraq etc. That just becomes generic debt in the skewed analysis, alienated from its past military adventures. The military budget is higher than stated.
Trump is a wildcard, but I could see the US defaulting on its debt, probably in some way that focuses the default burden on foreign countries holding US debt with some relief for domestic holders. I would definitely not be holding it over the coming few years.
I agree with you. To just offer a counterpoint, I sometimes see quotes like this one:
or this one: The line of reasoning seems to be1) The government is special because it can go to extreme measures to repay loans if necessary (i.e., print more money or raise taxes)
2) The reliability of the government means that it can borrow at a low rate (say, 3%) and make investments that are worth far more than that (say, 10%).
Put those together, and the government's borrowing amounts to a net benefit to society.
This argument reminds me of the 'then a miracle occurs' comic [3]. It doesn't hold water because
1) The extreme measures are very harmful - they cause high inflation and hardship amongst taxpayers.
2) Even if we accept that government investment makes a good return (a highly questionable assertion), that return does not go to the government. If the government borrows money to build a new road, then there is no doubt some economic benefit, but the government does not receive that benefit, and they are on the hook for the repayment anyway. So government spending does represent a pure cost - not an "investment". And in any case, interest payments represent investment that can no longer happen.
I would also point out that back when we ran briefly ran a surplus in the late 1990s, economists were not exclaiming about how terrible this was, or how paying off the debt represented a missed opportunity or a catastophe in the making. Everyone agreed at that time that surpluses were good, and that paying down the debt was good. The current "this is fine" thinking smacks of economists who have a predisposition to accept and justify the status quo, whether it is objectively good or not.
So all of that is to say that I'm with you - government debt is bad. We are in danger of some combination of insolvency, default, or very high inflation. And once we enter that spiral it will be impossible to get out of it without permanent damage to the economy and the global standing of the US (such as it is).
[1] https://theweek.com/articles/618419/why-americas-gigantic-na...
[2] https://markets.businessinsider.com/news/bonds/us-debt-econo...
[3] https://duckduckgo.com/?q=Sidney+Harris+comic+miracle+occurs...
> I would also point out that back when we ran briefly ran a surplus in the late 1990s, economists were not exclaiming about how terrible this was, or how paying off the debt represented a missed opportunity or a catastophe in the making. Everyone agreed at that time that surpluses were good, and that paying down the debt was good. The current "this is fine" thinking smacks of economists who have a predisposition to accept and justify the status quo, whether it is objectively good or not.
Oh? I remember all the teeth mashing about all those funds who have to buy treasuries and now what are they gonna doooo! And how this is unprecedented and how are the markets going to reacccct! Numerous articles about that sort of thing in The Economist and various other outlets.
> but the government does not receive that benefit
Yes it does, through increased tax revenues due to the increased economic activity brought about by the road existing earlier than it would have if the government had to wait several years to save up the money to build that road.
Also, at least in the US, the government is nominally "We the People," so if the general population experiences increased economic activity, then the government is benefiting, as it exists (nominally) for the benefit of the people.
> What are the flaws in this thinking?
-> Treasuries are considered safe during such crisis.
Is that truly still the case? Does the world consider the US stable right now?
I am astonished at how effectively the administration has blown up every pillar upholding the US economy, short, medium, and long term. The damage done here is incalculable. In all of human history never has so much wealth been destroyed so quickly.
Doesn't anybody remember Liz Truss? She took only 45 days to almost sink the UK.
> I am astonished at how effectively the administration has blown up every pillar upholding the US economy, short, medium, and long term.
They are only 73 days In....
"France’s Macron Urges EU Companies to Pause US Investments" - https://www.bloomberg.com/news/articles/2025-04-03/france-s-...
This is just delusional. Everybody is looking for some reason that makes this less stupid than it looks, but there is none.
Intentionally causing a recession to lower the debt burden makes no sense, neither politically nor economically. Besides that the US is not some third world country that issues debt in a currency they have no sovereignty over.
I think what’s happening backstage in this magic show are desperate moves to recapitalize the country. Foreign and domestic investors are pledging to spend trillions, probably under duress. Stocks are being crashed to create a flight to treasuries. Dollars are partially anchored to crypto by so-called stable coins. Federal assets are getting dumped and operating costs cut.
Maybe we will get out of this without having to survive on cat food, but I’m not holding my breath.
Fed rate influences treasury rates, but it's not a direct impact. If creditors lose faith in our fiscal situation, rates will rise no matter what the Fed does.
Tax receipts drop during recessions, generally governments have to issue even -more- debt during them.
> Treasuries are considered safe during such crisis.
No. Not during such crisis. It's already visible in prices of traditional safe havens (those based on US credibility) that this crisis isn't like the others. They are dropping like flies. Only gold remains.
"If the fed won't lower the interest rate I'll tank the economy until they do!"
The F-35 jet will cost over $1.5 Trillion, doesn't work and won't be used
Cancel it and stop making everyone's daily life absolute hell by doubling the prices of groceries, car payments, etc. every month
National Debt is not a problem for a country that will be around for 1000+ years unless you know of something that is going to greatly shorten that.
There are nearly 1,000 BILLIONAIRES in the US, the debt is their problem, they can pay more taxes until it's down to a number you like.
> The F-35 jet will cost over $1.5 Trillion, doesn't work and won't be used
Over 1,100 of them have been built so far and they seem to be working quite well.
The F-35 does work, and is deployed around the world right now including the middle east for the recent houthi operations.
National debt is absolutely a problem when interest payments crowd out the rest of your budget. Interest payments currently comprise about 17% of the budget, and this is set to grow. Those can only be paid with taxes or inflation, both of which hit joe taxpayer.
A progressive wealth tax starting at 2% on net worth from $50 million to $250 million and increasing to 8% for wealth over $10 billion is projected to raise $4.35 trillion over 10 years.
Seems like a great start to me.
Alas, I'll never understand people who make average wages defending billionaire wealth hoarding.
> doesn't work
I don't understand, they're being flown all over
>The F-35 jet will cost over $1.5 Trillion, doesn't work and won't be used
You've bought literal Russian propaganda hook, line, and sinker.
The F35 is an incredible piece of technology.
Do you remember infamous articles saying it couldn't dogfight? Not only were those stupid propaganda (you can't dogfight at 100km engagement ranges), all the people repeating them seemed to miss the comment by the older aircraft pilot that the radar assisted gunsight on their gen 4 fighter could not track the F35!, not even at knife fighting range. Go lookup how good gunnery was in WW2 if you want to understand how hilariously bad that is for gen 4 fighters.
The F35 is pricey to run, $40k an hour, but so was the F14, which is correctly understood to be a high tech masterpiece, a tech platform, and one of the best aircraft ever made.
We've already built 1000s of them, and they are already being used today. Israel's attack on Iran that showed just how impotent soviet era air defenses are was conducted with f35s.
"Israel used more than 100 aircraft, carrying fewer than 100 munitions, and with no aircraft getting within 100 miles of the target in the first wave, and that took down nearly the entirety of Iran's air-defense system,"
It's a very impressive machine, that everyone wants, and China is really rushing to build something competitive.
>There are nearly 1,000 BILLIONAIRES in the US, the debt is their problem, they can pay more taxes until it's down to a number you like.
150% correct. The USA is stupidly wealthy on the world stage. We don't have to play pretend poverty, if we would tax the people who have hoarded all that wealth.
Also, the now $2 trillion is the total program cost. It is development, cost to buy 2500 aircraft at $80-120 million each. Mostly, it is the maintenance cost for aircraft for decades of future service. The program cost is spread out over decades.
The important thing is that if the US wants to have air forces, it needs fighters and needs to replace the current ones. The F-35 is better and similar price to older fighters so it is the best option to replace them.
Everyone is quick to deride this move as stupid. I don’t disagree that there are downsides to the approach, but there is a set of very real national problems that this might address.
For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well? Increased foreign competition pulls down domestic wages; telling people that they should shut up and be okay with that because they can get cheaper goods isn’t palatable to a lot of people facing the negatives of globalization. Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
There really are structural challenges to onshoring production due to strength of the dollar due to its reserve currency status; our society as such is biased heavily toward importing goods rather than exporting goods. This is a real challenge that needs to be addressed as well.
Our national debt is not sustainable either. Either we pay it down some, or we inflate it away; these are the two ways it goes away, ignoring the option of a world-shattering default on the debt. Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
> Globalization has played a big role in creating the massive income inequality in our country; it seems like we should fix that.
Wouldn't restoring the prior taxes to those with highest incomes, and adding a proper capital gains tax, address this directly? As I've started to accumulate small amounts of wealth I've realized, my capital gains are taxed lower than my income; when I sell my house, I get up to 500k of gains tax free. If I backdoor a Roth IRA, I get tax free gains there too. etc. Add additional taxes to investment properties, in the form of property taxes could be one approach as well - I personally know of one investor that owns at least 20 (SFH) properties for example. So I'd propose starting there, as it targets both the wealth gap as well as hits those who can most afford it directly.
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
If tariffs significantly reduce demand, or worse cause a recession, they will have the opposite effect. It would take time to sort out the full impact. But AFAIK, the tax cuts are proposed to be pushed through immediately, without firm corresponding spending reductions nor time to sort out the impact of the tariffs; similarly the tariffs are being implemented in what seems like a haphazard way, with everyone unsure of what they would / will be, how much, etc.
In general, I think if the plan were modest tax increases, esp. around capital gains policy and targeting SFH as investments, (very) modest tariffs, and well executed spending cuts, nobody would be in uproar. I will be pleasantly surprised if the current plan ends well, but it certainly feels as though only those steeped deeply in ideology are supportive of them at the present moment, and I think that is probably telling.
You can tax whoever you want as much as you want but the problem is the industries from the past are no longer in this country.
This was actually the real cause of the collapse of Zimbabwe. The tax base disappeared. People think it's just because they printed into oblivion but that's not the full picture.
Sure, but the industries of the future arguably are. At least for now.
It's not like money isn't being made in the US today.
Regulations kill any and all profit on physical goods made in the US. It was more important to lift China out of poverty (Communism), kill a whole class worth of jobs and enact regulations to stifle any innovation because it’s okay if China pollutes, just not the US. It’s okay to buy goods from mega polluter China shipped on boats running on crude oil, instead of supporting Americans and American companies.
As you are about to find out with a president who is busy removing as many regulations as possible, consumer/worker/health/environment-protecting regulations are not the reason why physical goods are not made in the US anymore.
Manufacturing in the US had been shooting up
>Manufacturing output in the United States is at an all-time high as of 2023 https://en.wikipedia.org/wiki/Manufacturing_in_the_United_St...
No, but we have new ones.
in 1800, 95% of American were farmers in 1900, some 65% of Americans were farmers in 2020, it's down to like 5%.
My point is some industries just die. And its okay. The solution is not to go backwards, but tax the winners of the change to subsidize and retrain the people who lost.
But in America, the extreme winners have convinced the rest of us that we shouldn't tax them, and Trump is now asking us to instead tax everyone more
> in 1800, 95% of American were farmers in 1900, some 65% of Americans were farmers in 2020, it's down to like 5%.
> My point is some industries just die. And its okay.
You've got your example dead wrong. American farming didn't "just die," it got insanely more productive.
And a lot of the industries people want back didn't "just die," they just got moved so the "extreme winners" could profit off them even more. And then those same winners and their defenders always go "herp derp, industries gone, nothing we can do! Don't fight it, just repeat: gone foreverrrr."
Caveat
> and Trump is now asking us to instead tax everyone more
Trump is now demanding to instead tax US residents more indirectly
The vast majority of industries from the past are now highly automated and would be made even more so if the alternative were paying US-scale living wages to the employees.
So you bring the factories back to the US, but 95% of the created jobs are for robots.
Problem solved...?
100% this, in 2010 I briefly worked for a company that built assembly lines in the US and number one requirement for every client was reducing the number of workers needed. Almost every project going at the time reduced the number of workers by 80%+ and I imagine it's only become more automated since then.
It is absolutely wild to me that money gained from letting it sit is taxed less than money gained from working your ass off. A crime against the working class.
The system wasn't named “capitalism” because it systematically favors the working class, I mean, what do you expect?
Where in the US constitution is capitalism mentioned?
What's your point? The tax code isn't in the constitution either.
The point is that this isn't some fundamental property of our society that we all agreed to. It's de facto capitalist, not de jure. Just because a bunch of people pushed it one way doesn't mean we have to throw up our arms and just go with it.
The working class have property and stocks too and don't want them taxed stupidly.
That's the entire reason why income tax is progressive, and there's no reason that couldn't be applied to any other implemented tax including capital gains.
Yes, but far less. We can have tax free thresholds, you know. Like the capital gains exemption for sale if a house.
Any working class person against higher and broader capital gains taxes is not thinking very deeply, in my opinion.
Hard disagree. Compared to the OECD average, we collect almost double in personal tax revenue as a proportion of total tax revenue. What's more, historically personal tax revenue as a % of GDP stays roughly the same - regardless of active tax rates.
Where we fall dreadfully short compared to other countries is corporate tax revenue. In 2021, corporate income tax revenue in the U.S. was 1.6% of GDP, compared to the OECD average of 3.2%
It's messed up from first principles - hard work should be valued as a society over investment gains, and reflected at the individual level in take home income. Obtuse measures and comparative aggregates are irrelevant.
“Should be” is doing a lot of heavy lifting there - I have heard reasonable arguments either way - but it misses the point: whether the personal tax rate was all-time high or an all-time low, personal tax revenue stays roughly the same historically. In other words it’s a trap - raising the rate might make you feel better, but if history is any indicator it won’t change anything for everyday citizens.
Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer.
Also when talking about tariffs reducing demand and inflating prices, I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
He's one economist from a very conservative line of thinking.
As a counter example, Thomas Piketty argues at length that taxation and wealth redistribution remain an effective way to bolster a societies resilience and lessen wealth inequality - which is still a very real issue in the world, and arguably one that the US shows can have very real negative consequences for letting it go unaddressed.
As for demand and inflating prices, yeah, domestic products may be more attractive, but the economy is huge, and much of it does not have a domestic allegory. The other issue here is the tax is on all imports, not only manufactured goods, which means raw materials - which often have to be sourced elsewhere - make manufacturing more expensive even domestically
I asked ChatGPT to explain the arguments of Sowell and Piketty.
https://chatgpt.com/share/67eebae2-df3c-800b-aba9-6e36c04810...
I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books?
> raw materials - which often have to be sourced elsewhere
Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it...
>I liked Sowell's book, "Wealth, Poverty and Politics". Can you recommend one of Piketty's books?
I'd say start with Capital in the Twenty-First Century by Thomas Piketty. Its a great read, if a bit thick (its a very large tome indeed and very information dense)
>Is that necessarily true? The US has abundant natural resources. Tesla could be mining lithium a few hundred miles away from their factory instead of importing it...
Its about access, cost, amount, etc. One company getting lithium is a rounding error. The entire market for lithium is bigger than Tesla and even electric cars. Then there is the entire question of how fast you can get the lithium online. Its not like most (if any) of the businesses reliant on lithium - which again, more than just auto makers certainly - take in raw lithium and produce something with it. It is typically pre-processed depending on its use. So that needs to come online too. Also, is there enough of the US workforce that can get this material online quickly? We're talking years before something comes online in sufficient quantity to be meaningful, let alone replace other sources.
Then you have to ask how much of the given resource do we even have? Whats the quality? Not all lithium deposits are the same, after all.
And many more questions I am not likely thinking about, and this is only in regard to lithium. Think about the raw materials for everything in our lives - gold, silver, uranium, iron etc. and you'll find in more cases than not its simply unfeasible to start mining & processing it in the US, you will have to import it.
Your idea of what this takes is, frankly, a bit too simplistic to be realistic or useful until it answers all of these kinds of questions.
Maybe we should raise tariffs and raise taxes on the wealthy? Does it have to be framed as an either-or?
> and much of it does not have a domestic allegory
Well some would argue that's the problem. Maybe now we will? Idk.
The way its being framed in the public - and often in discussions even in this Hacker News comments section - is its an alternative to raising other taxes. Trump is selling it that way, along with simultaneous tax cuts he wants to either extend or implement, which goes to show the tariffs are not some way of addressing the national debt concerns either.
While nothing does, the actual discussion around it isn't allowing any room for non-tariff tax increases regardless.
I agree with your point about how the discussion is framed. To add to where it should be framed, in my mind, you can toss in cost cutting at the federal government in there as well.
Neither tariffs nor cost cutting, unless it targets major programs such as Social Security or Medicaid, will have an effect on the national debt or the deficit.
It’s all marketing.
Cost cutting always enters the equation, because somehow its better to eliminate benefits. Why not reform the programs? There is actually ample room for this, particularly with Social Security. Why not raise revenue via land value taxes, closing tax loopholes and other less and/or non regressive means?
The social safety net in this country is already terrible, making it more terrible by cutting the programs won't be better for anyone except a slice of the wealthy
Remember when Piketty advised the government of François Hollande? They enacted the wealth tax and there was simply a ton of capital flight and nothing was fixed? Leading to Macron winning the elections and enacting a ton of conservative policies and leading to pretty decent economic growth...
As I recall, Hollande decided to ignore all the advice around him[0]
>Mr Piketty’s second criticism touches on Mr Hollande’s tax policy. For years the French economist has argued for a more progressive tax system, which would merge both income tax, currently paid by only half of French households, and the “contribution sociale généralisée”, a non-progressive social charge paid by all. This too was one of Mr Hollande’s campaign promises. Yet the president has shelved any plans to overhaul the tax structure, preferring instead simply to increase taxes on the middle-classes and the rich.
[0]: https://www.economist.com/europe/2015/01/02/pikettys-snub
That's not quite what happened, was it?
First off, capital flight is not a good argument against high wealth taxes, it's an argument for more controls to prevent people from doing this, so they are forced to reinvest in business.
The wealth tax was in for a meager 2 years, and the richest in the country started calling it "anti-business" even though they were transparently refusing to reinvest that money in their company. Anti-business is shorthand for "We can't hire the 1 high-earner executive we want to play golf with instead of the 100 lower level employees that would actually help the economy."
Instead, they kept THEIR salaries and ate that tax cost, and told their employees they would suffer during these times. It was a coordinated effort to discredit something that was meant to create more jobs. Much like when Saudi Arabia artificially restricted oil until after the 2020 election. And the administration had no controls on this.
So yes, high taxes on the rich by themselves are worthless, but that doesn't mean those policies coupled with tighter controls aren't essential for wealth inequality.
Of course, conservative news is going to talk about this in the context of debt, and claim because the amount raised did not match the debt (moronic) that it was clearly a bad idea to tax the rich, when the real takeaway is there needs to be more controls and a bigger spotlight on how these scumbags jerk the system around. At the end of the day, they are trying to keep their yachts and their massive, unnecessary mortgages, and will fight tooth and nail to do so, and anyone falling for news stories about "oh it didn't work in 2 years, my boss said I was going to take a salary cut" is helping that agenda and nothing else.
> taxation and wealth redistribution remain an effective way to bolster a societies resilience
Tangentially:
It’s wild how inconsistent the public and political reactions are to different ways of getting revenue. Take this common pattern:
When DOGE identifies billions of dollars in waste, fraud, or unnecessary spending, the reaction is often: "That’s only 0.01% of the federal budget. It’s nothing!"
But when someone proposes a tax on billionaires that would over time raise a similar amount suddenly the reaction flips: "We’ll solve inequality! Fund healthcare!"
This contradiction is everywhere. How can $20 billion in government savings be "nothing," while $20 billion in new tax revenue is "transformational"? It's the same money.
>When DOGE identifies billions of dollars in waste, fraud, or unnecessary spending, the reaction is often
Did DOGE actually identify significant levels of any of this or is it simply labeled that for the expedited purpose of shrinking the federal government's effectiveness by any means possible?
They've been far less than transparent with the data that supports their findings and have been called out numerous times for misrepresentation[0][1][2][3] and lack of transparency which took a lawsuit to at least partially recitify[4]
[0]: https://www.npr.org/2025/02/19/nx-s1-5302705/doge-overstates...
[1]: https://www.npr.org/2025/03/01/nx-s1-5313853/doge-savings-re...
[2]: https://www.forbes.com/sites/conormurray/2025/02/19/here-are...
[3]: https://www.nbcnews.com/politics/doge/doge-days-musk-trump-t...
[4]: https://www.theguardian.com/us-news/2025/mar/11/judge-orders...
I don't think anyone would scoff and the discovery and elimination of waste or fraud. I think the vibe you're describing is doubt that these supposed billions in waste/fraud/abuse live up to the hype.
Surely there's plenty of waste in federal spending but I suspect the vast majority is not going to be blatant and easy to identify
NPR did in their February article about DOGE; their story is ostensibly that out of everything claimed, NPR could verify “only” $2B in cuts which they present as meaningless:
> NPR's analysis found that, of its verifiable work completed so far, DOGE has cut just $2 billion in spending — less than three hundredths of a percent of last fiscal year's federal spending.
> "Think of Congress and its budget as the debt-ridden dad on the way to buy a $250,000 Ferrari on the credit card, and DOGE is the $2 off gas card he used along the way," Riedl said. "It's great that he saved $2 on gas, but I think his wife may be more concerned about the $250,000 car."
https://www.npr.org/2025/02/19/nx-s1-5302705/doge-overstates...
Given that Trump wants to enact insane ass tax cuts for the ultra rich, their framing sounds pretty reasonable!
I don't know who these people are that you're talking about, who only propose taxes on billionaires and not the rest of the upper class, or who have compared those two numbers and seen they are different. I would imagine you're talking about two different groups with different figures.
Regardless, "taxing the rich" is not one mediocre policy, but several interdependent policies. It's not just picking the 5 richest people in the world and taking their money. The transformation doesn't come from redistributing $20 billion (wherever that figure is from) but encouraging executives to reinvest into their company instead of trying to suck as much cash out as possible.
Bobby Kotick making $155 million a year while Activison lays off hundreds of employees is insane. What on God's earth could you possibly need more than $20 million a year for? That is not right no matter you slice it. That money needs to be aggressively taxed so it is instead used to keep people employed at a much lower tax rate, not in the hopes that the government can use it for spending.
No one is suggesting only taxing billionaires to the tune of netting solely an additional $1B, that seems farcical.
>It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
Have you ever tried to purchase electronics in Brazil? I don't know if that increased demand for domestic goods is necessarily a good thing...
Yeah, I think all of the arguments made for and against tariffs are only partly true depending on the context.
Interestingly, Lua came out of Brazil for these reasons...
> And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer
How are those things related? Are poor people bribing politicians to increase taxes?
The argument is that increasing government revenue doesn't automatically mean We the People benefit; it usually means more pork and other ways of funneling money to benefit the people with the power to funnel it.
Exactly. Sowell lists many examples too in his book "Visions of the Annointed".
> It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
But domestic producers will surely increase their prices to match their foreign competitors’ tariffed prices.
Not necessarily, if there's adequate competition and no collusion. I think of Costco's Kirkland products which have a capped profit margin, for example.
Protectionism stifles competition.
It’s hard to see tariffs on steel (say) not raising wider domestic prices. Any domestic industry using steel (car making, house building etc) presumably now has to pay more for its steel which feeds through to consumer prices. You might increase the number of steel worker jobs but at a hidden wider cost to the wider US economy.
US homes tend to be built with lumber, not steel.
What do you think holds the lumber together?
US homes tend not to be built with Japanese techniques.
We already have Section 232 tariffs on steel and aluminum imports, and have since March 2018. These new tariffs exclude steel (since we tariff it already).
However, the widely used tariff exemptions available to US steel consumers who could claim difficulties sourcing cheap steel are now being closed.
> Thomas Sowell makes a good argument that the government does a terrible job at redistributing wealth to lift the poor, based on their track record. And so taxing the rich more doesnt actually solve that problem — it just makes politicians and their friends richer.
That is the most harebrained argument I've ever heard. If politicians are "bad at taxing rich people", maybe the solution could be electing people that actually share the average citizens perspective and attempt to do this more effectively (like Sanders or Tim Walz), instead of billionaire nepo babies that spend half their career on a golf course?
I mean if I was a billionaire, making policy for billionairs, got paid by other billionairs and had working class people still elect me, I most certainly would not try to tax rich people harder, either...
> I think it’s important to note that’s partly true. It doesn’t raise prices of domestic goods and actually increases demand for domestic goods.
Increased demand for domestic goods means increased price for those. And actually increasing domestic supply affects other sectors, too, driving up costs all over the board (=> see baumol effect)-- there is no large unemployed workforce to throw at manufacturing without driving up costs in the places that worked in, before.
And? Ask Sowell if he prefers progressive taxation and welfare or rapid spikes in tariffs sparking a global trade war.
(He actually was interviewed yesterday and he was very much not a fan of the tariffs.)
Sowell would be against tariffs, he’s a free market fundamentalist.
As usual, libertarianism is used as a justification for corporate fascism, mercantilism, taxes on the poor… basically the Republican agenda. Funny how that works.
You need to enforce monopoly laws, and more important than individual tax rates, you need to get the tax base spread out correctly again.
1950: 25% tax revenue came from personal income. 25% from social security. 25% from businesses. 25% from excise taxes.
Today: 50% tax revenue from personal income. 35% from social security. 7% from business. 7% from excise taxes.
This problem is never understood.
No, tax increases will not create better jobs to backfill the ones moved overseas by globalization.
The tax increase wouldnt be used to create better jobs, they would be used bolster social welfare and reduce the national debt, at the expense of wealth generation in the upper class.
The primary benefit of the approach is that the pre-tarrif economy is strong, health care, high prices, and very high SFH prices are the primary ways people are hurting. Modest taxes as noted above address 2/3 without upending the economy in the process.
Prices wont come down, but unlike the tarrif plan they also wont go up so... seems like a better option at least to my relatively uninformed brain.
Increased taxes (on the wealthy) could also be used, not just to pay down debts, but to start new programs like expanding domestic production, back loans for small businesses and house construction. Heck even just 'new new deal' style jobs that build infrastructure.
Though I am partial to using new revenue to increase competition (new startups) in weakly competitive markets. That's the most effective way of increasing supply, and choice, and letting a market function.
What better jobs do you anticipate will be created?
None, as they said.
If you believe in these tariffs then the major problem is how he enacted them. Businesses want certainty. It takes years to build factories. The next president could just wipe away these tariffs instantly. Hell, even the current one could. That does not give these companies the certainty they need to commit years of effort to building factories. If the goal is to spur domestic manufacturing then, at a minimum, he would get the tariffs enacted via a new law so they're more likely to stick for the long term.
This is the key point. Even if tariffs did everything Trump claims they will (they will not) no one is investing billions to build factories in America for tariffs that will not be there in a few years.
Turns out that governing based on the whims of the executive has downsides.
> not be there in a few years
Years? Lol, how much would you bet they are all exactly the same in a month? A week?
Which is why they want to abolish term limits.
There is still a functioning system of laws in this county. Devolving into a monarchy is not a necessary condition for stable trade policy (and the particular guy trying to install himself has not proven a force for stability in trade policies, even his own viz. USMCA).
> Which is why they want to abolish term limits.
I wondering who "they" is. It can't be the WH. Yes they said they want to work around term limits, but if the reason they are offering is the stability they've shown us so far ...
Their point has nothing to do with term limits.
> Hell, even the current [president] could [eliminate these tariffs].
The point is that the goal of building onshore production isn't as likely to be reached with these tariffs due in part to the uncertainty surrounding the method of enacting the tariffs.
Tarrifs are a tool that must be applied strategically. You typically announce tarrifs years in advance so business can shift their logistics and build out manufacturing where you want it. However a daily change in tariffs only creates a chaos that the economy cannot simply respond to fast enough.
A new steel mill won't magically appear in the middle of the US within a month.
> A new steel mill won't magically appear in the middle of the US within a month.
And yet, I'm sure Trump will show up at one to take credit for its existence within the next month or so.
> What about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
What about all of the domestic producers of finished goods who can now can not afford their materials and supplies? What about the domestic supplier of that finished goods producer who has their orders cut because the finished goods producer needs to cut production? What about the domestic consumer who'd like to buy those finished goods, but they can't afford it because prices over all have increased? What about the barber shop by the finished goods plant that has to shut down because the finished goods plant cut their workforce by 50%?
100+ years of studying tariffs have shown that they are effective when very narrowly targeted. Otherwise they almost never achieve their stated goal of actually increasing domestic production.
Should we tax goods from Mississippi to NY to save jobs in NYC? After all, wages in NYC are way higher than in MS. Trade with MS pulls down wages with NYC.
JD Vance had a nice speech about globalisation lately, he describes how globalisation made the rest of the world advanced and rich: https://x.com/OopsGuess/status/1902396228404674853
So if people were trying to make the world a better place congratulations they succeeded. JD Vance uses a bit different framing(!).
Anyway, back to your question, IMHO the problem in thinking here is that it implies that there must be "They" and "Us". You can't just get prosperous as a humanity, it needs to be a subgroup like "Americans" or "Germans" that do amazing things and they are very unsatisfied that Chinese and Indians got advanced and no longer do the shitty jobs. When they say globalism has failed us, they mean we thought that Vietnamese will keep making our shoes but now they are making cars too.
Essentially the core of the problem(or ideal) is nationalism and borders associated with it, preventing of people move around and pursue happiness.
A group of people like the generations of Americans who pioneered many technologies and sciences built a world, then other group of people(mostly their offsprings or people who caught up thanks to proximity to the ground zero) operated within that world and made some choices and transformed the world into something else. Now, they are unhappy with the current state and propose teaming up around something like religion/attitudes around genders etc. If you subscribe to the idea that people should team around these things and if you think that you won't be suffering that much and you don't care that some people might suffer a lot, then yes the current actions actually makes sense.
> is that it implies that there must be "They" and "Us". You can't just get prosperous as a humanity
This idea of humanity transcending our genetic (due to geographic proximity) tribal groups is a uniquely European one. Pretending we can abandon all tribalism and integrate the entire world into a European model is either immensely incompetent or intentionally malicious (I tend to think the latter). The current billionaire class profits immensely from all the diversity (both generic and ideological) in the west. It’s much easier to parasitically rule a divided people than a unified one. Nationalism is a defense against these parasites.
> needs to be a subgroup like "Americans" or "Germans" that do amazing things and they are very unsatisfied that Chinese and Indians got advanced
The issue isn’t other countries improving. The issue is the average America should not have a degraded quality of life (barring major natural disasters etc) so that our billionaires can be richer. A nationalist elite class would correctly say “no, we keep those jobs here because it benefits my countryman even if I’m going to make less money”. We do not have this and the wealth gap continues to increase.
> If you're subscribe the idea that people should team around these things and if you think that you won't be suffering that much and you don't care that some people might suffer a lot
Do you think parents should prioritize their children? Not saying this snidely - there’s no black and white lines here, but I think universalism can only be accomplished by taking care of our own and growing our tent, as opposed to diminishing our own to lift up others (who in many cases do not share our universalist sentiments).
I fail to understand what is "malicious" about the idea that we, as a single species, can someday achieve an equitable and global state of cooperation despite historical tribal / racial / religious differences.
Just because an idea originated in Europe doesn't make it a bad one out of hand.
> This idea of humanity transcending our genetic (due to geographic proximity) tribal groups is a uniquely European one.
Pan-Arabism, Pan-Africanism, and Simón Bolivar would like a word.
lots of opinions presented as facts.
Says the person who posted a tweet from JD Vance?
> This idea of humanity transcending our genetic (due to geographic proximity) tribal groups is a uniquely European one. Pretending we can abandon all tribalism and integrate the entire world into a European model is either immensely incompetent or intentionally malicious (I tend to think the latter).
I did not realize Star Trek is uniquely European, that explains all the accents they have. It's a good thing Gene Roddenberry was European otherwise all this nonsense would make us Americans less isolationist.
> The current billionaire class profits immensely from all the diversity (both generic and ideological) in the west. It's much easier to parasitically rule a divided people than a unified one. Nationalism is a defense against these parasites.
For as much evidence as you present I'll assert that nationalism in fact profits the billionaire class much more than anyone else, thinking of most marketing campaigns, most nationalist leaders are all backed by the billionaires to win over the hearts of the working class. It's almost like you say yourself, "It’s much easier to parasitically rule a divided people than a unified one" and nationalism is just as much about dividing a nation's people from others than about real unity.
I agree with the goal. I disagree with the execution.
First, from the outside looking in, it appears these tariffs were implemented in an adhoc basis which disrupt supply chains potentially bankrupting companies and result in more layoffs in the short term.
Second, there should be a carve-out on tariff policy to respond to national security interests. e.g., if and when the US wants Ukraine to rebuild its fledgling export economy, the US should set the tariff on Ukraine's products to zero as it is in the US' interests that Ukraine is financially strong. Similarly, the US should use tariffs to protect industries it deems strategic such as manufacturing advanced computer chips.
In other words, instead of using a purely political process to set tariff policy, I would argue tariffs should be managed by an impartial semi-independent agency such as the Federal Reserve. The governors of such a tariff agency should be tasked with the goals of advancing long term US interests, economically, employment-wise, and national security interests.
The Trump administration set the Russia tariff to zero, and we do still import stuff from Russia in spite of all the sanctions and set the blanket ten percent rate on Ukraine as you write. Maybe this is simply the current administration's national security interest.
There's only one nation's security interest that are advanced by an emboldened Russia.
Most of Tulsi Gabbard's professed foreign policy beliefs prior to being added to this administration echoed Russian state policy, she called it being independent. Tim Pool was just added to White House press pool, he claims he was fooled into repeating information provided by Russia state media, after it was revealed they paid millions to him to do so. There is an awful lot of smoke here.
> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
Good faith negotiations with our allies and trading partners that creates a balance of trade and reduces wealth inequality in the west. I'm not opposed to the actual ideas being floated, but the people doing are are completely unserious and it's being implemented in a stupid nonsense way.
> Good faith negotiations with our allies and trading partners that creates a balance of trade and reduces wealth inequality in the west.
We can look at a 50+ year history of every major U.S. trade partner increasing their protectionist policies, largely targeting the U.S., while the U.S. allowed trade deficits to balloon out of control. I don't see evidence that this "good faith" approach you speak of has any viability at all. The global economy can't say with a straight face that it has been a fair trade partner with the United States. For the past 50+ years the U.S. market has been open for business for all global producers, but the same has been far from true for pretty much every major U.S. trade partner. You can't even operate a company in China without 50% Chinese ownership, for example. The global stance on trade has all but made this an inevitable outcome.
How do you feel about the trade deficit, in the other direction, in digital goods (Meta platforms, Amazon/AWS, Google, Apple, ...)?
We negotiated those deals, we aren’t the victims. Now we don’t like how a deal turned out so instead of renegotiating we are throwing a temper tantrum like we weren’t the ones who suggested it in the first place. It’s embarrassing to be represented like that, and it won’t work! We will wind up weaker than we started, I hope they prove me wrong.
The u.S. didn't negotiate protectionist policies against their own exports. Can you cite a single example of this?
A more charitable explanation is that the U.S. has been all in on globalization and free trade since the 1970s and the rest of the world took a protectionist stance in response. I'm sure the rest of the world had their reasons. But the U.S. does now, too. Globalization and free trade that only substantially flows in one direction simply is not sustainable.
> The u.S. didn't negotiate protectionist policies against their own exports. Can you cite a single example of this?
Oh yes the hell we did. I was running an ecommerce store when this happened, it's been a disaster for US entrepreneurs who have any model other than dropship from China - https://about.usps.com/news/national-releases/2011/pr11_037....
> A more charitable explanation is that the U.S. has been all in on globalization and free trade since the 1970s and the rest of the world took a protectionist stance in response. I'm sure the rest of the world had their reasons. But the U.S. does now, too. Globalization and free trade that only substantially flows in one direction simply is not sustainable.
We negotiated those free trade agreements. Stop acting like we were being taken advantage of. Now, if you want to argue that American labor has been hosed, then I agree with that too, but China didn't do that - Nike did. None of these idiotic tariffs are going to help the American worker either - what remains of accessible opportunity for the masses has already become more like sharecropping with huge corporations owning the plantation, and it's only going to get worse under these policies.
If it's fundamentally a jobs program, you can be a lot smarter about it than tariffs.
If companies couldn't compete before, they're now further disincentivized to compete, leaving the rest of us worse off and uncompetitive with the rest of the world.
Tariffs are just bad policy.
That's the part I just don't get about the pro tariff as reshoring manufacturing argument. That industry only makes sense and will only be profitable in a world where the tariffs are permanent. The Vietnamese textile factories aren't going to just disappear their exports will shift to other parts of the world and if the tariffs ever disappear they'll shift right back to the US. So you'll have a tiny fragile industry beholden to the government for its continued existence that makes an expensive product only for domestic consumption... Maybe that's the actual goal create a new raft of client industries and workers in that industry who'll support the administration because to not do it will destroy them simply by lifting or easing the tariffs.
As a software engineer dealing with bits and bytes all day, it's easy to lose sight of the hard and sharp parts of reality. My wife is a chemical engineer who actually goes into a factory and is constantly dealing with production issues in actually making soap, ice cream, chemicals flow (different factories over her career).
JD Vance had an interview somewhere (I think in the NYTimes?) where he claimed that national prosperity is downstream of military might which is downstream of industrial base. It made me stop and think, because that does line up with what I was taught about how the Allies won WW2, and the US beat the Soviets in the Cold War: we outproduced them. I'm not sure if this is "fighting the last war", though, since I imagine a lot of warfare going forward is going to be technological and with things like drones, etc.
It's just so easy to deal with our economic abstraction, of dollars flying around, and computer work, and services and so on, that I sometimes do wonder about your point here about the actual physical, production of goods, and how important that is. Can you have a long term, stable, healthy, successful country that doesn't (and can't) produce anything physical?
We clearly can still make some stuff. I have a great squat rack and barbell set from Rogue Fitness, which makes stuff here in the USA (captured in this beautiful advertisement video[0]), and it's awesome. But I also have a made-in-the-USA wood pellet smoker which is garbage, and which I kind of wish I had just bought from China.
All to say, yeah, I think there's the potential for there to be something along the lines of what you're saying. That said, the implementation is maybe not great. Even taking the Tesla Texas Gigafactory, which was built in warp speed (construction to first cars in about 1.5 years), that's only leaving 2 years before a potential next administration could roll back the tariffs if they wanted.
[0] https://www.youtube.com/watch?v=3aCMGqA6_XY
Agreed there are serious restructuring that needs to happen in the US.
That said this approach doesn't make a lot of sense. There are many ways to do this without antagonizing all of your allies which only helps out your enemies and ostracizes the U.S.
Loss of confidence in the greenback is deeply problematic for US power.
>For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
We could instead pay for re-education and training for these folks to find jobs that do align better with the global economy and bolster social safety nets to help with job loss.
Tariffs are no guarantee the jobs will come back either or even if some of the manufacturing does come back to the US, that it will employ people who need it most or in the same number. Manufacturing automation is quite sophisticated nowadays. Even if the manufacturing comes back to the US - which I don't think is going to happen en masse if at all - the employment prospects that you're suggesting in this line of reasoning won't come back with them, is what the evidence suggests.
>There really are structural challenges to onshoring production due to strength of the dollar due to its reserve currency status; our society as such is biased heavily toward importing goods rather than exporting goods. This is a real challenge that needs to be addressed as well.
Why? Why is onshoring production of non critical goods a benefit to the US as a whole over the long term? Why do we want to protect manufacturing interests at the expense of other interests? These questions haven't been addressed. Not to mention the pain tariffs are going to cause isn't being addressed either, we're simply told to 'grin and bear it', and for what are we doing that exactly? Whats the actual nuts and bolts plan here?
Everywhere I look at the argument for tariffs I come up short on legitimate answers to these questions
>Our national debt is not sustainable either. Either we pay it down some, or we inflate it away; these are the two ways it goes away, ignoring the option of a world-shattering default on the debt. Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
There's other ways to handle the national debt than put broad tariffs on all our trading partners - including allies who have actually been very generous about their trade terms and investments in the US, like Japan, the UK (really much of western Europe), Canada etc.
If we really want to strength the dollar, we could raise wealth taxes (like capital gains or instituting a land value tax for example) and moderate spending. Why are tariffs superior to this? Tariffs only hurt the poor and middle classes anyway, who can't simply fly out of the country for large purchases to avoid them.
I really want to read a good response to this comment. I have the same questions, and I’ll add one more thought.
Lots of people talk about how the US should be more like Europe. People say the average European has a better quality of life, etc. Well, Europe has tariffs…
So does the US??? Ex - we've been placing tariffs on solar/ev parts for many years now to drive investment in those industries (And this is hardly the only place we've done this).
Targeted tariffs to protect and strengthen specific industries are fine - especially if done slowly and while supporting those industries internally to make sure that they aren't disrupted, and that they can actually capitalize on the space provided by a tariff.
---
This policy is not fucking that. It's just a backdoor tax on everyone, with zero planning and support internally to bring those industries back.
Simple terms for your simple comment:
A morbidly obese guy slowly exercising is great.
A morbidly obese guy getting dropped into a marathon with no prep is a recipe for a heart attack.
Europe has tariffs. Everywhere has tariffs. Europe doesn't have tariffs like this.
Europe has higher taxes. But, somehow, despite the inefficiencies of governments, this produces a happier populace who work less and vacation more.
Tarrifs can be useful in protecting your players in an new industry. In specific situations not using it like carpet bombing.
Thomas Sowell who is 94 has some wisdom to share: https://x.com/HooverInst/status/1907630250135273527?ref_src=...
Europe has tariffs pretty much in line with the US. The weighted average tariff for the EU is 2.7% and 2.2% for the US.
There's of course the opportunity to get those in line, but that requires negotiations.
Weighted average is an interesting metric, but I'm not sure of its value in this context. I can imagine that perhaps 2-3% is more of an equilibrium and any amount of tariffs will still trend towards some market equlibrium.
I believe the EU has 10% tariffs on all US autos and we didnt have tariff theirs. That seems relevant in a way that this weighted average doesn't account for, right?
And the US has a 25% tariff on F150s (light duty vehicles).
You can go tit for tat down the line, but all in all the numbers I gave you are the sum of everything.
Heavy tariffs won’t bring an equilibrium. It will only make imported goods expensive and allow the existing domestic producers to become laze and uncompetitive, all in all zeroing their export value.
We tarrif Trucks because they tarrifed our chickens. Tarrifs are pretty complicated and often don't make sense. But no the idea that EU tarrifs on the US are much higher on average is unsupportable
Had, past tense.
Progressive taxation, better public services, universal healthcare, free education for all
Doesn't the US already have the most progressive tax system in the world? If you want more public services the tax rate would need to increase at all levels but dramatically so at the middle to low end.
No.
The U.S. tax system is less progressive than those in many other industrialized nations. European countries like Denmark and France have higher top marginal tax rates (above 50%), while the U.S. top federal rate is significantly lower. Additionally, U.S. taxes and transfers do less to reduce income inequality compared to peer countries.
That is not what progressive means. The US doesn't have the highest marginal tax rate but a greater share of taxes are paid by high-income earners than others on a per dollar basis.
Raising rates on soley the rich will make the tax system even more progressive but will probably not make public service much more generous. Raising the tax rates on everyone would probably make the tax system less progressive but might actually fund a large increase in public spending.
You're right that "progressive" technically refers to how tax burdens increase with income, and by that measure, the U.S. looks progressive because high earners pay a large share. But that doesn’t mean the system is actually effective at reducing inequality.
What matters is outcomes, and the U.S. system—compared to other developed nations—does far less to redistribute wealth or fund robust public services. Other countries raise more revenue overall (often through broader-based taxes like VAT), and they spend it more equitably. So yes, technically progressive—but practically insufficient.
> Doesn't the US already have the most progressive tax system in the world?
It's arguable, but it's safe to say that it's one of the most progressive among development countries, but that's in large part a function of the comparative inequality and low tax rates to start.
> If you want more public services the tax rate would need to increase at all levels but dramatically so at the middle to low end.
Yeah, but the net effect can be an improvement in terms of inequality. See e.g. https://www.cbpp.org/research/what-do-oecd-data-really-show-...
"As a result, the latest OECD data show that while the United States has the tenth-highest level of income inequality of the 31 OECD countries examined before considering taxes and transfers, it has the fourth-highest level of inequality after considering them."
"As the OECD report notes, if two countries have identical tax schedules that include graduated marginal rates, the tax system will have a more progressive impact in the country with higher pre-tax inequality, because a larger share of that country’s income will be taxed at the top rates."
"Because of their comparatively small size and below-average progressivity, U.S. cash transfers do less to reduce inequality in household cash incomes than those in any other OECD country except Korea"
If you really want to onshore production, you don't increase taxes on the import of raw materials, parts, and components, you only do so for finished goods. That isn't what this administration has done though. They say they want to increase domestic manufacturing, but their actions clearly prove that that is not their goal.
There are two different questions here: (1) is Trump's strategy a good one to accomplish his goals? and (2) what are other good ideas to do so?
Just because there aren't many ideas in bucket #2 doesn't mean you should do #1.
For a trivial example, consider steel and aluminum tariffs (Larry Summers gave this example on Bloomberg yesterday):
There are 60x more jobs in industries that rely on steel/aluminum inputs than there are in the US steel/aluminium producers. 60x!
Steel/aluminum tariffs increase the cost of inputs to the companies that employ those 60x more people; their businesses suffer; those jobs are more at risk.
Meanwhile, it will take a decade for steel/aluminum production to be fully done within the US, and even then it will be a higher cost (i.e. the reason the US imports a big share of aluminium from Canada is that Canada uses cheap hydro energy to produce it - something that the US can't do).
Through that decade, every single item that uses imported steel/aluminum as an input will be more expensive for average Americans.
So you risk 60x the jobs, for a slow and ultimately non-competitive local industry rebuild, and meanwhile average Americans pay higher costs.
Now multiply that across every category of good in the economy?
#1 is bad. I don't have a great idea for #2, but #1 is bad.
Look at it from Trump's perspective for a moment. The only tool he has is tariffs, and the people he's negotiating with are not just foreign governments but also Congress. Because he has this authority he can use it to try to bring any of those to the table and negotiate alternative approaches. Not saying that's what he's doing. Just saying that's a possibility.
He's got the entire congress! He's got the entire universe of industrial policy to advance whatever domestic improvements he wants to pursue. Clearly they even have the political capital and appetite to do a massive tax increase!
The Republicans in Congress don't all want the same things, and they have very narrow majorities, so yes, he does have to negotiate with them.
Actually doing positive things is hard. Good presidents like Biden can pass stuff like IRA.
Wrecking shit when you don't care much about who suffers is much easier
The tone of discourse on HN has gotten quite negative lately. It can be possible for Trump to believe that what he's doing is good even if what he's doing proves bad. He seems sincere in thinking that yesterday's tariffs will do good for the U.S. Who knows, tariffs might yet do good (or not), and Democrats used to advocate roughly the same thing:
Clearly they changed their minds. It would be interesting to see why they changed their minds.I'd like some repairs made to my car, but I'd object to someone making them with a hammer (without a stronger argument in favor than "trust me").
The tone of HN is something. For instance there always seems to be someone partisan enough to defend Trump no matter how ridiculous and terrible his actions are.
It true that there are democrats who are more skeptical on free trade and I would disagree with some of their views although adding workers rights and minimum wages into trade agreements are things which might have some merit but none of them would try something as ridiculous and economically suicidal as this. They're literally putting tarrifs on an island with a bunch of Penguins.
That's because he's lazy and doesn't really care to learn about policy or listen to the vast majority of economists including conservative economists tell him he's blowing up the economy and he doesn't care much about the damage he causes. He might remotely care about the stock market going down or losing political power and being tried for some of his many crimes but he doesn't really care much if his supporters (much less the half of the country that voted for someone sane) suffer, starve or die from a preventable disease.
> very real national problems that this might address.
This is a dubious claim to begin with. If you believe that 'trade deficits are bad,' can you explain why? Post Covid, the US economy has emerged in significantly better shape than nearly every other country in the world, so I'm failing to see how these deficits are meaningful.
> Globalization has played a big role in creating the massive income inequality in our country
What is your source for this belief, especially when comparing globalization with other factors that cause inequality? From my understanding, the biggest recent contributors to a higher cost of living in the US are housing, health, and education. Health and education purely services-oriented, and housing is one-third a labor cost.
> our society as such is biased heavily toward importing goods rather than exporting goods
I think that's great. America exports services. We innovate to create new technology, are a leader in designing the things and systems that people want (think of our tech industry), and we delegate the work of manufacturing to others. That seems fine to me, and a function of having (relatively) open, free trade.
> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
At a high level, the problem is that free trade makes the pie bigger, but causes distribution/inequality problems. So generally speaking, the best measures are going to be those that improve inequality while minimizing the impact to the size of the pie. Raise taxes on the wealthy, increase spending on social programs to the non-wealthy, fund investments in programs that benefit everyone equally. (Public transit, libraries, healthcare, education, etc.)
Tariffs shrink the pie, and I'd heavily bet against those hurt by globalization being those who are able to grab a bigger slice under the current administration.
According to the Bureau of Labor statistics, there are 7 million unemployed in the U.S. currently.
I don't know how you expect these to cover for all the manufacturing you imply might come back to the U.S. with these tariffs, and that's assuming the space and the production means (factories, etc.) are here already. They aren't, and not for a couple years.
Combined to the fact that the U.S. is clearly sending a signal that coming there is dangerous now, especially for any other category than white males, and I don't see how you can even imagine that this situation is going to be working out.
There is a net outflow of US dollars, because we keep issuing new debt. The fix there is to stop issuing new debt, by fixing the budget. Sadly, no one seems to think this administration will do that.
Globalization is fine. Wages in this country are quite high overall. Inequality isn't caused by trade, it's caused by low taxes on rich people, weak unions, and weak labor regulation.
The terrible state of US production is a myth. The US is the second largest manufacturer in the world. The #1 spot is occupied by a country with over 4x our population. Manufacturing employment is down because our manufacturing productivity is really high. Yeah, we don't assemble smartphones or make plastic trinkets. We make cars and jetliners and computer chips.
If you want to address the national debt and inequality, the solution is to correct the power imbalance between employers and employees by strengthening labor regulations and unions, and to raise taxes, especially on high incomes, and especially on the super wealthy. Taxing people like Elon Musk down to a more manageable 10 or 11 figures of net worth won't do a lot for the nation's finances directly, but it will do a lot to curb their power and get the government to be more responsive to our interests instead of theirs.
(And no, tariffs are not a good way to do this, since they're regressive.)
Aren't "weak unions" caused by globalization? Unless the union is global, employers can always respond to stronger unions by pulling the off-shoring lever even more vigorously than they already do.
Globalization adds competition for both labor and business, which will drive prices down. That will limit what unions are able to bargain for, but it also limits what non-union workers are able to bargain for, so it's somewhat orthogonal. A smart union won't bargain so hard that their employer decides to move the facility instead.
Tax corporations and the wealthy since they receive the majority of the benefits. They benefit from a trained healthy workforce, social safety nets, infrastructure like roads and electricity and water. They benefit form the US dollar being the reserve currency for most of the world. I literally cannot list all the ways these two groups benefit in a real tangible outsized way than any other individual.
Trump wants to eliminate all federal taxes. That's NOT going to reduce the deficit. The current republican spending bill includes a 4.5T tax cut to the wealthy and businesses, while cutting only 2T in spending from entitlements WE PAY INTO SEPARATE FROM TAXES. I am entitled to the money that me and my employer pay into Social Security, it's an investment, not a tax.
Let's stop taking from working people who are quickly falling further and further into poverty and start taking from the people who literally own everything!
> For instance, globalization and offshoring of production has made goods cheaper for consumers, but what about the former domestic producers who could not compete
That misses the point on so many levels. First of all consider that this is a domestic problem too. What about all the businesses abandoning California for Texas because wages are so much lower to achieve an equivalent cost of living?
Cheaper goods produced elsewhere is not necessarily a security concern for the economy. Silicon produced only in Taiwan is a security concern for the US, for example, but rubber production isn't even though the US cannot produce natural rubber.
Finally, and most importantly, price depreciation of goods due to global options frees up American businesses and employees to seek more lucrative ventures as the market demands that would other not exist due to opportunity costs.
Do you honestly believe that there are significant numbers of US citizens lining up to take up low-margin manufacturing work as is currently done in China or elsewhere?
Chinese manufacturing workers live on a $25k/y income ($15k without adjusting for purchasing parity!). Do you beliefe that raising prices on goods by 30%ish is enough to make those jobs attractive to US citizens?
What sectors would you suggest primarily sourcing domestic manufacturing workers from, and would you agree that just doing that is going to lead to further cost increase for the average consumer?
In my view, the current tariff approach is a rather naive attempt at improving national self-sufficiency at the cost of the average citizen, and the administrations explicit statements and goals make this pretty clear-- shifting government income from taxes to tariffs is a very obvious losing move for the vast majority of people that spend most of their income.
US economy right now is heavily biased towards providing services and high-tech goods because that is the most valuable use of its citizens according to market dynamics. Managing the economy in a "I know better than the market way" certainly did not work out for the soviets...
Sometimes I feel that people construct elaborate theories of how Trumps policies will end up beneficial for the average citizen, despite clear, explicit descriptions of how that is not the goal and historical precedent of acting directly against working-class interests (i.e. raising estate tax exemptions above literal 1%er-thresholds).
So you are okay with exploiting people for labour, often in inhumane conditions just so you can buy some unnecessary junk for cheaper?
> US economy right now is heavily biased towards providing services and high-tech goods because that is the most valuable use of its citizens according to market dynamics
So basically geared for upper class / banking industry? US has some of the highest wealth inequality of the developed world.
But by far the most important aspect is military. Manufacturing capability is extremely important for military. US may be the most advanced, but a $10m rocket will not beat 10,000 $1000 drones.
https://www.nytimes.com/2008/01/05/business/worldbusiness/05... https://www.nytimes.com/2012/01/26/business/ieconomy-apples-... https://www.cbp.gov/newsroom/national-media-release/dhs-crac...
> So you are okay with exploiting people for labour, often in inhumane conditions just so you can buy some unnecessary junk for cheaper?
Do you think that better wages and working conditions in underdeveloped countries are a goal (or even just side-effect) of Trumps policies? How is that achieved?
> Manufacturing capability is extremely important for military. US may be the most advanced, but a $10m rocket will not beat 10,000 $1000 drones.
I don't see a coordinated effort to expand the domestic arms industry that is pushing for those tariffs.
If your narrative is that tariffs are driven by military strategy, then you have to show how those military-industrial concerns drove political decisionmaking- because all I see right now is the president preferring tariffs over taxes for ideological reasons...
> Do you think that better wages and working conditions in underdeveloped countries are a goal (or even just side-effect) of Trumps policies? How is that achieved?
No. It will make labour in US competitive where you have labour laws. Consumers will pay the fair market price for products rather than relying on abusing labour in poor countries.
> I don't see a coordinated effort to expand the domestic arms industry that is pushing for those tariffs.
It's not about creating military industry. It's about creating a manufacturing industry which can be converted into war effort if needed. It's also about self reliance. It's also about creating meaningful jobs that actually create something (as opposed to the wall street where you have upper class just extracting wealth from the working man).
I agree with you. The middle class is going to take all of the blunts. The rich people more or less are not impacted.
You can't look at this move as something in isolation. Trump has also completely flipped geopolitics on their head.
Here's other things he's done:
- Threatened Canada
- Threatened Greenland/Denmark
- Supported Russia (it's obvious)
- Told NATO allies export F-35s will be nerfed just in case we come into conflict
Americans are already very insular, I don't think you all realise just how much you've pissed off Europe and Canada (I live in both places throughout the year, family in both)...
American multinationals have benefited greatly from trade with other countries... Look around the world: iPhones and Apple products everywhere, Windows computers, Google dominates search, the USA is a top travel destination, American weapons are used by most allies, etc...
Right now in Canada and European countries we're talking about completely cutting out all US trade and travel. Like all of it. It won't be policy but the US has completely destroyed all goodwill and cultural influence it has across the "West".
Because of immense hatred of Russia, China is now the "lesser evil" and pretty much all developed countries will band together. And not only will countries move on from US hegemony, they'll accept any pain that comes with it because Russia is threatening Europe and the USA is threatening their neighbours. Without the geopolitical aspect, the US might have won this trade war. But no one is going to bow to the US to then get sold out and conquered by Russia...
One unintended benefit of this move might be reducing greenhouse gas emissions from global shipping ... if US consumers are consuming more US made products, the supply chain for those projects will have gotten significantly shorter in nautical miles.
I'm hesitant credit President Trump with this too soon though, after all, his motto is "drill drill drill", but It's going to be interesting to see what happens.
Emissions from shipping are about 3-5% of global greenhouse gases, and my understanding is that also includes all domestic shipping. Emissions from personal vehicles (not including freight trucks) is at something like 10%.
I don't have specific numbers for America on hand, but I'd be very surprised if Trump's administration broke even, let alone cause an overall reduction.
> what about the former domestic producers who could not compete,
Tariffs won't make them any better at their jobs. So the American customer can expect higher prices and lower quality of products and services.
> Everyone is quick to deride this move as stupid. I don’t disagree that there are downsides to the approach, but there is a set of very real national problems that this might address.
Because it is stupid. It's important to point out that this is stupid and not only doesn't help with problems that come with the benefits of globalization but makes it worse. How will a deep recession fox anything? Including debt(which is high but manageable under a sane government)
It's not the idea, it's how it was rolled out, how poorly it was communicated, how little sense the numbers mean.
This is a bunch of nonsense that is not driven by data and not even worth a response.
I am tired of people spitting BS just to defend Trump's inane policies and everyone else having to rederive modern economic trade theory in comments in order to counter it.
Physicists used to get a bunch of derision for thinking their high skills in analytical thinking in physics easily carried over to other fields, and now we have CS majors thinking the same.
Regardless I will do some of the countering:
> what about the former domestic producers who could not compete, and do not have the skills or capital to find a new job which pays as well?
We had a candidates that offered job re-training programs. Those candidates weren't selected and those jobs went away even as we tried to put up protectionist domestic policy.
> our society as such is biased heavily toward importing goods rather than exporting goods.
This is fine. Comparative advantages and all. We just need to produce the goods necessary for national security. It worked out well so far. Do we actually want to have other countries do the high value services and us doing the low value manufacturing???? Why are you justifying engaging in a trade war with Cambodia and Vietnam?
> Tariffs accomplish both of those, raising money at the same time as raising cost of goods and weakening the dollar.
This is not backed by any data. Every single economic thinkthank worth a damn, including conservative ones, have detailed how it will raise the national debt.
I am tired of people saying ridiculous arguments just so they can stave off cognitive dissonance.
Tearing down our soft power and throwig out every trade deal we have carefully crafted since WWII is absolutely ridiculous.
> So, to anyone who disagrees with these measures, but agrees that these are issues we ought to solve, what would you propose?
The solution is clear, let the tax cuts expire, and increase the taxes on corporations. Make special tax incentives on real investment and innovation.
Make a special tax for the four individuals behind Trump at the inauguration, who own more health than 60% of the US population.
Stop allowing billionaires and corporations cheat the tax code to have lower effective rates than the majority of US citizens.
I am sure the 14 billionaires on Trump cabinet will be working on this right away... \s
Billionaire boys behaving badly! Let’s teach them a lesson! That will solve all the problems in the world! /s
Yes of course. What is your solution?
"Warren Buffett Wants Higher Taxes For The Ultra-Rich, Including Himself — Says 'My Friends And I Have Been Coddled Long Enough" - https://finance.yahoo.com/news/warren-buffett-wants-higher-t...
"Reagan's Radio Address on Free and Fair Trade on April 25, 1987" - https://youtu.be/5t5QK03KXPc?t=119
Free all the trade (no tariffs by anyone) and let the chips fall where they may.
Denmark, Sweden, the Netherlands, Norway, Finland.
You don’t get world-class infrastructure, universal healthcare, and top-tier education without paying for it. High taxes are the price of a civilized society. Get over it!
Life isn’t meant to be a Squid Game.
While I agree those are great things, don’t fool yourself - someone IS paying for it
Those countries have a population that is a fraction of the US. I’m sure they make more effective use of their taxes too. In the US, taxes continue to rise and health care and education costs rise even more. There are many things that are broken. Painting all billionaires as the problem and thinking that confiscating their wealth via taxes will solve the issues… is a popular rallying cry but is not an actual solution
> Painting all billionaires as the problem
Strongly encourage you to learn about their favorite money making concepts of passive income and compound interest. And other various "financial engineering" techniques corporations are engaging in.
These guys make more money taking a dump than 1000 US workers doing hard labor. I'm sure they are like 1000x more genius that most people but I doubt you could make an argument where a system that rewards this sort of behavior, while contributing absolutely 0 net value to society can also coexist in harmony with the rest of us.
When the most efficient methods of accruing wealth are literally predicated on profiting from doing nothing, they are not the signs of a healthy society.
I’d encourage you to do some research on the history of charging interest. It does indeed make for a large wealth gap and that is indeed a significant social problem.
However it isn’t a problem limited to capitalism or the US. And “billionaires” have been around for quite a long time - I find it strange that some are placed on a pedestal for some reason
I will read into it thank you.
Yes current crops of billionaires aren’t particularly different, but the methods they have access to are increasingly detached from any real world value. And due to the overall wealth of the US and money in the world in general, their ability to create capital out of nothing is on the very extreme end of the spectrum.
They are driven by tunnel vision and are distorting the very concept of money and the purpose it has to serve in society
Dont pretend capital = productivity and wealth = wisdom. That’s how you end up with a system where work is taxed more than ownership, and basic rights like healthcare stay out of reach. U.S. exceptionalism is only notable on it's exceptional inability to do what 150 other countries already figured out.
A blanket 10% minimum tariff is a great excuse for any local US manufacturing to increase their prices.
I used to live in a country with heavy tariffs, every time tariffs were raised the local producers increased prices to be just below the imports. Even after the tariffs were abolished the prices (on local and imports) never really lowered in any significant way.
That always seems to happen with this sort of protections. It's like when the government tries to incentivize people to buy electric cars by paying 25% of it (example from the climate bonus in Sweden, which was given for years), but what happens is that buyers actually end up paying just maybe 5% less as the car companies now can increase their prices and still sell the cars they produce while making more money.
That happened in New Zealand, where the govt. paid $5,000 for electric cars. When this subsidy expired, prices decreased by a few thousand.
If a consumer was willing to pay $20,000 for a car why would they sell it to them for less than $25,000 when the final bill to the consumer will be $20,000, with the govt. paying an extra $5,000.
That's why the better policy is not to subsidize the purchase price of the car, but the various taxes associated with owning one, as well as offering certain perks like being able to drive in the bus lane. This was a huge success in Norway. Though now the percentage of new car purchases that are electric is so large that the subsidies are being rolled back because they've gotten too expensive(and the bus lane thing no longer makes sense because if the majority of cars can drive in it, it's not really a bus lane anymore). But I think that's fine. You can make an argument that when subsidies were introduced, electric cars were still struggling to compete with combustion cars in numerous ways, like range, capacity, access to chargers and repair services, etc. Subsidies/perks acted as compensation for those downsides for early adopters. The playing field is obviously a lot more even now. Chargers(including home chargers) are generally widely available, range is improved via better battery tech, there's a lot more players in the market, meaning more choice, etc. Not really a car guy, but I assume the repair situation is also improved, though it may not be on par yet.
In principle, that still injects cash into those companies though; it's just that the popular conception is that these subsidies are intended to make the product cheaper for consumers, instead of encouraging companies to produce them because they're more profitable due to the subsidy.
(This should not be taken as a blanket endorsement, god knows that companies follow the incentives, which is rarely perfectly aligned with the intent)
This is basically what everyone said would happen with Yang's proposed UBI in 2020.
Basic Econ 101 - The only way to lower prices is to increase supply (or decrease demand, however I'd really rather not have a huge pandemic, war, illogical engineered recession, or other situation that decreases the number of viable consumers...)
That this would happen is evident to everybody with a minimum knowledge of economics. It’s the same reason UBI won’t work because it would make prices skyrocket.
It certainly could. Depends a lot on the specifics of how the UBI is implemented, and how UBI affects salary levels. If everything remained the same and everyone just got x more income each year, then yes, inflation is very likely. On the other hand, something more like no questions asked/no demands made social security, where the only requirement is being unemployed, could improve conditions for people who are unable to work while paying for itself in eliminating heaps of red tape, and also freeing up a lots of manpower towards helping people sort out their lives instead of pouring over disability pension applications, without paying out a bunch of money to people who don't need it because they earn plenty from work already.
One could also pay out ubi universally, but have a one time down-adjustment of salaries the first year.
Right and wrong. Right if it increases aggregate demand more than available economic production thus leading to inflation.
But if we overall had capacity to tame in the added UBI, then no. Unlike targeted subsidies like EVs, UBI is do much better. Each industry is still competing with other industries
This also happens when a certain price range gets different benefits.
For example lower mortgage rates if the house costs below $X. Now houses that could sell for far lower than $X actually list close to $X.
Well yeah, that's the point. Its so factories paying local wages can now compete with factories overseas where wages are much lower.
A laborer in a subsidized, low-productivity industry is one less worker available for a high-tech, high-productivity sector. With a finite workforce, misallocating labor like this inevitably hampers innovation and economic growth. The U.S. should focus on being a powerhouse of technology and innovation, not divert resources to low-value tasks like picking olives from trees.
1. Not all workers are fungible. Your average 30th percentile individual =/= the person progressing your biotech industry. Would they be more beneficial to the economy working in a customer service job, or in a factory?
2. It's very hard to be a powerhouse of innovation if you don't vertically integrate. China has taught us this. You can't split out the gritty part (manufacturing) from the fun part (invention) of technological innovation and win in the long run.
> every time tariffs were raised the local producers increased prices to be just below the imports.
That's literally how tariffs are supposed to work. I'm confused about what you thought should happen?
Local producers are supposed to raise prices so there is more money for worker pay or business reinvestment or both.
Or, you know, profits.
Capitalists only care about profits.
I live in a country where we have many protectionist tariffs and the locally produced goods are expensive and lower quality compared to imported goods which guarantees profits at the expense of consumers.
I don't understand why people still believe in this day and age that wages will ever increase despite data showing the opposite for literal decades.
If you frequent an American form as a non-American, you'll have noticed by now that for most Americans it's as if the rest of the world doesn't really exist. You can talk all you want about how the thing they're proposing has been done in other countries with terrible results. Or the thing they're saying it's inviable exists in many other countries and it just works. You'll be ignored either way
No, the foreigners pay the tariffs. Then that foreign money gets spent on childcare and other things Americans need and want.
How many times does Trump need to explain this to you?
Maybe that's how Trump believes tariffs work, but they are actually a tax on imports, that the importer pays. The importer passes that along to the American consumer.
Other countries are angry about this because it discourages importing from them, and their US exports may go down, or they may have to lower their US export prices. Not because they have to pay a fee or a tax to the US.
No, you as an American consumer are paying the tariffs.
I also don't think it's enough to justify moving manufacturing to the US. The investments are to high, especially for something that might only last for four years. The US also doesn't have enough workers, so wages would increase.
Count on it. Especially after Trump (AKA we the taxpayers) gave the oligopolies and monopolies huge corporate tax handouts, for which they thanked us with massive price hikes and the current "inflation."
Oh, and of course there were Trump's tax hikes on middle-class Americans to boot.
What a mind-blowing betrayal and mess.
Yes that will invariably happen, barring price controls.
This is expected and normal? Demand for locally sourced goods will skyrocket which means prices should as well. What you are leaving out is that the US is well capitalized and those sky high prices will be a strong incentive for more competitors to join the market. With competition in place prices will eventually fall. Prices will likely never go back as low but at least our fellow countrymen will be employed, housed and hopeful instead of on the streets doing fentanyl.
People will starting fighting against more houses being built to protect their wealth even more than now. You'll be earning like $25/hr at the factory and all the single-family houses are 300k+ with significant interest. Assuming they never have a huge healthcare bill which also shows no signs of becoming affordable, if the factory jobs even offer decent benefits but my guess is they will all be high deductible plans.
So the US has been, more or less, the best place in the world to do business. Stocks historically soaring, yadda yadda yadda ... and somehow this guy sells the story that the US has been taking advantage of by all the other evil countries in the world. It does not, in any way, make sense. What a clown. A totalitorian clown unfortunately.
Would love to know what your country's tariffs are on the US.
You are downvoted but this never mentioned indeed. I have a hard time finding how much us Europeans pay in tariffs on stuff from China and the US.
For the EU and US: https://ec.europa.eu/commission/presscorner/detail/en/qanda_...
> For technical reasons, there is not one “absolute” figure for the average tariffs on EU-US trade, as this calculation can be done in a variety of ways which produce quite varied results. Nevertheless, considering the actual trade in goods between the EU and US, in practice the average tariff rate on both sides is approximately 1%. In 2023, the US collected approximately €7 billion of tariffs on EU exports, and the EU collected approximately €3 billion on US exports.
> https://www.belastingdienst.nl/wps/wcm/connect/nl/internetaa...
Is suspect you can translate yourself. Every country has a site I am sure (looked up uk tarifs yesterday for instance)
So depending on the goods, between 0 and 17%.
Yeah, I think best way is to look at the total tariffs collected by the EU on US goods - about $3.3b USD in 2023 - compared to imports ~$370b USD in 2023. So like, 1%.
It's downvoted because it's a transparent and weak attempt to "both sides" something that's not both-sidesable.
Why is it not "both-sidesable"?
Middle ground fallacy
No, I'm asking for details in this specific case. I don't have deep knowledge and understanding of the subject, so why is it no applicable in this case?
https://en.wikipedia.org/wiki/List_of_countries_by_tariff_ra...
> The European Commission says it charges an average tariff of just 1% on US products entering the EU market, "considering the actual trade in goods". It adds that the US administration collected approximately €7 billion of tariffs on EU products in 2023 compared to the EU's €3 billion on US goods.
> A World Trade Organisation (WTO) estimate puts the average tariff rate on US products entering the EU slightly higher at 4.8%.
> In both cases, this is far off the 39% figure quoted by the Trump administration.
https://www.euronews.com/my-europe/2025/04/03/fact-check-are...
Imagine calling trade "not both-sidesable". You can't make this stuff up.
"This guy cracked the tariff formula: @orthonormalist
It’s simply the nation’s trade deficit with us divided by the nation’s exports to us.
Yes. Really.
Vietnam: Exports 136.6, Imports 13.1 Deficit = 123.5
123.5/136.6 = 90%"
https://x.com/Geiger_Capital/status/1907568233239949431
Vietnam exports low value physical goods to the US. The US sells high value non-physical services such as Microsoft office, ChatGPT, Netflix, Facebook ads, iOS Appstore fees, iCloud subscriptions, etc to Vietnam. Other services include engineering consultants, US tax auditors, US consulting companies, etc. None of these are factored into the formula.
So a country like Vietnam gets royally screwed by this formula. They are actually buying way more from the US than just the physical goods.
If you're Vietnam, it's very hard to "just take it" as suggested by Treasury Secretary Scott Bessent. The formula is flawed in the first place.
If we truly want fair, the formula should be based on total profit of the goods and services sold. Services have much higher margins than physical goods typically.
I am quite certain that none of that software revenue is recognized in the US. https://en.wikipedia.org/wiki/Apple%27s_EU_tax_dispute
This is such an obvious fact and the fact that not more people see through this is insane to me.
The "trade deficit" is an arbitrary number unrepresentative for what the US makes the most money with.
That's true for most other places, including the EU. With services included, the trade imbalance is negligible. Source:
https://ec.europa.eu/commission/presscorner/detail/en/qanda_...
Some think AI helped with the formula
https://universeodon.com/@cryptadamist/114271484597938775
The tariffs might be a bad idea, but this accusation is ridiculous. For a simple methodology like this, it's trivial to prompt engineer a LLM to produce the same response. It doesn't mean that that's how the administration came up with the policy, any more than a LLM getting the same (correct) solution as a student on an assignment means the student used a LLM on that assignment.
Seems like it's at least a plausible possibility for Paul Krugman
https://paulkrugman.substack.com/p/will-careless-stupidity-k...
I think the accusation carries more weight than you're implying because while correct answers are all similar having two students give eerily similar wrong answers is often used as evidence for cheating.
The fact that this announcement is, to put it generously, weird, and not how anyone in the real world actually implements tariffs points to this administration going with the formula from some undergrad econ textbook or econ blog they found and applying it to a spreadsheet. Maybe they got it from an LLM, maybe they didn't, but what matters is the college sophomore level of consideration of the individual tariffs.
>Maybe they got it from an LLM, maybe they didn't, but what matters is the college sophomore level of consideration of the individual tariffs.
Sounds like we're in agreement? The tariffs are badly thought out, but the "lol they got their policy from LLMs" accusation is entirely spurious.
I really don't think this is entirely spurious considering Elon has been using LLMs to fire government employees. It seems like a very plausible explanation for how they came up with this policy.
>Elon has been using LLMs to fire government employees
Source?
from Mike Johnson, about DOGE's use of algorithms: ""Elon has cracked the code. He is now inside the agencies. He’s created these algorithms that are constantly crawling through the data. And as he told me in his office, the data doesn’t lie. We’re going to be able to get the information."
My speculation, but it's very likely that one of those pieces of analyzed information was the 5 bullet points from each federal employee justifying their job.
https://www.nbcnews.com/politics/donald-trump/live-blog/trum...
https://www.nbcnews.com/politics/doge/federal-workers-agenci...
Is Elon really that stupid?
Just because doesn't lie doesn't mean we understand it correctly.
I think so, but I'm not actually sure that any of the realities that would have lead to this outcome is any less embarrassing for the administration. Because there is real information contained in the fact that pretty much every LLM gives roughly the same answer— it doesn't help that the wording is similar either. Does it mean that they used an LLM? No not really, but it does strongly imply that their formula and the source for it are the "StackOverflow answer" for lack of a better term.
And while it's not wrong I guess it's also the kind of thing that you would expect to use for your econ homework than a real application of policy. I don't think it's unreasonable to assume that the person who made this spreadsheet really did do something to the effect of type "how to calculate reciprocal tariffs" into Google. And that's not a bad thing necessarily if you're a rando who's just been tasked with figuring that out but you couldn't have found someone with more experience with actually doing this and modeling the economic effects?
I think that it's a testament to the genuinely breakneck speeds they been trying to get policy out there that it's been so slapdash.
The takeaway from the X-poster being "it's good that they're using LLMs" is hilarious. Why praise the method if the end result is so bad?
Perfection is just a bugfix away /s
Holy cow! I had to check for myself: there are even more data points on trade balance for all countries at https://www.census.gov/foreign-trade/balance/index.html (whereas @orthonormalist used a partial list from wikipedia) and the percentages I calculate line up exactly with the Trump's full list of "Tariffs Charged to the USA" percentages (https://x.com/RapidResponse47/status/1907541343250878752) !!
Specifically they used 2024 trade balance figures. Example: take a random country, like Botswana, and the country's page at https://www.census.gov/foreign-trade/balance/c7930.html shows a 2024 trade balance of 104.3 (exports) and 405.1 (imports) so 1-104.3/405.1 = 0.74 which matches the "74%" "tariffs charged to the USA" claimed by Trump...
Rarely you get handed such blatant evidence that someone produced bullshit numbers and/or doesn't understand where the numbers come from !
Edit: someone said it doesn't work for Japan but it does. Every country I checked by hand matches the figures exactly... For Japan the figures are from https://www.census.gov/foreign-trade/balance/c5880.html and their 2024 trade balance is: 79,740.8 (exports) and 148,208.6 (imports) so 1-79740/148208 = 0.46 which matches the 46% "Tariffs charged to the USA " from the table shown by Trump...
thanks for the information. In light of this, it seems pretty silly: economy on a world scale isn't a line, it's more like a ring (country A has a deficit with country B, which has a deficit with country ... N which has a deficit with country A) at best. Isn't it like saying everyone should trade everything at the same price with everyone?
Can anyone else confirm this is true? I’m feeling a bit sceptical here.
Confirmed by the White House here: https://ustr.gov/issue-areas/reciprocal-tariff-calculations.
Thanks! This is an interesting read.
...and every country USA has a positive trade with, will get slapped with the 10% tariff. Every country on the table Trump posted, that have received the 10% tariff, the US have a positive trade with.
No winners in this one.
Plenty of countries got excluded from this—Canada, Mexico, Belarus, Russia...
Canada and Mexico were already hit with 25% tariffs (on non-USMCA-compliant goods) last month...
Source for original tariffs: https://www.wsj.com/economy/trade/trump-tariffs-canada-mexic...
Source for continued original, but no new tariffs: https://www.wsj.com/livecoverage/trump-tariffs-trade-war-sto...
Not saying I agree with it, but Trump has communicated that ideally these international companies would build factories in the US. There would be no point in doing that if not for some floor tariff.
I think a lot of people assume the economic consequences like these have not been understood by the WH. Although I don't like this administration I beg to differ: they know what's going to happen, and they expect the coming storm because they seek what follows.
They want to repudiate foreign held debt, or devalue it, by revaluation of the USD and they will wear what they think of as a one time economic shock to get their reset in a belief they can make it less like the Smoot-Hawley great depression because so many other economic levers exist now, including floating currency, MMT, and massive fintech.
Personally I think it's a mistake but hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care. Some amount of foreign trade will absorb the cost. Not all, not most. Not all prices in the US will rise and some substitution will happen although spinning up cheap labor factories again isn't going to happen in 2025. Maybe by 2027? Rust belt sewing shops and Walmart grade cheap goods production lines?
What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
The weighted average of the new U.S. tariffs will be 29% it seems.
Maybe they know the consequences, but to give you a idea... it was 1.5% before. The new ones will be equivalent to Brazilian tariffs in 1989 before opening the economy (31%, data from World Bank).
Now, Brazilian tariffs, which have one if the most closed economies, by weighted average, is 7%.
China, have 2.2%.
The United States will be an autarchy, similar to how LaTam was in the 70's, when tried this exact idea. The tariffs being as high instantly, will impact the economy, later, the country will probably grow, which is what they expect, but this is not a productive grow. Because your new factories now are not competing with external products, so your productivity go down, this means real income will also go down.
So yeah, some people at best (if is not a robot doing the job) will have a job in a factory, but on what he will be able to spend with his wage won't make it worth even for this person.
It's called Import Substitution.
Import Substitution: A Tried and Tested Policy for Failure https://www.kspp.edu.in/blog/import-substitution-a-tried-and...
>Import substitution is a policy by which the state aims to increase the consumption of goods that are made domestically by levying high tariffs on foreign goods. This gives an advantage to the domestic manufacturers as their goods will be cheaper and preferable in the market compared to foreign products. India adopted this model post-independence, and it continued till the 1991 reforms. Due to import substitution, the domestic producers captured the entire Indian market, but there was slow progress in technological advancements, and the quality of Indian products was inferior to the foreign manufactured ones. But after the reforms, the Indian market was opened to everyone, and the consumer got the best value for the price he paid. The Make in India policy of the present government is reminiscent of the pre-1991 inward-looking Indian state.
In the US it will be even worse. The US is already high-tech economy outsourcing low value-adding manufacturing to foreign countries while industries move towards higher value-adding products. After the tariffs, US manufacturing sector will sift to lower value-added, lower complexity products.
Yeah. Specially because the U.S economy is service-focused (and consumption as well).
Like, imagine now that all your computers will be more expensive/worse. This will affect services from like, a law firm - to a tech company. Will make harder for young buy good computers and start to code, etc.
I say this as a Brazilian, to us Brazilians watching, this is like: Why are the U.S repeating the same mistake?
I don't think Americans know this, but here in Brazil, we also have phone, tablet and PC national brands (Positivo¹, Multi², Philco³). National TV brands like Semp, AOC, Mondial. A ton of home appliances brands like Mondial, Philco, Britânia.
But why Americans don't know them? Because they only exists because of the tariffs. So they only exists in Brazil internal market. They are worse than foreign brands, but they exists because it's cheaper to buy a Mondial Kitchen Stand mixer than a Kitchen Aid!
And worse that most of these products are only white-label Chinese products, sold way more expensive than the real chinese ones.
This also create a whole gray market. A lot of people start smuggling products without import tax.
And this only with a 7% average tariff. Not the U.S 29% lol. Brazil with 31%~ prior to the 90's was WAY worse than this. A lot of brands just died when we opened a little the market (Consul, Brastemp, were Brazilian big fridge, Washing machine etc makers, they got bought by Whirlpool in the 90's)
American Brands then will now look for the U.S gov to ask for exceptions too, and this create a lot of corruption. And after you put these tariffs and there's a whole new companies made to internal market, it's almost impossible to remove because of the lobby from these companies (and corruption).
[1] https://loja.meupositivo.com.br/ [2] https://www.multilaser.com.br/ [3] https://www.philco.com.br/
Not for nothing, but Philco is/was an American brand. The Phil is for Philadelphia.
The fact that Americans don't even recognize it anymore may make a better case for the policy than against.
In Brazil, the Philco operation was bought by Gradiente (The company that sued Apple over the use of the iPhone trademark) in 2005. Before that, Philco was from Itau (a Brazilian bank).
https://pt.wikipedia.org/wiki/Gradiente_(empresa)
Stop. Hold on. You just heard a solid set of examples and logic on why the tariffs were bad for Brazil's consumers and your takeaway was that one brand that couldn't compete in the US moved to the sheltered manufacturing environment and that is good?
The policy is good for uncompetitive manufacturing - and so you are in support of it? Why is that less-competitive manufacturer from Philly who couldn't compete anywhere but Brazil more important than the people of that country?
Not at all - I'm not really taking a solid stance one way or another because I'm not an economist.
My only point was that Philco was being used as an unknown crappy Brazilian brand example. It used to be an American company that actually made quality things, and through outsourcing and general 'physical and financial enshittification' is pretty much an unknown to Americans now.
If you're in favor of quality things being made in the US, it's an argument for said policy.
But the examples _just_ given show that the same kind of tariff policy in Brazil caused shitty local options that could never compete with the outside world and cited example after example. The whole "grey" market for un-tariffef foreign goods.
There is nothing that says tariffs cause quality things to be built locally and the examples are counter to that.
Yes I understood the post but the difference is that Brazil didn't have a burgeoning or top tier electronics industry at any point I can remember. The US did and slowly gave it away to cheaper producers. Further, the average American has more disposable income and won't necessarily just grab what's cheapest.
So it's not easy to conclude they are the same in any fashion.
The question is what would happen today if the US ends up in the same situation. Will we go back to producing top tier electronics, or get stuck with crappy brands taking advantage of the situation? It's hard to say. I'd guess a mix of both. Top tier stuff would probably in house what they can, but the low end would get much, much worse. But that's just me guessing.
It's called US companies now could increase their prices by 30% and just don't worry much, if sales are pretty good already for them.
US short term prices jump +9% according to the KITE model for International Trade Analysis when you take tariffs and counter-tariffs into account.
Yeah, but the U.S. govt funds a lot of important research so it may not fall behind technologically unlike India…
Wait, what did you just say? The U.S. government has decimated its research funding?
Oh, well, at least the U.S. has a lot of high quality colleges churning out highly educated Americans, so that still may not be as much of a problem…wait, did you say Americans are increasingly turning away from college due to the high costs and the resultant loans that cannot be terminated even in bankruptcy, because the government has been cutting back significantly on funding education for years now?
Oh well, at least the U.S. is welcoming to immigrants who have founded over 50% of unicorns and usually tend to be the most dynamic and brightest slice of their country’s populations, so it may maintain its technological edge…
Wait what? Oh god.
Yeah, this is one of my biggest issues with this. There is no coherent plan.
It does look like a very coherent plan. Just not by an US government.
> The Make in India policy of the present government is reminiscent of the pre-1991 inward-looking Indian state.
Have you seen the 70s or the 80s? I was a child during the 1980s when India was a socialist state. There were very few private enterprises, because there was absolutely zero government support. Taxation peaked at 90% during the early 1970s under Indira Gandhi, who also nationalized many of the largest private companies - because private enterprise was seen as a bad thing. It was also impossible to bring in foreign investment, because that would come with profit motives.
Basically, the comparison you're drawing is not really accurate. The current Make in India plan is very similar to the US bringing in strategic manufacturing back into the US; a plan which has had bipartisan support (for example, the CHIPS Act). It incentivizes businesses (including foreign companies) to set up manufacturing units in India. And is quite the opposite of what was happening during India's socialist era.
India can grow at 10% but import substitution policy could hurt that, Arvind Panagariya says https://theprint.in/theprint-otc/india-can-grow-at-10-but-im...
From the article:
> Even though Make in India is not a classic import substitution case, it aimed to reach that end.
So it's not really import substitution. But let's ignore that article, it's not a serious piece anyway.
A key idea of Make in India is to make and export - which means that unlike socialist-era import substitution (via tariffs and permissions), the ones which aren't good enough will fail fast and cheap. It won't lead to people driving HM Ambassador cars for 40 years.
Whether Make in India will succeed or fail is a very different matter, of course.
>It incentivizes businesses (including foreign companies) to set up manufacturing units in India.
That type of protective policy works for India in incentivizing manufacturers to come build locally because Indian labor is still dirt cheap and the government will work with you to give you what you need without the pesky nimbyism, environmentalism, etc getting in the way of factories. US is not in the same case.
Isn’t the US the world’s biggest importer?
Quite a coincidence, I was reading this LRB essay [1] this morning by British political philosopher and historian Perry Anderson, analysing the last decade of political and economic (lack of) change in the West. He ended with this paragraph, I had to look up "import substitution" and then in this thread about the tariffs I see it mentioned again, there might be similarities with Trump and Getúlio Vargas. Any people more knowledgable in Brazilian economics want to chime in?
>Does that mean that until a coherent set of economic and political ideas, comparable to Keynesian or Hayekian paradigms of old, has taken shape as an alternative way of running contemporary societies, no serious change in the existing mode of production can be expected? Not necessarily. Outside the core zones of capitalism, at least two alterations of great moment occurred without any systematic doctrine imagining or proposing them in advance. One was the transformation of Brazil with the revolution that brought Getúlio Vargas to power in 1930, when the coffee exports on which its economy relied collapsed in the Slump and recovery was pragmatically stumbled on by import substitution, without the benefit of any advocacy in advance.
[1] https://www.lrb.co.uk/the-paper/v47/n06/perry-anderson/regim...
Honestly wouldn't compare Vargas with Trump here. Trump policies for me seems similar to what the military regime did (1964-1985)
Before Vargas rule (around the 30-40's), Brazil was an agrarian state, basically commanded by coffee barons and so on.
Brazil got the independence in 1822, and abolished the slavery in 1888. During this time, it was reigned by Dom Pedro I and Dom Pedro II. When the empire ended the slavery (one of the latest countries to end), the military and the agrarian folks, did a republic coup. In Brazil we call this republic "Coffee with Milk republic", because it was not a democracy yet (only 4% could vote), and the power was divided by São Paulo (Coffee state) and Minas Gerais (Milk state).
It's a long and complex story, but in short, in 1930, Vargas did what we call "1930 Revolution". It was a dictatorship, he persecuted the Brazilian integralists (fascists) and communists (and banned foreign languages aimed at banning italian/german/japanese speakers etc). The dictatorship ended, he got removed, and later he comes by election, in the first Brazilian proper democracy, with huge people support.
Anyway, besides all that, he basically industrialized the country. Moved the country from an agrarian state to modern industrialized state. But not only because of import substitution, he created like Ministry of Health, Education, all the modern BR state that we know. Penal code, and everything is still from 1940.The industrialization was mainly led by state-owned companies. He created a state owned oil company (Petrobras), created a state owned car company (FNM), steel company (CSN), mining company (Vale), etc.
The development during this time, was basically making the state to be the one that would industrialize the country.
The military dictatorship goal was different, after all, it was a coup against "the communists", with the U.S support at the time. So the industrialization was also led by the private sector, protected by the state with the huge tariffs, and some areas they just banned imports.
Instead of the FNM car company for example, we had then Gurgel, a private company making cars.
Of course, a lot of these companies died when Brazil opened the economy in the 1990s, exactly bcause they were not competitive and wasn't exporting anything anyway.
But one thing that people need to keep in mind always, it's how all of that makes the product expensive. A car in Brazil it's way more expensive than in the U.S and so on.
>It's called Import Substitution. Import Substitution: A Tried and Tested Policy for Failure
Which worked exceptionally well for China, South Korea, Japan and pretty well for Russia and India.
I think to nurture developing industries, it can be fine, but at some point you have to expose them to competition if you want to exceed what the domestic market can do.
Domestic industries DO compete - both with each other AND with foreign companies which are levied with tariffs.
One of the reason why China's import substitution was almost unreasonably effective was because domestic companies were driven to compete fiercely with each other.
(In America there is a drive to do the opposition- wall street likes consolidation and oligopolies)
And yeah, once your national industrial ecosystem is sufficiently powerful most countries suddenly get religion about removing all tarriffs everywhere. This is what America was like in the 90s - and they were just as obnoxious about that as they are about this - the exact opposite.
The argument that business competition within the Chinese market is stronger than within the US market is objectively untenable.
I suppose it's just a coincidence that these days your manufactured goods are predominantly stamped with "made in China".
That has no bearing on my point. US companies purposefully outsourced to China
...in part because fierce domestic competition within China drove quality up and prices down and in part because of Chinese protectionism.
These days Chinese protectionism is not necessary to keep the offshoring train running and only American protectionism will arrest it.
The US outsourced to China because of cheap labor, not because Chinese products are good--precisely because US companies were competing with each other and needed ways to reduce prices and improve margins.
That this ultimately had the effect of diminishing the manufacturing base in the US doesn't speak to the ability of US or Chinese companies to compete.
China is a centrally planned economy. To argue it's more competitive than the US is again not tenable.
>The US outsourced to China because of cheap labor
Yeah, in 2003. The US offshores to Bangladesh or vietnam for cheap labor now and has for a long time.
Manufacturing is offshored to China simply because it cant be done in the US at anything resembling a reasonable cost, not because labor is cheaper. That is because the Chinese industrial ecosystem is unparalleled.
>China is a centrally planned economy. To argue it's more competitive than the US is again not tenable.
The economic dogma of the late 90s is getting a little long in the tooth now. Not least because it was completely blindsided by the rise of China.
It turned out that the most effectively run economies were a hybrid of distributed and centrally planned (China has open internal markets while credit allocation is largely centrally planned).
There was a lot of other stuff than just import substitution in the Asian miracle. See https://www.astralcodexten.com/p/book-review-how-asia-works
By the way, what I find most baffling in these discussions is that these calculations are always based only on physical goods, ignoring services, where the US usually has a positive balance - eg, with the EU, the US has a 109B positive balance. In our economies, which are more and more service based, why are services ignored?
Services are ignored by Trump for precisely the reason you mention. The big question is: What will other countries do, like Germany, who tend to export goods to the U.S. but import services. Right now, those are the countries who would rather prevent this thing from escalating, but if escalation it must be and they run out of ammunition within the scope of tariffs on goods, where will they go next?
Tariffs on services may also be less popular with the citizens. It's not obvious that the locally produced fridge is only cheaper because of tariffs. It will be more obvious that everyone non-EU based pays more. It will also be harder to control (how will EU extract tariffs for payments I do to companies with no EU presence?)
But I don't how much about it, maybe these are already solved problems. After all VAT already exists and faces similar challenges.
There are two kinds of "services". You have jobs that are in finance and software, which make good money, and you have jobs in cosmetology and fast food, which have terrible pay. The services that we export are the former.
Your high school grad (or high school dropout) isn't going to get one of those finance or software jobs. But they could get a factory job, if we can get those back.
So the best spin I could put on this is that the emphasis is on physical goods because that's where the people who are hurting in the current economy could find real work.
(Of course, if that were the case, the reasonable thing to do would be to explain that, instead of just acting like services didn't exist as something that is traded.)
I was reading an interesting article about tariffs put on foreign garlic or mushrooms can't remember which, rather than buying American companies just paid more for the foreign product and charged higher prices. The American makers of the product didn't sell more the company's just didn't care. Prices will go up Americans will buy less deflation will occur because they have to sell the product.
Likely will result in worse products as well (which is what happens when you remove competition).
LaTam is perfect example on how bad this "wide" protectionism is. There's a ton of economic papers about it.
If you really want protectionism, you could do something more similar to how South Korea did, by choosing specific sectors of economy you want to "protect", to create a "national industry".
Most protectionist industrial policies also exempt imports of machines and other supplies used in factories.
e.g. It makes no sense to put tariffs on machines used in a factory in the USA. AS that would make it more expensive for a factory to operate if they have to import a more expensive machine from Germany. "Buy a machine from the U.S", that would mean a more expensive machine likely, as it only exists because of tariffs.
That basically means you'll have factories on best case scenario, but your cars, your computers, phones, won't be exported.
It's great if you want to be self-sufficient pending a great war. The way things are going, it may be the only thing to justify such blatant self-sabotage, and hence necessary to start one.
If you make everyone rely on each other, war hurts everyone more and is more likely to be avoided. If going to war doesn't cost you a supplier, war is more palatable.
Global trade reduces war
If you think a war is coming, why would you antagonize your closest allies?
Building up strategic industries is another reason.
Or, in America's case, arresting their decline.
It can be a self-fulfilling prophecy : “We have to go to war with them because they retaliated with tariffs!”
Trump has literally said that if Canada doesn’t like the tariffs, they should just let the US annex them!
Well if you do all you can to stirr some 'great war', you will eventually get it. Its only US saying there will be one though, rest of the world is in WTF mode. China doesn't care about anything global but Taiwan and its own security. They are probably more capitalist than US at this point and prefer having stable trade cash flows rather than expanding.
So, if thats the real underlying reason for all these steps then US is the warmonger here attacking literally everybody preemptively. 5D chess at least.
Short term consequences are probably different then long term.
In the short term you can't just create a new garlic farm in a day.
In the long term it will still be more expensive (if american garlic was the cheap option they would have used it from the get-go) but there will probably be more adjustments then in the short term
That's part of the reason why these tarrifs are so stupid. There is no warning on the specifics so there isnt time for companies to come up with alternative plans. Given how inconsistent trump is, there is also limited incentive to seek alternative supply chains, because who knows if he will just change his mind again.
This is also the start, other countries will retaliate and the current administration being the current administration will probably respond.
>The United States will be an autarchy, similar to how LaTam was in the 70's, when tried this exact idea. The tariffs being as high instantly, will impact the economy, later, the country will probably grow, which is what they expect, but this is not a productive grow. Because your new factories now are not competing with external products, so your productivity go down, this means real income will also go down.
If what you say is true, tarrifs should not exist in any country. And yet, most countries are using tarrifs.
What if a particular country is using dumping and sell at prices so low, it will kill a particular industry? And after they kill it, they start jacking prices at unseen levels and you will have to pay because you don't have a choice?
Most countries do specific tariffs on areas of the economy they want to develop/protect them.
If a country is doing price dumping, there's even legal ways of protecting these sectors, by applying to WTO (but the U.S basically killed the WTO). But even if the U.S don't trust the WTO, they could apply antidumping tariffs to these specific sectors (like the 100% tariffs Biden administration did to EVs).
U.S is not doing this right now, it's protecting "all sectors" of the economy. There's no other reasonable developed country with a 29% tariff.
You can check here: https://data.worldbank.org/indicator/TM.TAX.MRCH.WM.AR.ZS
You'll also notice that most developed or growing economics have low tariffs...
>And yet, most countries are using tarrifs.
On specific industries they want to protect. Not completely across the board.
VAT on imports are across the board, as far as consumer goods go.
VAT by definition applies to domestic products as well, and is thus not putting foreign sellers at a disadvantage.
Domestic producers can redeem part of their VAT, which foreign producers can't, effectively making it a tariff. Also European countries apply their own bona-fide tariffs to foreign imports, which anybody who has imported into the EU has experienced. It is stated "tariff" on the bill you receive from customs and in the law that regulates said tariff, and in your accounting for expenses if you are a business. But now we have to pretend these tariffs do not exist? What kind of game is this? Has everybody became psychopaths?
VAT is like a sales-tax but along the supply chain (with credits) - so it's like a complicated sales-tax.
If you want to use that for argument, you should include US sales taxes in the calculation too. Which could be fair, I guess.
China has many tariffs and non-tariffs restrictions. They are targeted as tariffs tend to be (well...).
For instance, tariffs on cars vary from 25% to 47%. It is quite the status symbol to drive an imported car.
Their policy has always been to develop their own car industry, so foreign manufacturers had to set up factories in the country but even that could not be fully foreign-owned and had to be through a joint-venture with a local manufacturer. I believe Tesla's Gigafactory in Shanghai (opened in 2019) was the first fully foreign-owned car factory they allowed.
It's hard to imagine that there's a way they thought this through in several redundant dimensions.
I understand rationally that there was an economy before the US plunged the world into neoliberalist global free trade in order to build its trade empire, and there will probably be an economy after... but likely not a US trade empire.
But another thing is investment uncertainty. The mechanism by which protectionist tariffs are supposed to work functions over a timespan of a decade or two - foreign imported goods are made more expensive, and so when investors believe they're confident in future tariff conditions, they spend money on domestic factories to produce goods, which have a large setup cost and gradually pay back the difference relative to their good-importer competitors that are paying high tariffs.
If investors can't form a confident prediction on future tariff conditions, investors can't invest; The sheer uncertainty of having a lunatic making up random numbers for every country over lunch and then rolling them out at close of market is instead going to scare them off. Trump has gone back and forth over tariffs with Canada and Mexico over the past couple months, and this doesn't just demonstrate that tariffs can be set extraordinarily high for arbitrary reasons, but that they can be set back to zero for arbitrary reasons. Both of these transitions cause economic ruin for one investor or other; If it's going to happen every few months then nobody is going to build factories or launch import supplychains, at least not for competitive prices. The risk of going bankrupt tomorrow (or in four years when the next administration takes over and abruptly cancels every tariff) on what is basically a coinflip then gets priced into consumer goods for both producers and importers.
The most frustrating of Trump's projects are not just when he shreds your rights or shreds precedent or tries to topple the government, but when he looks favorably at a policy you think is a good idea (like having a manufacturing sector) and chooses to pursue it by running around with a flamethrower setting everything ablaze because on some lever somebody's taught him about the Broken Windows Fallacy wrong, as a joke, and he's upgraded it. During his administration, we circle the wagons and declare that the policy is a terrible idea. Post-Trump, the absolute ruin that the execution of that policy predictably brought will discredit it for the rest of your adult life.
People are also getting way too caught up in the math and numbers. They think WH calculated the percentages through incompetence but the 25% tariffs weren't based on anything very real either. The entire goal is not carefully calculated trade equality, it's mafia style intimidation to get some easy concessions as quickly as possible from everybody... before the economy crashes too hard. Spamming tariffs to see what sticks. The math is just a plausible justification for something they would have done anyway.
It's bully tactics.
For ex see Canada's fentynal importation issue, which was something invented to justify a natsec emergency legally. The numbers don't have to be real, just plausibly deniable.
Bingo. Occam's razor suggests that the WH is again simply trying to force good short-term deals using mobster tactics.
>They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
Devaluing dollar does not reduce debt measured in dollars. It only makes US debt less valuable to forefingers.
Devaluing dollar can work well only if foreign investments into US stop or reverse. "foreign investors at the end of last year owned 18% of U.S. stocks, according to Goldman Sachs" The trend has already reversed https://www.reuters.com/markets/us/foreign-demand-us-assets-... Killing foreign demand for US assets more permanently is possible but it means financial market crash.
What WILL happen is recession. Atlanta Fed GDPNow dropped from -2.8 to -3.7 percent in a week. https://www.atlantafed.org/cqer/research/gdpnow?date=2025-04...
https://www.nordea.com/en/news/mar-a-lago-accord-explained-a...
https://think.ing.com/articles/mar-a-lago-accord-10-question...
https://www.forbes.com/sites/eriksherman/2025/02/23/why-trum...
https://www.lowyinstitute.org/the-interpreter/unpacking-mar-...
I certainly don't understand enough of economics, but:
- If everything overnight costs 20% more for the American consumer, it equals 20% less disposable income and less purchasing power.
- US companies, even the few ones not directly affected by tariffs, are going to be hit by less demand, and that in the aggregate is going to affect the performance of all American companies.
- So, it makes sense to dump as much American stock (and perhaps other instruments) as rationally possible.
The rest of the world is also going to feel the shock, though at this point is unknowable to what extent, and it also depends on the policies governments outside USA enact. In Sweden for example, we react to imported USA inflation by increasing central bank rates and catapulting the country into recession, and I totally see that happening in the next few weeks. Even it does not, it is what the public expects, and already many may be reigning in on consumption and investment. And dumping American stocks like crazy.
Foreign countries like Japan and China own around $1.8T in US bonds. These are valued in dollars, like stocks.
Yes. That's what I said "Devaluing dollar does not reduce debt measured in dollar"
The US would still have to pay the debt in Dollars. Devaluation affects currency exchange rates. Debt would be less valuable in Yen and Renminbi but just as expensive for the US government.
Doesn't Europe and Japan have dollar swap lines with US? So ultimately it is US buying its own bonds through Japan to create an illusion that there exists enough external demand.
I thought the US gov is hoping that debt is relinquished as part of negotiations, is that not the case?
That's a crazy showertought. WH might actually consider it.
After hypothetical successful debt relinquish negotiations, any new US debt would have similar interest rate to Argentinian debt, 30% or so. Wall Street would shrink and London (or Frankfurt) would become new global financial center.
In reality, countries do just as what they do now. They raise counter-tariffs. The US faces coutertariffs from everyone. Other countries only from the US. Trade between countries other increase and they gradually adjust. Europeans start buying less iPhones and buy more Androids made in South Korea. Less Fords more Nissan.
> Europeans start buying less iPhones
I wonder... they're all made in China anyway. And shipped from there directly, not through the US. I'm sure that either the US tariffs won't apply to them, or Apple will shuffle some subsidiaries so they don't.
Buying goods from American corporations is going to leave a sour taste in the mouth for Europeans now.
Yeah but for smartphones you have two choices, both American.
Don't tell me it matters who makes the hardware, it's the OS that sets the experience.
Samsung and apple?
Apple and google. Read both lines of my post.
Most (if not all) Fords bought in Europe are actually made in Germany (AFAIR).
If that is the plan, it's terrible. The majority of US debt is domestic.
https://usafacts.org/articles/which-countries-own-the-most-u...
Yes and no. As a headline "I reduced $7t of foreign debt" is pretty good. The plan appears to be to invite people to Mar a Lago and offer to trade the existing debt for new instruments out in the never-never.
Domestic debt might not be such a big deal? Who is coming to collect?
So the argument is that we crashed the economy but at least we screwed foreigners over and not just social security?
Wasn't that the plan all along, people always said "Ballooning Government debt is fine since unlike normal debt Governments can just print money and never really pay back the real value".
Someone has to get screwed over when you do that, who do you suggest get screwed over?
I heard the term "bail-ins" used in this context. i.e. the elites will have to suffer the devaluation.
That was a rainy day argument for not caring too much about debt. But what's happening now is we're raiding our savings account to pay for bath salts. No, it was not "the plan all along".
> But what's happening now is we're raiding our savings account
What savings, USA just takes on more debt it hasn't saved anything.
Other countries got screwed when doing that because the US used to have the world currency and could print money essentially without repercussions.
Note the past tense as this advantage is now gone with Trump.
YES. About ~30% of people appear willing to experience a loss as long as they believe they're inflicting a greater loss upon other people, and this personality type is baked in young. In my vier it's not a coincidence that polled support for Trump consistently hovers around 30%.
https://www.science.org/doi/10.1126/sciadv.1600451
Not all policy is rational. Oftentimes it's atavistic. Surely you have noticed by now that Trump deals in emotional arguments, not reasoned ones.
So the full faith and credit of the US Treasury is thrown away just like that?
No one collects the debt. It’s just redeeming treasury bonds. If they are no longer good then the sub prime crisis is going to look like a minor economic wrinkle.
> As a headline "I reduced $7t of foreign debt" is pretty good.
Nobody cares about the big numbers when the wallets are empty.
> Domestic debt might not be such a big deal? Who is coming to collect?
Old people with retirement needs. A lot of that debt is borrowed from SS surpluses in the past, and now the system is actually in deficit (so needs what it lent out back and then some). I’m all for screwing over boomers, psychologically I’ve convinced myself they are responsible for Trump and this mess (not entirely true, but the boomers as a generation messed things up for us before Trump was president, anyways).
Still fits within a populist agenda. Not a lot of sympathy for mutual funds and the wealthy holding treasury notes that get inflated away.
I'm not excited that 20% of federal revenue goes pay debt interest to some investors and stockholders. Especially when much of the original debt spending also went into the pockets of stockholders, sometimes the same ones.
Of course, the actual problem is lack of control and debt spending, not the fact that investors exist.
People say that public debt doesn't matter because it domestic, but the recipients and payers are different. It doesn't cancel out when I'm responsible for paying taxes and Vanguard or JPMorgan get the debt interest.
> Still fits within a populist agenda. Not a lot of sympathy for mutual funds and the wealthy holding treasury notes that get inflated away.
Wouldn’t this include average people’s pensions, IRAs, etc, too?
Yeah, national debt is splattered all around the US economy, but that doesn't mean it is uniform, or the payers and recipients are the same in terms of participation, returns, or even time.
Foundationally, national debt is about passing costs into the future, which also creates another huge dichotomy in payers and beneficiaries. Minimal federal spending is on growth, so isn't really about investment as how much value can be extracted from one group to another, largely, but not entirely overlapping group.
> but that doesn't mean it is uniform, or the payers and recipients are the same in terms of participation, returns, or even time.
I’m not sure if I’m following, but a (let’s say) 20% cut to the value of an average retiree’s pension account will hurt much _more_ than the same cut to a diversified wealthy person. This is simply because poorer people are affected more by fixed costs. I don’t see where the populist angle comes in. Shouldn’t the populist angle be about targeting the “elite” specifically?
Given everything recent I’d say competence in the WH is a stretch
The prez is literally holding up placards where half the numbers on it are mislabelled and they rest of the numbers are that mislabelled/misunderstood number divided by half
That sounds like garden variety incompetence to me not 5D chess
There is a low cunning at work though - Trump now runs the largest military in the world and the largest economy and if the only way he can impress other people is to use that power he will use it to try to beat them into submission. Chaos at this point is his friend as he attempts to stay in power as long as possible, so expect trade wars, war, domestic chaos and forcing others to show loyalty to him personally and pay him off as the biggest bully in the room. He sees this in very simple terms. So no there is not a high intelligence at work but he is not without agency and cunning. He has operated this way all his life due to inherited money and got away with it.
And damn the consequences for everyone else, including the people who elected him, he doesn’t consider that in his calculations, which is what makes them so confusing for those who think he is playing by normal rules of politics or business.
The bring manufacturing back to the US never made sense to be numbers wise.
Thing A is currently manufactured in China | Vietnam | whatever lower cost country and sold for $x today. Slap on 50% tariffs so now it costs $1.5x. That provides an incentive to produce thing A locally sure.
But if you can already produce thing A locally for $x, you wouldn't have offshored the production in the first place. Maybe producing thing A locally will cost less than $1.5x, but it'll still be more than $x. So cost still end up increasing.
Am I missing something?
I think the long game answer is clear: Trump wants an old fashioned World War with China before 2027 and needs production back in the States.
Yes, this is the puzzle piece many are missing.
They see a way with china by the end of the decade so they are trying to remove dependence on their manufacturing and flip Russia to our side.
Except there isn’t any guarantee of a war with china, it’s just an idea they have. For all we can tell they have no intention of that. Taiwan is tricky though
Whether one umbrella factory moves from China to the US within this election cycle doesn't really make a dent. The moving of industry from the US happened over decades, and was hand-in-hand with the US making fewer umbrellas and more computer programs, satellites, and microchips. Moving basic manufacturing of low value goods to the US would cannibalize the capacity of producing higher value goods. And none of it will be noticeable while Trump is still alive.
Hard to say re: labor cannibalization - if you are sociopathic about the labor force like Trump is, all these fentanyl deaths are just spare capacity that didn’t have an input interface and should have been in a factory.
The missing piece is not all costs are passed on to consumers.
Company absorb costs all the time. If you think cutting your price by 10% will boost sales by 20%, you do it because total profit is higher even though per unit profit is lower.
And the reverse is true - companies might increase prices and accept lower volume.
Not to mention not all items are interchangeable. Is a car made in Mexico worth the same as the same model made in Germany?
So basically a lose lose from company and consumer perspectives. Either company makes less profit or consumers pay more or a mix of both.
Congratulations you have just re-discovered an Econ 101 concept called deadweight loss
Low cost items, of the type the vast majority of the population are quite sensitive to the price of, have almost no margin on them to start with. There isn't 10% to cut.
True, but a $5 trash can with a 10% tariff is $5.50
The $5 trash can is made in China, which is receiving something on the order of a 50% tarriff.
And now that's 50c extra in taxes to the government for every other part of the supply chain consuming $5 trash cans as an expense.
The Q5 is made in Mexico.
Two typical scenarios that we know from the past in industries like cars for example.
Corp one has two factories one smaller one in the us one bigger one in the eu. They will now shift more of the production to the us from eu to avoid tariffs.
Corp two only has a factory in the eu. They will now build another factory in the us to be able to avoid tariffs and keep selling their goods at competitive prices.
Forgive me my ignorance, but: parts from which cars are assembled (or raw materials from which parts are manufactured), are also subject to tariffs, aren't they? So the only shift that would happen is that of the labour (and US labour is not the cheapest, IIRC).
They would in the current scenario, yes, but the OP said “Two typical scenarios that we know from the past in industries like cars for example”
In the past, countries would put tariffs on importing cars, but not on importing car parts (with some complex definition of what constitutes a car and a car part. IIRC, there once was a loophole where one imported a car and converted it into a van by removing back seats to avoid a tax on importing vans)
For manufacturing physical goods, labour cost is a small percentage of the total cost of the good. Why is this? Because modern labourers are extremely productive: they are highly skilled at their jobs and use very efficient tools and machines to do their jobs.
No those factories will shift too its a domino effect.
The problem with this theory is the tariffs will both have to remain in place for a decade and businesses will have to believe that they'll remain in place for a decade for that to pan out.
Nobody is building a new factory, based on tariffs that they expect to be gone in three years time.
Three years? I'll be surprised if the tariffs last three months.
They will only shift if it's predictable that the tariff policy will stay for long enough to recoup the high capital investments of building a whole new factory just to serve the internal market.
For many industries it might not make sense unless it's a 5-10 years long plan, the risk of investing a lot to build a new factory, bringing it online over the next 2-3 years, to then have tariffs removed and making your new shiny factory more expensive to run than one outside of the country, will also be factored into the total cost.
The tariffs are so broadly applied that the risk factor is much more massive than anything the USA experienced before (like during the Japanese cars era of the 70s/80s), it's wishful thinking the domino effect will happen in the short/medium-term.
> They will now build another factory in the us to be able to avoid tariffs and keep selling their goods at competitive prices
They won't be competitive prices though; they'll have to charge more because of the capital costs in setting up a whole new factory and supply chains, increased labour costs, and having to pay tariffs on importing parts.
I imagine that not being able to export cars from this factory due to reciprocal tarrifs will also drive up prices, due to things like lost flexibility, redundancy, and economies of scale.
And it isn't like we have especially high unemployment right now. There isn't a labor force available to suddenly staff a bunch of factories even if they took zero time and capital to set up.
That's the entire point of it all. I think you are the only person in this thread who gets it. When there isn't a labour force available, you have to increase salaries to get workers. This means other industries and businesses have to increase salaries to keep their workers, giving a domino effect – meaning higher salaries for workers across the board. It might even mean that shit industries can't find any workers and have to close shop. For example the restaurant industry.
This also means higher prices across the board for consumer goods, but the worker still net benefits greatly.
Who does not benefit: The people who do not work. And that's fine. But it's also this class of people who make the entire political and media class, and hacker class apparently, so that's why we have this enormous resistance.
The tariffs aren't set at like 10,000%.
"Domestic production will replace imports" is conditioned on the cost of domestic production being lower than the cost of imports with the tariffs added. "Just spin up new factories with capital investment, raise wages substantially to get people to change careers from service industries, and train all these new people" isn't going to be a cheaper approach to building furniture than continuing to import it from Vietnam with a high tariff.
The effect will be minimal new domestic manufacturing and higher prices for large numbers of goods.
I think you fail to account for just how little a salary needs to be increased for it to be interesting to switch jobs for the people who are making the lowest wages. In Europe, people compare wages with single digit differences per hour when deciding for switches in jobs and careers.
And low paid workers in the service sector aren't low skilled and costly to get going. They're intelligent and honest, and would be fine workers in manufacturing if given the opportunity. They're working in the service sector because those jobs couldn't be off-shored.
If corp two could have factories in the US and still sell them at competitive prices they would've done that already no? The fact that they haven't indicates it didn't make economic sense. So then doing so would mean their costs would go up, which would either mean they have to eat the extra cost and reduce profit or pass the extra cost to consumers.
They can only pass the extra costs if there is no competition and they can only eat the costs if their margin is big enough to absorb the cost and still remain profitable. If their us market share is important they will shift their production around to the us or somewhere that has a favorable trade agreement with the us.
The stated goal of tariffs is to force companies to shift production back to the US. But US production costs more, hence the outsourcing in the first place, so shifting production back to the US increases cost.
If costs goes up then either prices go up too or margins go down or a mix of both.
In the first scenario the investment isn't astronomical, and if there is surplus capacity you can definitely shift around to avoid tariffs. I think Volvo already announced this wrt. to their US plants. They can take some production from the EU or China and use capacity in the US to build cars. The parts are still imported from China and the EU so will be more expensive, but they still seem to think this can help.
But the second scenario is a massive investment. It not only requires the economics of it to work today, it requires knowing what the situation is 1 or 2 decades down the line. You can't build a car factory in two years. Barely in four. And even if you do, it doesn't matter if it's likely to operate at a loss in 8 years!
The most important thing for that type of investment is stability and predictability, not just "the costs will be lower for at least 2 years now! or maybe 2weeks we don't know since the tariffs seem to come and go depending on which side of bed the local czar wakes up on".
You just made me think of another scenario, Corp three has mostly idle factories at important locations around the world but designs their factory lines to be packable and shippable around the world to hedge against tariffs. The carrying-cost of buildings is considered insurance.
No corporation is building a factory based on a policy that has a lifetime of four years.
3-4 years is a LONG time in business. I do not know how long the tariffs will last. Maybe they will come to a deal next week maybe not. but if they stick around businesses will move stuff to the us. I'm saying this as an EU citizen.
3-4 years is not long at all in this context. Most places take that long to get permits, and additional years to build the factories, and additional years to even become profitable and self sustainable in ideal circumstances.
It's not a long time if you're talking making massive capital investments into things like new factories or capacity.
Your second sentence indicates the more significant problem though, because that uncertainty on timelines makes even the 3-4 year time horizon questionable. Nobody is going to invest anything based on tariffs that may go away or change next week and the only way you can tell if they're sticking around is waiting so long you don't have time to make the investment any more.
It might be different if Trump came in with a clear, transparent tariff plan on day one. But they're already all over the place and being implemented in extremely unpredictable ways. Some people might argue his unpredictability is an asset in general, but it's absolutely not in this case.
3-4 years is a very short time for developing land in the US, anywhere near population centers. You’re looking at that much time just to get permitting done, optimistically.
That’s may be true. But why does Vietnam have such high tariffs? They should be competitive based on their lower costs right? So it’s simple: Vietnam can eliminate tariffs on imports and the U.S. would eliminate tariffs as well.
the tariff is calculated based on trade deficit, not how much tariff the other is applying
> I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
Clearly they will "secure the vote". Massive voter disenfranchisement is already taking place, it will go to the next level.
The one thing I hope Americans think about is to believe in democracy, and discuss with others on the other side of the aisle. Really, most have voted the way they did for real, valid reasons. And recognizing them is the path to heal your country. Only through understanding will democracy prevail.
Do not spiral into dividing your own country. That is the real goal of authoritarian regimes.
You can believe in democracy all you want, but disenfranchisement really has a way of undermining it.
Elon proved this with the Wisconsin Supreme Court vote.
He will likely dangle hundreds of millions in front of voters across the US to buy their vote without any repercussions.
And then make that money back through the insider dealings that prioritise SpaceX et al.
GOP outspent Dems in WI and lost. Dems outspent GOP in FL and lost.
Which is a sample size of 2. We have 468 seats which are up for election.
Musk's brazen [1] use of money will have an impact. Question is how much.
[1] https://apnews.com/article/wisconsin-supreme-court-elon-musk...
Musk's money probably helps, his strange need to be a visible face of this seems to possibly be backfiring.
How massive?
> What's the plan for that?
The answer to this is pretty simple, although American Exceptionalism makes it hard to see for many Americans. For every other country, most could see pretty clearly that they'll not plan on holding free elections going forward.
"Personally I think it's a mistake but hot takes "they have no idea what's coming" are I believe naive."
They slapped 10pct tariffs on the Heard and McDonald islands. Literally uninhabited islands in Antarctica.
The defending theory for that is that it doesn't allow for loopholes by trading through tax exempt countries.
It's certainly an interesting strategy. Let's see how it plays out.
Except those islands are Australian territories. And they've given Australia higher tariffs, so in theory they could reduce these tariffs (which will be paid at least in part by US citizens) by exporting through there?
There's nothing strategic about a 4 column excel spreadsheet and one formula.
By all accounts, it doesn't make sense. Hence why it's ... well, interesting, to say the least.
Why don’t you look up how they came up with those tariff numbers and come back and tell us that this is some sophisticated economics at play here.
I didn't say this is sophisticated.
I said they expect the outcomes people are complaining about. They've workshopped this, and are aware how this is playing out. I would be very surprised if there is a significant leak of "we didn't expect this" anytime soon.
Trump believes in tariffs, I don't.
Apparently much of the rest of the world believes in them as well: almost every country has tariffs and had them long before Trump.
Usually targetted tariffs to protect specific industries, not across the board like this. This is next level.
> they know what's going to happen, and they expect the coming storm because they seek what follows
If they do they’re lying. The mechanism by which tariffs restore production is by raising prices. That makes it more lucrative to invest in serving that market. If producers have to absorb the tariff, they won’t boost production and the tariff is just a corporate tax increase.
> to repudiate foreign held debt, or devalue it, by revaluation of the USD
That’s called inflation!
My personal opinion is less complicated: they're pulling the economic levers they have in a way that they can use to enrich the top 0.1% even more. The richest of the rich got very wealthy during COVID (economic fallout, buying up lots of stocks at a discount then the biggest stock market bull run we've ever seen) and they want to make it happen again.
I am amazed at how many people are still imputing intelligence to Donald Trump. Him winning the presidency again after everything is less about him being some deep mastermind and more an exposure of the issues with America that have been there building for decades now.
The difference between Trump 1 and Trump 2 is that all the "establishment" R politicians who were "corrupt" or "deep state" but willing to work with him could at least steer the ship in the first term. Those people are gone and all who remain are ideologues and yes-men. Trying to find logic in the madness strikes me as someone going through the stages of grief near death, trying to find sense in a senseless, uncaring world. Take occam's razor, no one is steering the ship at the white house right now.
> a lot of people assume the economic consequences like these have not been understood by the WH
I think you're making the same mistake a lot of observers are making: you're looking at this from an economic perspective, and think those decisions were taken on an economic basis. But that is likely not the case.
The Trumpist movement is entirely focused on political aims: re-establishing old hierarchies of power inside the country, and entrenching them for good. The important work is the slashing and burning of welfare and safeguards for lower and middle classes, putting minorities "back in their place", and entrenching the wealthy into positions of absolute dominance. Everything else is a distraction, to keep newspeople busy and the population focused on recreating an idealized, "Happy Days" 1950 society. Enemies will be created to make you hate, this or that policy will be picked up or dropped just to keep you arguing, and meanwhile the important work is made irreversible. Once you destroy what was built over a century, it will take decades to rebuild them, and meanwhile the New Normal will take root and become impossibly hard to remove.
Fascism and nazism did not move from economic principles - they picked up what they needed as they went, opportunistically, because their main aims were fundamentally political. The Trump II administration works in the same way: the priority is political dominance to achieve political aims at societal level, everything else is tangential and opportunistic.
> hot takes "they have no idea what's coming" are I believe naive. They know. They just don't care
I think they know, they care and decided that it is a reasonable way forward given very limited (trade and budget deficit) options. Otherwise I think you are spot on.
To spitball some ideas on your midterm comment (again, agree to it). One possibility is they see it as an unavoidable loss, plan on using veto to maintain course set during the first 2 years (which is why they rush) and hope to be in the updraft phase by the November 2028 elections. Maybe.
This seems likely, but I cannot figure out why they are not trying to pass more legislation in the first 2 years if they're fairly sure they're going to lose the midterms.
The only conclusion that can be drawn from their public actions is that they believe they can more or less enforce all their policies by executive order and that they're very sure they will be keeping the executive in 2028.
If they piss off enough people impeachment is back on the table. They might not last until the 2028 election.
I don't think its about devaluing the currency to pay back debt at all. I believe it's about a fundamental vision of an autark USA, decoupled from any international obligations, whether its NATO, WHO or WTO and focused purely on producing and selling domestically whilst having a "beautiful ocean on each side".
I believe that's an unrealistic vision, not least since America's debt means it cannot afford significant shrinkage of its global market or a loss of its status as reserve currency, but I believe autarkie is the goal none the less.
> and they expect the coming storm because they seek what follows.
Well, a lot of economists, including one Nobel Prize winner (Paul Krugman) have commented on this being a bad idea for the economy...
On the off chance that those people who are supposed to know what they are talking about are all wrong and haven't thought about it being some genius diversion tactics -- it's generally still a pretty bad idea for a government to effectively ask everyone to "tough it out" and "just trust me bro".
It's really disappointing that people are actually trying to theorize this as some kind of genius plan. It doesn't take a genius to figure out the amount of irreparable damage they have already done to regular folks is unacceptable (uh... I'm sure some nutters out there think that DOGE is keeping track of all the damages they have done and will pay everyone once their genius plans have worked out).
That kind of logic really amazes me.
paul krugman isnt useful example because he is a liberal democrat and people will try to say thats why he said its stupid. even though hes right and it is stupid. plenty of conservative economists are basically saying wtf Bro to these tarrifs. Sadly that will also probably not help but it has more of a chance to do something
> they know what's going to happen, and they expect the coming storm because they seek what follows.
I agree that that's their understanding. I'd argue that in reality they don't, they can't. International relations are a very complex system. And there is no precedent of an empire wilfully dismantling its periphery.
I really don't enjoy the whole "may you live in interesting times" thingy
> They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
Given how dependent usa is on foreign debt, that sounds crazy to me.
If they accomplish that sort of thing, they wont be able to borrow at favourable rates anymore. That seems incredibly bad for usa. Am i missing something on how severe that would be?
IIRC they are trying to pay off their debt since they are on a brink of default. They don't want to borrow anymore.
They are literally borrowing more right now. I believe at record levels. Billions per day.
The massive tax cuts Trump is trying to extend or introduce are much larger than the spending cuts proposed so far.
edit: Also the USA is nowhere near a default, unless congress chooses to not raise the ridiculous debt ceiling policy.
> They want to repudiate foreign held debt, or devalue it, by revaluation of the USD
I don't understand, who's holding that "foreign held debt"? foreign countries I suppose, so which countries do you have in mind?
For one, it's not China, which holds a large amount of US treasury bonds (so basically, China is a lender of USD). So the revaluation of USD would work great for China: one, the value of the China-held USD bonds increases, and second, the price of Chinese exports decreases in USD terms.
So help me understand, what's the plan with the revaluation of USD?
Of course there are people who know. But not the decision maker. I notice the use of collective pronouns, but there is only one person driving this. Everyone else is riding the tiger.
Not sure why, despite long and consistent experience, that people keep thinking he’s anyone but exactly who he appears to be. There’s no grand plan, calculated risk, or 4D-chess. The clown is just putting on a performance, based on his immediate feelings, and the immediate reaction of the crowd. There’s nothing else there.
That runs against basic financial reality. The treasuries are the basis of all U.S. liquidity. Owning commercial papers or stocks doesn't help as companies own treasuries. Putting deposits in banks won't help either because banks hold treasuries.
You've read up on the purported "Mar a lago" accord model? The idea is to threaten a repudiated debt, or agree to convert to long term non interest earning debt alternatives which can't be traded.
That's supposedly done with the agreement of the creditors. There's never paying down of national debt over an extended period of time. That's not how modern finances work. Why they feel the need of cramming down friendly creditors is beyond me.
Foreign held debt is less than 30% of outstanding, and less than that is sovereign-owned, so I don't think devaluing or attempting to restructure foreign debt via "century bonds" will have much effect on US debt obligations.
I seriously doubt this administration understands any of this. I agree that they don't care, but I don't think they know what's going to happen. No one does.
I think this is what's going on:
https://youtu.be/cmTeg0B9tH8?si=yhIAg45FCBUW40mI
Japan Joins CHINA To Strike Back On U.S. Trade Punishments!
https://www.youtube.com/watch?v=ZOz4UgTW5-0
I recommend reading the summary of the video if you don't have time.
In my opinion you are giving the US government far too much credit. Trump has through his usage of social media created a weapon that he can strike at anyone that stands in his way. With all branches under Republican control there's simply no one left who can stand up to him without having his political career destroyed. We've seen this story unfold so many times in countries around the world - Turkey would be one recent example where the misguided policies of Erdogan have left the country with record inflation rates for years.
> I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
They tried to steal an election already - it's pretty easy to understand why they are making decisions as if they don't have to worry about elections anymore
This does not, at all, contribute to the discussion.
> What amazes me is the timing
If it didn't hit midterms it would hit the next presidential race. You gotta pick your poison. I guess they decided it's better to just get it over with.
Trump told you, I don't know why you still wonder what's the plan: https://www.reuters.com/world/us/trump-tells-christians-they...
As a professional armchair economist, I would call it a power off rather than a reset.
It took over a hundred years for countries to once again have economic trust with France again when they went hard on tariffs in the 1600s causing war.
Who in their right mind would negotiate with a man known to rip up existing agreements on a whim?!
I have a feeling that this will knock the United States down a peg economically to the point where we look back on Liberation Day as America’s Brexit
Brexit is going to look like a minor bump compared to this. Even the stupid deal the UK negotiated didn’t try and seal the borders to imports.
Bretton Woods would like to have a chat with you.
This was a macro argument assuming a benevolent intention. However if we look purely at self interests the main thrust is to increase revenue on paper to cut taxes. At the same time raise debt ceiling. And when the tarifs proof unsustainable then well, we are in happy deficit spending land with no fault on the drivers side.
> Rust belt sewing shops and Walmart grade cheap goods production lines?
Are we really going to see this happening in 2 years? I'm not sure about this. The cost of Mexican/South Asian factories are still a lot lower than US.
We absolutely will not, especially given the administration's demonstrated lack of willpower.
What you will see is many promises of massive investment, conspicuously scheduled to break ground around 2028ish.
That's what I'm really worried about.
> the midterms will hit
The plan may be that there are no more elections, or that the only people who are allowed to vote are identified MAGA supporters. Does this seem impossible? Everything Trump has done would have been considered impossible only a couple of months ago.
What Trump reveals is the utter apathy of Americans. They're sheep in lions' clothing, not the other way around.
> "they have no idea what's coming" are I believe naive.
There could be someone who understands this. But this someone never shows their face in public, or provides any rationale for the policies beyond the nonsense like "reciprocal tariffs" or similar nonsense. I mean the literal board with tariff percentages that was held up had numbers that made NO sense, to anyone! Yet there are no critical questions?
It's beginning to feel like a conspiracy theory. That behind the obvious idiots who are the faces of the policies, are some other, less inept people who are pulling the strings. But who would this be?
> they expect the coming storm because they seek what follows.
If there are elections in 2026 and 2030 then what follows is a blue wave in the midterms and millions of disappointed voters who had their 401k's gutted, saw prices of most goods increase 10%+ in 2 years, saw little to no tax cuts, lost their jobs if they worked for the government, and lost their social security.
So I asked this question back when the wiki page for exorbitant privilege[0], the term used to refer to the US’ status, was posted. I was provided with a few links of people who do seem to understand[1]. The Hudson Bay capital piece was probably the most interesting[2].
0: https://en.wikipedia.org/wiki/Exorbitant_privilege?wprov=sft... 1: https://news.ycombinator.com/item?id=43529614 2: https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
> Maybe by 2027?
Why on earth would you spend millions and billions of dollars on investing into a ROI-10-year factory, when a cheeseburger overdose or, heaven forbid, the Dems winning another election will take that investment and turn it straight into the toilet?
Not to mention that you'll be locked out of the world's markets, thanks to reciprocal tariffs.
> What's the plan for that?
Trump ran on a campaign that voting is a pain and you won't have to do it again if he wins. Since then he's maintained that third term is the plan. Doesn't really matter how upset the voting population is if you're going to ignore their votes.
they understand first order effects, but second or higher orders are seldom predictable in this matters. So the risk is huge. This massive shock will reveal hidden frailties.
Foreign debt is held in US treasuries, surely they know that? Trump can decide that treasuries can no longer be redeemed, but foreigners only hold 20% of them, so…he would have to somehow make them selectively redeemable, and anyways, there would go the USA’s credit, unless you mean other countries can bribe Trump with treasuries to bring down their tariff? They could also depreciate the USD reducing its debt in real terms but that will most definitely cause hyper inflation along with tariffs.
They have no plan, not even a concept of a plan. Trump is just hoping that he can get lucky with a good outcome, but that is really improbable. This is a huge opportunity for China though if they make deals with everyone else to the exclusion of the USA.
Even the idea of moving production back the USA is misguided, we are already at low unemployment, and haven’t made enough investments in automation like the Chinese are doing ATM. I doubt China will let us import that tech to setup our own factories quickly without worrying about who will work them.
They might be smart about it like you said, but they might also just be stupid. And the theory that they are smart about it is based on a whole bunch more assumptions...
This sounds like typical NYT sane-washing. After the Signal fiasco I've lost all confidence this administration is secretly super competent but just refuses to let any of us see it. There is no big plan here. This is just an old man surrounded by too many yes-men.
There is also a camp of ideologues that don’t care if they implode the economy if they get to LARP the TV version of the 1950s. Imploding the economy might even make it easier to sell traditionalist politics.
This is, as they say, “sanewashing”. Trump is doing this out of a mix of spite and a view of trade as a zero sum game. He may be advised into a path to try to pivot this into a “win” by large scale debt restructuring, but that is not the overarching motive.
Fully agreed. Tariffs are one thing that Trump has always been clear about. He likes them, he sees them as beneficial and now that he has no brakes in this administration he is finally going to try and put them in place.
There is no 4D chess.
I mean it's also clear he doesn't understand them. The poster he posed with today has a column labelled "tarrifs charged to the USA".
The main feature of them was he discovered in his first term he could do them unilaterally without Congress, and his audience would just go along with it anyway.
I had hoped that this kind of "Trump is actually playing 4d chess, you just don't understand" argument would be dismissed after seeing him through the first term, but apparently not.
This is a good take, but I think I can answer your question about the midterms. This is timed specifically for them. The drop we're seeing in markets right now isn't a pricing in of the tariffs, per se (at least, not yet), it's a pricing in of policy uncertainty that is going to lead to a near-term drop in investment.
However, because they are doing it so early, they will have time to recalibrate and bake in exemptions until the market / inflation is happy. Up to and including backing off of the policy entirely, if that ends up being necessary. As a political strategy, it is perfectly timed to allow Trump to "save the economy" from his own policies. This is true imo independently of what you may think about the policy as policy.
When it comes to the policy as such, recipirocal tariffs, conceptually, are designed to incentivize the overall global reduction in tariffs. So, as a headline, implementing "reciprocal tariffs" is actually favorable to free trade. However, there are some important details that they have fucked up, such as identifying tariffs with trade deficits in general, and in particular identifying them with trade deficits in goods only. That is really the component of the policy that doesn't make sense, and it is important.
Most likely, they will recalibrate and/or provide a lot of exemptions, particularly as the midterms approach. As a political tactic, I think it will work out fairly well, if they respond to the feedback appropriately - that's the big question though, and that uncertainty is the most significant reason for the market drop.
So my pessimism they can't "heal" this in time is the weak bit, if there are multiple levers they can tweak leading into the midterms to say "it's morning in america"
I say pessimism but in case it's not clear I'd prefer a democrat victory, both in the immediate past and in the coming midterms.
The reason for my "optimism" is that it's just as easy for him to undo this as doing it in the first place. If he keeps them in place as constructed for more than say, 3 months, without shooting them through with loopholes, then he might have a real unfixable problem on his hands, as businesses start to seriously reorient themselves. However, if over the next 3 months or so, he starts tactically peeling them back or being very "generous" with exemptions, the net economic impact could be relatively small, and maybe even moderately positive (depending on the details).
Fwiw I'd prefer the republicans win again, so my optimism is actual (not that I don't have substantial criticisms of the current admin's policies). However, it is refreshing to have a content-focused exchange on the internet about politics, so h/t to you :)
What I don't understand with your argument is, how do you account for the loss of trust of your trading partners? Even if the WH responds and tweaks the tariffs there is no hiding the fact that they have damaged trust in the US as a trading partner. I mean just look at what is happening in most western countries already, there a serious reorienting away from partnership with the US. Also consider that the US is primarily a service export economy and that it's generally much easier to divest from services than manufactured goods, I suspect the moves will have caused serious and long lasting damage to US companies.
The loss of trust issue is the one I worry about most. However, it's also true that the key players who we've implemented tariffs against have had them against us for years, and we've simply absorbed that.
I don't like the mechanism he chose to implement them, or the sharpness with which they were imposed, but I do think implementing actual proper reciprocal tariffs phased in over a reasonable period of time was a good idea. And I agree with you re: the service/goods issue. Them excluding services in their trade deficit calculation is by far the dumbest part of this plan.
Why are we talking reciprocal tariffs? It has been widely reported that the tariffs have been calculated based on trade deficit and not based on existing tariffs. That should alreadyy become clear by the fact that nobody in the western world has anywhere close to the same average tariffs, or that there are different rates for the EU and e.g. La Réunion (which is part of the EU and does not have the right to set their own tariffs).
Eh, this worries me less. I mean ideally yes trade signatures have value but we all know the reality here is that strong nations don't feel bound by international law.
I don't think "reputational harm" exists in international relations. I do think the terms of future bilateral negotiations may be less favourable to the US for a while but if they are too iniquitous they won't get ratified in Congress.
Maybe some significant 20+ year investment choices redirect. Some future 56th president will complain 47 laid the seed of this disadvantage. In every other respect after the noisy bit is over people do what they do.
> the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
There won't be any elections. We will stick with Trumpism. We will be our own best friends, Morty. The outside world will be our enemy. We will do great things Morty, we will do the greatest things. A Trump administration for a 100 years. A Trump administration forever. Over and over. Running around, the Trump administration forever.
You have seen nothing yet. Next he will want a mineral deal with each country to pay back the money they stole from the USA in the past. "Primate Behavior Reference 21": https://youtu.be/GhxqIITtTtU
We even have aspiring leadership in Australia who see this as a win win and have proposed offering JV in uranium, lithium and rare earths. Murdoch press backs the idea, even when criticism of Trump is overt they always go to "we need him more than they need us" because of 50+ years of Defense posture which assumes we're insured by US forces.
What posture? Contracts with either Russia, or the US are worthless. E.g. the Budapest Memorandum?
" According to the three memoranda, Russia, the U.S., and the U.K. confirmed their recognition of Belarus, Kazakhstan, and Ukraine becoming parties to the Treaty on the Non-Proliferation of Nuclear Weapons and effectively removing all Soviet nuclear weapons from their soil, and that they agreed to the following:
1. Respect the signatory's independence and sovereignty in the existing borders (in accordance with the principles of the CSCE Final Act).
2. Refrain from the threat or use of force against the territorial integrity or political independence of the signatories to the memorandum, and undertake that none of their weapons will ever be used against these countries, except in cases of self-defense or otherwise in accordance with the Charter of the United Nations.
3. Refrain from economic coercion designed to subordinate to their own interest the exercise by Ukraine, the Republic of Belarus, and Kazakhstan of the rights inherent in its sovereignty and thus to secure advantages of any kind.
4. Seek immediate Security Council action to provide assistance to the signatory if they "should become a victim of an act of aggression or an object of a threat of aggression in which nuclear weapons are used".
5. Not to use nuclear weapons against any non–nuclear-weapon state party to the Treaty on the Non-Proliferation of Nuclear Weapons, except in the case of an attack on themselves, their territories or dependent territories, their armed forces, or their allies, by such a state in association or alliance with a nuclear weapon state.
6. Consult with one another if questions arise regarding those commitments. "
They will hang you out to dry.
Always keep in mind that Blackrock manages the retirement/social insurance funds of a lot of countries. If the USD crashes, they will, too.
The aftermath will probably be complete isolation of the US, because no country will want to trade with them. And the administration is fine with that, because they're not interested in keeping the status quo of democracy alive.
More influence for them, less influence from outside. That's how oligarchs think and act.
If they hold the midterms...
Is this a thought held by any serious person? The only major country to indefinitely postpone an election recently has been Ukraine. This idea that the midterms wouldn’t be held is tin foil nonsense.
Ukraine hasn't postponed elections indefinitely. They have postponed them until they are no longer at war.
Other countries have effectively gone from moderately democratic elections to sham elections. Turkey is one major country that is going through this process at the moment.
That all sounds fine except that the admin have no intention of keeping these tariffs, rendering your point kind of moot. Trump will enact/retract these tariffs multiple times over just the next month, and few to none of them will still be this high in three months. Since we are just speculating here - what is probably going on is that Trump has some very bad ideas and no one is allowed to contradict him. I'm sure there are people around him that know better, but he really is this simple minded. To your point about midterms, I'm sure his Project 2025 handlers are beside themselves that he's doing this, but there is little they can do to stop him.
Of course they don't know. Should be obvious by now.
They are not experts in the field. But loyalists for a trump autocracy
> What amazes me is the timing: the midterms will hit while the bottom is still chugging along.
I think Trump is getting unpopular actions out of the way quickly, perhaps planning to announce an income tax reduction later to save the midterm elections.
I have followed writings of the many in this administration, seen their interviews etc. Anyone who thinks there is a "5D chess", "the plan" etc. is purely drinking cope here.
> cheap labor factories again isn't going to happen in 2025
It is not going to happen ever unless we plan to move people from better paying jobs in McDonalds and WellsFargo to China styled factories or we allow much higher immigration levels from South America.
Trump admin and his advisors genuinely believe that tariffs are good, that they will create factories and jobs within USA and enable white families to raise families on a single income. They think rest of the world's existence is a mistake, they hate Europe, China, India and South America. They don't know much about Africa and admire Russia.
They didn't learn from the last time, when U.S. soybean farmers got screwed (the first time) and other countries established alternate supply chains that of course didn't involve the U.S. at all.
As the USA makes itself a trade pariah and other countries forge new relationships amongst themselves, we're permanently devalued. The world will (continue to) move on without a backward-looking, unreliable, sad, and obnoxious USA.
>They didn't learn from the last time, when U.S. soybean farmers got screwed
They absolutely learned. They learned those soybean farmers they screwed through outright incompetence or being too stupid to govern would still consume their propaganda and happily vote for them again.
Trump's inner circle like Navarro, Miller etc. do not give two hoots about Soybean farmers or anyone else. They think poverty is a good thing if helps their view of "nationalism".
I have never caught even the slightest whiff of Trump knowing what he's doing on any topic. I'm genuinely not trying to be glib either, this is a sincere observation. When has he publicly or privately intimated that he understands how tariffs or trade work? Or energy or immigration or infrastructure or technology? His public persona gives facile and misleading explanations that are ostensibly just politicking, but every tidbit of leaked insider accounts or hot mics or unguarded moments don't show anything more than the same persona.
> When has he publicly or privately intimated that he understands how tariffs or trade work?
He has a Bachelor's Degree in Economics.
Sadly, this doesn't say much. He was a terrible student by all accounts.
>by all accounts
Which accounts?
For example:
https://studyinternational.com/news/trump-student-wharton/
https://www.phillymag.com/news/2019/09/14/donald-trump-at-wh...
https://studyinternational.com/news/trump-student-wharton/
> Despite the US president attesting to the fact that he finished “top of his class” at Wharton Business School at the University of Pennsylvania, his former college professor, William T. Kelley, had another view.
> After Kelley’s death, Frank DiPrima, a close friend of Kelley, revealed that the professor felt the president was a fool.
https://www.phillymag.com/news/2019/09/14/donald-trump-at-wh...
> It was, it can be said without fear of exaggeration, a day that will live in infamy. When President Donald Trump emerged from his mysterious one-on-one summit with Russian president Vladimir Putin in Helsinki in July of 2018, the respective visages and body language of the two world leaders could not have been further apart. The Russian president looked smug and sated, like a vampire with a bellyful of peasant blood; Trump looked like a man who’d just received a painful enema.
Any accounts that could be taken seriously?
You are confusing the actual accounts with the surrounding article.
Look, Trump has been claiming that he graduated first in class, but never provided any evidence. In fact, he refuses to publish his college records. Why is that?
> You are confusing the actual accounts with the surrounding article.
The first one is hearsay from a dead guy and the other one is a creative writing project. If you had these accounts handy from reputable sources, you would have posted them from the reputable sources. This is not the standard of commentary expected of this forum.
> Look, Trump has been claiming that he graduated first in class, but never provided any evidence.
The articles I have read on the subject suggest that this claim is impossible because he would have been on the honor roll and does not appear there. This tells me that he’s either delusional, misinformed, or a liar. It doesn’t tell me he doesn’t understand economics.
Go back to my comment further up. When has he ever publicly or privately demonstrated that he understands economics? He repeatedly insists that exporters pay tariffs. He says a trade deficit means we're being robbed. His list of misapprehensions on basic ideas is very long. Absent evidence to the contrary, one can only conclude he knows nothing about economics. Maybe he studied it 50 years ago and maybe he didn't. He has not demonstrated an iota of fluency since entering politics.
>He has a Bachelor's Degree in Economics.
Must have been worth as much as toilet paper considering his history of bankruptcies. I would be highly suspect of every person involved in letting him earn a degree in anything.
https://www.washingtonpost.com/politics/2016/live-updates/ge...
Trump's greatest talent is in lying with a straight face, then finding explanations for the lies:
>Why the discrepancy? Perhaps this will give us an idea: Trump told Washington Post reporters that he counted the first three bankruptcies as just one.
His failed businesses include money printing machines aka casinos.
How many successful business founders have never failed?
This tariff plan isn't Trumps. He co-opted Robert Lighthizer last time round, He was a trade negotiator, who believes strongly in protectionism.
It is Howard Lutnick's plan who is the Secretary of Commerce.
Has been widely reported that there was conflict amongst the inner circle about the extent of the tariffs and that it was Lutnick pushing for the most extreme version which is what we ended up with.
Thanks for the correction. I had trouble remembering the name and when I went searching Lighthizer came up first.
Is there a cite for that? I believe it just haven't seen it. Very worrying because Lutnick was Musk's guy and that puts him at least adjacent to Thiel and his cult of monarchy.
Trump 2 is as far from Trump 1 as Trump 1 was from W. Bush.
And now W looks like a respectable statesman by comparison. And by comparison, he is.
Even during the first Trump Presidency I would see meme images of Bush Jr. captioned "Miss me yet?"
W was a tool, but I never thought he harbored malevolent intent for our country or served as a foreign asset the way Trump does.
Trump makes Clinton look like a gentleman and Bush Jr. look like a scholar.
They literally took trade deficit %s and represented them as tariffs levied by those countries.
> . I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
given that they've done most of the things they accuse others of, I wouldn't be surprised if they win by 110%.
Probably the plan for that is to do massive gaslighting on social media and find someone to blame for the hardship. Leveraging emotions (especially the aggressive ones) may be an effective way to keep support of the base.
I really wish I was more optimistic and share your position that voters are driven by self-interest. I hope you're right though.
There may have been a hint of strategy at one time. But the sheer level of gross incompetence coming from every side of this administration does not really lead one to believe that "global 4d chess trade war" is within the actual abilities of this administration to grasp.
Trump wasted his inheritance and has been several times in bankruptcies - and not "I took risks" bankrupt, more "I f*cked up" and "I lied" bankruptcies.
Why do you think we are naive and you aren't?
>> hot takes "they have no idea what's coming" are I believe naive
While I agree they probably have some idea what will happen, don't forget that these same people added a journalist to a group chat where they planned a military attack. They fired a bunch of critical people and then didn't know how to get in touch with them to try and rehire them. Assuming they're total idiots isn't much of a stretch.
> ... they know what's going to happen
While we cannot predict the future, it's moving faster. The world system is under immense stress. Complexity at this scale increases the chance of black swans and unpredictable outcomes. Many powerful actors are reacting simultaneously in divergent directions, which can reshape the trajectory altogether. We are vulnerable to cascading surprises.
By the time the midterms come along I doubt there will be many people left who want the job of fixing up this mess. So they will likely get to keep it.
I tend to agree with you that they know. However the signal leeks showed me that they are not just playing stupid in public - it seems that they are like that for real.
Even the best economists can't predict economy results from "small" actions.
With global ones like this - they are absolutely oblivious what will happen.
Personally I think that their bet is - it will hurt US, but it will devastate EU and hurt China more than US. EU is fragile economically and political instability will follow if its economy crashes. Especially if US pushes OPEC to jack up the prices.
>What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?
tax cut financed by the tariffs? Will buy/mislead a lot of voters when those checks would get sent mid next year.
Especially those voters who couldn't notice that all those countries having tariffs (and VAT) are worse economically than US in major part because US didn't until now have much tariffs to speak of.
The 2nd paragraph is 100% accurate.
"The king is walking around naked; surely he's got a great reason for that. And his advisors wouldn't let him do it if there wasn't a deeper purpose!"
This explanation doesn’t make sense because dollar denominated debt doesn’t change with devaluation.
What is the more likely explanation is all the countries with trade surpluses will feel the pain long before the US and agree to much better terms than before.
The PM of Canada had already indicated progress is being made on their trade deal.
The US already had pretty favourable trade deals with most of the world. The trade deficit wasn’t because of tariff barriers to US goods overseas.
But the countries hit with high tariffs have specifically uneven trade arrangements.
When countries put a high tariff on US goods while enjoying low or no tariffs when exporting to the US - that’s an unfair arrangement.
No, they do not.
Vietnam for example: US 46% tariff, Vietnam average 15% tariffs.
This will hurt the US far more than it hurts other countries, as other countries will just start to bypass the US and trade with other nations.
Who would trust goods from the US or having them as part of your supply chain after this?
The tariff’s aren’t entirely based on the trade deficit. Vietnam artificially keeps its currency undervalued to boost exports.
Trade with other nations?
These are exports to the US, which is 25% of the world’s GDP.
Who is going to replace that demand?
You think Vietnam, where 30% of GDP are US exports, is going to be hurt less than the US where Vietnam makes up 3.9% of imports?
Does every country in the world maliciously connive to keep their currency low vs the dollar? Currency valuations are not tariffs and it is absurd to compare them to a tariff.
These tariffs are a huge mistake according to almost every mainstream economist, I hope instead of parroting the party line you’ll be able to admit their failure in a few years.
Vietnam does manipulate its currency. It’s not something that hasn’t been widely discussed for the past decade or more.
And if you artificially keep your exchange rate 10% higher, that’s an effective 10% tariff on US imports.
I have no idea if the tariffs will work but I don’t fault a country for saying “we’re matching the tariffs you apply to our exports”
> Vietnam does manipulate its currency.
So does every country in the world, this is neither surprising nor reason to slap tariffs on imports (which will hurt US consumers).
> I have no idea if the tariffs will work
We have lots of examples from history of tariffs not working, so there is that. They lead to trade wars, and then sometimes to real wars, never to prosperity.
The unparalleled prosperity the US enjoyed in the last few decades before 2008 was driven by open global trade and being the currency of last resort and the centre of world markets. I think there is a lot of complacency in the US about that position, and we're seeing the beginning of the end.
No, every country in the world doesn’t manipulate their currency. Most can’t because of the floating exchange rate (which Vietnam doesn’t have).
Do you think Canada’s tariffs on dairy products has worked to protect the industry? Seems like it has?
Claiming that free trade has benefited the US is true, but the benefit has gone to the top at the expense of the bottom.
Europe uses tariffs to protect domestic industry and when the US decides to do it, suddenly it’s wrong?
Interest rates, taxes, subsidies and reserves also affect currency value.
The US uses selective tariffs already, which is fine though not actually that helpful IMO, what is new is absurdly high punitive and blanket tariffs on everything. This will tank the stock market, raise prices, cause a recession and perhaps most importantly ruin the reputation of the US as a safe haven.
The absurd tariffs on trading partners that don’t matter like Laos are a perfect illustration of how much thought went into this.
bit of an 11 dimensional chess answer. Senator Chris Murphy has a much better explanation, which is simply this is Trump's way of holding private industry hostage [1]. The tariffs will be incrementally removed as various private industries give him loyalty pledges just as he is doing with large law firms and universities. that's it! so simple.
[1] https://bsky.app/profile/chrismurphyct.bsky.social/post/3llu...
Rich people are typically insulated from economic downturns, especially ones they cause, by their ability to shift investments and asset allocations to mitigate and/or profit from changing tides.
Furthermore, Trump has never bought his own groceries, pumped his own gas, or interviewed for a job so retail prices and layoffs are abstractions "for plebs". Plus, he's reaching the end of his life so he doesn't have very much proverbial skin in the game since his motivations revolve almost exclusively around himself.
I hold a more pessimistic view of the cause and I do agree with your argument that they do know the consequences. But they don't care for another reason.
The plutocracy has fully captured the government and now seeks its ultimate goal: complete transfer of all tax burden to the 99%. For this end they cut the government spending, wrecking the democracy and they impose tariffs to generate fake temporary revenues, so they can argue that the huge tax cut (dwarfing all that came before) is economically sound and fully justified.
This will wreck the global economy and with the coming bad times (wars, famine, extreme migration) nobody will have the presence or the governmental weight to rein in these few rich man.
It looks too complex, IMO. As someone living in Trump's beloved country (Russia), I'd say you should ask, "Cui prodest?" If some oligarchs (currently called billionaires, but we'll see) surrounding Trump benefit financially from these tariffs, then the plan isn't about state debt—it's about their personal wealth.
From the people in my life who talked about their preference for this administration, the economy was the core reason I heard. Specifically interest rates, but ignoring that that’s the federal reserve and the president has no impact on that.
Whatever - all that said, I can’t imagine this leads to an economic boom or anything near it by the midterms. Are the republicans going to lose midterms if the economy is shit? I’m not sure, but I can’t imagine this works out well. I’m no economist though, so what do I know.
If we have something closely enough representing a "free and fair election", there's zero chance Republicans hold the House of Representatives in the mid-terms. But they'll still have the Executive branch, the Senate, and a frighteningly strong hold on the Judicial branch.
Though it seems clear and likely that any means of voter suppression that can be used against areas and demographics that traditionally lean strongly Democrat will be utilized, with a lot less checks and balances than have existed in the past.
> If we have something closely enough representing a "free and fair election"
Make you wonder, doesn't it..
It's insane, because all those people have now backpedaled and no longer bring up the economy as their primary concern.
Also insane because all of this was so predictable. Trump couldn't stop talking about tariffs throughout all of 2024. It was obvious that he was going to do this, and obvious that it would tank the economy.
People don't like saying that they were wrong. Otherwise, we would have a world peace and prosperity.
A lot of people rather change their beliefs than ever admit they’ve been wrong.
> It's insane, because all those people have now backpedaled and no longer bring up the economy as their primary concern.
Give it time. They will.
As soon as they have the narrative to blame the incoming recession on Democrats, they definitely will
They will never if they keep getting constantly bombarded by right wing propaganda. They're already starting to call it "Biden's recession", as they've been told to do by Fox News.
Hey, at least they were not alone. "Economy/cost of living" consistently polled as the number one issue for Trump voters.
It's fascism, reasoning with people won't work. The economy was the problem because Biden was in power. Now it's fine because trump is "doing what is needed and we all need to pay higher prices".
> “The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.”
Edit: poor formatting on mobile.
The “Liberation Day” tariffs aren’t random—they’re step one in a broader strategy called the Mar-a-Lago Accord (yes, named after Trump’s resort). Here’s the playbook from Stephen Miran’s framework and what’s likely next:
The Mar-a-Lago Accord Framework
1. Tariffs as Leverage
• Example: The “reciprocal” tariffs target countries with trade surpluses (China, EU) to pressure concessions.2. Currency Realignment
4. Sovereign Wealth Fund Where “Liberation Day” Fits?—> You are here | Step 1 <—
The 10% baseline tariff + “reciprocal” rates (up to 50%) kickstart Miran’s plan by:
What’s Next (If the Playbook Holds)?1. The ̶C̶l̶o̶n̶e̶ Currency Wars
Expect Trump to accuse China/EU of “currency manipulation” to justify further dollar interventions.
2. Debt Shakeup
Pressure foreign Treasury holders (like Japan) to swap debt for century bonds. If they refuse? More tariffs.
3. Sector-Specific Tariffs
Pharma, lumber, and tech tariffs are likely next to “protect” U.S. industries.
4. Retaliation Escalation
Allies like Canada/EU will counter with tariffs, risking global recession.
The Perils Lying Ahead (Miran’s paper admits risks)
Miran’s paper admits risks:
Bottom line: “Liberation Day” is phase one of a high-risk plan. Success depends on whether trading partners blink first."The Road goes ever on and on, Down from the door where it began. Now far ahead the Road has gone, And I must follow, if I can." - Tolkien
https://smithcapitalinvestors.com/wp-content/uploads/2025/03...
A possible retaliation by the EU could be to not enforce US intellectual property rights in the EU anymore. Or we could start taxing cloud companies, who, until now, have not paid taxes in the EU for profits that they generate in the EU.
This is exactly what I was thinking. Is not the US export far higher than import if they take into account the software and other IT services they sell? I would expect other countires to tarrif that.
That would work of we had viable alternatives (on par with the US offers or as an easy migration). But we don’t really, so if the EU also adds tariffs than we’ll have the same issues the US is going to have. Meaning higher prices for the same offer since we’ll have no other choice but to stick with the US IT offer.
Like other comments said, this could work only if this was long term and everybody bites the bullet until they have a good local alternative to foreign offers with high tariffs. And the chances of having a lower offer as the one you were importing are really high. So, everybody is betting on short term.
Higher Prices? What is the "Price" of Instagram and Google Maps? But on the other hand, how would you put tariffs on these?
The good thing is: If the EU finds a way to tax the money flowing from advertisers to big tech, consumers would not be affected (at least not financially), because they are not the ones paying the price.
The price is not for using it, but for serving ads on it. They'd increase the price for ads that target European customers.
Yes. So advertising gets more expensive when targeting EU users. The users don't care, so there wouldn't be much public backlash. And the advertisers will either cut back / relocate their ad spendings or raise their marketing budget.
That price will be paid by the customer
The customer of the end product? I don't think that marketing budgets work this way.
> What is the "Price" of Instagram and Google Maps?
Those are free for consumers, but Google Suite (Mail, Calendar, etc.) for enterprises definitely has a price.
> Higher Prices? What is the "Price" of Instagram and Google Maps?
You gonna tax their real customers, the advertisers. And a 100% tax on advertisement is actually healthy for the economy and society.
I don't think the current US administration understand the EU.
There are some things where I have my doubts about the current actions of the European countries, like rearmament. Will that be dropped the minute a new US administration enters? What the EU does well, like really well, is trade and bureaucracy. It is, in my mind one of the few areas where the EU can absolutely run circles around the US, while managing to protect and isolate itself from the worst fallout. We've already seen this with the current EU tariffs, they are extremely precise and targets Republican votes at almost no cost to EU consumers. I think that will continue, rather than imposing broad tariffs, the EU will target things Trump care about specifically.
I have a pet theory on why that is. In EU to become a Brussels career bureaucrat you need to be able to speak a couple of languages fluently. This serves as a kind of a filter. Whatever they are, dumb they most certainly are not. To a lesser extent this applies to European politicians too.
Bureaucrat yes, politicians no. Every eu law is translated in to every language of the union and EU employees an army of interpreters that translate in real time sessions of EU parliament- you can be an EU politician only knowing your mother tongue. Expense spent on these translation services has a side benef though- you have a large volume of publicly accessible multilingual text which came in handy for training machine translation (eg deepl) even on smaller languages.
That’s why I said “to a lesser extent”. It’s _possible_ to survive as a high level EU country politician without being fluent in a second language, but it’s definitely suboptimal. So it still serves as a forcing function.
The thing is, you need to take into account the fact that a lot of the political "deals" are not done during official EU sittings, when these translation services are available.
A lot of the discussions happen during the informal after-hours in cafes and restaurants.
This is one of the reasons why, for many years, the Dutch delegation was very unsuccessful at pushing their own interests and placing their representatives in "important" positions, as they were all keen on taking the first train home from Brussels, and were skipping these informal gatherings.
It's not a stretch to imagine that a poor mastering of the "important" EU languages will put a politician at a disadvantage in such settings, due to an inability to communicate with his/her peers.
0% chance of this happening, but I like the idea.
Why not? Multiple politicians have already mentioned IP as a possible method of retaliation. Also, the goal is to hurt Trump, his voters and his allies. Tech Bro's are Trumps allies nowadays.
Denmarks largest export is Ozempic. Ignoring IP rules will hurt EU producers too.
How do you plan to ignore IP to hurt American tech companies. I guess if you allow piracy of all of netflixs content that would work (but same thing would hurt spotify).
Most tech companies are not protected by IP but by network effects and vendor lock in. It would be far simpler to simply implement a minimum tax on revenue or advertising spend in country to extract value.
Phase out Facebook, Instagram and Xitter, 200% tax on Google ads, subsidize local cloud providers, phase out Amazon.
Make piracy legal for downloaders, and stop enforcing the criminal law for seeders.
Also pirate Microsoft, like in good old times.
The DMA is already a tax on US tech companies specifically, given it is enforced exclusively against US tech.
Hence the retaliatory tariffs. The backdoor taxes through 'laws' (that are NEVER enforced against EU companies -- Spotify got a DMA carve-out).
The EU has already been doing that with "fines".
The fines were for breaking EU laws. Don’t break EU law, don’t get fined. It’s quite straightforward
When americans are angry, they tend to spread that frustration with a shovel on everyone.
My country as been hot by 29% tariffs.. I can't say what we did to upset americans, given that we do not compete with any american industry in any substantial way, bu we are bearing the wrath of the wounded american blue collar worker regardless.
I wonder what the net effect of tariffs will be in an year, americans are so used to cheap imports, especially all those shien/aliexpress/temu stuff.
In the culture of the contemporary American right, cruelty is a sign of strength and mercy (or even just empathy) is seen as weakness.
bingo.
Your country didn't do anything. America is being run by a madman, quite simply. This isn't reflective of Americans broadly. The people who voted for Trump wanted cheaper prices, now Trump is making everything more expensive.
The next month is going to be very interesting. The business community is going to put huge pressure on Republican representatives to undo this, and Trump's own supporters will revolt once they see the new prices reflected at Wal-Mart.
I don't know how it's going to play out, but this isn't the end. It's just the beginning.
I wouldn't count out Trump sending out "tariff profit" checks (with his face of course) to all Americans. If he gives everyone a $2000-5000 check (undoubably paid for by borrowings not real tariff income) then he'll get a pass for at least a few months.
That's a human trait and not really an American one, though I am definitely not an apologist for American-specific problems
Pakistan has 58% tariffs on the US.
That’s using the bizarre trade deficit/total imports formula put forward by the administration.
I’m curious what Pakistan actually imposes on US imports as a policy.
No, they don't.
Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs? In my home country VAT is ultimately charged the end-customer and this happens regardless of the origin of the goods. How can this be a seen as a tariff?
Besides, isn't the "Use tax" most(?) American states have more or less equivalent in function?
Others pointed out that the tariff rate they are pointing to is actually just calculated based on trade imbalance. So the logic is that they have a number they want to get to and are throwing around terms that their constituents don't understand to make it sound reasonable
VAT is not a tariff, no one reasonable thinks it's a tariff but the US doesn't use the term VAT so enough people won't second guess it if trump says it's an tax on american goods
VAT is effectively a tariff though, because it disincentivizes import/trade with the US (and other foreign countries). Since the US has no VAT, it's leading to unfair competition.
Good write up here https://www.economicforces.xyz/p/stop-saying-a-value-added-t... about how VAT doesn't alter the levelness of the playing field re imports and exports
VAT complicates the business environment for US companies operating in the EU, and it takes a major chunk of their margins. US doesn't have VAT and has a significantly easier business environment for EU businesses to operate in - leading to an unbalanced playing field.
VAT is just one component though. Remember that US largely subsidizes and sponsors the defense of EU, Ukraine, Taiwan, Japan, etc - but those countries have been giving less and less back, over the past years.
1) EU businesses have to deal with complicated sales tax arrangements that vary by state and municipality.
2) EU businesses have to operate in their own environment and also face the VAT. There is no protectionism here. The playing field with respect to VAT is balanced, regardless of which side of the pond is (...was) an easier business environment to operate in.
VAT complicates the business environment for EU companies operating in the EU too. You're demanding that American companies in the EU should be able to operate the same way they do in the US instead of complying with local laws, ie you're just demanding the right to bring your legal environment with you. Do you believe that foreign companies who open branches in the US should be exempt from US laws and be able to run themselves according to the law in their country of origin, at their US branches? I doubt it.
> it takes a major chunk of their margins
Completely false. Cost of VAT is passed on to consumers not met by companies and as EU companies pay VAT too it doesn't force US companies to lower prices and so harm their margins.
No, VAT is not a tariff. It applies to all goods sold, not only imported ones.
VAT applies equally to domestic and foreign companies. It's a tax.
Tariffs and barriers to trade are measures meant to incentivize production in the country imposing them. That's what free trade is meant to get rid of, that's why Trump is so keen on tariffs and likes them
If a company moved a production line to within the EU from outside because of VAT they'd still have to pay the same exact amount of VAT as they did before. It's just not an incentive in that sense
Repeating this does not lead to understanding. Give a concrete example of how the rules applies which show your point...
US has sales taxes.
If anything, VAT incentivizes sustainable economy by making production more expensive than reuse.
Bullshit. VAT is levied on domestic and imported goods, from the consumer's point of view there is absolutely no difference.
Well, they are saying, EU market is harder to operate in (because everyone pays VAT) than the US market (no VAT, also lower regulatory barriers it seems), and also EU firms have a "home advantage" benefit, for example the regulation is written for their benefit.
So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit.
Additionally, US car tariff used to be 2.5%, whereas EUs is 10%. The imbalance is short in justification, though across the board, EU and US charge each other similar tariff amounts altogether, so there are other areas where the US charges more.
Whether that justifies broad brush enormous tariffs in everything, and whether US does the same in other industries (defence for example) is an exercise I leave for the trader.
> EU market is harder to operate in (because everyone pays VAT)
Surely it's not exactly rocket-science to handle VAT...
Explain how it's an disadvantage for an US exporter compared to a domestic company... Give an example instead of handwaving. I'm willing to admit I don't understand all the details, but you wont convince me using this vague statement: "harder to operate in (because everyone pays VAT)" ...
If the US adjusted selected tariffs to protect selected industries the outcry wouldn't be the same, so I'm not very interested in specific examples where the US have a lower tariff than the "counterpart".
> So US is easy to sell in for everyone, EU is "hard" to sell in for everyone, but maybe less so for EU car makers. So there is something to this argument, it's not entirely without merit.
It's completely without merit. Do you really think US regulation isn't written for the benefit of US companies? It is!
From my post:
> [...] US does the same in other industries
As it happens, automotive regulation in Europe is far stricter than the US ones (emissions and pedestrian safety come to mind).
Not the point I was making.
In any event US cars don’t sell in Europe for a range of reasons including size and fuel consumption. Those stricter rules apply to everyone and I don’t think it’s beyond US manufacturers to meet those rules for cars sold in European markets.
If you’re saying that Europe should loosen its safety rules just so the US can export more cars then the answer will certainly be no.
We'll also need to raze our cities to make bigger roads for their cars. Unlikely to say the least.
Or the US companies could do a minimum amount of effort to tailor their product line for the target market.
> Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs?
There is no logic. VAT isn’t tariffs and is not discriminatory. In the same way as trade imbalance is not theft. It’s just Trump trying to find reasons to complain and present the US as a victim.
The only logic is that since the USA doesn’t have a VAT system, there is no way to do export VAT rebates.
> Export VAT rebates mean to refund the VAT paid in various domestic production stages to exporters. The purpose is to ensure that the prices of exported products are free of taxes in order to maintain a level playing field for international markets.
So that can’t exist at all for American exporters, since the USA doesn’t use VAT, their goods are taxed at a higher rate (as far as the exporters are concerned). It’s confusing, but Trump could have just asked for negotiations to get rid of this distortion.
I dont get it. VAT is end customer tax applied exactly once. The rebates exist so importers, suppliers, resellers, shops dont pay VAT multiple times. This applies to every product local or imported.
With special case of digital goods this for a looong time meant that software sold from outside EU over internet was around 20% (VAT) cheaper because VAT was ignored by the companies. That’s quite a big advantage especially for US. And a reason why EU wanted VAT to be applied equally. Many companies still ignore it but it’s illegal now.
I'm not sure I follow. When I read the rules for Norway [1] it appear the importer (in Norway) pay the VAT on the imported goods (as opposed to the the seller for domestic a domestic business). But it's nothing that indicates that this amount payed does not enter the ordinary VAT accounting. Ie.: the amount payed will in effect simply be forwarded to the end-customer, just like domestic goods. I don't understand how a "VAT rebate" would come in play here?
> Export tax rebates involve the return of indirect taxes that have been levied on inputs used to manufacture goods that are eventually exported out of the country. These taxes can include VAT, ...
So this seems to be about imported goods being more expensive in US, not the other way around? Ie. if a US company import some product from Norway they have to pay VAT to Norway? And if they subsequently sell a derived product back to Norway they do not get refunded this VAT?
[1] https://www.toll.no/no/bedrift/import/importguide#merverdiav...
So let's say you make something in Europe, you pay VAT on the inputs, when it is sold to someone, they pay VAT, you take the VAT that the consumer paid and deduct the VAT you already paid to make the thing, sending the rest to the government, who only gets 20% on the thing, it doesn't get 20$ + 10% + 5% + .
You have to keep receipts of the VAT you paid to make the thing to do this, Europe doesn't like sloppy paper work, and rightfully so. Except...America doesn't have VAT, so there are no VAT rebates, they pay taxes on inputs and the consumer pays 20% on the finished item. But you are also right: if Norway exports a thing to the USA, they aren't getting a VAT rebate either from the sales tax paid on the thing in the states (or does Norway get a VAT rebate on things exported to non-VAT countries? I'm not sure).
But really, VAT is a better way, you avoid double taxation. The US should really just adopt it and make their VAT system compatible with Europe.
So that make short of sense, except according to this
"Selling goods to customers outside the EU
If you sell goods to customers outside the EU, you do not charge VAT. However, you may still deduct the VAT that you paid on related expenses, such as for goods or services purchased specifically to make those sales."
So the inputs are not more expensive to American importer. Yes the European company is compensated for the VAT they paid on an input, but this is a tax to begin with. Which the US companies not pay. So this is not unfair to the US company..
Or is there something I'm not getting?
I don't see how it's even possible to negotiate .
VAT countries apply VAT on all domestic transactions (and that includes imports). VAT countries do not apply VAT on exports because they _rightly_ assume that the importing country will apply VAT or whatever sale tax equivalent is in place in their territory.
This is not a distortion. There's really no other way to make it work.
Other thing is that when you’re VAT registered, as a buyer of parts you reclaim VAT on things you purchase as inputs. So the tax on the final product is what matters.
With US sales taxes you accrue tax all the way up the chain.
What?
Sales tax exemption is a thing when buying items for sale or materials for items for sale.
In many states in the US, if you go and buy materials, as a business, you pay a sales tax. There are exemptions and partial rebates, but there's nothing across all industries, and it varies by state. So if you were a farmer you might find you were exempt on fertilizer and tractors but not on a pickup truck.
That's different to a VAT, because there, as long as you're a registered business for VAT purposes, all purchases you make are exempt from VAT - either you don't pay it when you purchase and are invoiced by a business, or you can claim it back if you keep receipts. Companies have to register for VAT when revenue hits a certain amount; here in the UK it's £85k for e.g.
>either you don't pay it when you purchase and are invoiced by a business
As a business you pay VAT when you purchase. And you collect VAT when you sell. Then you pay to the government the difference between collected VAT and paid VAT. That's what the "Value Added" part means.
No, if you provide a VAT number, in business to business transactions, companies will not normally charge VAT in the first place, so you don't pay it when you purchase in many cases as a business.
However if you go into something aimed at consumers, and make a purchase, they're normally not set up for this, which is why you're able to reclaim when you have paid it.
This may be an arrangement set up in some jurisdictions and probably widely used nowadays.
The default (as in « the original setup ») is what i’ve described.
> So if you were a farmer you might find you were exempt on fertilizer and tractors but not on a pickup truck.
There are items that generate a non-deductible input tax in VAT countries (often entertainment items or cars). But usually, those will be the exception and deductible would be the default.
A tariff is a tax specifically on foreign goods. It is an artificial barrier to trade used to make domestic products more competitive. VAT is a tax applied to all products equally, so it isn't a trade barrier. You might be able to construe a convoluted argument that it is easier for domestic companies to work through domestic regulation, but that's pretty weak.
The US seems to have simply taken the value of the trade deficit with a country, divided it by total imports from that country, and used that as the tariff percentage. So in their logic, wherever there is a trade imbalance, this must be explained by barriers to trade. So in a sense this is also a repudiation of the core hypothesis of global free trade as an ideology: That, if countries trade freely with one another, they can specialise on certain production and a virtuous cycle makes everyone richer. In Trump's ideology, trade is a zero sum game, and having a trade deficit means that you are losing.
For context - here is one of Trump's posts which mention VAT: https://truthsocial.com/@realDonaldTrump/posts/1140091752662...
No details provided.
European VAT makes it difficult for American companies to compete in Europe. US has no VAT, making it easier for European companies to compete in America...
Combined with the fact that the US is the de-facto largest benefactor of NATO, Ukraine, UN, etc... then the US is getting shafted by the EU and Trump is correct in seeking ways to mitigate that.
Applying this economical pressure on the EU is a valid strategy, IMHO.
This doesn't make any sense.
European companies pay VAT in Europe. American companies pay VAT in Europe. European companies do not pay VAT in US. American companies do not pay VAT in US.
Where is the unfair competition?
I'm literally quoting you:
> "American companies pay VAT in Europe. European companies do not pay VAT in US."
VAT is a significant income stream for the EU. They take that money and re-invest it into their economy in an uncompetitive manner, whilst constantly propping up more anti-competitive regulation (which harms American businesses).
Have you looked at EU countries budgets? We "invest" in social security and public health systems. Our defense budgets go in large part to buy arms from the US, and Musk complains if we decide to prop up Arianespace for some defense satellites while threatening to cutoff Starlink for Ukraine paid by Poland. Have you looked at how much money your DoD sends abroad (and how much of it is pork)? You're literally telling us to be more protectionist, and then expect something different.
I don't really care what you invest the money into, the point is that the VAT is a mechanism which messes with the concept of a free global market and it leads to unfair competition and an unleveled playing field. If you combine it with other factors (such as the fact that the US is the sole guarantor of Europe's defense) - the US is in the right for challenging the European economy.
We tax consumers, actual people, where they actually live, on what they consume, to fund the public services they benefit from.
Why would that be a market distortion!?
You're welcome to stop funding our defense. Just don't expect us to continue to fund your arms industry when you tell us to buy additional weapons.
American companies pay VAT in Europe. European companies pay VAT in Europe.
American companies do not pay VAT in in the US. European companies do not pay VAT in the US.
American companies pay sales tax in the US. European companies pay sales tax in the US.
US sales tax is *significantly* lower than VAT, varies by state (allowing for all kinds of loopholes), and applies to fewer categories of products and services sold. No point arguing this, VAT is a protectionist and anti-competitive tax and the US has a right to challenge it.
Why are you arguing this point? It’s de-facto cheaper and easier for European companies to compete in the American markets, than the other way around.
How is it protectionist if the European companies also pay it?
You are arguing about rules that apply to all companies competing in Europe and then extrapolating that to say that “American companies competing in Europe” are mistreated.
Are you saying the VAT doesn't benefit Europe and European economies (both directly and indirectly)?
If I read you correctly you're saying that a tax imposed on the consumers in a country benefits the country as a whole and thus aslo the companies operating in that country, which make it unfair to foreign companies? Is that really what you're arguing?
I’m saying the VAT is not protectionist.
We started this conversation with you seemingly not understanding how VAT messes with free trade, and it sounds to me like you're in a different place now. Feel free to keep arguing over semantics all day long, I'll leave it at that.
My place hasn’t changed at all. Everything I’ve said is internally consistent. You are welcome to view any form of taxation as an impediment to “free trade” but that’s not how competition works. Feel free to continue believing that taxation is inherently protectionist, I’ll leave it at that.
There's "taxation", and then there is "taxation". VAT is an incredibly aggressive and overreaching version of "taxation", and it has severe implications on free trade with Europe. I'm not sure why you won't acknowledge this.
And by the way - plenty of economists view taxation as impediment to free trade.
I’m not sure why you won’t acknowledge that a tax that affects domestic and foreign companies equally is not protectionist. But here we are.
I’m not saying that taxes don’t have an impact on the economy, or the business environment, or growth, or profits…of course they do! Maybe the tax will lower demand which makes investment less appealing, and so less investment from Americans happens as a result. But there's also less investment from the Europeans in that case! And most of all, it has nothing to do with the competitiveness of American products in the European market, because the European products face the same tax. VAT does not distort the relative price between European and foreign products.
If you want to say that tax revenue is used for subsidies that are anticompetitive — well money is fungible, you can’t blame that specifically on VAT revenue, and you should be making an argument against subsidies, not the VAT. But then you will need to address the many ways in which the US subsidizes its own industries.
Have a good day!
How is it easier for the European companies to compete when the US companies have the same conditions?
Not everyone is an expert in this field. If you are, I'm sure you can provide a more understandable explanation.
It's not obvious to me that the different rates of sales tax/vat matter for competitio either. An example is worth thousand words here...
Can you explain how it make it difficult?
Ie. Give an example of how the system is an disadvantage for en American exporter or an advantage to an European exporter
No, you are simply incorrect, a VAT system does not make it harder for US companies to compete. It's explained well here: https://www.economicforces.xyz/p/stop-saying-a-value-added-t...
For those who don't follow the link, here's an extract from the article explaining the core situation:
Imagine a car that costs $30,000 to produce before tax. Now compare four scenarios:
1) BMW sells the car in Germany (domestic sale): Germany’s VAT (let’s say 20% for simplicity) is added on the final sale. The German consumer pays 20% VAT, i.e., an extra $6,000, for a total price of $36,000. BMW forwards that $6,000 to the German government as VAT.
2) BMW exports the car to the U.S.: Since the car is exported, BMW does not charge German VAT. Any VAT BMW paid on parts or inputs is refunded by the German tax authority. The U.S. buyer pays the $30,000 price, and since the U.S. has no federal VAT, there’s no equivalent federal tax on that sale. (A state sales tax might apply at the point of sale, but we’ll come back to that.) The key point: the German government collects no VAT on an item consumed in the U.S.. This makes complete sense because that car’s being enjoyed by an American buyer, not a German resident.
3) GM sells the car in the U.S. (domestic sale): The U.S. has no VAT, so the American consumer pays $30,000 (ignoring any state sales tax). No federal consumption tax is collected. (In states with a sales tax, the consumer might pay, say, 7% extra to the state government, but again, the federal treatment is no tax.)
4) GM exports the car to Germany: When the car arrives in Germany, it faces the same 20% VAT as any car sold in Germany. So a German customer buying the American-made car pays $30,000 + $6,000 VAT = $36,000. That $6,000 goes to the German government. From GM’s perspective, it doesn’t owe U.S. tax on that export sale (since the U.S. doesn’t tax exports of goods), but its product will bear German VAT when consumed in Germany.
What outcome do we have here? In Germany, both the BMW and the GM car cost the same $36,000 after tax, and the German government collects VAT on both. In the U.S., both cars cost $30,000 before any state sales taxes, and the U.S. government collects no federal consumption tax on either. Each country taxes consumption within its borders—no matter where the product came from—and does not tax consumption outside its borders. This is precisely the goal of destination-based taxation: neutrality. Consumers in each country face the same tax on a given product, whether it’s domestically produced or imported. And neither country’s producers carry their home consumption tax as a “ball and chain” when they go compete in foreign markets.
You forget that the US company would be taxed more in its profit to make up for the absence of an US VAT.
Whereas EU companies don’t pay other US taxes.
So you'll just tax imports, fund the entire federal govt on just imports, and call it a fair trade policy?
Well, good on you. Just don't be surprised if that leads to retaliatory, and targeted, tariffs.
There is no logic to it. It's just the US going insane and Americans nodding along.
https://taxpolicy.org.uk/2025/04/02/no-vat-isnt-a-tariff-but...
https://iccwbo.org/news-publications/news/are-value-added-ta...
https://www.cnbc.com/2025/03/31/as-trump-reciprocal-tariffs-...
etc, etc.
The only reasonable reply as a consumer and/or cloud-service purchaser: Economic wide-scale boycott of the US.
US formally don't have VAT, when most other developed countries have.
As I know, US states few decades spent on talks about implement VAT, but have not achieved agreement yet.
For equivalent, most US states have trade tax, could be returned with set of rules. So, on some abstract level it could be considered as far equivalent of VAT, which is also could be returned with set of rules.
VAT has nothing to do with this.
What you know about number of companies need to make modern automobile? What about CPU/GPU?
To be more concrete - estimate number of companies, which stay between mineral deposit and discrete GPU board which you could fit into your computer?
The De Minimis loophole is highly significant with FOUR Million packages per day (What ???). The clause to address this loophole needs to be stated more accurately - It should be clearly defined to be higher or lower of 30 % of the value of shipment under $800 OR $25 per shipment and not either. If either then the De Minimis loophole will be continue to be used at $25 per shipment. Source : https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...
The whole table doesn't make sense. We (NL/EU) don't charge the US 39% to import . Apparently orange guy (not the Dutch) doesn't understand VAT rates.
Car? max 4.5 + 21% VAT = 25%. But it simply doesn't matter bc we don't want their cars.. Except for thee Dodge RAM, which can be converted to a tax efficient company car (crazy)..
What amazes me even more is that Elon doesn't seems to understand it either.
They calculate (export-import)/import also they try to hide it behind complicated formulas
https://universeodon.com/@cryptadamist/114272487006550281
On top of that they excluded services and only recognize goods for the calculation.
The thing is that Europeans wanted the Tesla cars. They fit perfectly into the Europeans identity - had Tesla kept on and kept the Tesla cars competitive without any political interference, then that could have been great car exports from the US to the EU.
They wanted it because at the launch until 2018 it was basically free because of all the tax incentives. You got the following benefits (Netherlands):
The 85K car resulted in 90K deductibles in the first year.The 85K car, including everything was cheaper to drive / own than a FREE car.
Almost all of that stopped in 2022, and what do you know? People stopped buying. THIS is politics. Setting policies which drive behavior.
The government "decides" what you will want to buy / drive / etc.
Yes, this is what I wrote: The price needs to be competitive and the car needs to fit on European roads / in European cities.
The point is exactly, that Americans are more than welcome to sell cars in the EU, if they can satisfy that.
It is not that Europeans categorically don't want to drive American cars.
Tesla built a factory in Germany to produce their cars.
Yes, but only later and only for the Model Y. The irony is that the most popular model, the Model 3, is manufactured in China, across the red sea (houti’s!) to West Europe.
Seems he is using trade deficit percentages in his chart instead of tariff percentages ... :/
> Except for thee Dodge RAM, which can be converted to a tax efficient company car (crazy)
You can no longer do that since 1st of Jan 2025. The BPM discount for company cars was removed.
Thank god, I'm so tired of seeing those things parked around Amsterdam when the original loophole was for farmers :eye roll:
But then by the same logic isn't income tax a tariff.
Brave of you to assume that comrade muskov understands anything.
> But it simply doesn't matter bc we don't want their cars..
But is that cause or effect?
As found elsewhere on this thread, the rate is based on trade deficit. Trump believes that having a negative trade balance with a country means that they're cheating somehow, as opposed to meaning that you just buy a lot of manufactured or raw goods for them.
And no, that does not make any sense, and you're not missing anything. He believes this because he's a fucking idiot. He's aggressively racist, comically petty and thin-skinned, and overtly authoritarian, and as far as I can tell actively wants to permanently destroy American science and civil society out of spite, but he's also really, really, really dumb. In this case, he's managed to combine his powers to take a goal that's born out of racism and xenophobia and then implement it in the most idiotic way possible, and somehow the result is even worse than the sum of its components.
It doesn't make sense because you didn't read the original board. It clearly states 'including trade barriers'. You're attacking a strawman.
Countries, including the EU, like to have 'low tariffs' and then have sneaky backdoor taxes or outright bans on US goods through things like milk quotas (Canada), 'biosecurity' (Australia) or EU courts issuing spurious fines on US companies (based on vague laws that only get enforced against US companies, like DMA).
It doesn't make sense because it is not a table of tariffs (including or excluding trade barriers) at all.
It is a table of the current trade deficit against each country as a ratio.
I think you might be granting the administration too much benefit of the doubt. They aren't based on "tariffs + trade barriers", they're just based on trade deficit alone.
https://x.com/JamesSurowiecki/status/1907559189234196942
https://archive.ph/kRkRh
> milk quotas (Canada)
You mean the milk quota on imports that (a) trump negotiated and (b) the us has never hit?
No, I mean the trade dispute that the Biden admin began. [1]
[1] https://ustr.gov/about-us/policy-offices/press-office/press-...
Ah, so a practice that ruled on years ago, and which it turns out still didn't have any significant impact on imports anyway?
Also, remind me, when was the last time that the US actually complied with an unfavourable ruling from the trade panel?
VAT is not a "sneaky backdoor tax", it's imposed on all goods, regardless of where they're produced or imported from.
DMA (and similarly, GDPR) are enforced in EU countries just as much. It's just that the US tends to have more gigantic tech companies that do shady things with user data. Apparently the US doesn't care, but the EU actually does, and so it enforces its laws.
If anything is sneaky, it's the way how the in US you never see salestax until you're about to pay :D
DMA is applied equally, you say. How interesting! Can you link me to the examples of the EU going after EU companies for DMA violations? I couldn't find a single one. Not a single case, ever.
The EU wanted to fine Google $35,000,000,000 under DMA. That's a backdoor tax. No European tech company faces this scrutiny. Never have, never will -- because the DMA is a tax on the United States.
It's also interesting that the Google and Meta DMA fines are expected to land in the next week. What a timing coincidence, almost like it's retaliatory (as many articles have suggested).
Maybe the companies from the EU just didn’t violate the law? How does enforcement prove that it’s a tax?
> Can you link me to the examples of the EU going after EU companies for DMA violations?
https://ec.europa.eu/commission/presscorner/detail/en/ip_24_...
So they haven't gone after a single EU company and the ONLY court cases or investigations on DMA were specifically US companies?
We’re talking many 10s of billions in “fines” specifically levied against US tech firms where there is no EU competitor.
I don’t necessarily disagree with all of the laws themselves (some are incompetent EU risk aversion, some are good protections) but given the massive never ending fines being applied in bad faith and constantly moving goalposts it is indeed a defacto tariff on US tech firms.
The fines are not imposed in bad faith, they're imposed for actual, provable violations of the law. Companies who do not violate the law are not fined. Complaining about fines is another way of saying "We'd like to trade in the EU while violating EU laws that every EU company also has to adhere to."
The laws are specifically designed to target US firms without affecting EU ones and enforcement of fines and the size of them is highly selective -- the most attractive targets with the highest willingness to pay without getting to the point where they would pull out of the market.
If you do not see the moral hazard in this, I don't know what else I can tell you. If the EU had a seriously competitive tech industry, many of these laws would have never been created, as the EU is not some moral believer in privacy (they fight against encryption domestically), they are just run-of-the-mill protectionists like all governments.
If you claim GDPR is "not affecting" EU companies your position has nothing to do with reality.
There hasn't been a single DMA fine against an EU company, ever. Nor have any been investigated.
The DMA is a tax on the United States. Look no further than its enforcement and its text (highly targeted).
Could it be because EU companies based on doing shitty and illegal things just never get started in the first place?
DMA is not the same as GDPR.
The thread is specifically about DMA. My parent comment mentions DMA specifically. This 'EU enforces the law equally' position is nonsense, considering Spotify, an EU company, was carved out from the DMA.
Sounds legit!
This is nonsense, I'm about to launch a company in the EU and these laws are a major consideration and potential pain point for us, too. They are very relevant for EU companies.
This makes me wonder if US companies complaining about the GDPR and DMA have any idea how many more laws EU companies have to comply with in addition to this. It's not easy.
> provable violations of the law
If you ever tried reading GDPR or DMA... you will realize pretty quickly that there is little meaning in them.
I am totally unsure someone can prove a DMA violation. It's simpler with GDPR because a lot of concepts from it have been already somehow interpreted and agreed upon. But we do not have case law in EU, so I guess even known GDPR violations are often dubious.
You're trying to claim a law that is exclusively used to fleece U.S. companies and never EU competitors is 'not bad faith'?
When has the DMA been used against EU tech companies? Never.
Your comment also shows a fundamental misunderstanding of the DMA and GDPR laws. Neither of them are objective laws, and they are applied subjectively without guidance.
Let me be very clear: the EU does not tell you how to comply with either the DMA or the GDPR, period. The law is extremely vague and does not prescribe how to comply in any way, shape or form.
DMA has not been used against EU tech companies because US tech companies are clearly the market leaders in the area the DMA is concerned with. The DMA exists to make sure that companies (from the EU, US, or elsewhere) comply with EU regulations regarding privacy, tracking, and consumer rights.
It's not a "tax" on US companies, it's just that US companies don't bother to comply with the regulations that apply in the EU, and thus get fined.
>US tech companies are clearly the market leaders in the area the DMA is concerned with.
There's a good argument that this is targeted. Why didn't this regulation affect SAP? Their market position gives them leverage over a massive number of companies.
>it's just that US companies don't bother to comply with the regulations that apply in the EU, and thus get fined.
It's not that they "don't bother", it's that they understand complying with the regulation to cost them more than the fine. In other words, the regulation itself is a sort of fine, or tax imposed by the EU, with a magnitude of roughly equal proportion to the fines it imposes.
No offense, but this is a silly argument. Companies in country X tend to develop their products in conformance with country X. Of course, products developed in the EU will conform with EU law. By the same token, I would be surprised if US companies habitually developed products that don't conform with US law.
> It's not that they "don't bother", it's that they understand complying with the regulation to cost them more than the fine.
This means that the fines are not high enough and don't fulfill their purpose. That's an argument for the thesis that the EU is handling fines of violators in a too lax fashion, not the opposite. This has also been the impression of many EU citizens, and it seems to be the reason why so many huge US corporations keep violating EU customer protection rules again and again.
But the reality is also that US companies that violated those rules basically have no EU competition because the EU has an abysmal market in certain tech domains. There simply are no viable EU equivalents to Apple, Google, Facebook, and Microsoft.
>Companies in country X tend to develop their products in conformance with country X
You have the order wrong. The companies came first, then came the laws. So we might reverse this statement to: "countries with company X in them tend to develop their laws so that company X is in conformance with those laws". This latter statement seems likely enough to be true, and is exactly the point of order in this discussion.
>By the same token, I would be surprised if US companies habitually developed products that don't conform with US law.
It's called "growth hacking". Uber was quite famous for it. The only time you'd benefit from breaking the law in a foreign country vs. your own country is if you intend to exit the market of that country; you don't have to worry about paying fines if the country can't reach you. If the intention is to continue doing business there, then any punishment will have to be borne just as if you were headquartered there.
>This means that the fines are not high enough and don't fulfill their purpose.
You're missing the point. The laws scale so that eventually they will be high enough that the company has to conform. The point I'm making is that a company's willingness to break a law shows that the law is costing them money, and we can even estimate how much money it costs them by the size of the fine. If we assume that all laws are fair and just then this just means that the company is evil. However, as we showed above, some laws are unjust, hence them costing a company money can be a way of unfairly extracting money from those companies.
At least as far as I'm concerned, there is no need to further discuss your "laws are made for companies" conjecture. I don't find it plausible for various reasons. Anyway, good luck in your future endeavors!
Explain why Spotify got a carve-out from the DMA despite being an effective monopoly gatekeeper.
Is it because it's an EU company and the DMA is a tax on the United States?
'The law that applies only to US companies is applied equally and fair!'
This argument would be just as valid if the US was the world leader in assassination markets: shitty and illegal practices are shitty and illegal, regardless of whether they were firmly established with significant markets in other countries first.
Unless you're EU company Spotify, who got a carve-out from the DMA despite being a monopoly gatekeeper :)
VAT isn't a trade barrier.
DMA is. GDPR is. Both are applied principally against competitors using arbitrary fines invented by the EU. No compliance guidance is given, because the laws are inherently vague.
It's not. It is not anything specific against for example the US. We have many consumer protection laws. Has nothing to do with the US.
Link me to a single example of an EU company getting fined under DMA. After all, you said it was applied equally so it should be easy :)
If a city enforces a new speed limit somewhere and only people living outside of the city break that speed limit, you argue that the law isn't applied equally because no resident of the city has been fined so far?
That's the most backward way of trying to prove a point (without even addressing whether DMA and GDPR are a good thing or not, just based on that...)
None of the gatekeepers are EU companies.
You might say that's proof of it being unfair, but can you name a EU company which should be one? I can't really think of one, US companies are just so much bigger on the internet, even in the EU.
Looking at the other law you mentioned, GDPR, there are many EU companies receiving GDPR fines.
Absolute nonsense, of course. Your case disintegrates completely given Spotify was given a specific and targeted carve-out in DMA.
The law is written to arbitrarily tax US "gatekeepers" while explicitly excluding EU gatekeepers. Booking.com is another, also carved out.
In that case, VW being fined 17bn for dieselgate should also count as a trade barrier?
That's not just some bs - the other side of the coin is crooked billionaires and other reptilians taking advantage of anything in their way blinded by their massive greed and psycopathic traits.
Excuse me, this is not how a society should roll. Not a sustainable one at least.
Comments like this make me wonder why some Americans think they should be able to move on every other country “like a bitch”.
In some places, dollar is not god. Important, but not god.
And here I thought brexit would keep the top spot as act of self harm
Actually this is one time when Brexit is paying off. We get 10% tariffs, the EU gets 20%.
EU has signed up to lucrative trade deals with Canada and Mexico since Brexit and has many more similar ones with other Asian countries. International trade is complicated and it is very much something the EU specialises in.
You get a 10% tariff when you run a deficit with the US. EU gets a 20% tariff on a 40% surplus. You win!
Not really, if the whole world sinks into an economic depression then the percentages won’t matter much. What will matter is the starting position and whether the country’s economy has enough headroom to ride it out.
It doesn’t. Because of Brexit.
Jonathan Portes, who is very, very much not a Brexit fan, agrees with me.
Yep. This is like brexit but ten times worse.
Everything is bigger in America.
Here's something I want to understand: In 1930 the Smoot-Hawley Tariff Act was passed by congress - an act of legislation. Nearly 100 years later we have the president unilaterally picking any tariff numbers he wants. What happened?
He invoked the International Emergency Economic Powers Act (IEEPA), which gives him the ability to levy tariffs in an “emergency”. There is no actual emergency, of course, but Congress does not have the political will to stop him.
Congress could stop this tomorrow if they wanted. They ceded all control to the executive. [Republican] Congress is hoping to claim credit for anything good that happens, but scapegoat Trump when things crash.
As I understand: Congress gave the president the power to add tariffs in some "exceptional" cases. Trump claims this is an exceptional case.
We'll see if Congress or the courts do something about it.
I believe this from the White House contains the only semi official numbers:
https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr....
That has 10% across the board starting April 5th, then unspecified rates for the “worst offenders” starting April 9th.
I say “semi official” because it’s not official until US Customs and Border Patrol publishes the rates. So far I don’t think they’ve done that. Their announcements page here doesn’t have anything:
https://www.cbp.gov/newsroom/announcements
Yes Trump has a history of announcing shocks and then quietly back-peddling etc. But the numbers come from the big placard he holds up. There are pics of his announcement holding his rate card in article if you scroll down.
Yeah, I’ve seen the boards he was holding up, but the fact that those numbers are not on the whitehouse.gov page and that they’ll be implemented a few days later makes me think they’re not final yet. Plus we don’t know if they’re in addition to or replace the existing China tariffs, for example.
They're absolutely in addition to.
We run a very small business (luckily just for side income). One of our suppliers expects prices to go up 45-55% by the time this is done. It sucks out loud because there are literally no suppliers from the US for the parts we need.
The admin has stated they are in addition to (totaling 54%).
The exemptions...
>Some goods will not be subject to the Reciprocal Tariff. These include: (1) articles subject to 50 USC 1702(b); (2) steel/aluminum articles and autos/auto parts already subject to Section 232 tariffs; (3) copper, pharmaceuticals, semiconductors, and lumber articles; (4) all articles that may become subject to future Section 232 tariffs; (5) bullion; and (6) energy and other certain minerals that are not available in the United States.
Exempting chips alone doesn't make sense. Does Intel have to pay 20% on ASML lithography machines or more on Japanese ones? Meanwhile TSMC can fab chips in Taiwan and export to the US without tariffs.
I thought the tariff goal was also to fix the issue with Pharmaceuticals where the R&D happened in the US, the company then “exported” the IP to the EU factories, and now import the drugs back. This results in a US tax rate of 0%.
The EU probably does not have a trade surplus with the US, but rather a trade deficit.
https://www-gmexconsulting-com.translate.goog/cms/de/dunkle-...
I was thinking the same. IT is a huge business, the best kind of business right now, the pinnacle of human technology at this point in time. America is the world leader in development, and "exports" of IT. You can't really tariff software, as it's some kind of IP.
On the other hand, much of the "digital infrastructure" is free and open. Perhaps if rival powers put enough effort into sanctioning US effective sales in IT, however that may work, America could lose it all.
> You can't really tariff software, as it's some kind of IP.
The bureaucrats in Brussels will easily find a way to do it.
Yupp, no one says tariffs must only be matched with tariffs. This is a big trade war.
EU has a surplus on physical goods, and a deficit on services.
With regards to goods, the EU exports more than it imports from the US, but we do import more services from the US, which can likely be taxed in retaliation.
Yes, but only because iPhones, Dell computers, HP printers are shipped from China and not the US. Yet the majority of profits from these trades are accrued in US companies or offshore tax shelters owned by them.
So what's going to happen is:
- each country will impose equivalent taxes on the import of US goods - this is not only expected, but the norm under international trade law. - with the rest of the world, still having free trade agreements between them, will start trading around the US, the US won't be able to compete
The value of the US$ will likely drop by the value of the tariffs. If everyone starts trading around the US we'll probably lose the US$ as a standard currency to trade in, maybe switching to yuan or euros, the US$ is buoyed by it being the currency everyone uses, that's going to drive it even lower.
Not just goods, US tech sector will be taxed and tariffed into non-existence.
>each country will impose equivalent taxes on the import of US goods
Many of these countries already have tariffs on U.S. goods. The EU has a 25% tariff on US agricultural, chemical, and some manufactured products.
That's precisely the point right? Devalue the dollar when so you can pay off your debt with a higher value asset.
If the US$ drop 30%, the deficit magically dropped 30% when calculated in something else....
Which is like burning all the houses (including your own) so you can use your houses to buy other people's houses cheap.
This only works if you have superior manufacturing infra. To some extent the FAANGs export tech. But if FAANG is a tiny thing compared to say Toyota.
"Pay with digital dollar, and you don't have to pay tarifs". Problem solved. Demand for digital dollar will grow, but can also be used for normal dollar transactions. Therefore the USD will devalue, and gone is the national debt.
/s/digital dollar/bitcoin or trump coins or doge coins
This make no sense. Tariffs are paid by the supplier who is receiving money from the US customer. Are you saying if they pay the tariff in doge coins the tariff is zero doge coins?
As for other polices that "punish USD" "reward MagicCoins" ... well the market would hopefully see both currencies as crap and use Euros or Yuan. Or maybe new currency baskets will emerge to decentralise power.
No.. the tariffs are paid by the US importer/distributor (Target, Walmart) who is buying from the foreign supplier (Fererro from Nutella). The importer/distributor will charge the extra + margin to the US consumer. The supplier in the EU or China will pay exactly 0 buckazoids.
So basically in the US, Nutella will become only a luxury food!
My point about creating a new currency is that I wouldn't be surprised if they would allow certain transactions to bypass some regulations.
You know the US already pulled a trick on the dollar about 50 years ago, right?
> To some extent the FAANGs export tech.
Speaking of FAANG - EU has been considering proper taxes on the digital economy for some time already[0]. I guess this will speed up the works on this.
[0]https://www.consilium.europa.eu/en/policies/digital-taxation...
But the US$ is kept artificially high because it's used as a reserve currency for things like oil/etc - this is IMHO the main reason why the US is in this position, it wont let its currency float down leaving exporters screwed (but cheap imports for the masses). Just increasing the cost of imports but not making export prices higher (lower in fact because other countries will be raising tariffs against the US)
It's very much a case of "you can't have your cake and eat it too" fix an artificially high US$ and you can force everyone to trade in it for oil, but as a side effect you screw your exporters
That's like burning your house down to cook a steak.
Perhaps.. mr Oompa Loompa might as well go out with a bang.
Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense.
Devaluing the dollar and subsidizing production in the US makes far more sense.
But I’m not an economist or anything.
America got richer and outgrew the phase where tons of factory jobs made sense. It seems pretty clear to me that well-paying manufacturing job in developed countries were the product of a particular moment in time where poorer countries couldn't do it yet. Now they can. It was never going to last.
I live in NJ and people often make a lot of noise every time there's a report of people moving out of NJ because of high taxes and high housing costs (yet NJ's overall population has increased).
To me, it makes sense: NJ is a place where you live to make a high salary (proximity to NYC and Philadelphia) and raise a family (very good public school systems as a result of those high taxes). When you no longer have a need for those circumstances, you move.
Likewise, the US is not a great place for certain types of manufacturing because the labor and raw material supply chain simply isn't there. Why not focus on the things that we are good at instead?
It was never going to last if the US allowed for very low cost imports from those countries. This is literally one of the largest points of tariffs - protecting domestic manufacturing. We could have had high tariffs the whole time and offshoring would have been much less pronounced. I'm not saying that would have been a net positive, but to say it would never last is only true under certain circumstances.
You were still going to lose export markets as international competition grew, and you were still going to shift to higher value-added service jobs as the economy developed.
> Americans have been hurt for 50 years
Can you please explain a bit more about this 'hurt'?
My understanding is that a significant majority of sources of US 'hurt' are internal and there has been ample opportunity to vote at least some of it away, but the votes keep going in the direction of making it worse.
The worst thing about it is that the situation has essentially been perpetrated on the citizens of the US by those with power and influence for the simple human weakness of greed. Unfortunately they've got the power and resources to effectively do large scale "convincing".
> Americans have been hurt for 50 years
No they haven't. They've benefitted from it.
Because now most Americans don't slave away in unsafe factories 7 days/week for dollars an hour.
The error is assuming that Americans are homogenous. Wealthy ones benefited tremendously by reducing their production costs while the less fortunate were put into international labour productivity competition.
And yet, we have a system where the less fortunate could, simply by choosing to, make the government use some of the wealthy people’s money to make things better for themselves. This has been done in the past in the US, during the years that many consider America’s best. In other countries, the poor don’t have this option.
But, they choose not to. To some this choice is noble, to others it’s foolish. Either way, what can you do?
When the wealth redistribution were done in the past there happened to be a strong movements that backed the change. I don’t see prospects of that happening in the foreseeable future given the new technologies of surveillance and deception.
Well, does the American public make it viable for a politician to push for expenditure of taxes on supporting the "less fortunate", say in terms of re-education or, you know, subsidizing social safety nets? If income inequality was such an issue, why did Americans put into power a billionaire to design the economy twice? Lol
Income inequality does not have a chance of standing as relevant issue in corporate media. Furthermore social media has become a significant suppressor by shaming (perhaps not the right word) people of their circumstances. As a result the perceived public opinion is far from actual opinion of the people on the relevant issues that Bernie Sanders often speaks about.
Whereas some did vote for the Trump in spite to make others suffer as they already do.
> They've benefitted from it.
They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice.
> Because now most Americans don't slave away in unsafe factories 7 days/week for dollars an hour.
Now they're collecting disability in their unsafe neighborhoods, getting morbidly obese while their substance abusing kids play vidya games in the basement into their 30s.
Yes, it's really like that. People want their factories and incomes back. I don't claim that anything happening here is going to deliver that, but that's the pitch they're voting for. To their credit, at least they're pursuing that in lieu of some UBI ideocracy made of fantasy money.
As for you: it's fine to point out all the ways they may be misguided and/or misled, but unless you have an alternative that doesn't amount to expecting everyone to somehow earn an advanced degree, and then discover it's next to worthless (even before "AI",) your really not contributing much. So what do you have?
Anything?
People who voted that wouldn't want to work at factories with working conditions and salaries Chinese factories make everything they consume. They also don't support the unions that would make working bearable in factories. Even if somehow factories would return and pay reasonable compensation, that would make the products so expensive most Americans couldn't afford them. People would have to consume a lot less. Which may be a good thing for the planet, but I doubt that's what the voters are prepared for.
> People want their factories and incomes back
But are they willing to work for below minimum wage for ridiculously long hours ?
Because otherwise that factory will be uncompetitive against China, Vietnam, India etc.
Unless of course you want to resort to tariffs which will instead transfer that cost onto everyone.
> They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice.
This conundrum, like so many others in public discourse, is downstream of the widespread but fundamentally incorrect belief in free will (which in turn is downstream of belief in supernatural powers, because free will sure as hell isn't explained by anything in nature).
Nothing is in anyone's control. There's no such thing as "eyes wide open". People's behaviors are 100% downstream of genetics and environment. Some people behave rationally some of the time, and to the extent they do so it is because the environment set them up to do that. There is absolutely no coherent reason to generalize that into the idea that most people vote (or do anything else) rationally.
You shoe-horned two things together - free will and rationality.
Just because free will doesn't exist, doesn't mean they didn't act "rationally" (whatever that even means in this case).
Deindustrialization and Nikefication in the past several decades isn't "rational" long-term behavior either.
I mean in their actual self-interest rather than, say, what they have been made to believe is in their self-interest.
> Deindustrialization and Nikefication in the past several decades isn't "rational" long-term behavior either.
Maybe, but I was responding to "They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice."
There's an implication here, and in a subsequent reply that people voting against their interests is "[t]he go to midwit rationalization for every electoral loss", that people exercised free will when they voted.
This is plainly incorrect, because free will quite clearly does not exist. No one has ever shown the kinds of violations in the laws of physics that would be required for free will to exist.
Since free will does not exist, there is simply no a priori reason to believe that people voted in their interests. People's voting decisions, like everything else they do, are out of their control. To the extent that they vote in a particular way that's good or bad for them, it's driven purely by luck and circumstances.
It is this a priori belief that people vote or act in their own interests that's the real "midwit rationalization".
> There's an implication here, that people exercised free will when they voted.
There's no such implication.
> This is plainly incorrect, because free will quite clearly does not exist.
> Since free will does not exist, there is simply no a priori reason to believe that people voted in their interests.
What are you even talking about.
People (and living beings in general) acting in their own self-interest - pretty much all the time - it is the most universal general principle of life if there ever was one. This doesn't require or involve free will.
How well a biorobot (no free will!) executes in pursuing his self-interests, is the selection critereon.
Now, the people make mistakes pursuing their self-interests, doesn't mean they aren't acting in their self-interest. Because they sure as hell are - all the frigging time! It's their whole firmware!
Deindustrialization / nikefication all the way through the value chain except the very, very top last step of the value add - hasn't been in their self-interest, it isn't in the interests of their nation either.
It's only in the self-interests of short-term thinking shareholders that min-max asset valuations with great costs to everyone else but themselves.
> People (and living beings in general) acting in their own self-interest - pretty much all the time - it is the most universal general principle of life if there ever was one.
Base evolutionary instincts to survive don't translate to humans living in complex modern societies acting in their self-interest.
>Base evolutionary instincts to survive don't translate to humans living in complex modern societies acting in their self-interest.
What are you talking about?
Base evolutionary pressures and instincts have translated in exactly that.
Complex modern societies, and emergent behaviors and strategies arise from agents acting in their own self-interest (organizing in groups or otherwise to further their goals).
The idea that not only people don't act in their self-interest, but you - in fact - know better what's in their best interest is truly some mid-tier thinking. Or that you have some unique ability to know what's in their best self-interest, but they... for some reason... don't.
Now it doesn't mean that acting in self-interest doesn't sometimes result in ruin, because it surely can! That however doesn't mean that all these choices weren't made with self-interest in mind, front and center, despite people claiming otherwise.
The groups and societies that enact the winning, most sensible strategy, economic and industrial policy will win out. Those individually or in groups that don't, will go to shitter and or be selected out. It's that simple.
>>People want their factories back.
Did you ever work at a factory? I did. I would most certainly prefer to collect a pension and play video games (which I do now in retirement). Anyone would.
> They benefitted from it so hard they voted for the exact opposite with eyes wide open. Twice.
People vote against their own interests constantly. This is literally evidence of that.
> vote against their own interests
The go to midwit rationalization for every electoral loss.
Note the abject lack of anything resembling an alternative.
Doomsaying prognostications, odd questions, free will talk for some reason, evidence free assertions about voters and their interests, doubts and fears...
And precisely 0.0 alternatives offered.
I can't imagine anyone being surprised that we've ended up with Trump et al. When all you offer is un-actionable thoughts and cowardly status quo, no one will listen to you. Meanwhile, the cohort of disenfranchised, disposable people grows around you until they fear the status quo more than they fear change.
Congratulations!
The richest country in the world cannot save their own citizens from poverty. Not to mention most number of millionaires and billionaires. Obviously the solution is to impose tariffs based on some made up numbers. Wonderful idea!
> Now they're collecting disability in their unsafe neighborhoods, getting morbidly obese while their substance abusing kids play vidya games in the basement into their 30s.
> People want their factories and incomes back
Sounds like what they really want is safety and hope for their futures. I'm not sure going back to the way things were - good or bad - is the way for society to move forward though.
I've met a lot of people in St. Louis working various factory jobs. Making different kinds of specialized equipment, food products. I think they get paid $25+ an hour starting out. A fair amount seem like tedious jobs.
There's around 12.8 million people in the US working in manufacturing.
Yeah … talk to someone who worked in the 50s and 60s in Detroit.
Or anyone who worked as a switchboard operator. Nobody did anything to protect their jobs!
> No they haven't. They've benefitted from it.
some benefit. many have been in a state of perpetual poverty/welfare, but we don't see those in the official stats because the rich are so rich here it skews numbers
How about steel mill jobs paying $35/hr?
Saying Americans haven’t been hurt they’ve benefited applies to white collar workers only - no change to jobs and cheaper goods.
Plenty of white collar jobs have moved overseas e.g. IT, marketing, call centres. Especially with remote work.
The point is that as a country it has adapted by people moving into industries that aren't able to be easily outsourced.
>>> Americans have been hurt for 50 years
>> No they haven't. They've benefitted from it.
> Saying Americans haven’t been hurt they’ve benefited applies to white collar workers only - no change to jobs and cheaper goods.
And that's a big reason why Trump won: white collar workers, like the GP, lecturing blue collar workers, while being ignorant of their actual situation.
And what Trump has been doing does not actually serve blue collar workers. Republican policies don't serve blue collar workers in general: anti union policies, for one. Republican policies serve billionaires and make no attempts to hide this, but they win blue collar votes from foolish people who believe culture war narratives matter. The culture war was invented to distract from class war waged by billionaires against the working class, hello.
You've just repeated the Democratic party line, designed to cover their ass for their inaction and inattention. Democrats will lecture the blue collar working class to not believe their lying eyes and trust the Democrats, then lecture them on how they have to because Republicans are so much worse.
It's a dumb strategy, and it isn't working anymore.
The US today produces more steel than it ever has in its history, with ~1/10th of its peak workforce.
Those jobs aren't coming back.
Now they're safely home, unemployed.
> Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense.
Yeah, some tariffs aren't a bad idea. But this plan? Just stupid, without any thought or strategy behind it.
The tariffs should be used more strategically to reorganize supply chains, not these blanket tariffs of low cost and high cost places. And probably ratchet them up slowly, to give time for production to move, instead of a big bang of putting them up everywhere.
So tariff China and Mexico, not Canada and Germany.
Devaluing the dollar makes paying national debt more expensive
No it makes it cheaper because the US is in a unique position of issuing debt in its own currency.
You can both be right. Old debt is cheaper to pay but new debt more expensive. And the government runs a deficit so new debt is always accruing.
New debt is only more expensive if you have to exchange something of value to obtain the USD to pay down the debt. But since the Fed can expand the money supply at will, it's essentially creating new USD out of thin air which can be used.
(This is how the US has been able to sustain such a large debt without any real consequences.)
What will happen though is that interest rates on T bills will rise, so yes, in that sense, it does eventually become "more expensive" to service new debt. But again it's in nominal dollar terms and so it's just a matter of issuing more dollars. The trick is to do this in a way that doesn't devalue the dollar thus triggering an inflationary cycle.
It’s an impossible trick. The chicks come home to roost. You can’t have an exponential forever.
I can't say it any better than Randy Newman:
The end of an empire // Is messy at best
And this empire's ending // Like all the rest
Like the Spanish Armada // Adrift on the sea
We're adrift in the land of the brave // And the home of the free
https://www.youtube.com/watch?v=E0EAwSpTcM4
I'm an American. I've generally benefited from the system here (which speaks to my privilege, of which I'm aware). I don't want to wade into political battles, but I'm genuinely concerned for my future and the future of my children from an economic standpoint, based on where things seem to be going.
I am considering options on the spectrum with ends like:
* Staying here, because this is where I was born and raised and I've felt like the country has generally taken care of me - and hey, it can't stay bad forever, right?
* Leaving to another country, because I am feeling less and less like the country's leadership care about building a society or economy that tries to take care of its people and creates incentives to innovate.
This isn't because of just the last few months; I view the last few months as big symptoms of something more systemic that's been building up. I am also not looking to jump ship quickly because things "temporarily got hard."
On the flip side, I'm also feeling incredibly jaded these days: how could it be much better anywhere else?
Are there places out in the world where my wife and I could take our experience (mine being a strong career in tech, my wife's being a strong nursing career) and put it to use elsewhere where I could hope for a good standard of living, more stability in government leadership, and incentives similar to the economic system I grew up in, where our children could thrive and build a life?
I'm not pulling any triggers quickly or easily... I'm just trying to gather some data and different perspectives, even those that might challenge my own. Maybe an answer is "stop reading news."
edit: formatting
I'm not American so this is a newb question, would moving to a saner state help ?
If you want to relocate to another country focus on the "pull factors" of that place, rather than the "push factors."
I moved to Sweden because my wife and I felt that was the best place to start a family. I'm on parental leave and cherish every moment I get to spend with my kid.
We would have made the move no matter what was happening in the US. Well, unless there was a major cultural shift and a generous grant of child care benefits equivalent to SWE.
If it continues on the current trajectory, literally all the OECD countries will offer a better life than the US. In every meaningful measure they already do
Thank you, good information.
I've traveled a bit to some of the other OECD countries and haven't felt any disparities in comfort and such while traveling, but traveling and building a life and career are two very different things.
If I may: I would sit this out for a little while.
Moving with another partner to another country is a huge undertaking.
Now, if this was in the back of your mind before, that’s another story.
Heard. The thought of moving to another country is, honestly, scary, like starting over, figuring out how to live and build from from 0 again.
It's not just my partner, but also my kids I'm concerned about. The idea of moving my whole family to another country feels overwhelming, but it's a sacrifice I'm willing to make if it means my children can have a chance at a good life, versus what I'm starting to fear they'll experience here.
I appreciate the reminder of patience.
Not saying it is easy, but when I was a teenager I moved across the world because my father needed the job. It sucked in the moment, but looking back it was the best thing that ever happened to me.
Yeah, go gentrify the locals in some lower-cost-of-living country. You sure 'deserve' it because for some reason you have a 'right' to just immigrate there and buy their housing and sh*t from under their feet.
What motivates such a rude answer? The parent is genuinely exposing a personal question. Nothing in his post suggests that he would go gentrify a low COL place.
I appreciate your frustration, dumbledoren. Your comment speaks to perspectives I could expect to face in another country - thank you.
I can only say my personal intent isn't that. I live a simple life. My family has a small, old home. We garden, grow our own food, and are respectful to our environment.
I prioritize supporting small, local businesses.
I wouldn't want to parachute into another country acting as though I Know Better™ and bringing my "American sensibilities" to another country.
If I were to leave the US, I see myself entering another country, hat in hand, knowing fully I'm not better or special, and it's my job to adapt and to respect the culture and country.
> I can only say my personal intent isn't that. I live a simple life.
And yet you will end up doing that when you move to such a country. Regardless of your intentions.
> it's my job to adapt and to respect the culture and country
Unfortunately respect and cultural adaptation do not alleviate the effects of gentrification via housing costs and cost of living.
It would be less of a problem only if you went to a country and location that has a similar cost of living as where you live now, but then again, that's not really on the table, is it...
> It would be less of a problem only if you went to a country and location that has a similar cost of living as where you live now, but then again, that's not really on the table, is it...
This seems to be an assumption you made, but the poster did not imply or state.
As someone in a similar mindset to the poster, I'm not looking for lower CoL places, I'm looking for comparable QoL places which ultimately points to Europe or Oceania. We'd be paid dramatically less, which we're okay with, but the QoL would be comparable (perhaps even better when counting social services).
So, it already starts affecting stuff. I and 10 other recent hires were cut today because our next round is in jeopardy. That startup is in sales and hiring area, so it senses recession much sooner than other industries, but there's that.
If anyone is interested, you can find the US's assessment of the tariffs imposed on the US by other countries here: https://ustr.gov/sites/default/files/files/Press/Reports/202...
EG:
"The UK has duties on approximately 5,000 tariff lines, including on certain agricultural products, ceramics, chemicals, bioethanol, and vehicles. Tariffs on some products such as bananas, raw cane sugar, and apparel, which tend not to be import sensitive for the UK, are maintained to provide for preferential access for imports from certain developing countries into the UK compared to the MFN rate. The UK has some high tariffs that affect U.S. exports, such as rates of up to 25.0 percent for some fish and seafood products, 10.0 percent for trucks, 10.0 percent for passenger vehicles, and up to 6.5 percent for certain mineral or chemical fertilizers"
The idea that a giant regressive tax, which these are, will help the lower or middle class or do anything but kill demand and destroy jobs is madness.
It also won't help the debt because even though we might collect some money in the short term, the long term solution is we need to grow our way out and these policies are recessionary.
The goal of the world now is to specifically target red swing states with counter tariffs so that the democrats will win the midterms, pass legislation to prevent the president from being able to unilaterally impose tariffs in the future and thus put a swift end to the golden age.
Pass legislation? That will be vetoed or ignored?
Liberation day indeed... when Canada/Australia/Europe/South Korea/Japan are now the enemy I'm not sure there are any more friends left.
Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports. I think more and more we see lots of evidence they don't know what they're doing.
> Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports.
Note that the White House has both (1) officially denied this, (2) provided the formula they assert was used as support for that denial; but the formula is exactly what they are denying but with two additional globally-constant elasticity factors in the divisor, however, those elasticity factors are 4 and 0.25, so...
Wow I really just read a .gov website trying to obscure a formula by multiplying 0.25 by 4.
I'm stunned.
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."
In practice I believe at least 90% of Americans can’t figure out what that formula actually means; but if they drop the epsilon phi bullshit only 70% can’t figure it out. So it’s pretty effective obfuscation after all.
"Assuming that offsetting exchange rate and general equilibrium effects are small enough to be ignored"
Yes, let's assume the world is constant and changes are made in isolation.
What's the laden velocity of a spherical import with no air resistance?
African or European?
Thank you for finding this. It's extremely valuable for those of us who are trying to make sense of the tariffs.
This is the same president that took a sharpie to a map, to show the incorrect path of a storm, because he could not admit being wrong or making a mistake.
These people are either malicious or incompetent. That's been the case for every single day of the decade-ish that Trump has been foisted upon us.
for reference, the Deputy White House Press Secretary's tweet (providing evidence of (2): https://x.com/KushDesai47/status/1907618136444067901
It also proves (1), since it is a response (QRT, rather than a comment) to a tweet describing the trade deficit/exports approach, and starts with "No we literally calculated tariff and non tariff barriers.", and then presents the formula proving (2).
That formula just simplifies to trade_deficit/2*total_imports per country. It doesn't disprove anything it just looks fancier but the two extra terms are constants that simplify to 2. If you do the math it lines up for every country that didn't get the default 10% rate.
https://imgur.com/a/jBTiz7T
What’s QRT?
I assume quote retweet.
The Onion couldn't even make half of this up without looking like bad writers... but here we are
Reality isn't constrained by quality bars.
Someone quoted this headline elsewhere, so I looked up the actual article[0].
It would have been hilarious back in 2001. It's... scarily prescient in 2025. Can satire be just too good?
[0]: https://theonion.com/bush-our-long-national-nightmare-of-pea...
I've seen people use "sanewashing" to refer to the type of comment you're replying to, there's no sane explanation but people try to come up with one because the world doesn't make sense otherwise
I think often trump's policies are rooted in some sort of idea that is perhaps controversial but at least not totally insane, and then implemented in the most boneheaded way possible.
E.g. one explanation given for these trade policies is that trump sees a war with china down the line and is worried that china has tons of factories that could be converted to make ammunition while usa does not.
If so, there is at least some logic to the base idea, but the implementation is crazy, probably not going to work that effectively, and going to piss off all amrrica's allies which would be bad if WW3 is really on the horizon.
2. Alienating allies won't help the US produce ammunition
You're giving him too much credit.
Trump has always liked tariffs [alas, I can't find the source for this pre-presidency, its been blown out by current events]. He thinks trade is a zero sum game, and thinks that someone else set up the petro-dollar system.
Trump has consistently and reiliably always cowered away from war. Using other means to stop it (see russia, NK, China, Iran). Yes I hear the "we're going to invade x, y and z" but they never acutally came to anything (is that because of his advisors?)
Trump doesn't think about future capacity, only future pride. Does this change "make american stronger, and other weaker" is pretty much the only calculus that he's doing.
Trump's thinking is roughly as following:
"Why do we have taxes when we can use tariffs to raise cash and bring power back?"
"Why don't they buy from us?"(china/rest of asia)
"why are we spending money on them, when we don't get any money back? They are weak."(NATO)
"Why are we punishing russia, they are offering deals" (Putin offering cash deals)
There is no 4d chess. Its just a man who's pretty far gone, shitting out edicts to idiots willing to implement them.
> Trump has always liked tariffs [alas, I can't find the source for this pre-presidency, its been blown out by current events].
Here you go, Feb 2011: https://money.cnn.com/2011/02/10/news/economy/donald_trump_c...
"The comment repeated past statements from "The Apprentice" star, who has said he wants to put a 25% tariff on all Chinese imports, to level trade imbalances in the global economy."
thank you for this link, it is most appreciated.
> [alas, I can't find the source for this pre-presidency, its been blown out by current events].
Doesn't help that Google's custom time range search is complete garbage. Searched for "trump tariffs" from 1/1/1980 to 1/1/2010 and almost every link is about the current tariffs but with timestamps between 1980 and 2010.
e.g. "20 Nov 1987 — President Donald Trump issued a slew of tariffs on Chinese goods", "30 Jun 1981 — Ontario Premier Doug Ford announced Monday a 25% increase on electricity exports to some American states as a result of President Donald Trump's tariffs", "31 Dec 1999 — IMF says too early for precise analysis on Trump tariff impact", "1 Feb 2001 — Trump's Global Tariff War Begins"
Did find a couple of links that were chronologically correct - a 1999 Guardian story about Trump wanting to tax the rich(!) and a 1987 NYT story about Reagan putting tariffs on Japan.
(duckduckgo was even worse)
Excellent research, many thanks!
Trump's tariff mania goes back decades. There was an article about it in The Times a couple of days ago. Sadly, it's paywalled.
https://www.thetimes.com/us/news-today/article/why-trump-tar...
https://archive.ph/ugF8W
There is no logic to these things. This is the emperors new clothes, over and over again.
The proximate cause for these tariffs is not some future event. This is post fact rationalization.
The proximate cause is still the ongoing “information” war which determines the perceived reality that is litigated in elections.
Earlier politicians played theater, acting as if the red meat being fed to voters was real on TV, but dealing with reality as need be when it came to decision making.
This was a betrayal of voters, who saw their election efforts result in legislators who didnt do what they said.
Trump does what he says. He believes WWE is real, and acts as if it is. His base believes it is real, and now reality is crashing with the fiction.
The fiction will prevail, because his party has also been working to build the power to enact their will.
Everyone sees logic here, the same way that everyone saw the emperors clothes. The alternative is illogical.
This is the reason potential reasons “we dont know” have to be postulated (war / China can make more ammunition)
How will they project power into the Asia Pacific now they have tariffed their allies and probably forgotten about AUKUS?
It is the logic of schoolchildren. It is the simplistic logic of a teenager discovering Ayn Rand's wikipedia entry. (Grover Norquits came up with his tax pledge while in highschool.) The world is more complicated than any econ 099 exam.
The US are never going into a direct war with China, and China is never going into a direct war with the US. This is M.A.D in action.
At most we might see a proxy war over Taiwan (i.e. the US supporting and arming Taiwan, with sanctions against the PRC). The risk would then be a widespread disruption of global trade, at which point the US would not want to be dependent on the Chinese economy or factories in any way.
>Trump sees a war with china down the line
So is destroying diplomatic relations with all their allies and trying to force ceding of power in central Europe to a former enemy who is allied to China?
Go on with ya.
He's a prick saving himself from prison whilst being willingly used to establish an oligarchic fascist state from the former USA.
If you follow the logic of it, at least to the first order - fighting a two front war is bad, forcing europe to deal with russia frees up USA to focus on china. America's withdrawl from europe has made european states panic and re-arm, and you could argue that a well-armed europe that grudgingly helps america with a common enemy would be better than a poorly armed europe that uselessly helps willingly.
The second order effects of what he's doing are pretty obviously terrible for usa, but quite frankly i dont think trump is smart enough to see that.
[To be clear i think trump is stupid, but i don't think his actions are entirely random. There is a chain of reasoning here, it just misses the forest for the trees]
> America's withdrawl from europe has made european states panic and re-arm
Russia's invasion of Ukraine is more immediate concern there. Even if Europe still could count on the USA's NATO commitments 100% the war was a big wake-up call in terms of readiness.
If you look at what has happened i'm not sure. The ukraine invasion has been happening for a while now, and it has caused increase defense spending in europe somewhat, but it seems suddenly over the last three month the needle has been moving a lot faster than the last few years.
The problem with this line of reasoning is that Trump just pushed our allies in that part of the world closer to China. China stated the other day they are working on a joint response to tariffs with Japan and South Korea. Additionally, leaving power gaps around the world from the pullback of USAID gives China an in to be the 'good guy'. This is the exact opposite of planning for a conflict with China. In fact, it feels like ceding the fight before it even begins (much like what he did with Russia).
I like this take a lot. I also think that America competing on manufacturing is obviously never going to happen.
Why is it obvious and why never?
I think there is a bit more nuance. US manufacturing jobs are never coming back. If you look at the stats, US manufacturing output continues to set records. Yes, the US is second to China (has been since ~2010), but that was bound to happen on population/demographics alone.
Because Americans are too rich and manufacturing is too cheap. If any of those changes it's a different story, but that's unlikely to happen.
Unemployment is at 4%, there's no reserve army of labor that can be mobilized to make flashlights and sew t-shirts for $3/hr.
Anyways, I hope you're looking foward to prices for everything going up.
The folks who voted because of the price of eggs are not going to be happy. And midterm elections are next year.
They didn’t really care about egg prices.
But then we can promote immigration from poorer neighbouring countries to pick up the work. Oh wait...
Could be a thing? Perhaps people might start caring about product durability and stop buying cheap shit that goes in a landfill because the producers only care about shelf appeal.
This is my hope, too. But also I fear the transition is going to be ugly. Personally I feel lucky that I’m not just starting out my life — I already have high quality stuff.
Paper backing ggm's take:
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
https://www.reuters.com/markets/us/markets-wrestle-with-trum...
>In a November paper, economist Stephen Miran, whom Trump has picked to chair his Council of Economic Advisors, raised the possibility that Trump could use the threat of tariffs and the lure of U.S. security support to persuade foreign governments to swap their Treasury holdings for lower-cost century bonds.
Via
https://news.ycombinator.com/item?id=43350553 https://news.ycombinator.com/item?id=43561808
Just so pple get the credit (even if they appear to be not so sane)
It makes perfect sense. You have a narcissistic asshole in the White House who got elected because the Democratic Party fumbled the ball.
I wouldn't put 100% of the blame on the Democrats, here in Australia we are frequently voting for the least worst option not the best, and I'm not sure how the Democrats weren't the least worst option when compared to the other option
but for some reason a whole heap of people decided to stay home this time and this is the result, hope they still feel happy with their decision
I've heard that there's polling lately to indicate that's not true (unsure on source, it might have been an interview at Vox.com), and that higher turnout would have advantaged the Republicans further.
Probably stemming from David Shor's Blue Rose Research. I bumped into that @ https://www.liberalpatriot.com/p/new-insights-on-why-harris-...
> You have a narcissistic asshole in the White House who got elected because the Democratic Party fumbled the ball.
It don't want to sound too persnickety, but there is always at least one losing side in an election. It doesn't have to mean they dropped the ball, it could just mean people preferred the other option. Hindsight bias is wonderful, but you have no idea what would have happened if they'd run with a different agenda, they may have had a worse result.
I'm not sure how you could look at 2024 and not see a historically terrible campaign by the Democrats. They had to force the presumptive nominee to drop out because his brain was dripping out his ears. That alone would do it!
> but you have no idea what would have happened if they'd run with a different agenda, they may have had a worse result.
The 2024 election had historically-low support from normally stalwart Democrat demographics such as Latinos, the youth vote, and black males. That, IMO, supports the conclusion that the Democrats did something wrong this time. Also, not only did those groups abstain but Trump also picked up quite a few votes from them (especially working-age black males), suggesting that they are swing voters who probably could have been swayed to stay on the Dem plantation if exposed to more convincing messaging, or a more compelling Democrat candidate.
That's fair, thanks.
Some corrupt members of Congress and the judiciary deserve some of the blame.
Sometimes something does not make sense because we don't see or understand the big picture and what people are trying to achieve, and thus it literally does not "make sense".
Trump is neither stupid nor insane and he will have access to many very smart people, too. Based on that the reasonable assumption is that they are trying to achieve a well-defined objective and have set a plan in motion to do so.
The "game" is thus to figure it out. @ggm's comment above is one possibility.
There are two issues with this thinking:
1. It is authoritarian. Democratically elected leader's duty is to present the policies he plans to implement so that voters can decide if they want them implemented.
2. It is based on the "4D chess" myth - that the leader is way smarter than the rest and is capable of outsmarting other countries. The history shows that it is never true. The leaders are normal people. And the institutions are as good as the founding principles that are honored by them.
> Democratically elected leader's duty is to present the policies he plans to implement so that voters can decide if they want them implemented.
That's 100% not true. A candidate leader might tell you what they're going to do, and then you elect the leader, and then they do them, but they don't propose plans once in power to see if the electorate like them.
As much as I'm not a Trump fan, I really don't like that people use a separate yardstick to measure him vs people they like.
There is a fine line between democratic leadership and authoritarianism.
Public consultations and transparency are two crucial and lately very under appreciated parts of democracy.
If a leader cheats the voters it is no longer democracy.
Possibly, but the thing I have repeatedly heard is "Trump is doing this because he promised it on the campaign trail". The things might be bad (e.g. some pardon didn't sound great) but I wouldn't describe him as not fulfilling anything. He seems to have made some very specific promises, and has kept at least some of them.
Maybe there's a website that keeps track somewhere.
(1) is you not liking it, not that it isn't the case. Whether it is authoritarian or not is besides the point. (2) I am not claiming that they can "outsmart" anyone, just that the objective and plan may not be publicly or explicitly stated, or even that what is publicly stated is not the real objective (this is not "4D chess" this is actually how things tend to be in practice from politics to business).
(1) Bypassing the judicative branch is authoritarian.
(2) You just claimed trump has access to smart advisors and some hidden masterplan but you ignore all counter indication. He ousts critical journalists, nominates incompetent staff, invasion-mongers, tweets and plays golf alot.
If i can see any common factor in his insanity, its the need to have an enemy to pose as the strong man against, which indicates that trump does not have a constructive vision for the US.
1) heads of state can in fact be incredibly incompetent 2) the goal could entirely be 'stay in power' (which can also be implemented incompetently!)
The UK for a good few years had a government which had both these attributes. They were only interested in policies which would appeal to their base, but eventually even those soured on them because the policies were implemented so badly.
Occam’s razor is specifically a counter to this.
The simplest solution is the right one. You are projecting intelligence, because you are used to.
This is AFTER the US government has roundly fired thousands of their experts and workforce, AND has just told everyone of its intelligence and army rank and file that there are no repercussions for a massive dereliction of duty.
AND IT IS ONLY APRIL.
On the contrary, in context I believe my comment is actually the simplest explanation. Claiming that the US government is insane while we, as random members of the public know better, is certainly not the simplest explanation...
It does not imply that what they are doing is a good idea or will work (whatever the objective is), just that there is more rational thought in what they are doing than what people might assume because the public does not have the information and seeing through what is going on requires insights that most people don't have, either.
Again, check @ggm comment above. I am not saying that this is what is going on but it is a possibility, and an average member of the public would never think of that scenario and thus wouldn't see the order in the apparent chaos.
> Claiming that the US government is insane while we, as random members of the public know better
Not insane, incompetent.
The problem with primarily hiring sycophants from his favorite cable news channel is that he's not getting the best, even from the GOP. This also makes him even more susceptible to people with their own agendas like Musk since no one is willing to pushback.
You don't need much background in Economics to understand that blanket tariffs hurt companies that rely on imports and exports and lead to higher prices. They used an LLM to come up with a formula that's just the trade deficit when you simplify it and called it "tariffs charged to the USA".
Curious - what would count as a non-average member of public?
"Very smart people"
https://nitter.net/KushDesai47/status/1907618136444067901
'Excuse me, we used Greek symbols to calculate this! Checkmate, libs!'
It really smacks of an "I am very smart" attempt.
Just dont tell them about the arabic numerals. I dont want to buy a new calculator. Not under these tarrifs.
> arabic numerals
Soon to be "Numerals of America"
You mean "God Bless The America Freedom Numerals Sponsored By Brawndo"?
The math mutilater!
I’m afraid they’ll be learning about reverse Polish notation.
wait seriously? can you provide a source? That is some serious denial of reality by the administration
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
https://x.com/KushDesai47/status/1907618136444067901
To give further evidence that they don't know what they're doing, it's easy to generate this tariff plan using a fairly simple LLM prompt that gives back that same ratio:
https://bsky.app/profile/amyhoy.bsky.social/post/3lluo7jmsss...
If anyone needed any more evidence that they don't know what they're doing, what I find interesting is that the various French overseas territories that are part of the EU are tariffed at different rates than the rest of the EU (treating those as separate countries is traditional for any US company, which is sometimes a headache when you want to order something).
Réunion is at 37%, which isn't a problem because any company in Reunion could just use an address on mainland France, but there's more: Guadeloupe, Martinique and French Guiana are tariffed at 10%.
Does that make an easy loophole for any EU company wishing to export things to the US at a 10% tariff?
If these published rates actually going to be enforced this way, it seems like the whole EU has a very easy way to use the 10% rate.
French Guiana is part of the EU, sounds like mailboxes there will soon become good business.
If exploitation of the "loophole" got to the point where it starts affecting trade balance then presumably the rate would be revised fairly quiclly.
Are those part of the EU? The whole membership of EU (or more precisely European institutions) is a mess and I really only know EEA, Schengen and Eurozone by heart. But there definitely are territories which are part of e.g. France, but not part of the EU
They are part of the EU and are part of the EU customs area, there is no practical difference with other EU territories regarding trade.
They are not part of Schengen (but EU citizens don't need any visa, it's mostly intended to curb illegal immigration from South America via Guiana) and have the ability to use different VAT rates from mainland France, but that's all.
I found it interesting that when the UK was part of the EU, the Isle of Man was not, but because they held British Passports, the people of the Isle of Man were EU citizens.
> the people of the Isle of Man were EU citizens.
Not quite, at least not by default. The pre-Brexit Manx passport did confusingly include the text "European Union" on its cover, but holders of Manx nationality were only citizens of the EU if they had lived for at least 5 consecutive years in the UK or if they descended from a UK parent or grandparent.
Source: https://en.wikipedia.org/wiki/Isle_of_Man-variant_British_pa...
It's the same for all the non-EU French territories. EU citizenship is not territorial, it's directly linked to the person's nationality so you wouldn't remove EU citizenship from a French citizen just because he happens to live in New Caledonia. French or British citizens living in Canada also are EU citizens after all.
The state of British citizenship is a bit more complicated though I think. A bit like US citizenship which kinda depends on which US territory one lives, as far as I understand.
No, a British citizen is a British Citizen wherever you live. There are tax implications based on where you live, but that's unrelated.
Right, but citizens of British overseas territories, crown dependencies and whatever other statuses exist are not necessarily British citizens. Same as with the various US territories.
This is what I meant when I said these citizenships work in more complicated ways than the French one.
I think all French territories are part of the EU, but some other countries work differently. The prime example is St. Martin, where the French part is in the EU, but the Dutch isn't (yes that technically puts a EU border through the middle of the island, although there were no pass controls when I was last there.).
Yes, but Martinique is not considered a territory, and is considered part of the EU.
French Guiana is in the EU.
Sure they are, 2 seconds of googling compared to a minute writing your post:
> The European Union (EU) has nine 'outermost regions' (ORs): Guadeloupe, French Guiana, Martinique, Mayotte, Réunion and Saint Martin (France), the Canary Islands (Spain) and the Azores and Madeira (Portugal). The ORs are an integral part of the EU and must apply its laws and obligations.
Let’s not assume they actually want a growing economy, I don’t think GOP voters want a growing economy.
That might explain this then:
> Trump Tariffs Hit Antarctic Islands Inhabited by Zero Humans and Many Penguins
https://www.wired.com/story/trump-tariffs-antarctic-islands-...
LLMs are basically just good at sourcing ideas from the internet. Me thinks this just means that this tariff idea exists on the internet, especially since grok, chatgpt, etc all come up with the same idea. We used to not have income taxes and funded the govt with tariffs so this probably isn't a new concept despite media outlets pretending like it is.
This is cosmic-level hilarious.
Jesus Christ.
Who needs more evidence?
I watched the man with my own eyes as he seriously floated the idea of injecting disinfectants to treat Covid-19. That was five years ago. His mental faculties have not improved since then.
The Drinking Bleach hoax: https://americandebunk.com/2024/07/01/the-drinking-bleach-ho...
A bit strange that this surely totally objective and unbiased site seems to lean heavily into one direction when looking through the other 'debunks'.
The site was of course trash, but from what I remember he was asking if people gave themselves sunburn would it kill covid.
His words to me felt they were those of a typical 5 year old, or an 80 year old with dementia, asking questions about subjects he doesn't understand but desperately trying to fit in.
But no, he did then ask about injecting a disinfectant.
Now it's quite possible Trump doesn't know the meaning of the word "disinfectant".
In the same press conference he also asked if "heat and light" will get rid of covid.
(Although of course he says this as "suggestions" and the "I'm just asking questions" tactic)
A bit strange that you sidestep the video and transcript (which supports the debunking) because it doesn't fit your confirmation bias
The strange thing here is that you've chosen to defend the indefensible on the grounds of trying to "both sides" something that really is only from one side.
Watch the whole thing for yourself https://www.youtube.com/watch?v=zicGxU5MfwE He talks about light for the first two things (cover the body and put it under the skin) and then switches to disinfectant. Was clearly talking about some kind of chemical to "clean the lungs" like you would clean you bathtub.
It's even worse, into the calculation they only counted goods, not services (where the US typically runs a large trade surplus).
I was wondering if this was the case.
Yes. These are College Freshman Essay economics, where you know just enough to declare it's time to go bold and are still stupid enough to believe it will work.
It's not that there's no strategy, it's that it was designed by reckless amateurs who haven't done the reading, haven't consulted with anyone that understands all the trade-offs, and have an uncapped appetite for risk.
The TV version works out perfectly, since the writers control the ending.
It's not: in the formula they posted, phi is the "passthrough from tariffs to import prices". That's where the country's own tariffs are factored in. Or am I reading this wrong?
> Parameter Selection
> ... The price elasticity of import demand, ε, was set at 4.
> ... The elasticity of import prices with respect to tariffs, φ, is 0.25. ...
Those two letters are Greek! Tariff them! Substitute them with superior American letters, like... you know what you have to do!
You're reading it wrong because it's nonsense
None of the values are related to their names in any way
It is AI-generated slop. They did no work on this at all.
What about Australia? We’re in surplus. Is 10% just the minimum?
Yup.
Have you considered the possibility that they know perfectly well what they're doing and they're just lying about it? Lutnick, the commerce secretary, has been CEO of Cantor Fitzgerald for over 2 decades. The treasury secretary has a similarly stellar resume. There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.
Trump personally may or may not understand it (I think he does) but his political superpower is his willingness to stand up in public and say complete bullshit knowing that it's bullshit, knowing that some people are fools who will uncritically believe the bullshit, and other people are cynics who who will nod along with the bullshit either to make money out of the rubes or because they think it serves a strategic purpose.
You can waste years wondering which side of Hanlon's razor someone is on, but it's important to remember that obsessing over such dilemmas can lead to paralysis. Just like there are a lot of street hustles and cons that depend on confusing/misleading the mark before tricking or mugging them out of their money, there are a lot of political gambits that depend on inducing analysis-paralysis in opponents. Manufacturing dilemmas is also a key element in military strategy.
My advice is to stop worrying about whether these people are such fools that you owe them some sort of empathy and an effort to save them from themselves, or you will end up like Charlie Brown having the football pulled way by Lucy yet again. It is OK to cut them off and treat them as bad actors, for the same reason you should often round off quantitative values instead of obsessing over precision.
Let’s not forget Congress could assert its authority over tariffs at any time. This isn’t just the executive branch unilaterally creating the biggest, most regressive tax hike in our lifetimes, it’s a coordinated GOP operation.
I wonder what kind of phone calls their donors are having with them.
Yes, it's never a good idea to underestimate the intelligence or agency of the enemy.
But in this case: what is the game plan? What are they trying to achieve? Is it simply chaos, so that they can rule in perpetuity?
One thing they do is allow him to raise taxes on the middle class and poor, who will be paying those tarrifs, while lowering the taxes for the rich. Everyone's talking about some 3D chess when "more money for the rich" has always been the only consistent Republican policy.
> when "more money for the rich" has always been the only consistent Republican policy.
You probably want to be more careful with how you phrase that. The Republican party passed the Civil Rights Act and ended slavery, among other things.
Those may not be the type of Republicans you are thinking of today, but they still had that little (R) next to their names.
> The Republican party passed the Civil Rights Act
Way more Democrats in both houses of Congress voted for it than Republicans (to be fair the Democrats held the Senate 67-33). A Democratic president signed it. His Democratic predecessor asked for it. How do you figure "the Republicans did it"?
https://en.wikipedia.org/wiki/Civil_Rights_Act_of_1964#By_pa...
My interpretation: "No one really knows what will happen but it could work to bring some production back to our country, let's give it a try, if it doesn't we try something else."
>Have you considered the possibility that they know perfectly well what they're doing and they're just lying about it?
Politicians are just pretending to be dumb? Why?
>There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.
I don't think most people deny that these are capable individuals. The problem is - I think the people in Trump's inner circle now are sycophants first. They know what Trump is doing is destructive, but they are just choose to be yes men. Remember, this isn't Trump's first go-around, and the majority of people who stood up to Trump the first time (Pence, Barr, Perry, Price, Rex Tillerson) are gone.
Funny enough wikipedia has an article[1] about this that is so large that it has many sub articles. Ultimately, I can't trust that his appointments are exercising any sort of discernment because a large number of his 2016 appointees were fired for doing so.
In short, Fitzgerald could be a genius, but all signs point to him being a yes-man that would rather sink the ship than stand up to Trump.
[1] https://en.wikipedia.org/wiki/List_of_dismissals_and_resigna...
> Politicians are just pretending to be dumb? Why?
To hide their motives, if you think they are just dumb then you will not look for the real reason they do it.
Not sure that is what happens here, but that is a very common reason to play dumb.
> I think the people in Trump's inner circle now are sycophants first
If this is the case, we could at least likely put to rest most concerns that Trump will be implementing much of Project 2025.
I'd be very surprised if he had too much to do with that plan directly. Assuming that's true, and if he's only surrounded by yes men, no one is there to convince him to do anything other than exactly what he himself wants to do.
Politicians are just pretending to be dumb? Why?
I told you: because it creates a strategic dilemma that paralyzes the opposition. The same reason a hustler pretends to be dumb to lure the mark, the same reason trolls use shitposting to bait people.
His name is Howard Lutnick. He was CEO of a financial firm called Cantor Fitzgerald. https://en.wikipedia.org/wiki/Howard_Lutnick
Yeah, and what if Lutnick doesn't care about making America better but just making money for himself? And his salary is not tied to his performance, but to his sycophancy?
It is not as if he is going to die of starvation because of tariffs. He has no skin in the game.
In my experience, people who operate that way often convince themselves that they can do both. They'll make themselves rich, that's the primary goal, but they contort reality enough to paint the picture of a win-win.
A great example is Rubio. People may disagree with his politics, but he has been a competent government person for a long time. Even had a legit shot at POTUS at one point. And now, he's trying to shrink away while Trump and Vance make a mockery of the Oval Office.
>Lutnick, the commerce secretary, has been CEO of Cantor Fitzgerald for over 2 decades.
Lutnick clearly has zero actual influence in this administration. He's a barking dog sent to do TV soundbites, and his explanations are often full-bore nonsensical or completely contradictory to his prior explanations. Foreign officials (such as Canada) have repeatedly come out of meetings with Lutnick almost...assuaged....as if Lutnick is saying "he isn't really going to do this...there's no way", because even Lutnick doesn't realize just how stubborn Trump is about his outrageously stupid ways. These guys keep trying to pretend this is all some masterful negotiating strategy by the Art of the Deal master.
And based upon 100% of Trump's history in government, it won't be long before Lutnick and Bessent are out of this admin, both will be "RINOs" attacked by the MAGA cult, and they'll both be telling the tale of how outrageously stupid Donald Trump is. Like closing on 100% of Trump's administration in the first term.
Just look at the lead up to these tariffs. The day before Trump was still "deciding". This is something that a team of expert economists should have worked on for months, probably to conclude that free and liberal trade is what made the US the richest large country on Earth, but instead it was something that everyone had to sit around and wait for Trump to pull something out of his ass.
Trump has openly and widely talked about tariffs replacing income tax for years. This administration is clearly one where no one ever can counter any harebrained idea from Trump -- and they're all incredibly stupid ideas from that incredibly stupid man -- so whatever nonsensical takes he has they have to all try to make talking points around and create some post facto rationalizations. It is the most dangerous administration in human history, and the American voter looked at this traitorous, constitution-shredding, law-breaking imbecile and said "more please!"
There is no 4D chess happening here[1]. There isn't even checkers happening. No masterful long term negotiating strategy. It's just a fumbling moron (rapist, charity-stealing imbecile) that is doing the most nonsensical way to deal with a deficit rather than, you know, raising taxes. And to be clear the US deficit is untenable and needs to be dealt with, and the head in the sand approach by successive governments is not reasonable, but combining DOGE's ham-fisted stupidity with Trump's economic destruction and the deficit is likely going to be much, much worse. The US is on the fast track to insolvency.
"But China....next war....China!"
Trump started this whole thing by attacking allies. By dissolving alliances and trying to economically harm its closest friends. Precisely the opposite of expectations if the US were seriously trying to counter China.
[1] Aside from corruption. Tariffs are the foundation of corruption because everyone has to come, hat in hand, begging for exemptions. There is going to be a line to the White House of manufacturers and importers, from Apple to military contractors, begging for special waivers. Which they'll get if they grease the right palms, as this is the most blatantly corrupt administration in US history. He's selling pardons in the open, and operating a literal protection racket, and this is just...an ordinary day now.
Why are you so certain that these tariff plans were still being decided by Trump the day before? He sure likes to put on that front publicly, but I'm less clear on how we'd know whether that's him playing games or an actual representation of the reality of how his cabinet is operating.
If one does want to impose a large block of tariffs, it does seem reasonable that you would want to keep details quiet until the entire package is announced. You wouldn't want other countries responding early
Quiet? Trump has been bellowing about his tariffs for months. China, South Korea and Japan -- long absolute adversaries -- even had a meeting about how to respond. The actual tariff plan is 0% based upon reciprocity, and instead is based upon "we're a rich country that buys lots of stuff, so let's punish the citizens who buy stuff" (as the largest tax hike in history). There are tariffs for unoccupied island chains.
And these apply immediately. This is an administrative impossibility. CBP is going to have a disastrous couple of weeks about this rag tag collection of barely defined nonsense.
This is 100% disaster, top to bottom.
Details of the tariffs weren't known at all until yesterday, they were quiet.
The comment I replied to was claiming that Trump himself was still deciding what the tariffs would be until this week. My question was how we could be so certain of that.
As far as reciprocity goes, how is this plan not based at least in part on reciprocity? They claim other countries have taken advantage of the US and we're on the losing end of trade deficits. The tariffs they announced seem to be based entirely on trade deficits/surpluses with each country.
I have no idea if this would work or what the administration's real motives are, but the on the surface it sure seems like they proposed tariffs that target the problem they claim - trade imbalances.
Specific rates weren't known because they were spitballed last minute, apparently based upon a ChatGPT conversation. That there were going to be significant tariffs has been openly gloated about by this admin and mouthpieces like Howard Nutlick for months. Do you think every other country needed a specific number to start their response plans?
And really that is a silly theory regardless. The US would achieve maximum effectiveness by doing a normal tariff legislative process and then soberly discussing with all parties. Instead it's constant on/off brinksmanship. Because Donald Trump is a profoundly stupid imbecile with a simpleton, child-like understanding of the world. There is going to be customs and business chaos as this is factored in.
>As far as reciprocity goes, how is this plan not based at least in part on reciprocity?
It has zero bearing on reciprocity. Reciprocity is matching the other party's tariffs.
If you're richer than the other party, or if they sell things that you want but you don't sell things that they want, that isn't reciprocity. It's like if I tariff my children when they buy from McDonalds -- I mean, McDonalds doesn't buy from me! - and claim it's reciprocity. That would be insanely stupid, right?
It's a massive tax hike on Americans -- a regressive tax that will hit the working and middle classes the hardest -- shrouded under some patriotic America thing. No way anyone falls for this...right?
All that is correct, but I think you missed the point the other poster was making. What if, instead of blundering about stupidly, the goal is to cause as much chaos as possible in order to consolidate political power?
Does the exact percentage of the tariffs matter? I suspect it doesn't - these look like approximate numbers to obtain concessions, and a complex formula doesn't really help anything.
Far as I can tell, the ideal would have been to simply double incoming tariffs, but that would be infeasibly large. This was a way to generate a plausible smaller number that can be increased later on an individual basis depending on how the country responds.
So I'm guessing it's not important to tariff the penguins of Antarctic Island?
Penguins are a myth. They are all too identical. Clearly cgi.
And they run Linux
Penguins are just mascots.
You're probably thinking of that one dead badger.
Of course, penguins are birds and birds aren't real.
Oh, birds are very real. They just run on batteries.
I think the Trump Crime family shorted the market last week and made millions today and this week
Now control the SEC so the privileged won't get investigated for insider trading.
That's how you devolve into a 3rd world country by the way. I've lived in 3rd world countries and seen this over and over again. That's why 3rd world country stock markets don't go up - because locals and international investors have a distrust in them. Locals know insider trading is rampant.
Once this kind of corruption is accepted in society, everyone will need corruption in order to stay ahead.
I hope you’re right as I’m betting on the short as well. Made a crap load on TSLQ a while back.
I went from a low risk investor to betting on US doing stupid stuff and stated making real money. Cognitive dissonance investment I think.
I wish I had the guts to do that. Instead I stayed in my diversified portfolio. :(
Honestly I thought the billionaires would keep Trump in check as they want number to go up, so I bet on that. Hindsight is always 20/20 though :(
Elon Musk directly benefits from this also, so...
I'm not sure about that, he will be importing a lot of parts for his cars.
> he will be importing a lot of parts for his cars.
How doesn’t need to make as many of them anymore, so that’s a saving.
If you think Trump won't have exemptions for his friends, I have some of his memecoins to sell you.
"These specific parts from these companies from these countries receive 0% tariffs".
He doesn't care about Tesla anymore. He's making some fat money out of AI, SpaceX is a money printing machine now that he's got the ear of Trump and he's spending almost all his daytime (and nightime) hours shitposting and boosting racists on twitter.
This is just a stray thought of mine - but I feel like the US might go down a very dangerous path - I think to avoid retaliatory tariffs, US companies, such as NVIDIA might decide to create foreign subsidiaries, and license the technology to them - after all the tariffs don't apply if Europe does business with a Taiwanese subsidiary.
But this will expose them to a technology exfiltration scheme and/or hostile takeover in the vein of what happened to ARM China.
Am I reading too much into this?
They already wouldn't be subject to this tariff if they bought directly from Taiwan. Tariffs only happen when goods cross the border so unless Nvidia's logistics required them to ship into the US to get goods to Europe they shouldn't be affected by the tariffs directly.
Genuine questions: why are they calling it “reciprocal”? Is the US just matching the tariffs set by the other countries?
Also, this announcement has wiped out any plans of buying tech products this year, plus a holiday to the US and Canada later in the year. Good thing too, as the entire globe is probably staring down the barrel of a recession.
Someone calculated the formula used. They divided the trade deficit of each country by total trade of each country and assumed that was all a tariff.
So for example Indonesia and the US traded $28 billion. The US has a 17.9 billion trade deficit with Indonesia. 17.9/28 =0.639, or 64%, which is assumed to be all caused by tariffs. So they divide by two and impose 32%.
Anyway no the US isn't matching tariffs they're dramatically exceeding them.
Thanks for pointing this out. As a follow up, if the US has a trade surplus, they seem to just slap 10% in both columns.
That's a bit of a messed up way to calculate things.
I also think the US deficits are hugely overstated because much of what the US produces is intellectual capital rather than physical goods and the profits are made to appear in foreign subsidiaries for tax reasons. Like if I buy Microsoft stuff in the UK, Microsoft make out it was made in Ireland for tax purposes, but really the value is created in and owned by the US. The US company both wrote the software and owns Microsoft Ireland. So much of the perceived unfairness Trump is having a go at isn't real.
You raise an excellent point that US corporate tax evasion is exaggerating the trade deficit. However, from the perspective of winning US elections, I think it does not change the issue that the trade deficit falls more on de-industrializing Midwestern states, and the corporations you are referring to are concentrated in Northeastern and Western states.
Secondly, if Microsoft or Apple makes the profit appear in Ireland, it cannot move that money back to the domestic US, right? So as long as the money sits overseas, it would not count towards US trade and thus the deficit calculation is fair.
They don't move the profit back to the US, but through Ireland and the Netherlands they move it out of the EU mostly to some tax havens in the Caribbean. From there they use them for their stock buybacks, which I think equals mostly flowing back into the US.
This is no longer true. Said loophole was eliminated in 2017, and completely closed in 2020.
Again, not flowing back to the right people. All of this could have been solved by sane redistribution, but no. It'll still be redistribution but in a cruder, less apparent form.
If the profits went back to Apple HQ directly they would serve to raise the share price and allow stock buybacks and stock based compensation for employees. Same as they do now.
You may not like a tech company succeeding at exports and having a rising share price, but that is distinct from the overall point which is that properly considered these are US exports obscured by the US tax code which incentivizes profits abroad.
That's a great point. I checked into this, and if and when the profits are repatriated they indeed only show up in the capital account, not the current account.
However, in practice even if not repatriated those exports show up in the us economy. Profits raise the share price, which allows stock grants at higher values, effectively a wage as one example.
I wonder how big an effect this phenomenon you highlight has. Must be a fairly large overstatement of the US trade deficit.
If the US has a trade deficit, doesn't that mean the US is trading make-believe pieces of paper for real goods.
Like, if I scribble on a piece of paper and then trade you the piece of paper for an incredibly engineered brand new laptop, is that bad for me? Is this a sign of my weakness?
I know economics can be complicated, and probably "it depends", but why is a trade deficit bad? Why does the Trump administration want to eliminate trade deficits?
It's like the blaming in a playground fight; who started first? For context: https://nitter.net/KushDesai47/status/1907618136444067901
It's just spin. The new duties are purely punitive.
Because when the blowback comes, people will be looking to cast blame for starting this whole trade war, and when that time comes Trump will point to the word "reciprocal" and say "we didn't start this, we were only reciprocating".
> Is the US just matching the tariffs set by the other countries?
No. Trump claims that the new tariffs are a 50% discount on what those countries tariff US goods at. (Even if that's questionable - is VAT a tariff?)
If he's correct, or anywhere close, this is a "tough love" strategy to force negotiations. We'll see how it goes. It also plays to his base - why should we tariff any less than they do us? And they have a point, it's the principle of the thing.
> If he's correct
He's not.
According to [1], the White House claims Vietnam has a 90% tariff rate.
According to [2], 90.4% is the ratio of Vietnam's trade deficit with the US -- they have a deficit of $123.5B on $136.6B of exports.
The same math holds true for other countries, e.g. Japan's claimed 46% tariff rate is their deficit of $68.5B on $148.2B of exports. The EU's claimed 39% tariff rate is their deficit of $235.6B on $605.8B of exports.
Who knows, maaaaybe it just so happens that these countries magically have tariff rates that match the ratio of their trade deficits.
Or maybe, the reason Vietnam doesn't buy a lot of US stuff is because they're poor. The reason they sell the US a bunch of stuff is because their labour is cheap to Americans. (They do have tariffs, but they're nowhere near 90%: [3].)
America's government is not trustworthy. Assuming that what they say is truthful is a poor use of time.
[1]: https://x.com/WhiteHouse/status/1907533090559324204/photo/1
[2]: https://ustr.gov/countries-regions/southeast-asia-pacific/vi...
[3]: https://www.investmentmonitor.ai/news/vietnam-gives-us-tax-b...
It's so quaint to me that people actually believe his rhetoric. How long do you think people will put up with high prices before they turn on him?
If high prices are inevitable, what’s their endgame? Are they actually incompetent or are people too pessimistic about what they’re attempting to do?
Prior to yesterday's announcement, the claim regarding tarrifs was that the goal was to bring manufacturing back to american soil. This is unlikely to happen in any case, but it requires at minimum that consumers put up with high prices for a while (with "a while" being measured in years, if not decades). Actually, the "liberation day" tarrifs strongly agree with this goal: after speculation, the administration announced the formula for these new tarrifs, which has nothing to do with counter tarrifs or trade barriers as claimed, and instead comes from a ratio of the trade deficit in goods and the overall amount of trade. In other words, countries that export a lot of goods to the US (and the US doesn't have commensurate goods exports to) get high tarrifs. This makes sense if the goal is to incentivize manufacturing in the US, by making manufactured goods from outside more expensive.
There is another camp that thinks that trump doesn't really have a goal per se, and is rather doing all this as an exercise in showing off his strength and to draw attention to himself. This camp holds that eventually trump will get bored, or the public will turn on him, and he'll need to get rid of tarrifs to save face. We call these people "optimists".
> If he's correct
Trump is not in the business of being _correct_, or indeed caring about correctness as a concept.
And no, these are, obviously, not the actual tariffs, don’t be silly.
Are those in addition to existing tariffs?
And there are a lot more countries in that list, South Korea and Taiwan are going to really hurt for electronics. And I assume Vietnam, Cambodia, Bangladesh and other countries will hurt for other good that are made cheaply there.
> And I assume Vietnam, Cambodia, Bangladesh and other countries will hurt for other good that are made cheaply there
Vietnam and Bangladesh would hurt American consumers (clothes). Cambodia not really.
Silver lining, Brazil and Colombia (edit: and the rest of Latin America) are kept at baseline, and Philippines is now the lowest tariff developing Asian economy.
We'll probably see a significant amount of capital returning to Philippines (who saw de-industrialization when South Korea signed their FTA with Vietnam).
> Are those in addition to existing tariffs?
Yes (Edit: not sure now, I'm hearing some say they include the 2017 tariff regime of flat 10% - smh shows how this was just a political ploy that answers for such a critical question are mixed)
(Edit 2: was right initially - thanks u/inverted_flag)
So 54% on China, and this might not be the end of it as countries will retaliate and Trump might increase them even further.
> as countries will retaliate
Depends on the country. India is negotiating a Bilateral Trade Agreement by mid-2025, Vietnam has sent a trade delegation to DC to negotiate as we speak, and tariffs on Colombia, Brazil, Philippines, and Turkiye are the lowest for middle income countries.
The harshest pain will be felt by Cambodia and Vietnam, because both are part of ASEAN like Philippines and share similar trade partners (Japan, SK), Bangladesh as they have an FTA and significant capital from India, and China as EU (looking at you Poland and Czechia), Turkiye, Japan, SK, and India are now cost competitive
You'll be seeing more "Made in Philippines", "Made in Colombia" "Made in Turkiye", "Made in Brazil", and "Made in India" shirts, auto parts, and assembled electronics now.
We might also see a return of Malaysia in the semiconductor industry, as they are now cheaper than Taiwan - great for whoever buys Intel Foundry Services (Penang reax only)
As soon as Malaysia gets anywhere near a significant capacity of semiconductor manufacturing they’ll also get increased tariffs. Or, the the tariffs will end and it will return to Taiwan.
Stability is necessary for any big shifts to be worth taking.
> As soon as Malaysia gets anywhere near a significant capacity of semiconductor manufacturing
You mean since 1971 when Intel opened their OSAT in Penang?
Malaysia was THE hub for electronics manufacturing until 20 years ago when China became cheaper.
In fact, it was the same businessmen in the Penang electronics industry who largely invested in China's electronics industry.
Also, semiconductors are exempted so my whole thread is moot about that. Electronics manufacturing though will return (and already started due to most companies China+1 strategy).
But will investors make any long term decision given the unreliability of the US administration? Who would invest in manufacturing in a country if the tariffs could be gone tomorrow again?
The examples I listed are countries where manufacturers ALREADY invested in capacity well before this happened.
Supply chains have gotten way more resilient after Zero COVID in China and Vietnam caused a lot of supply chain craziness.
Seems unlikely, at least in the near term. These are LARGE amounts of good to be shifting, and they don't shift overnight. Plus, if the tariffs calculations are really based on trade imbalance, who's to say Columbia won't get slapped with more tariffs as soon as they start making and exporting more goods to the US. Pretty risky to be opening up a bunch of factories only to be tariffed to death right after.
> These are LARGE amounts of good to be shifting, and they don't shift overnight
Hence I listed countries where manufacturing in those industries was significant until 10-15 years ago or where investment has largely moved beforehand.
> Yes (Edit: not sure now, I'm hearing some say they include the 2017 tariff regime of flat 10% - smh shows how this was just a political ploy that answers for such a critical question are mixed)
https://xcancel.com/EamonJavers/status/1907540655871521264#m
I'm a freelance selling software services. Some of my customers are in the US. Am I affected? These tariff don't impact software, right?
Different countries have different tariff. Is there room for arbitration? In which a 3rd party business from a country with low tariff would buy a product in one of the countries with high tariff and export that to the US, taking a small cut.
Services aren't traditionally part of tariffs; tariffs apply only to physical stuff moving across borders.
That being said: I work in a services-oriented business right now "exporting" services to the U.S. and the leadership of that company is seemingly getting very worried, trying to diversify their customer base out of the U.S.
If, in the cycle of retaliatory action, they run out of ammunition with tariffs on stuff, who knows what other crazy ideas will come to the surface: Tariffs on services do come to mind, maybe restrictions around recognition/enforcement of foreign-owned intellectual property,...
Tariffs on services are much harder to enforce. There's point of entry so it's harder to check.
However, some countries have a withholding tax for services provided by foreign companies. The client is responsible for withholding the amount from any payment and paying the government. And banks play a role in the enforcement if needed.
So it can be done !
Tariffs are on goods. Unless you're physically shipping software across the border it shouldn't affect you.
You mean arbitrage, and yes, that definitely happens as a result of tariffs.
Upon import you have to declare the country of origin of the good. That's what is being tariffed and makes your arbitrage idea essentially fraud.
Usually this is happening where you import "parts" and the final assembly "the product" is "made in" and sold as "product xyx". Then the origin country of the parts do not matter.
I don’t buy the blanket statement that the consumer always pays the tariff. It depends on what alternative companies have. If a company can purchase the same clothing from Chinese, Vietnamese, or Mexican vendors, a tax on China only could make the Chinese vendors lower the price or risk losing the business.
However, a blanket tax on every country, regardless of available alternatives, would leave businesses with fewer options and make it more likely that the cost is passed on to consumers.
For taxes to work in raising money, they have to be paid. So, if the goal is to make revenue from the taxes, then raising costs is expected?
If the goal is to incentivize alternatives, then the tax has to be such that it raises the price above the gap there now. So, even if you do drive people to an alternative source, the new price will be higher than the old. (Unless the thought is that people were choosing to not buy the cheaper source to begin with?)
I suppose you can argue that some suppliers have such a margin that the tax could be an effort to get them to cut into that? I have not seen evidence that that is the case?
> If a company can purchase the same clothing from Chinese, Vietnamese, or Mexican vendors, a tax on China only could make the Chinese vendors lower the price or risk losing the business.
This example implies producers are already in competition with one another, so it's unlikely that any of them can lower the price much. On the other hand, if some producers leave the market due to the tariffs, then there's less competition overall and the other producers can charge more.
> This example implies producers are already in competition with one another, so it's unlikely that any of them can lower the price much.
Non sequitor. Differing production conditions between countries would result in differing profit margins.
The objective reality of the situation is that there is a transaction between a buyer and a seller. That transaction is what pays the tariff, VAT, property transfer tax or whatever vampirical suckage by whatevername.
Both transacting counterparties are robbed.
How that is distributed between them is a matter of which has more alternatives. E.g. if the seller has lots of prospective buyers, most of whom are not subject to the tax, then the market price they demand is not sensitive to the rare buyer who does pay the tax.
If a big fraction of the seller's prospective buyers face a tax, then it makes their product or service look more expensive to a good chunk of the market, which exerts downward pressure on the price. The downward pressure on the price means that the seller effectively pays some of the tax, through lost revenue.
So, the transaction pays the tax as such, but how much of it is distributed between buyer and seller depends on the degree of influence of the tax on the price point.
The concept you are describing here is "tax incidence" [1].
Tariffs are taxes.
I'm sure lots of hours will be spent researching the incidences of these across many industries.
As you note, one major factor is the presence of substitutes, but there are several others.
1. https://en.m.wikipedia.org/wiki/Tax_incidence
This is true, but the amount of production in China dwarfs everyone else, and definitely what America can bring up anytime soon, so two consequences:
A. Tariff for Chinese goods will be reflected in consumer prices pretty much directly.
B. Domestic suppliers if the same goods have very limited capacity, giving them the pricing power to raise their prices by the tariff amount, and take it as extra profit.
Take for example cars. We will see American cars go up by the same amount as imports as long as they are oversubscribed on capacity.
Of course! That definitive statement is rhetoric.
The payer of a tariff is decided by the relative elasticity of supply and elasticity of demand.
Sometimes the seller will eat it. Sometimes they buyer will eat it. Sometimes the product wont get made or sold.
Most goods in US directly or indirectly relies on importing. So practically, I think it just mean US introduced VAT.
Except VAT and Sales Tax is typically applied regardless of where the item / service originated from.
It also doesn't apply potentially several layers down.
That's not to mention things like reverse charge for B2B etc.
In other words, not similar at all!
Except it seems like the president has more control over tariffs.
Taxes are approved by congress, so this was surprising to me. Does the president essentially has full reign to tariff whoever they want (for whatever reason) until the end of their term?
Maybe this is less about economic independence and more about grabbing whatever power is within reach. If domestic taxes were up to the president and tariffs were up to congress, would we see exactly the same situation with domestic taxes?
Not quite the same.
An item sold for $1000 say would pay $100 at 10% VAT. The items in the supply chain all charge VAT and reclaim VAT they spent. I think usually this terminates at the import (maybe?)
Well, when you put it that way... it doesn't seem that bad at all.
Maybe the real innovation here is the political manouvering of coming up with a new, desperately-needed government revenue stream.
The lion is not killed by other beasts but by the worms inside.
Factories are not coming back to the USA in large number, for a lot of reasons, at least not until full automation + tariffs makes them economical. But the biggest reason is that what's going to happen is that the average joe is going to suffer a bit, then will vote against these policies in the next election, and that's only 3.5 years away. If it takes a year to build a factory -- and frankly these tariffs could be adjusted again or removed in a few months -- and then they're likely to be fully removed in 3.5 years, I'm just not sure it makes sense to invest in a factory.
Optimistic to assume that the US will have voting in 3.5 years.
My suspicion is that Trump will declare a national emergency and suspend elections at the mid-term if it looks like the Republicans will lose seats in the House.
I doubt enough people would stand for that. He might try, similar to how South Korea tried a similar trick last year - it didn't stick.
They already stood for that and voted for him again, where have you been?
The government is already actively ignoring federal courts. Who is going to stop them?
The army isn't likely to stand for this
They’re the most likely to go along. The whole point of the army is following orders. Congress doesn’t have the threat of jail for not listening to Trump.
Want to bet that Trump's argument for a third term hinges on the US being in a recession/depression and needing him to see the economy through the struggles?
This doesn't come as a surprise as we all know it's going to come.
My question is, how does the US prepare to re-industrialize itself? Is the tariff good enough to provide incentives so that factories start to appear domestically? I fear this might not be the case.
The US never lost manufacturing. It just automated it. Those people who know how to run a factory still exist.
However there is no getting around it taking years to setup a factory (less if you can import the assembly line back from China). So nobody sane will start a new one in the next year based on these tariffs - odds are too high that in 2 years the democrats take over congress (the house not flipping would be a shock: typically the out of power party gains a few seats in non-presidential elections and only a few seats need to flip. The senate is somewhat unlikely, but the loss of the house would have ripple effects there).
Even ignoring the above, any few factory would be highly automated. There won't be thousands of new no college required jobs created in any new factory. It will be maybe 100 (probably less), with a bunch more engineering degree required.
The De Minimis loophole is highly significant with 4 Million packages per day (What ?). The clause to address this loophole needs to be stated more accurately - It should clearly define it to be higher / lower of 30 % of value of shipment under $800 or $25 per shipment and not either
Source :https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr....
This is absolutely shocking. As these tariffs are reflective of trade deficits this administration is taxing the cheapest sources of goods for the American economy in proportion of volume.
This is economic handbrake territory. It will impact every industry that imports goods (as well as many raw materials and components) and will devestate many, if not all SMEs who rely on importing goods to sell to local customers. Fashion retail in particular and drop shippers will have to raise their prices considerably.
While I imagine the ideas behind these tariffs have some sense of justification, the numbers simply don't add up. Manufacturing clothing in the US simply isn't viable at the sorts of scales for mass consumption. For example, you can pick up Levis at Walmart for around $25 that have been manufactured abroad. The Levi Vintage run, which are made within the US, have prices starting at $150. So all this will do is force people will less money to spend an extra ~50% (or $12.5 in this case) on their jeans, as this will still be cheaper than $150. Obviously to entirely succeed at the supposed aim would to create a world where all jeans cost $150 and this would simply mean that most people would not be able to afford jeans.
So has anyone an idea how those tariffs would affect software sales? Say I'm a German guy selling a license for my software to someone in the US. Will this fall under tariffs, too. Or are software licenses somehow exempt? Asking for a friend(me).
My opinion. (Also as a German guy doing a similar thing).
On the first order no. The tariffs just announced are only on goods and are collected at the ports when you physically import them.
On the second and third order. What I think will happen is that the EU will mostly retaliate against US services. And then trump might counter retaliate against EU services. So I would start looking for customers outside the US.
It won’t unless you’re shipping an item to the USA.
I think the eu should look into taxes on u.s. services, instead of tariffs on products. Taxing AWS/Azure/etc +25% would do a lot in getting similar services in the eu expanded.
Out of curiosity, would you still need to pay the full tariff, if the cost of an item that was shifted to a token/smart contract, that only enabled a right to purchase, but reduce the device cost to like a dollar or shipping.
It’d be pretty cool if someone derived a legal smart contract solution. One could argue that, the tech enabled products are two things a digital service, and a manufactured product. Those costs could be potentially be seperated.
Then again, I know nothing ^_^
As a preview of our future, it's now a good time to review the decline of standard of living that occurred when Great Britain lost the privilege of having the World's reserve currency, the Pound Sterling.
My estimate is we're in for a 75% haircut to our personal standard of living as the US Dollar loses it's place, and we actually have to pay for everything we want in hard currency or real goods. Trump killed the golden Goose, and threw it into a wood chipper.
Yep what many people overlook is that this deficient just means the rest of the world is financing the US overconsumption. And the only reason they are happy to do it is because they are happy to hold USD and are happy to invest in the US economy.
Tariffs are a tax on consumer goods. They will also be counterproductive to economic growth.
This is basically the Kim Jong-Un approach to foreign policy:
Kim: threaten a nuclear war, see if people will pay you to stop
Trump: threaten to crash the world economy, see if other countries will pay to stop you
He doesn't care that this will shrink the global economy, or even, at least in the short term, the US economy. If other countries submit in order to negotiate tariffs down then he has his "win" politically, if not then he has someone to blame.
Three things:
1. On the face of it, this looks horrible. I won't rehash the many arguments against it here, though. This page is already chock-full of those arguments.
2. Robot labor could make ultra-low-cost manufacturing possible in the US, to the point that many things become cheaper to make locally than to ship from abroad, tariffs or or no tariffs.
3. If any major country/region negotiates lower tariffs by fully opening its market to US products, every other country/region will be forced to do the same, expanding free trade everywhere.
> If any major country/region reacts by negotiating lower tariffs in exchange for a full opening of its market to US products
Would any country trust the US in a negotiation?
Probably only to the extent the US actually does what it has agreed to do.
>Robot labor could make ultra-low-cost manufacturing possible in the US, to the point that many things become cheaper to make locally than to ship from abroad, tariffs or or no tariffs.
That's not a solution to anything though. All it does is ensure your money goes to Mr. I-own-the-robots instead of to Foxcon's Mr I-own-the-people
That doesn't bring back any jobs
The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we make.
If you no longer want the trade deficit that means payments of fealty by those who trade in dollars, which countries aren't likely to tolerate, or abandoning the USD as a global reserve currency, which would be disastrous, truly disastrous. Our debts would suddenly become existential because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy. I don't think many truly understand just how disastrous it will be.
This isn't America's liberation day. This is Russia's and China's liberation day. While America was once able to check their power, America is no longer in a position to do so, we will barely be in a position to satisfy our own military's logistics requirements.
This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies. It is not only a de facto soft blockade of American trade, but it is an attack on the mechanics of American hegemony. Politicians already ask for money instead of votes or actions. That means if foreign governments spend money, they can elect their preferred candidates. America's own government was a result of french support. We institute regime change in other counties, and I see no reason to believe we are immune.
If trade stops occurring in US Dollar, which is a consequence of the stated goal of our current ruling regime, that would be the coup de grace on this country's hegemony. It is the definitive end to it, and the birth of Chinese hegemony.
Ray Dalio's Principles for Dealing with the Changing World Order feels prescient: https://www.youtube.com/watch?v=xguam0TKMw8
What still baffles me is how people act like this was some kind of thoughtful decision.
When you put someone incompetent in charge of a country, a company, or a sports team, collapse is inevitable, no exceptions. We’ve seen it play out over and over again because of stupid choices only driven by ego.
Now it’s the US’s turn
For extra sauce on the "they're barely even thinking about this" cake someone figured out where those crazy "Tariff Charged" numbers were coming from, they're taking the trade deficit and dividing by the total imports from that country.
https://imgur.com/a/jBTiz7T
edit: The White House deputy press secretary posted their formula and it is just trade_deficit/2*total_imports per country just dressed up with a lot of fancy language to make it seem smarter but the two extra terms are constants.
https://x.com/KushDesai47/status/1907618136444067901
I just asked ChatGPT with a lazy prompt: "Come up with a formula to impose reciprocal tariffs that will reduce America's trade deficit to zero" and it came up with basically the same formula.
Oh man if people in the White House are just using ChatGPT...
https://chatgpt.com/share/67ee890e-b400-800b-ac83-90a6147d32...
(edit: fixed link)
I never know for sure if that's the source or if the bots are just reading the same "Tariffs for Dummies" source the administration is working from.
> chatgpt.com/share/67ee890e-b400-800b-ac83-90a61463212
404.
> White House are just using ChatGPT
Likely, Grok? https://grok.com/share/c2hhcmQtMg%3D%3D_e8b4c405-3bb8-4f01-9...
The Terminator franchise had it that the AI has to nuke humanity and fight a giant war including time travel to take over.
Nah, all it has to do is offer to be "helpful" and do stuff for us and we'd be like "sure, go ahead, take over, here let me cut and paste your advice right into a policy document."
People keep asking me how AI will "take over", they don't like my answer "humans are lazy and delegate everything to the AI".
They don't like it because they know it's true.
I can't believe that could be real at all, but then remembered we're still on the "Biff has the Grey Sports Almanac 1985" timeline
Good to see that Trump will be providing subsidies on goods imported from Australia to balance out the -107% trade relationship they have with them.
Oh wait its a 10% tariff on Australia too. Better make a new version of this chart with a -117% benefit to the US then...
No. They’re designed to scale with trade deficit expressed as a percentage. Its not random. https://www.understandingamerica.co/p/the-one-word-that-expl...
I don’t understand what you’re trying to say. What rtkwe described is literally what they are? They didn’t say the tariffs are random (unless the comment changed, which would explain why yours makes no sense to me), they said they aren’t what the White House is claiming they are.
If you think trying to balance out the trade deficit with every single country without any other nuanced consideration whatsoever is a good approach, that’s one thing (a lot of people would disagree), but there’s no getting around that the information around this is either misinformed or deliberately misleading.
I'm objecting to his characterization that "they're barely even thinking about this." He makes it seem like they picked this formula out of a hat. But there is an ideological rationale to scaling tariffs up with the size of the trade deficit, as described in the article I linked.
Why do you think the White House aren’t simply saying that, then, rather than claiming it’s about reciprocal tariffs and trade barriers?
The "idealogical rationale" is not coherent or even consistent with the papers that the administration cited:
From one economist who was cited in the rationale:
> It is not clear what the government note is referencing or not from our work ... But I believe our work suggests a much higher value should be used for the elasticity of import prices to tariffs than what the government note uses. ... The government note uses a value of 0.25 for ‘the elasticity of import prices with respect to tariffs’, denoted with the Greek letter phi. But our estimates found a value of 0.943 — very close to 1 — for this elasticity.
From another:
> this is where the discrepancies between our work and the table that President Trump showed arises ... our results suggest that the EU should not be tariffed, and yet they set high tariffs against them. Finally, our range of optimal tariffs is substantially lower than the ones the Administration just announced.
But it does provide a convenient fig-leaf rationalization for the class of over-confident economically illiterate folks to cling to, so it seems to have succeeded.
see: https://www.ft.com/content/bbaa8daf-b7b0-4dca-bc23-c2e8eee68...
non-paywall: https://archive.ph/wip/JMgcP
rayiner does this pretty consistently - strawmanning the argument and acting confused, on most political threads on hn.
I notice he seems to have a GPT-level understanding of issues, offering a thin justifications of his viewpoints, and then just completely ignoring any substantive discussions and instead only engaging in threads where he is "winning".
IIRC he is a lawyer, a field where strategically deploying intellectual dishonesty is particularly advantageous.
That's why I’ve stopped feeding the troll — I just downvote or flag when necessary. It’s a shame because, years ago, he was one of the better commenters on HN.
He's done this since at least 2016 so you can rest assured he's not a bot.
This is a real human being making these apologetics and using classic distraction and whataboutism techniques
Nope my edit was to add the bit I helpfully marked edit to show where the White House had confirmed this was their method while attempting to deny it.
I've seen this comment a couple of times. What would be a better way of doing it? Also consider that if they would've had a more complex formula, what would be the cost of needing to explain it publicly? Would they then need to start defending the fairness of each tariff vs doing it the simple way and having a single formula across the board?
How about “not doing it at all”?
How do you propose to fix deindustrialization?
US industrial output is the highest it has ever been. Where did you get the idea that we "deindustrialized"?
By looking at where things are made rather than by using hedonic adjustments to multiply up INTC revenue until it hides the problem (or whatever the strategy is today now that INTC is flagging).
Right, doing that shows US industrial output to be at its highest level ever.
Oh, you're one of the people who believes the "Made in America" stickers. That explains a lot.
Made or assembled?
I mean, both? We actually track this stuff, you know? Or at least we did until DOGE fired everybody who does that
Then what is the breakdown between products manufactured here and those merely assembled?
Assembly is one example of manufacture, so that distinction isn't really the one you think it is. Output is tracked by value added, so the mythical "car comes missing a single bolt which gets added in Flint" doesn't really show up in the output numbers, if that's your worry.
US industrial output is much lower than it has been relative to our consumption. We should mostly make in the country the industrial products we consume.
We are a consumer nation because we are more prosperous than our peers. It's the same reason you buy your food at a grocery store.
Generally, the clamoring for domestic production comes down to: 1. Employment. But because we are more prosperous, our employment is aimed elsewhere. We have jobs for people that are less dangerous, less manual, and better paid.
2. A fear that without domestic production, we're at a strategic or military disadvantage. But it's not that we _can't_ produce in an emergency, we can and have historically (see: oil in the 1970s). What protects us most is hegemony, which is threatened by things like across-the-board trade wars.
3. Nostalgia for the good ol days. Look, if you want to work in a factory, we have lots of them here, still. Nobody will stop you from putting on the hard hat. But in all likelihood you have a less stressful, less dangerous, and better-paying job today.
There really isn't an argument for this. Our trade was - as all trade is - mutually beneficial. Right now we're pushing the glass to the edge of the table when it was perfectly fine where it was.
One other important note: there are things we literally cannot produce domestically due to lack of natural availability (food products, certain textiles)
How can a "prosperous" nation sustainably consume more than it produces?
As long as there's someone to produce it ... forever?
I somehow keep eating 6-10 eggs a week despite not having a chicken.
Growth. Same reason we never need the national debt to be smaller than it is.
I think people look at "national debt" as though we're buying trillions of dollars of stuff and not, fundamentally, two things:
1) mandatory saving for future, like a Social Security for the country (which is ironically also comprised of Social Security)
2) investments made into the future of the country. People buy T-bonds because they're reliable returns. Low risk, relatively low reward. If suddenly our future looks less bright, our debt will slow, but it will be a pretty telling canary in the coal mine.
It's baffling to me that people generally don't grasp this. They treat it as though we're just ... buying stuff on a credit card.
Like this goes back to Adam Smith; these questions have been answered for a long time now
Manufacturing as a share of GDP is bound to fall. It is inevitably going the way of agriculture.
The US is in the envyable position of having developed a globally dominant service sector. Putting that at risk of retaliation by imposing tariffs on all imports, including the lowest margin stuff like screws and bolts is utter insanity.
https://www.ft.com/content/aee57e7f-62f1-4a57-a780-341475cd8...
> We should mostly make in the country the industrial products we consume.
You state this as fact that we should all agree on. Why should we do this? Why not rely on our allies and friends to do what they do well, while we continue to do what we do well? Is trade not the basis of peace? If we stand alone, we must ask why we must.
So you agree that we are not deindustrialized. Have a nice day.
We really shouldn't though.
Cargo culting "manufacturing jobs" isn't actually a plan.
(I also notice nobody is talking about bringing back switchboard jobs or typing pool jobs)
Why? That's what trade is for
I'm curious, are you personally volunteering to work in the factories? Or is it a situation where we need industrialization to come back but you personally are not willing to see it through?
I mean, is the poster in question a senior robotics engineer? Because that's whose going to be working in any factories that open. Maybe they'll have some security guards and janitors, I guess
Do people actually believe this? Maybe industrial output according to some cooked up numbers or specific industries.
Yes. People are very good at rationalizing self-serving beliefs. Here's how the numbers were cooked:
https://qz.com/1269172/the-epic-mistake-about-manufacturing-...
Interesting, so basically no growth since 2007 if you exclude computers, even with increased productivity. And the drop in employment is insane and it's no wonder that there is a huge political movement with fixing that as a pillar. Not even to mention regional problems that have been going on longer in the Rust Belt. Yeah I find it pretty disgusting when workers in service based industries like here have no sympathy for the workers in these industries.
What made-up numbers are you using to pretend it's not true?
I'm not the one making unbelievable statements. Were you one of those people who said there was no inflation at all until the last possible moment?
Here, US manufacturing output is up 50% since 2010: https://www.macrotrends.net/global-metrics/countries/USA/uni...
That it's relative share in GDP is down during that time means that other sectors were growing even faster (think Google, Netflix and so on, so services instead of things). That the service sector gains in relative importance is actually a sign of an advanced economy, every modern economy looks like that, not just the US.
In the end, the problem is that China manufacturing output is $4.6 trillion according to those numbers while the US is $2.5 trillion, while it was around the same back in 2010. This, along with its decline in percentage of GDP is causing the perception, and it also is causing decline in employment in manufacturing. The perception matters ideologically and the employment issues matters materially, and so we have these tariffs as an effort to bring manufacturing back to the US.
Pretty big goalpost shift from "who believes these cooked up numbers" to "perception matters."
So provide any measure by which US manufacturing output has declined. Good luck!
You're both making claims. How about either one of you provides some actual numbers? (Or rayiner, for that matter...)
Google is free (for now), but if you need a link:
https://www.macrotrends.net/global-metrics/countries/USA/uni...
It is. But it's really a lousy conversation to have you two going back and forth several times, with each of you asking the other to substantiate their position, and neither of you actually doing so.
We lost 6 million manufacturing jobs over the past decade.
Jobs is not the same as production. Many of the jobs are lost due to automation. If you bring manufacturing back to the US you’ll be “hiring” a lot more robuts than humans.
So? Manufacturing is not a jobs program. The output is what matters.
You might as well say we "de-agriculturized" because we automated farming.
Um, by picking and choosing what goods need protection in the long term?
Like, we can't make more fish. Avocados take a few years to grow new trees. Steel mills don't just appear in Ohio.
The worst part is that, even if you believe Donny, he's so mercurial with these tariffs that no one is going to give you a loan to do anything about any of this. This Katy Perry doctrine [0] he's established is just poison to any sort of capital investment. You've got no idea if any of these tariffs will make it to Monday, let alone to the time it takes the mortgage on your t-shirt factory to be paid off. And then you've got a new administration in four years and no idea if they will keep that protection for you either. How are you going to plant a whole vineyard and get it profitable in 4 years when grape vines take 7 years to mature to fruit bearing?
There's no point to any of this, even if you believe him.
[0] 'Cause you're hot, then you're cold You're yes, then you're no You're in, then you're out You're up, then you're down You're wrong when it's right It's black, and it's white We fight, we break up We kiss, we make up
Overall I agree, but I'm not sure there's literally no point. American primary producers will likely benefit - people who own mines, oil wells, farms, etc., and some American manufacturers too as long as they source enough of their raw materials from within the US that the price hikes on resources from overseas don't bite them too much. Still an overall loss that will be borne by American consumers, but a small section of the population who are already wealthy will greatly benefit...
The point is, as this Senator explains, not economic, but to gain leverage over companies and countries:
https://bsky.app/profile/chrismurphyct.bsky.social/post/3llu...
"Do _____ and maybe we can cut you some slack on the tariffs"
If there is a point and it's not just absolute stupidity.
I think he's on to something, but then I come back to Hanlon's Razor: Never assume conspiracy when stupidity will do.
Sure, they might be trying to do this. But I'd give that a ~3% chance.
There is no 'there' there.
They are 'burning down your house to cook a steak.'
The emperor has no clothes.
There are many more ways to say it, but as truly unbelievable as my mind keeps insisting it is, these people are just plain-jane morons.
Fair points. I go back and forth.
I genuinely thought his cabinet was at least competent, they have credentials like they are at least, but then fucking Signal happened and made it obvious what they actually are:
The exact same kind of fail-upwards, born on third thinking they hit a triple, grindset grifter, loser mid-level management nepobabies.
> The exact same kind of fail-upwards, born on third thinking they hit a triple, grindset grifter, loser mid-level management nepobabies.
Could not have put it better myself.
Welcome back.
> people who own mines, oil wells, farms, etc.
Huge swaths of midwestern farmers will go bankrupt if tariffs are imposed. Subsidies and exemptions are being specifically added to prevent the complete collapse of multiple red state economies due to the harm from the tariffs.
Even things like oil and mines aren't guaranteed safe, because of complexities around where refineries are, loss of export market, or weakness of dollar offsetting any nominal gains when looking at actual purchasing power.
Exactly, tariffs may be a wise way to protect parts of your industry that need protection and investment. The Chinese for example have been using this tactic for decades. But you need to choose which sectors to invest in. The way Trump is doing is nothing more than an instant devaluation of the dollar purchasing power.
The problem is it's economically illiterate. Trade deficits aren't bad in themselves - they can be a sign that you're getting a good deal. Consider the case where a country with low wages exports raw materials to the US, and doesn't buy back as much from the US. This is the situation for lots of poorer countries who are exporting cheap raw materials to the US, and the US gains from these situations. Trump's policy simply makes all these raw materials more expensive.
Another way of reducing trade deficits would be to make Americans so poor that they can't afford to buy things from overseas. Eliminating trade deficits in itself isn't a rational economic goal.
Having said that, American manufacurers on average will likely benefit (though maybe not if their raw materials are too much more expensive), but this benefit will only come at the cost of American consumers, who are denied cheaper options from overseas by the tariffs
You’re calling Trump “economically illiterate,” but what you’re saying will happen is exactly the motivation of Trump’s policy. He just thinks it’s a good thing rather than a bad thing.
Trump’s bet is that the upsides will be borne disproportionately by his base, while the downsides will be borne disproportionately by Democrats’ laptop-class base. It’s not irrational to think that will be the result.
How will adding a tax to every single consumer good benefit his base?
Because the taxes will encourage shifting production to the U.S.
How much do production workers get paid in China? How will our production goods be affordable at American labor rates? This strategy just makes everything more expensive - nothing cheaper.
Exactly and even if it does work to reshore factories (which will take years and we'll just ignore the question of where all the workers for these factories will come from, and that the goods needed for making those factories are also being tariffed) they'll only be competitive in a protected market so they're only really producing for the US market which will be stunted because costs would have inflated through the roof!
Not to mention these are blanket tariffs, not protecting specific American industries. So anything that's not feasibly produced here will be more expensive anyway.
Yes everybody, we are taxing all of your groceries - but all of those American coffee and banana farms (!) will be protected.
Sorry, who is saying that this will make things cheaper? I haven’t seen Trump or Vance argue this.
I mean, a large point of their campaign was that price increases were a major national concern, right? Can we agree that they repeatedly made that point? I recall many lawn signs to that effect.
So given that, I would have assumed that this administration would focus on making things more affordable. Instead, I'm seeing people try to explain to me that, actually, raising the prices across the board is a good thing!
To put it plainly, it seems like the administration raising prices is, in fact, not a good thing for Americans. And I don't see how American labor can produce things that are more affordable than what we can buy now. So it seems like a net negative, because ultimately they are choosing to make everything more expensive for consumers.
J.p. morgan is predicting 1.5% higher price index due to these tariffs. Even if that continues all four years, it’ll be much less than Biden.
Lots of time to make up for causing the largest market drop since COVID as well. Hopefully you're right and everything will be fine.
Trump did decent in the rust belt. Many of them have lost their good paying manufacturing jobs. If, and this is a big if, we can bring back manufacturing in the US they can get their jobs back.
If I'm company leadership, I'm not doing anything but trying to limit damage while this guy's in office. His tariffs can turn on a dime- his petulance is business poison.
What is the time scale we are talking about when we talk about this change?
GM announced they are going to hire some temporary workers and expand overtime for existing workers before the end of this month.
I'm sure there are more companies, but that is all I've seen so far.
I don't think it's his base that will benefit. More the owners of factories, mines, oil wells, etc.
I was just talking last night about how ironically the things Trump is doing fall not to far from what Bernie bros have dreamed of. Heavy tariffs and no income tax is pretty much the conservative version of liberal hand outs.
What do they expect to happen if the heavy tariffs either move the manufacturing of those products to the US or make the imports expensive enough that consumers switch to domestic manufacturers?
That tanks the revenue from the tariffs, which would make them an ineffective replacement for income tax.
> You’re calling Trump “economically illiterate,”
I mean he's gone bankrupt 6 times including managing to bankrupt a casino a business where on average people give you money to get less money in return... He also confuses simple economic terms like equating trade deficits with tariffs.
Trump also thinks imports subtract from GDP.
Consider actual tariffs? A trade deficit isn't a tariff or trade barrier it's just the natural flow of commerce from them selling more stuff than they buy. They're dressing it up like these countries are charging US imports these crazy tariffs but they're not at all, especially not across the board.
That's imminently doable but would require more work than plugging in 2 numbers from the US trade delegation website so we get this complete lie instead. Trump has had it in his head for ages that trade deficit == tariff (or is lying about that to make his supporters swallow this as the US just fighting back) and it's a completely broken understanding of trade.
> Consider actual tariffs? A trade deficit isn't a tariff or trade barrier it's just the natural flow of commerce from them selling more stuff than they buy
That’s just defining what a trade deficit is, it doesn’t explain why trade deficits arise. For example, other countries have cheaper labor and laxer environmental regulations. Simply looking at the country’s tariff rates on U.S. goods doesn’t account for the whole picture.
Other countries also have different population numbers. To take a random example, why would e.g. Uruguay (population 3.5M) buy as much from the US (population 100x) as the US is able to buy from them?
Besides, if the trade volume is what determines the tariff, why would any country want to have a trade surplus with the US? The best solution for other countries is to artificially limit their exports, or find more reliable trading partners.
On the face of it that sounds reasonable, but then you look at say China with a 35x population over Canada yet Canadians don't just buy as much from China as vice-versa, they buy CAD$65 billion more. So I don't think the argument that larger countries necessarily have a deficit against their smaller trading partners holds water.
I do agree that this madness will only encourage other countries to conduct their trade elsewhere.
> Other countries also have different population numbers. To take a random example, why would e.g. Uruguay (population 3.5M) buy as much from the US (population 100x) as the US is able to buy from them
Because the U.S. can buy from Uruguay only as much as 3.5 million people in that country can produce.
First we don't import any where near all of Uruguay's exports, in fact we're only about 8% of their actual exports which should tell you this isn't the reason we buy more from them than they do from us.
Next that's always going to be imbalanced because they produce goods cheaper and can't afford as much as the equivalent chunk of people in the US.
So, we aren’t factoring in natural resources and the different values they have either then?
Yeah sure, Europe is absolutely known for their lax environmental regulations…
GP said other countries, not "Europe". And Europe does have cheaper labor. Even in western europe you can find a 5x-10x difference in certain salaries especially in white collar industries.
Assume good faith.
> cheaper labor and laxer environmental regulations
So we've exported our worst paying, most environmentally damaging industries? I mean the rivers catching fire was probably exciting but I'm not exactly pining to bring that back...
Tariffs can only set those industries up for internal markets, other countries will just continue to buy from the cheaper source so the protected industry has to continue to be protected.
Additionally who's going to work these labor intensive industries? We're already at 4.1% unemployment, there's not vast masses of people waiting for low paying work as seamstresses and one of the other major prongs of the Trump ideology is reducing immigration drastically so we're going to squeezed on that end too.
Finally we've done mass tariffs before and it always ends badly. Remember Smoot-Hawley? it deepened the Great Depression because people thought they could turn to protectionism to prop up and bring industry to the US. It just doesn't work when broadly applied.
It’s been our turn for a hot minute. Republicans have been blowing up the status quo since Reagan, and the Democrats enforcing austerity since Clinton. American corporate leadership is excellent at hitting quarter-after-quarter KPIs for bonuses and share price growth, but there’s ample data it has all come at the expense of workers - increased precarity, decreased wages, increased costs of everything, as the country is plundered down to its core and sold off piecemeal.
Post-Carter United States (and South Korea, and Japan, and the UK, and much of the developed world in general) is a prime example of the follies of prioritizing numbers-on-a-spreadsheet growth in the short term, over a balanced and robust domestic economic engine that ensures a healthy, happy, stable populace that wants to have kids (since they have the money and time to be good parents).
Clinton was the last fiscally responsible President, using a strong real economy to pay down some of the debt which had service costs equal to the costs of US federal debt today. You can't criticize that given how high the debt was in the 1990s.
> Clinton was the last fiscally responsible President, using a strong real economy to pay down some of the debt
The Clinton social program cuts combined with the Bush II tax cuts is what gave us the poor distributional effects of the 2001-2008 expansion, which both set the stage for and magnified the impact on all but the narrow slice at the top of the Great Recession; while they seemed harmless in the unusually strong boom economy they were implemented in, monentary nominal budget balance acheived that way has had massive adverse long term effects.
It also, contrary to your claim, didn't pay down any of the national debt, which increased by at least $100 billion every year of the Clinton presidency.
I can when he did so not through raising revenue, but by gutting social safety net programs.
If you have a debt problem, you need to both raise income and cut unnecessary spending. Clinton - and every Democrat since Carter, really - only ever did the latter, and always targeting the working class for spending cuts as opposed to the corporate or wealthy classes. God forbid we curtail subsidies to fossil fuel companies or sugar producers or big box stores with a disproportionate amount of workers on government assistance programs, god forbid we stop bailing out failed banks or bankrupt private enterprise, let’s instead make sure poor people can’t have housing and children can’t have three meals a day.
Throwing large numbers around without examining how those numbers were achieved is what politicians and despots bank on the populace trusting, because once you know how those figures are reached, you’re confronted with how the system really works and suddenly have a distaste for it.
> What still baffles me is how people act like this was some kind of thoughtful decision.
I'm no economist, but I can see that there are second order effects that this addresses that other systems would lack.
1) Tit for tat on tariffs doesn't work because of other barriers to trade such as currency manipulation, subsidies, regulations, etc.
2) We've learned from games such as iterated prisoner's dilemma that strategies that succeed are ones that clearly communicate how they'll act and respond. A clear formula such as deficit/imports accomplished this. Countries know exactly what they must address in order to access US markets.
3) You can end up playing whack a mole with countries in that they can set up shop in other countries to bypass tariffs in their own country. By applying a consistent formula to all countries, you no longer have to play whack a mole.
Then why not just set a flat 10%? Why gut the industrial subsidies? Why gut state capacity?
It seems thoughtful if you or your children or your friends are heavily invested in crypto and think removing the USD as the primary currency of trade is a good idea.
I know it's a Republican joke to blame evil meddling globalists for the US's problems but it sure seems like a bunch of people looking to ruin the US for their own global ambitions are running the show right now.
Every accusation is an admission when it comes to Republicans.
Luckily the US has quite some momentum so it can be hoped the damage is limited before the next election so it can then be reverted.
This is what forced me vastly curtail my news consumption for the most part. I can only take so much breathless reporting about the "strategy" of the Trump administration, when it's plainly sheer incompetence with the winds of malice in the background. There is no actual plan to "make America great again", it's non-stop incompetent pandering to a base that just wants others to suffer.
This has been termed "sane washing" and is extremely irritating: smart media people reverse engineering a vaguely plausible logic from the regime's actions when on closer inspection they never gave said logic as their reasoning.
> What still baffles me is how people act like this was some kind of thoughtful decision
Maybe it's the "Why not inject disinfectant to beat covid" [1] for the economy. But this time nobody around him said no. (note: added around him)
[1] https://www.bbc.com/news/world-us-canada-52407177
Loads of people are actually actively saying no. Those in power have goals that don’t comport with listening.
In this case it's much much worse than just incompetent. You're looking at someone who takes an evil delight it doing the opposite of what smart people say to do, and destroying stuff.
Plenty of us knew the outcome would be catastrophic. We were outvoted by the idiots.
Also you were outvoted because the Dems didn't have a reasonable alternative. Mrs Harris was incompetent. She was a poor public speaker, which further made her look incompetent given her previous role as a prosecutor. Further, the Dems didn't offer her as part of an open primary. They forced her on everyone.
The US presently suffers from future shock and stilted political process. We need more parties and better voting options both in the HR department and the mechanical process like ranked voting.
Since both parties benefit from the status quo, we shall see no change.
> Further, the Dems didn't offer her as part of an open primary.
The only people promulgating this red herring would never have voted for her anyway.
> She was a poor public speaker,
Compared to Trump? A man known for his incoherent ramblings?
My cat is a reasonable alternative to the current potus. Sometimes, the people get what they deserve.
Agree with paragraph 2.
Paragraph 3 is a cynicism I don't yet fully buy: There are enough liberals and so-called Democrats that care about this country that perhaps they will be open to ranked-preference voting and the opening of our "political markets" to save the country.
Partial on paragraph 1. Biden should have left a lot sooner, and Harris, loyal to the president and unable/unwilling to break with him on anything of value, should not have been the "pick".
But she was and is infinitely better for this country than Trump in every manner, unless we're into accelerationism. I don't think she is incompetent. She was unwilling.
There’s been many people opposed to free trade for decades, on both sides like Pat Buchanan and Bernie Sanders. You can think those guys are incorrect in their analysis, but calling it “mindless” is just ridiculous.
This tariff regime is simply a “minimal viable product” aimed at the idea of reducing structural trade deficits.
My theory is that it actually has nothing to do with trade at all--why else would the story changes so much when they are asked to describe the methodology or rationale?
This is how they cut taxes without cutting taxes. They've even said as much: "We'll do this huge tax cut and revenue from tariffs will pay for it." But tariff revenue IS tax. It's just a tax on spending versus income. It's quite clever because a tax on spending disproportionately impacts the poor and the middle class (who spend a much higher percentage of their income).
Sanders might impose tariffs, but he would be smart enough to realize that if trade deficits need to be reduced what matters is reducing the deficit on the aggregate trade, not reducing the deficits individually with each trade partner.
Trump is treating each country as a separate issue and wants to reduce the deficits with each of them. That's completely stupid because even if every country got rid of all trade barriers and protectionism there would still be deficits with some countries and surpluses with others because different countries need to import different things.
For example say country A needs some natural resource that they have no domestic supply of, so they import that from country B. A uses that to produce goods for their own use and for export.
Country B's biggest need is some other resource that they lack, so they use the money they get from selling their resource to A to buy the resource they need from C.
In this scenario A runs a trade deficit with B and there is nothing whatsoever wrong with this.
The whole freaking point of money is to make it so you can trade for goods without having to have goods of your own that the other party wants.
Just posting something doesn't make it true. Don't be disingenuous by making it seems like Sanders supports this idiotic "plan" just because he spoke out in favor of certain tariffs or against parts of free trade in the past.
In fact he called these tariffs along with Trump's plan to cut taxes on he wealthy an absurd transfer of wealth:
> Trump's absurd idea to replace the income tax with a sales tax on imported goods would be the largest transfer of wealth in U.S. history. If enacted, taxes would go up by over $5,000 a year for a middle class family, while those in the top 0.1% would get a $1.5 million tax break.
https://xcancel.com/BernieSanders/status/1850933809384137106
And Trump's economic plan "insane"
> https://www.nbcnews.com/meet-the-press/video/bernie-sanders-...
Many agree, most polls have Trump far underwater in his handling of the economy.
> Respondents gave Trump poor marks for his handling of the economy, which 37% approved of, with 30% approving of his work to address the high cost of living, an issue that also dogged Biden.
https://www.reuters.com/default/trump-approval-falls-43-lowe...
Sanders was a protectionist until it became seen as treasonous in Democrat circles: https://sandersinstitute.org/event/rep-bernie-sanders-oppose...
Again, just because Sanders would support some protectionist policies doesn't mean he supports the tariffs going on now. He's on the record saying they're a regressive sales tax benefiting the wealthy.
Which is why I was pointing out your comment is disingenuous by insinuating Sanders would support the tariffs because it's anti-free trade.
Protectionism is usually about protecting existing jobs and industries.
This idea of blanket tariffs to try and kickstart industries is unique.
You're really driving home this "Hey everyone, Trump is just doing exactly what Pat Buchanan and Bernie Sanders agreed to do".
This is the equivalent of saying that any anti-war protester is instantly a complete ideological pacifist. It's illogical.
I challenge you to find a policy paper endorsed by Sanders that said "let's do universal tariffs on the entire planet by taking the inverse of our trade balance - and leave Russia out of it".
Everyone knows tariffs are a tool, often meant to encourage domestic production (when applicable and feasible) or to protect against unfair foreign trade practices.
They do not work as a permanent source of revenue in the modern era, and they can never operate as both a strong source of revenue AND a tool for repatriation of production. If they work as revenue, that means production stays foreign. If they work as incentive, they will diminish in revenue.
Nothing about this makes sense unless your goal is to tear down the US and the USD as a global economic power and global reserve currency. This is not about making America strong.
Yes and: IIRC, their intent is to bolster the US dollar as the reserve currency.
Not that I understand it, cuz am noob:
Admin thinks US dollar is too strong. So they want to devalue it. Which will then trigger a sell off of US Treasuries, further devaluing the US dollar.
I have no idea if this is the Admin's actual plan, the merit of such a plan, or if there's any realistic hope for achieving the intended outcome.
If any one can make any of this make sense, please chime in. TIA.
Devaluing the currency is a standard approach to encouraging an export-oriented economy. See China and Japan.
In economic terms, its a transfer from consumers of cheap goods to producers.
I'm really do appreciate all those on HN who comment either for or against these tariff measures by including cogent arguments and relevant facts. As against ...
> What still baffles me is how people act like this was some kind of thoughtful decision.
I'm afraid it is. An unholy coalition of capitalist-anarchists and ultra-conservatives is the driving force behind it. They both want to reduce the influence of the government to a level as small as possible. That can only be done by dismantling the current federal government.
Dismantling the federal government by massively increasing the role of government in trade and imposing the biggest tax increase in a century?
That doesn't sound right...
The next step is to cut income tax for under $150k/yr earners. Tariffs raise prices by 20%, tax cuts let you keep 20% more earnings.
This would make the federal government dependent on tariff income, and, as the theory goes, diminish the funds the government has as American industry grows to avoid tariffs.
Probably not going to work out as it is only a first order effect view, but that is the idea they are chasing.
Except they aren't cutting taxes by 20% for people under 150k. They are pushing a tax cut which disproportionately affects the top 1%.
Trump has explicitly stated he wants to eliminate income taxes for people earning under $150k.
Ironically (but not really if you can clearly understand his platform, any why so many bernie bros became trumpets), Trump is doing a lot of ostensibly good things for the uneducated working class at the expense of American "elite" class. The autoworkers union president literally spoke yesterday at Trumps event cheering the tariffs. A union, cheering Trump.
The stock market is off a cliff, but how many factory workers actually have an appreciable amount of stocks? Poor middle America doesn't give a fuck about that. They give a fuck about having a place to go to work and make a good living.
Trump is doing what he was elected to do. Whether or not it is possible without making things much worse seems like a long shot, but his core base has a "I don't care if we destroy the system, the system sucks!" attitude, awfully similar to Bernie bros.
The GP didn't say the people pushing this were smart or intellectually honest.
Think of it like when you take a car apart and now it's taking up more of the garage then when it was together.
Capitalist-anarchists are certainly opposed to tariffs - after all, tariffs are just taxes that expand government influence. Protectionism is a left-wing, big-government policy.
The goal would be dismantling the state, and hence (national) tariffs, for good. The people behind it are quite well off, and can bear the tariffs for now. And it's not just capitalist-anarchists. This is a cabal of spiteful people with different goals, but some shared ideas about the scale of government, prepared to use as much force as necessary.
> Protectionism is a left-wing, big-government policy.
It isn't left-wing. Just check the US history of protectionism. Or Germany's. Or the France's. Even the UK's. Or even simpler: look at what happened just now. How can you call Trump left-wing?
That's what really blows my mind. Growing up as Reagan Republican. When did Republicans go from law-and-order, to anarchists?
Traditionally anarchism is a left-liberal idea. Now the far-right is same as far-left. Left-Right is now a circle.
> Now the far-right is same as far-left. Left-Right is now a circle.
https://en.wikipedia.org/wiki/Horseshoe_theory
Reagan’s administration was very corrupt. So that law and order evidently didn’t apply to them. It was also very profligate. So that fiscal conservatism didn’t apply to them. I don’t see a lot of difference between the actor Ronald Reagan and the actor Donald Trump. Maybe in degree but not in kind.
I’ve been a left liberal my whole life. We haven’t gone anywhere.
Anarcho-capitalists are not anarchists. They share no history or ideology with any of the other variants of anarchism.
They're extreme libertarians/neo-feudalists.
Yes please, more people spreading this information.
> They're extreme libertarians/neo-feudalists.
The ancient Greeks would have called it Tyranny. All of this has happened before.
How do you get libertarians mixed in there? Libertarians want freedom from government, not the consolidation of power nor levy of new taxes (which tariffs are). Apart from downsizing select government organizations, what the current administration is doing is the exact opposite of what libertarians would want.
Tariffs are only part 1 of the plan. The next step is cutting income tax entirely for most people. Trump has said this, and even yesterday called on congress to pass his "Big Beautiful Bill".
This would severely hamstring the government, and make it incredibly difficult to reverse (you would need to re-implement income taxes, while removing tariffs, and hope to god that trading partners have mercy and forgiveness (unlikely))
How are you not seeing how "extreme libertarians/neo-feudalists" is similar to anarchism?
Anarchists don't want a king. Neo-feudalists want to be the king.
technically they would be closer war lords in my opinion.
extreme libertarian's don't.
Maybe don't put libertarians and feudalist together.
Peter Thiel most definitely wants a form of kingship though he professes to be a libertarian
I believe it means libertarian in the context of present systems. In their new system, they no longer need to be libertarian. Just absolute ruler. King is even the wrong term.
Dictator
I didn't realize. I guess libertarians have morphed into something new.
Can't believe they would be publicly calling for a monarchy, and still call themselves libertarian.
It's not the first time they've hijacked the term. It's a smokescreen because they're aware of how unpalatable their beliefs actually are.
Anarchism is not just “no government”, but rather “no rulers”.
Leftist anarchists are acutely aware that power and capital accumulation go hand-in-hand.
Extreme libertarians are perfectly fine with the unfettered accumulation of capital and seemingly ignore that that results in unchecked power. Or they have faith that a “truly” free economy would somehow check itself before becoming effectively neo-feudalistic or dictatorial. As if the lion would fear the zebra.
Leftist-anarchists want to keep power to an absolute minimum. Usually relying on a combination of culture and group action to wield just enough power to prevent the growth of unchecked power in the hands of a few.
In my mind, culture is the key element. The capital-worshipping, me-versus-all culture we live in would fit quite well into extreme-libertarianism and then it would devolve into defacto rule by a few. (As seems to be happening anyways. Because, again, capital accumulates, protects itself and takes power where it can when no one is willing to or allowed to work together to stop it.)
Leftist-anarchism requires a more mature, selfless, introspective, cooperative culture. Anathema to the “United” States of America.
> Leftist-anarchists want to keep power to an absolute minimum. Usually relying on a combination of culture and group action to wield just enough power to prevent the growth of unchecked power in the hands of a few.
Most anarchists, just like hard-line communists, seem totally opposed to the idea of private capital at all. To me this seems just as bad and unworkable as allowing unchecked use of capital accumulation for political gain.
They are opposed to private capital such as the private ownership of the means of production, eg land and infrastructure.
They are generally not opposed to personal property, especially if the property is actively used.
Extreme libertarians, “anarcho-capitalists”, do not distinguish between productive and nonproductive property. And so they ignore the end result of private ownership and accumulation of the means of production: new rulers in some form.
Opinions on money and currency vary.
Similarly, opinions on wage labor vary, but generally they expect a laborer to receive their full worth, ie wage labor would not see profit extracted from it.
This is a very strange view of it. Anarchism is extremely far from liberalism. "Anarcho-capitalists" are more or less just extreme libertarians, they share no history or ideology with any other anarchist movements, no other anarchist movements recognize them as anarchists.
The far left and the far right are not the same either where do you even get that! A far left party in the american context is something like democratic socialism, or sure why not actual marxist-leninism. While the far right is proud boys, groypers, literal neonazis, christian integrationists. You may have equal distaste for both but that doesn't mean they share anything else.
"no other anarchist movements recognize them as anarchists."
Once you go down the rabbit whole of trying to define 'anarchist' , there are actually dozens of definitions, and they all argue about who is really anarchist. So, that they don't agree that some other group isn't 'really anarchist', I take it with grain of salt .
These extreme Republicans want to get rid of government. I'm using the highest level gloss over, that No-Government is Anarchism.
I'm sure in reality, humans would re-coalesce up in communes/tribes/feudal groupings, and thus re-form local groups, and is that still Anarchism? At what point of organization do we stop saying something is 'anarchism'. I'm just saying, when the US breaks up because there is no government, it will be anarchy, and that seems to be what Republicans are shooting for..
> Once you go down the rabbit whole of trying to define 'anarchist' , there are actually dozens of definitions
Which is why I avoided providing or using any definition of anarchism, instead describing the actions of people who consider themselves anarchists.
> and they all argue about who is really anarchist.
Yes, but there is only one group who consistently considers themselves anarchists but who exactly zero other anarchist groups recognize as anarchists. All other anarchist movements have at least one mutually-recognized peer movement. I'm not saying this is an absolute or the only definition, but it's very useful in this context. There is something different about ancaps.
> These extreme Republicans want to get rid of government.
They do not! They are not proposing an elimination of the military or police departments or prisons, for example. They are using the DoJ to pursue political enemies, the executive branch to enact and enforce tariffs. In fact exactly the parts of the state that are used to create and enforce hierarchy. I do not know any anarchist movements, other than anarcho-capitalism, that has this goal.
I understand why your view of it is alluring, I find it to be so as well. But I have found that it simply has very little explanatory power for this situation.
The only thing the far left and right truly share I think, is radicalism. By which I mean an intention or acceptance of rapid and comprehensive change to the dynamics of daily life for the whole population. But the actual changes they want have virtually no overlap.
It's because the far left and the far right are both made of up of people deeply disaffected by the status quo, and when those people talk they often find that at the very least many of their grievances overlap.
In terms of today's landscape there is a list of things like LGBTQ issues, race, gender equality, abortion, religion, etc., and if you avoid things on that list you'll find a huge overlap between the views of the far left and the far right. Both are broadly opposed to what's popularly called neoliberalism, the post-Reagan/Clinton post-cold-war order, and the reasons for this opposition overlap quite a bit if you again avoid the topics that I listed. From that perspective, blowing up the system is the goal. When they see trade policies like these crash the present system, they view that as a success because they think the current system is such a mistake that it must be smashed.
(I am not making a judgment in this post, just explaining the landscape.)
Correct. The left and right seem like a circle because Pat Buchanan and Bernie Sanders long had a large overlap on issues that have become highly salient today: immigration and free trade.
It’s not “anarchism” it’s simply rolling back the bad parts of Reagan’s legacy: free trade, immigration/amnesty, and foreign empire.
When Democrats embraced free trade and globalism with Clinton, most of the liberal Reagan republicans and neocons became Democrats. What MAGA is today is what the bulk of the GOP has always been: a coalition of social conservatives and business owners.
What is so bad about free trade?
Isn't competition in free markets something Republicans believe in anymore? Because forcing Americans to buy inferior locally-made products at a premium through artificial restrictions surely isn't that.
Free trade and globalization are also a pacifying force, by creating mutual dependencies between countries.
Protectionism doesn't work.
> What MAGA is today is what the bulk of the GOP has always been: a coalition of social conservatives and business owners.
I'm skeptical of this historical analysis.
The two major political parties fundamentally realigned during the civil rights era of the 1960s. Before then, Democrats controlled the south. Strom Thurmond switched from Democrat to Republican in 1964. George Wallace ran for President as a Democrat 3 times before he became an independent. Robert Byrd was a Democrat until the end. Who were the "social conservatives"? Both Ronald Reagan and Richard Nixon (Californians, by the way) made their names as staunch Cold Warrior anti-Communists during the McCarthy era.
I don't think there's any such thing as what "the GOP has always been", or what the Democrats have always been, for that matter. I'm old enough to have seen the parties change several times, and the definitions of "conservative", "liberal", "left", "right" morph into something unrecognizable to former adherents.
The only constant is change.
> The two major political parties fundamentally realigned during the civil rights era of the 1960s.
This is an incorrect analysis looking at the wrong causal factor (civil rights rather than economics). Even in 1976, Carter did great in the deep south. The realignment happened in the 1980s, due to economic growth in the south. The south went from being poor and agrarian in the 1930s to being newly industrialized in the 1980s.
> Who were the "social conservatives"?
The 19th century GOP was a coalition of religious conservatives and protectionist industrialists. MAGA is a coalition of religious/cultural conservatives and protectionist industrialists.
> Even in 1976, Carter did great in the deep south.
Carter was a southern conservative, deeply, overtly Christian, whereas Ford, the accidental President, was a northerner and social moderate.
In any case, Presidential elections are not necessarily the best indicator of political alignment. After all, some were blowouts, such as 1972, 1980, and 1984. On other other hand, note that Lyndon Johnson lost much of the south, except his home state of Texas, despite winning big elsewhere in the country. But for political alignment, you also have to look at local elections, such as state houses.
> The realignment happened in the 1980s, due to economic growth in the south. The south went from being poor and agrarian in the 1930s to being newly industrialized in the 1980s.
This makes no sense, because first, the south is still poorer, and second, the political correlation you're implying simply doesn't exist. Why would wealth and industrialization turn a state Republican when that doesn't appear to be the case anywhere else in the country? To the contrary, at present the rural areas are solidly Republican and the urban areas solidly Democratic.
> The 19th century GOP was a coalition of religious conservatives and protectionist industrialists.
I can't say I'm very familiar with the 19th century GOP, and neither of us was alive in the 19th century, but I don't think you've correctly characterized the 20th century GOP. Moreover, I don't think you can characterize "the party of Lincoln" as socially conservative either.
Carter was from Georgia. Think that might've helped how he did in the south?
Don't think that data point is as good as you imply it is.
"Democrats embraced free trade and globalism with Clinton"
History would disagree with this. Republicans and Big Business were always for free trade and globalism.
Because in 80's-90's, big-corp was salivating over that sweet cheap-cheap foreign labor. To put this on Democrats is a retcon.
No, I agree with you. My point is that Democrats embraced it in the 1990s as well. So the Republicans who were otherwise liberals but just in the GOP for the cheap foreign labor switched sides.
Business owners don’t like the tariffs either. Even American car companies are being hurt by tariffs on steel and car parts.
> An unholy coalition of capitalist-anarchists and ultra-conservatives is the driving force behind it.
It's called Oligarchy.
> What still baffles me is how people act like this was some kind of thoughtful decision.
It is. This is being done as part of a plan, with full intent.
The clearest evidence of incompetence for all to see is Trump's cabinet from his first term. If they're actively speaking out against him, something is seriously wrong.
> Rex Tillerson on Trump: ‘Undisciplined,’ ‘doesn’t like to read' and tries to do illegal things
Sadly, people didn't vote for Trump so much as they voted for "anti-woke." Or: I am tired of being looked down on and this is my revenge.
I wonder how much more evidence American people need to see Trump for being a Russian asset and working against US interests.
We are in treason territory.
People that support him don't care about evidence. It's a cult following.
Authorities focused on "classic" terrorism when monitoring online content and propaganda and got completely blindsided by the take over of the media.
I find it particularly interesting how many popular US media people disseminate provably false Kremlin propaganda, as if someone flipped a switch.
Fascinating times.
They knew about it back in 2014 but Obama didn't do enough about it.
You could not have designed a more effective version of a “Manchurian Candidate” in my opinion.
In fact, this administration has been so effective and brazen that if you were to try and write this as fiction, the scope and scale of what is occurring would be deemed unbelievable and would require toning down for the audience.
>and working against US interests.
>We are in treason territory.
Are we just going to start throwing "treason" accusations whenever a political opponent does the wrong thing? Being anti-free trade? Hurts US hegemony and makes US consumers pay more. Treason. Being pro-free trade? Sells out hard working americans while enriching corporations. Treason.
Propaganda and lead poisoning did a number here.
It's the perfect storm.
I don't see an end to this
The best thing about your comment is you could be referring to Trump, or the GP. 9 out of 10 people who read your comment will say "hell yeah" and think you agree with them whether you do or not.
Brilliant.
The people who know what the effects of lead poisoning are, know :D
Well, enough of some Americans elected a convicted felon to the Oval Office, so...
Russia noticeably absent from the global and per-country tariffs
Trump is allegedly planning on sanctions against Russia if they do not agree to his peace plan.
Trump just added some additional sanctions on Russia for helping the Houthis.
Sanctions seem worse than tariffs to me, but I'm not an expert.
https://www.reuters.com/world/us/us-sanctions-russia-based-n...
He didn't add sanctions on Russia, but on people dealing with Russia - that's a different thing.
But notice how people talk now - Trump might say he is "planning" something against Russia and people take it as a proof that he is not an asset. They forget about concept of sacrificing something to gain advantage. If heat turns to much on Trump, they might let him disrupt something and then run propaganda that Trump isn't bent. Until he makes next move massively benefitting Putin.
Seems like they can be doing this over and over and general public will see it as Trump just navigating difficult geopolitical landscape and that we should "trust the process". etc.
I am not sure why you are calling this out seeing how many people are hypothesising what is going to happen in this thread (economy destroyed, USD no longer reserve currency, etc). At least we have actual words to base what I wrote unlike all the other theories being thrown out in this thread.
I can fully understand how people on both the left and the right could have ideological differences with Trump, how they can hate the way he interacts with people, think he's picking unqualified cronies for high level jobs, etc. I disagree with the last one but I can at least see how a reasonable person would get to that conclusion.
"Trump is committing treason because he is instituting tariffs" or "Trump is a Russian asset" is not a position any reasonably intelligent person can come to without being blinded by partisanship. It's simply not a serious position to have.
If Trump were a Russian asset, what could he possibly do to advance their interests more than what he is already doing? Hell, he is running Putin's playbook on Canada and Greenland. Did you vote for that?
NATO is already over because none of our allies can expect Trump to honor our treaty obligations.
Regardless of what his intentions might be which are all speculations as far as I'm concerned, he managed to convince Europe to rearm in 1 month, which is a net positive for Europe and America (assuming America still sees that as a positive) and a massive blow for Russia.
How about stopping to supply Ukraine with weapons?
He's been trying to do that as well.
https://www.nytimes.com/2025/03/04/world/europe/trump-ukrain...
Considering there's nothing stopping him really, what does "trying" mean exactly?
By that I mean he did it, briefly, then probably got a lot of push back internally and rolled it back. The whole event seemed like a chance to drum up an excuse to drop support for Ukraine, but ultimately wasn't enough of a reason to present.
I don't really see another way to take that. Have you watched the full exchange on it?
And I mean his first impeachment was because of his impounding of aid to Ukraine.
Acting like he hasn't been working towards killing support for Ukraine is ignoring his actions and his own statements.
> If Trump were a Russian asset, what could he possibly do to advance their interests more than what he is already doing?
Rhetoric is a poor substitute for actual evidence.
Many moons ago, the fringe right used a similar argument to imply that Barack Obama was pro-ISIS. After his hasty withdrawal from Iraq, ISIS filled the power vacuum. Their "caliphate" grew for years and years, with no significant intervention from the US! At the time there wasn't a great answer to the question "If Obama were pro-ISIS, what could he possibly do to advance their interests more than he already has?". Yet (hopefully) we all know that this was simply bad faith, conspiratorial rhetoric. He was obviously not pro-ISIS, and there was no evidence whatsoever that he was. So how could people possibly have entertained such an idea? Easy--they already hated Barack Obama, so they were willing to give the conspiracy theory the benefit of the doubt.
Do yourself a favor and apply the old tried and true standard: extraordinary claims require extraordinary evidence. It'll save you a good deal of embarrassment.
Have you seen Obama disseminating ISIS propaganda?
Your conspiracy theory isn't coherent enough to be implied. Make the argument.
Trump and his administration do spread Kremlin falsehoods and talking points. This was a major sticking point in Gabbard's confirmation. For instance, she spread the false claim that Ukraine was developing bioweapons that are a threat to Russia. Trump himself repeated the false claim that Zelensky has a poor approval numbers and is preventing elections because he's a dictator. Trump also said Ukraine started the conflict. In his last admin he said that "Crimeans want to be Russian".
>Gabbard
Tulsi isn't Trump.
> Zelensky
Trump quite reasonably called Zelensky a dictator. Ukraine can legally skip elections while under martial law, sure. But seeing as Zelensky has the power to end martial law at any time, he is single-handedly preventing Ukranian elections, depriving the people of Ukraine of their voice during what is potentially the most pivotal span of time in Ukranian history. Surely you still call Putin a dictator, even though he attained his status without directly violating the constitution?
> Trump also said Ukraine started the conflict.
Are you referring to that time Trump uttered the words "you never should have started it" in one of his word clouds while speaking to a journalist? That is evidence that he is in thrall to the Russians?
> In his last admin he said that "Crimeans want to be Russian".
The vast majority of them are Russian, ethnically and linguistically. All polling prior to the 2014 invasion showed that a significant majority would support annexation by Russia. Don't worry, you can know this fact--and even repeat it out loud!--without the bad men in the Kremlin gaining control over your mind.
> But seeing as Zelensky has the power to end martial law at any time, he is single-handedly preventing Ukranian elections
He doesn't. The president of Ukraine can only propose the imposition or termination of martial law to the parliament. Nothing happens unless the parliament approves the proposal. In February, the Ukrainian parliament even adopted a resolution to remind the dumbasses calling Zelenskyy a dictator of this fact.
> All polling prior to the 2014 invasion showed that a significant majority would support annexation by Russia.
Support for joining Russia was 23% in a 2013 poll, down from 33% in 2011. The majority opinion (53%) was that Crimea should remain as it was, an autonomous region within Ukraine.
Obama could have invited ISIS to talks with his security advisor. He could have made any sanctions on them toothless. I'm sure there's more.
> This is Russia's and China's liberation day
With the tariffs in Asia (Vietnam: 46%, Thailand: 36%, Cambodia: 49%) it feels like a good opportunity for China to increase their trade/influence in the region as well.
Sri Lankan here. They just slapped 44% on us (higher than on China). The country is just trying to recover from the economic crisis and the sovereign debt default of 2022, so we have very high import duties on certain items (e.g. vehicles) to discourage dollar outflow. Looks like the US just saw that as hostile and decided to strike back.
The numbers appear to be based on the trade deficit alone, not on any differences in import duties etc.
That is correct. It was empircally proven here: https://www.ft.com/content/c4f9c7f6-0753-4458-840e-bcde1b74a...
To quote Alex Scaggs of FT:
All countries tested against this theory are correct within 1-2 percent.you can just read the methodology where they published it here: https://ustr.gov/issue-areas/reciprocal-tariff-calculations
Now somebody factor in Services and rerun the numbers.
This is interesting. I don't know the details of Trump's tariff policy, but if this is correct, it would follow that the policy should have some mechanism to reduce the tariffs as the trade imbalance is reduced.
Not sure why? It’s an irrational policy not based on any kind of sense. I don’t think I’d expect it to be logically consistent. Besides, what do you do with a country where US is a net exporter? Provide subsidies for imports?
It’s all drunk monkeys driving a train… there is no economic theory to expect consistency from.
It’s not “irrational.” It’s crude, but it’s based on a logic that, on average, trade deficits should generally reduce to zero. And I strongly suspect this is about our large, diversified trade partners (EU, China) and is simply being imposed across the board for appearances.
There is no “logic” that any two country pairs should have an equal trade balance.
“Belief” or “dogma” or even “idea” would work, but there’s no logic in that claim.
There’s not even a policy goal. If the intent is to convert the US from a net importer to neutral or even a net exporter, it means our cost of production needs to be about average. Which means our populace’s quality of life needs to be about average; wealthy countries are more expensive to produce in. Mix in the supposed interest in economic and social liberty, and you’ve got a country trying to destroy its own wealth in the name of controlling what its freedom-loving citizens buy
There is no logic here. It’s drunk monkeys all the way down.
Imagine the classical triangular trade. Three countries can have entirely balanced trade, yet each country has a 100% trade deficit with another country. Everyone benefits, and no one runs a trade deficit. Throw a huge tariff in and a country’s trade, imports and exports, will collapse.
> a logic that, on average, trade deficits should generally reduce to zero.
1. Why do you believe this is true?
2. Why do you believe that 0 trade deficits are a good thing?
Unless they think that because it came out of an Excel formula, there's a logic behind it - and honestly, I wouldn't be shocked if these folks have that insight.
> Besides, what do you do with a country where US is a net exporter? Provide subsidies for imports?
In this instance, I believe the thought pattern is: "we're being smart here".
They’re even adding Greek letters, very intelligent. https://x.com/Brendan_Duke/status/1907741651172311353
I'll be damned, I had no idea and I still got it right.
Once people accept that this administration is very much like the Russian regime, where everyone is the type of person playing to an aesthetic, you see this stuff coming miles away.
This is what these sorts of people would do.
You're right I think it's MAX(10%,(imports-exports)/imports) as a general tariff plus targeted reciprocal (in some cases, not all)
It does nothing with "hostile". For China, yes, but for most other countries tariff is simply ($USA-import - $USA-export)/$USA-import. That simply, numbers are check for many many countries. I'm sure, USA imports a lot of tea from Sri Lanka and some fruits and wood/furniture.
(Freshly made Sri Lankian tea is the best, IMHO! I mean, proper tea, not all these grasses, berries and synthetic aromas which are named "tea" in modern western world).
I would have assumed it was Sri Lankan textiles that were a major cause of the tariffs.
Any recommendations for tea brands/products?
Unfortunately, no, as I've changed country of living year ago and still can not find way to good tea in new place. Also, I'm not sure, that recommendations from Europe is actual for you even if I have one.
But really best "black" tea of my life (and I spent most of my life in country with strong tea culture, where loose tea and teapots are still very popular, and not, it is not UK!) was bough at random tea factory in the middle of nowhere in Sri Lanka, packed in simple 1kg vacuum bags. No brand, no name, only date of picking (two days ago) and packing (today at the day of bought) :-)
As a local, the brand called Dilmah is just a regular supermarket brand for us, but I hear it's quite popular in places like Australia and New Zealand.
Ahmad Ceylon Tea is a good strong black tea. They mainly trade in Middle Eastern markets I think so check Arab/Indian grocery shops
(waves from across Lake Beira)
It's mind-boggling because the US has been trying very very hard to pull Sri Lanka away from China for a decade now
I would be surprised if the current US administration even knows where Sri Lanka is, let alone our pre-Trump foreign policy with them.
> They just slapped 44% on us (higher than on China).
Not true, China's is on top of its existing tariffs.
So 53% on China in total, because the previous rate was 20%
The strange thing I find is that Trump is not going after the companies who were the ones that decided to move production to China in the first place.
> it feels like a good opportunity for China to increase their trade/influence in the region as well
influence for sure. But trade? Vietnam/Thailand/Cambodia already have ~40% of their imports from China and 5% or so from the US, I don't think this tariff can realistically increase trade between China and SEA countries much.
What about the inverse though; Vietnam/Thailand/Cambodia increasing their exports to China?
China has been trying to build up domestic markets for the past several years. With the US imposing high tariffs on Chinese goods it stands to reason that they’re not in a position to import from Vietnam, etc. because there will be domestic overproduction.
"because there will be domestic overproduction."
Is that from a decrease in demand, or an increase in supply from other countries? I'm curious what the price elasticity of demand looks like for Chinese imports.
My interpretation is: it’s domestic overproduction because China isn’t exporting as much to US so it will consume domestically and then not have need for imports from the other SE Asia countries.
My question is more about where the US is then importing from. I assume some goods are more elastic than others. So will the US simply stop buying, or will it shift to buying elsewhere with lower tarrifs?
Could be, but China's imports from the US where not much (6% of their total) and cannot be easily substituted from SEA countries, as they were mostly importing a ton of agricultural stuff (soybeans, corn) plus fossils.
I understand 6% of china may be a much higher percentage of, say, Vietnam's export, but I just don't think Vietnam can produce that much more of that, quickly.
https://atlas.hks.harvard.edu/explore/treemap?exporter=count...
I checked these numbers for Thailand: China: 24%, US: 6.73%
For Vietnam: China: 32.79%, US: 4.04%
I did too, from the Atlas of Economic Complexity (2023 data).
Cambodia's top 3 is China 42%, Thailand 20%, Vietnam 12%
Thailand's is China 28.7%, Japan 10.2%, US 6.3%
Vietnam's is China 40.8%, South Korea 15.9%, Japan 5%
https://atlas.hks.harvard.edu/countries/116/export-basket
https://atlas.hks.harvard.edu/countries/764/export-basket
https://atlas.hks.harvard.edu/countries/704/export-basket
Non-monetary tariffs: - Regulatory hurdles that prevent import (eg. CE requirements) - Currency manipulation (eg. RMB) - Domestic industrial subsidies (eg. export tax credits). ... you have a lot to learn about international trade.
Would it reduce the share of exports that US sells? If they decide to buy directly from China over the US given the higher price of everything in the US (keep in mind the raw components dont all appear out of nowhere).
The Chinese don't want to buy anything, except raw materials. Their idea of trade is to sell products to you, not buy anything from you.
The CCP maybe, but the Chinese people for sure want to buy products from other countries.
No, they used to, but less and less now, bc Chinese goods are getting better, plus economic is tighter in recent years.
For most things, they already produce better and cheaper products. And they can buy from obter countries, It is just in US that Trump tarifs are applied.
What about fashionable Brand stuff?
That will continue to exist but less popular than they use to, as local fashion brand is catching up fast.
And what’s wrong with that?
Did not turn out too well the last time they sold tea, silk and porcelain and accumulated the vast majority of the world silver reserves.
You don't want to buy anything? You don't need anything? The British had one thing the Chinese "needed".
Eventually, you are no longer producing goods domestically and they can raise prices or deny your ability to purchase.
Not to mention 29% tariffs on Norfolk Island. Who hasn’t exported anything to the U.S. in years.
And a 10% tariff on the Macdonald Islands, which has a population of zero (not including the penguins).
Perhaps Trump thought he was taxing a fast food competitor?
Fun fact: these are all internal territories of Australia. Why they get separate tariffs is weird.
According to the Guardian (https://www.theguardian.com/us-news/2025/apr/03/donald-trump...):
> Despite this, according to export data from the World Bank, the US imported US$1.4m (A$2.23m) of products from Heard Island and McDonald Islands in 2022, nearly all of which was “machinery and electrical” imports. It was not immediately clear what those goods were.
In the five years prior, imports from Heard Island and McDonald Islands ranged from US$15,000 (A$24,000) to US$325,000 (A$518,000) per year.
Maybe someone has accidentally uncovered some kind of tax evasion scheme here?
Bizarre, tax/tariff evasion or "Mistake" does seem like the most likely explanation - yet US$1.4m is too little to bother evading tax on really. I mean that could be a refit on a boat or something -- $1.4Mn is literally nothing.
The Guardian has investigated further: https://www.theguardian.com/australia-news/2025/apr/04/revea...
In the case of Norfolk Island, it was apparently some mislabeled shipments from Timberland (based in New Hampshire, NH <-> NI) and from two companies based in Norfolk, UK.
For Heard & McDonald Islands, it was mislabeled machinery that actually originated in Austria and Germany.
Pity the Faulkland Islands, population 3,200 and about a million penguins. They have a 42% tariff.
Are you feeling great again, Americans?
This is to protect domestic penguin manufacturers. Well thought!
Yet they also are a British territory and the UK has a 10% tariff. What bonehead came up with that.
Now it is 1.4 mln, in future this could be 1000 more, if this will help with overcoming tariffs. Check what happened with Germany export to Kazakhstan in 2022.
> Check what happened with Germany export to Kazakhstan in 2022
Can you elaborate? Tried searching for it, all i found is that Kazakhstan reported 500M exports to Germany, when it was actually 7B. But you were talking about Exports from Germany to Kazakhstan, which I wasn't able to find.
gp implies that those are goods which ended up in Russia after the EU war sanctions.
oh, that would make sense, yes. AFAIK Turkey was also used a lot to accidentally ship goods to Russia.
Of course, several of these islands with 10% tarrifs are ex-colonies of various EU countries. Of course any french manufacturer will send goods to the islands (0%) then from there to the US (10%) rather than pay 20%. It's obvious, then the US will notice and the island will go to 20% and so on. It's all completely hateful.
It could be a clerical error — intending to choose Haiti or Honduras, or maybe Hong Kong, and clicking or typing HM by mistake.
Or maybe OCR is used somewhere and has made the error.
That may be the stupidest explanation I have heard yet.
It must be the correct one then. :-)
The Guardian are reporting essentially this, it's clerical errors of some kind:
https://www.theguardian.com/australia-news/2025/apr/04/revea...
I saw a post on X which said it was "vibe tariffing" and I think the person was speculating that the tariffs were probably generated using an LLM and saying "make me a tariff chart with ALL the countries and each one about 25% but randomize them."
That's the only plausible explanation I can see. A human with any brains wouldn't put tariffs on islands only populated by penguins.
Doge should look into this inefficiency.
I think it's basically reciprocal adjusted for trade deficit, with a floor of 10%.
So obviously you'll end up with 10% on all sorts of places where you actually have a trade surplus and no tarrifs on your goods, or, yes, islands inhabited only by penguins.
But some of those places aren’t even countries. As already stated - weird.
It’s almost like it wasn’t well thought out.
> It’s almost like it wasn’t well thought out.
Joke of the month.
Thankfully this is the only thing which this administration hasn't thought out as well as it should have.
Only barely four years left, yaaaay!
I'm not saying they make sense but according to the US Trade Representative this is the equation used to calculate the tariffs:
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
For many countries patter look like ($USA-import - $USA-export)/$USA-import.
> these are all internal territories of Australia. Why they get separate tariffs is weird.
Probably because they had separate entries in a "list of countries" which they picked as a base for their list? I don't really think there was more thought put into that, especially not for the countries who "only" got the "baseline" tariff of 10%. Interestingly though, Russia seems to have been completely left out, while Ukraine gets 10%.
, while Ukraine gets 10%.
The Orange Emperor has a huge hard on to make Ukraine suffer ever since it led to his first impeachment. Zelenski didn't kiss the ring so down they go.
10% is the hard minimum, nobody has less than 10%, so ergo 10% is actually the most favourable rate.
Even the UK gets 10% which is truly mad given we have balanced trade and tarrifs (if anything the US tariffed the UK more than they did them).
^So essentially MAX(10%,(imports-exports)/imports)
If you look at the full list (available e.g. here https://www.newsweek.com/trump-reciprocal-tariff-chart-20545...), some countries (most prominently Russia) are not on it. Whether that means anything is debatable, but Mexico and Canada, who were explicitly "spared" from these tariffs (but have other tariffs "tailor-made" especially for them), are also not on the list.
Is it possible the Newsweek list is wrong?
The EO and Annexes are not on the Federal Register website yet but on the Whitehouse website it has EO[1] and Annex I[2] and Annex II[3].
I do not see Russia or Ukraine mentioned in any of those so I would assume both get the base "10 percent" under section 2/3.
[1] https://www.whitehouse.gov/presidential-actions/2025/04/regu...
[2] https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-...
[3] https://www.whitehouse.gov/wp-content/uploads/2025/04/Annex-...
Russia is already subject to sanctions and high tariffs. What is the balance of trade like?
Also imposing high tariffs now would reduce the power of the threat to raise tarrifs: https://www.ft.com/content/ec99b3c2-9f4d-4f34-9a01-f97d98131...
> Russia is already subject to sanctions
So is Iran, and yet Iran is still on the list.
Well, the reasonable explanation would be that Russia is sanctioned and thus already has an infinity effective tariff.
But then, I have no idea if the reasonable explanation applies. Are the other countries not in the list Iran and Cuba?
Russia is a interesting catch, but you can easily imagine why now is an inoptune time to piss them off.
The others make sense since they have worse tarrifs (though different, yes)
I've seen a suggestion that they're using ccTLDs.
Which might explain why the British Indian Ocean Territory - population, one US military base - has such a high tariff. The BIOT, aka Diego Garcia, has the ccTLD .io.
In that case, where is the tariff rate for USSR (.su)?
Then that list is wildly inaccurate. Norfolk Island hasn’t been an external territory of Australia for some time (about a decade) - it is literally part of the Australian Capital Territory and they vote in the electorate of Bean.
The Trump admin couldn’t arrange a pissup in a brewery.
Probably because the tariff table was put together by an ignorant acolyte. They are not serious people.
Seems like a business opportunity to set up an import company on the Macdonald Islands and sell the goods to the poor folks in Norfolk Island.
10% on British Indian Ocean Territories, whose sole inhabitants are US soldiers at the Diego Garcia base.
It's what you get if you let people which don't know what they are doing make decision about things they don't really understand without being open for consulting because they know better using only oversimplified statistics which often don't tell even half the story.
Or at lest it looks a lot like this, honestly from its patterns it looks a lot like the decision making done at a previous employee where someone who was expert in one field got a lot of decision power and decided they now know better in every field and dear anyone says otherwise.
Isn't this just common sense? I mean, if there are no people/production/imports in a certain territory, it doesn't mean that all of this won't appear there literally tomorrow, especially when tariffs on goods from these territories are zero.
That doesn't seem likely, because they separately listed parts of France that are wholly in the EU (Martinique, Guadeloupe, Réunion and French Guiana, separate tariffs there are as meaningless as having separate tariffs for Berlin and Munich) but they also did not list those that are NOT part of the EU (EDIT one list I found does list French Polynesia, but not New Caledonia[0]) even though they are the ones where a separate rate would make the "most" sense (if any of this makes sense anyway).
There is trade today between New Caledonia, or French Polynesia, and the US. They are probably going to be tariffed at the rate for France, which is probably going to be the one for the EU, but who knows, neither New Caledonia nor France itself are listed.
It is really apparent that there is no understanding behind this half-assed list.
[0]https://www.forbes.com/sites/mollybohannon/2025/04/02/heres-...
If that’s the thinking, they forgot Antarctica, the Marianas trench, and the Moon. Someone could, theoretically, take advantage of the lack of tariffs.
I’m all for being charitable but at some point Occam’s razor says it’s just ChatGPT mistakenly including these places.
If there are no people there is no government to trade with, no customs, no regulations.
It takes a lot longer to set all of that up than it takes for Trump to just raise another tariff if that happens. So nobody would invest in that. It would only be a loophole for a week or so.
So why bother doing this pre-emptively (even if that was the reason)?
It's like they pulled a list "All Countries the US Trades With" off wikipedia and used that.
https://en.wikipedia.org/wiki/List_of_the_largest_trading_pa...
Same clowns who made blanket cuts to every Federal dept and then had to walk a bunch of them back. There's no nuance or forethought, or realization of the long term damage they're doing.
Very likely that is literally what they did.
Strictly speaking it also includes some British military and contract staff from other countries (cleaning, landscaping etc, whatever they need).
Where is this list posted by the US Government? These countries aren't in Annex I of the Executive Order.
It has British in the name of course. Gotta tariff those leeches. /s
If this made any sense to begin with, then not excluding any region at all would make sense. Why leave some area which would become a theoretical middleman in trade just for purpose of tariff evasion? At least they'd be covered from the simple workarounds.
> Not to mention 29% tariffs on Norfolk Island. Who hasn’t exported anything to the U.S. in years.
Should have set that to 99% then eh?
Tax the 99% seems pretty accurate.
It's a tariff, it could be infinity percent
Well, you know, you can go even higher, you don't have to stop at 100% :) Infinity is the limit here ;D
This is to stop the practice of shipping things to a place, making a small change, then re-exporting from there to avoid tariffs.
Is that commonly done on uninhabited islands? Wouldn’t the shipping cost offset any gains? Where do you even make these small changes if there’s nobody there? And what does the export paperwork look like?
The problem is that the truth, that this was some haphazard nonsense thrown together at the last second using some ChatGPT prompts, is hard to believe, so people try to insert rationality where it doesn’t exist.
It probably already exists and I just can’t find it, but there’s some kind of law here about how some actions are so insane that they compel people to invent elaborate explanations to avoid the discomfort of recognizing insanity.
Funny thing is the assumption that having ChatGPT run a country is worse than elected politician is not as obvious as you might think.
That doesn’t hold water if you’re talking about uninhabited Antarctica territories.
They knew what they were doing. They created a meme, a dead cat.
Then you waste time discussing the unimportant, "funny" topic, while the big picture is ignored.
To add to the comment: If you want to be the capital of an empire, you have to act like it—like Troy, Rome, or Constantinople—meaning you run deficits and play buyer of last resort. When you are no longer that, the empire has indeed collapsed.
Relate: https://www.washingtonpost.com/archive/opinions/1998/08/18/t...
"The golden prize for America's enemies is to remove the US dollar as a global reserve currency."
I would argue that for this to become even remotely possible, America's list of enemies must not automatically become everyone else's enemies too.
that is to say: the USA's secondary statutes have to become ineffective.
To do this, the EU's blocking statutes (to ignore secondary sanctions) have to be effective. Right now Europe's own companies just ignore the statutes to keep their US trade.
To make the blocking statues effective, the EU's own research recommended fines/sanctions/bans/… on licences for foreign (read US) banks, and companies that ignore the statue and don't serve EU companies trading with sanctioned countries.
But to do that, the EU would need alternatives to American services.
Power and influence follow sovereignty.
€0,02
Europeans have a lot of alternatives to American services, including building out their own.
What Europeans truly lack is the ability to defend itself without the U.S. They have the technical know how and can build the manufacturing capacity but that will take a decade at least.
Also, European financing is just not as strong.
However, with the U.S. voluntarily walking away from its role as the center of the world, this may not be a problem for too long.
Tech is the easiest service to replace considering American tech workers by insisting on WFH have already largely eliminated the geographical advantages American tech used to have.
Between three and five members of the EU could become nuclear powers complete with delivery systems within a year if there was political will. A couple of them in significantly less than a year. If the EU is truly responsible for its own defense, then it gets to choose how to go about that. There is only one way to do that in the time frame in which it will become necessary.
Nuclear is a bragging tool, but only useful in real war if things are going bad enough that you decide to end the world.
What will take Europe most of a decade is the combination of all the things you really want during war so you are not forced to end the world. Air defense - they have some but not near enough without the US. 5th generation fighter jets. Bombers. A navy - they have some great things but are missing many useful ships. They seem to have enough tanks, but are missing many other parts a modern army needs. And all of the above needs ammunition - they cannot provide Ukraine what is needed 3 years into that war - means they can't scale up to their owns needs if a war were to break out.
Fortunately war with Europe seems unlikely right now, but that can change fast and you need to be ready. Never has a battleship started during a war seen battle in that same war. (I don't know how to verify that claim, but it seems reasonable anyway)
> Nuclear is a bragging tool, but only useful in real war if things are going bad enough that you decide to end the world.
No, it's a deterrent. This is why it's so important that the systems are in place and functional. So they can actually be used, to make sure they never have to.
A deterrent is not like a bragging tool at all.
You don't need a huge navy to battle Russia. It's navy is pretty small (they don't even have a functioning aircraft carrier) and there is anyway a land connection between Europe and Russia.
For fighters I don't think 5th gen is the magic number, you can do well against Russia with more 4th gen, and the generation counter is pretty imprecise anyway, rafale and Gripen are continuously modernized with new software and electronic warfare
Europe has Aster which is a replacement for patriot with similar characteristics. Since the technology exists it should be a small thing to scale up production.
And ammunition has been scaled up since 2022 and every shell used in Ukraina is a shell that does not need to be used in the rest of the countries.
Most of the Iowa class battleships took less than four years from launch to commissioning, so in WW2 your last statement would have been challengeable had the USN not realized the folly of building more BBs.
They were all started before WW2. The Montana class was abandoned - maybe it could have seen service if it was continued but it wasn't. In WW2 battle ships were still king of the ocean - airplanes were showing promise but not yet good enough to replace them (though if the war had gone one just a couple more years they would have)
You mean started before the US involvement in WW2.
And the battleship was definitely NOT the king of the ocean. Carriers quickly took over that role, and aircraft quickly made mincemeat of the best battleships ever built, starting with the destruction of Force Z near Singapore and culminating with the destruction of Yamato and Musashi.
> What Europeans truly lack is the ability to defend itself without the U.S.
Pushing this message is disinformation that has been particularly successful part of the OrangeMan administration.
Europe can defend itself. Combined they have huge military resources and technological replacements for most of what the US can provide.
So - Europe can defend itself. But it prefers to use money, allies and Ukrainian soldiers lives to avoid having to.
The Chinese have alternatives to American services. Europeans could have too if we wanted.
Unless you have a magic lamp, “wanting” is not enough to achieve effective change.
What Europeans need is pragmatic governments and politicians. In fact it might be easier to find a magic lamp than an honest politician.
US big tech companies are dominant because they are monopolies not because they are technological marvels.
If we were to ban US social media, European alternatives would emerge very fast.
The TikTok case in US might be a good playbook for the future. Require markets that US based companies have a near monopoly and require them to divest on EU and onshore operations. You solve tech hegemony and tax evasion in no time.
China has goods and services, but don't underestimate the language barrier for services. Language is a barrier between EU member nations providing each other services, even though machine translation is OK between those languages and most of us learned one of the other nation's languages in school; The gap between Chinese and Latin-Germanic languages is much larger.
I'd give an example, but every time I have previously shown an example of machine translated Chinese to demonstrate that AI is bad at translating English into Chinese, the responses miss the point of the example — criticising the translation whose very errors are meant to demonstrate how bad current AI is.
> Right now Europe's own companies just ignore the statutes to keep their US trade.
If it’s the trade keeping EU companies in line, isn’t the destruction of trade that these tariffs are intended to achieve precisely the kind of thing that will then prevent them from staying in line in the future?
If its like last time, European strategy (ex France maybe) will rise no higher than "let's just try ride out the next four years, then things will go back to normal".
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade.
This is just one facet of a broader point. When people talk about a "trade deficit" what they are really talking about is what's known in Economics as a "Current Account deficit". When discussing international trade and Balance of Payments, there are two accounts - Current Account (goods and services flow) and Capital Account (asset and liability flow). By definition, the two must net to zero. That's not an equation, it's an identity. If you have a Current Account deficit then you have an equivalent Capital Account surplus. It works in both directions. For example, foreign direct investment into another country in the form of a loan leads to a flow of funds into the country (Capital Account surplus) and then those funds are used to buy things (import) from the first country or other countries, leading to a Current Account deficit.
How does this impact consumables? The capital doesn't balance, it disappears but the money used for it still exists
I was just thinking about this and I'll bet you anything that Trump is 100% hung up on the word "deficit" and that's about it. If we said "net importer" or "goods taker" or something like that we would not be in this situation.
Good one. Trump doesn't want anyone to be able to point to any deficit in anything Trump is in charge of :)
I wonder which nations are truly "antifragile" to similar takeovers?
The U.S. seems especially vulnerable with its limiting two-party bias, among other factors.
I'd argue that the level of education of the general populace in (still) functioning democratic countries might be the prime mitigation factor.
Based on this, if I were placing bets on prediction markets, I'd wager that e.g. Finland would be among the last to succumb.
It's more likely to be related to culture and political structure than education is my guess. Unless, maybe, we want to use a different definition for education than just degree attainment. For example, Finland has lower attainment rates for bachelor degree equivalents than the US. This would seem to disprove your point.
The real issue is the two party split and urbanized distribution. The way the voting works and the structure of the houses means that once you reach about 85% urbanization the rural areas won't matter. We can see this at many state levels that mimic national political structure. We have multiple nations within our county, with the biggest divide probably being between urban and rural. So all you have you have to do is promise the rural group who feels they are increasingly marginalized a candidate who will look out for their interest. The specifics of those promises don't really matter because in the 2 party system it's us vs them more than actual policy positions. You will find a much bigger difference looking at the urbanization based metrics than you will at the roughly 10pt difference in who people with bachelor degrees voted for.
Edit: why disagree?
> For example, Finland has lower attainment rates for bachelor degree equivalents than the US. This would seem to disprove your point.
In Finland, most university students go for a master's degree. A bachelor's degree is often seen as sort-of a safety valve, if it turns out you didn't have what it takes to complete the full master's degree. So you get at least some sort of degree from having been to university rather than just having your high school diploma as your highest official educational achievement.
Even if we look at just masters, Finland is only slightly ahead a 16% vs the US 12%. But using this sort or logic, then why not compare doctorate degrees, for which the US has 2% attainment vs Finland's 1%? To me it seems like drawing random line to fit the narrative when I don't see anything in the degree metrics that points to Finland being more educated. We could use different metrics, such as some sort of test, or test scores at the secondary level to say Finland has a better education or education system (we'd have to see the numbers to verify, but I wouldn't be surprised).
I have no interest in a one country vs. another country pissing match, just pointing out that (arbitrarily) selecting the bachelor degree as some kind of metric might be highly misleading, at least in the case of Finland.
Except we just looked at the numbers and showed it doesn't appear to be misleading. I was merely responding to the person stating they would bet that Finland would be the last democracy to decay due to education. But it seems the educational attainment is roughly equal. I also called out that other metrics might be better indicators, both if we were using education and if we were looking at other factors like culture.
My only issue with your comment is it seems to blame a two-party system. It is my understanding/belief though that a two-party system is just inevitable in the U.S. When a 3rd party has risen it acts only as a spoiler to the party it is most aligned with.
With increased granularity of representation, you can have more parties. Breaking The Two Party Doom Loop discussed details.
Our country has not increased the number of representatives sufficiently to allow local issues to reach national stage, so instead we all worry about national issues over local ones, for one example.
Most local issues shouldn't be handled nationally due to the diverse perspectives. That's pretty much the whole point of the (largely ignored) 10th amendment.
It's only as inevitable as the current voting system. If it changed to some kind of ranked choice, new parties would quickly gain representation.
To be sure. But here we are.
A third party has never had enough support to really be viable. Nor have we had multiple alternative parties with viable support. Right now it's all or nothing. If you had multiple new options with nuanced positions (even just filling the quadrants of social/fiscal conservative/liberal), then people could have real options. I admit this is unlikely under the current structure. However, it could take shape with structural changes to the voting process. Yes, even with some of its negatives, ranked choice might be one possible road to multiple mainstream parties.
> A third party has never had enough support to really be viable
The republicans were a third party. Granted the old Whig party was seeing significant troubles, but they still were a third party and thus prove you wrong. 3 parties are not viable, but third parties are.
Sure, I should have qualified in the past 100 years, or modern times, or whatever. The political environment, the modes of information, types of issues, and even the culture has drastically changed since the Republicans surpassed the Whigs. It's not really an applicable example to the modern scenarios.
Why does that make it inaccurate to blame the two party system? The two party system causes the problem, but that doesn't mean something else can't cause the two party system.
Yeah, not inaccurate ... maybe loaded? I wasn't really refuting the point, merely responding to why OP may have been getting downvotes. Sometimes words can suggest a bias and people may respond to that.
> It's more likely to be related to culture and political structure than education is my guess. Unless, maybe, we want to use a different definition for education than just degree attainment. For example, Finland has lower attainment rates for bachelor degree equivalents than the US. This would seem to disprove your point.
The university educated are the top. Politics is not about the top few percent, it's about the masses. At this the US education system is really bad, especially in poorer areas.
Overall, I believe the number was something like 46%+ had a college degree of an associate or higher. So it's not just the top few percent. But I do agree that many areas of the US, especially in specific subjects, are lacking. But that sort of ties back to my comment on culture since the voters and locals have some influence on what is taught or what is not.
Don't know why the disagree, but this is a real problem and plagues the House of Representatives which then allows actually incompetent but loud candidates like Greene and Boebert to vote on important and serious legislation.
If these individuals are exceptions and the rest are competent, then there should be minimal impact beyond creating a side show. As a tiny minority, they wouldn't have any real sway in the bill construction within their party, especially if it has any chance of passing. The split between the parties is usually narrow, so the representatives with the most potential to influence passing legislation are the ones near the center margins as they may vote against party lines and provide a bigger base of support. The reps near the outside margins tend to have less influence. Even if they sway some stuff during the creation of the bill, it's stuff that likely has to get ripped out to find enough support to pass into a law.
But if things are passing by only 1 or 2 votes anyways, where anyone 1 persons vote is a major deciding factor, that's an indication of a bigger issue. Such a divide means that half the country feels they are getting screwed and there was little compromise to include their concerns.
If they're the average, then why call them out as specific examples?
Not exactly. The house of representatives should be much much larger than it is.
The same thing with the senate too. Current senate setup gives a lot of power to empty land.
"Current senate setup gives a lot of power to empty land."
That's the entire premise that got the smaller colonies to sign on. It's a feature, not a bug.
I mean, owning slaves was a feature at one time. Features change with time.
How do you think that would work out? I would guess the less populated states would leave if they feel disregarded. I mean, that lack of representation was the basis for the revolution.
Switzerland. Power is extremelly distributed between municipalities, cantons and, in the Federal Government, there are 7 equal ministers. The system is not only robust by definition, but encourage dialogue and citizens participation in politics at every level through popular vote, educating people during centuries.
Germany. The country was designed to be incredibly hard to takeover from the inside.
Central government is weak, even if AFD would takeover the chancellorship there are few measures that would immediately allow them to intervene in the federal states or „Länder“, much much less than in the US e.g. unless there is war there is no way to use the military to force compliance.
You would have to take over the country 17 times, and since the elections are not synchronised you would have to convince everybody all the time that this is good idea.
Individual German federal states could be taken over much easier, Thuringia probably will be the first in 2028.
The biggest weakness than is that the legal prosecution on German federal state level is under control of the executive and could be used to prosecute political adversaries. But if this goes to far the remaining parts of the country could vote to takeover the executive if there was a breach of the constitution.
Expanding on this, Vlad Vexler offers a broader framework here:
https://www.youtube.com/live/hgPGPZRQdaU?si=4W0z1vkk2bfnueJZ
His analysis complements the crucial discussions elsewhere in this thread about the economic details (reserve currency risks, the tariff math) and specific geopolitical impacts, by focusing on the political drivers; the nature of post-truth populism, underlying societal weaknesses, the challenge of maintaining civic coherence in the midst of it all, etc.
The allies tried to make Germany robust against this.
Doesn't matter how intelligent or educated or homogenous culturally the Finns are...if Russia were to decide to invade.
Domestic political antifragility means nothing if you're not anti-fragile in terms of the outside world.
It's called the anarchic global system for a reason. The only thing enforcing norms is power and the fear of it.
Antifragility would be the EU finally forming a real union. As someone living in Finland, I'm not holding my breath that happens in our lifetimes. If you take a sample of average, non-cosmopolitan Europeans, they can barely even communicate with each other in the same language. Let alone come to agreements on who's going to pay for each others bloated social welfare expectations.
The EU is the very definition of Fragility. While Finland has made far more rational decisions than its EU neighbors (having correctly prioritized energy security, military, and technology), it doesn't matter because size is more important.
Our diversity is not fragility. It makes things harder to arrange but it also keeps them fair. There is no chance of some president/party getting voted into office and making unilateral decisions that screw everybody. Like you know, the US. Or the UK with Brexit. In Europe the diversity keeps that from happening.
It also combats exceptionalism, that "Our nation is the greatest ever!" kinda stuff. Because in Europe we know we're not a nation but an alliance. That we need others to survive.
And remember that Finland didn't even bother joining NATO until Russia invaded Ukraine, if they thought it was so important to be together as a big bloc, this would have been the first step.
Ps: if the other countries in Europe didn't agree with Finland's smart decisions, how do you think these decisions would come to pass if Europe was one big country? Because the people wanting those would be in the minority. You would have very little input to the whole. And no chance to decide them yourself as you currently do.
“Diversity” is a nice positive spin on what is an extremely fragmented/disjointed/nonexistent energy policy, military strategy, technological cooperation, consumer markets, etc. Like I said, the average European cannot converse with his/her neighbor even at a 1st grade level in a common language. These are obviously not strengths in the context of the current international order, and to try to brush that away with platitudes is to live outside of reality.
If the EU had a cohesive strategy on these things, you can 100% guarantee Russia wouldn’t be starting wars along its borders. Russia is a small, weak economy compared to a theoretical unified EU (the irony of that phrase!)
Also, the reason Finland didn’t join NATO before is not because Finland felt they were so strong on their own. It’s because Finland didn’t want to piss off Russia in the slightest way and end up like Ukraine. An inability to make formal alignments comes from a position of weakness, not strength.
> “Diversity” is a nice positive spin on what is an extremely fragmented/disjointed/nonexistent energy policy, military strategy, technological cooperation, consumer markets, etc. Like I said, the average European cannot converse with his/her neighbor even at a 1st grade level in a common language. These are obviously not strengths in the context of the current international order, and to try to brush that away with platitudes is to live outside of reality.
I don't think we should be a geopolitical strongman like America though. The world has seen enough of America oil police. Blowing up half the middle east under the guise of 'freedom' and leaving power vacuums that caused nasties to bubble up like ISIS. Which hurt Europe a lot more than it did the US (think mass refugee exodus, attacks etc). They caused these problems.
I think it's great that Europe has more ideals than just money. We still care about all our citizens, not the top 0,01% that has all the money.
> If the EU had a cohesive strategy on these things, you can 100% guarantee Russia wouldn’t be starting wars along its borders. Russia is a small, weak economy compared to a theoretical unified EU (the irony of that phrase!)
Well especially because we don't have a good nuclear deterrent. And this is nothing new. Putin has been massacring ex-soviet states during all of his career. Checznia, Georgia etc. But nobody gave a crap in Europe. Part of this is that the EU had their designs on Ukraine also and this is why we suddenly care. I don't like this expansionist EU. Yes, I do think the Ukrainians should be helped and they should be free to choose who to align with. But it's a bit hypocritical that we didn't help the others before them.
For the nuclear deterrent we should have worked on that more but America was always against that and they assured they would protect us. Clearly now we can stop trusting them. Even after Trump I don't think relations will ever be the same because we know there can always be another Trump.
But with a deterrent we will be fine. Putin is not going to invade Poland if he knows Moscow will be nuked the same day.
> Also, the reason Finland didn’t join NATO before is not because Finland felt they were so strong on their own. It’s because Finland didn’t want to piss off Russia in the slightest way and end up like Ukraine. An inability to make formal alignments comes from a position of weakness, not strength.
So, in other words appeasement. Which is something that you are accusing the EU of now.
I just don't think you can expect the strongman EU to emerge and there are many people like myself that don't want that to happen.
Also, military blocs (NATO) and economic (EU) are very different things. After NATO we should just form a new military one.
> made far more rational decisions than its EU neighbors (having correctly prioritized energy security, military, and technology
Because there is one objectively correct way to prioritize /s
I would argue everything else sits downstream from those things. It would be quite an understatement to say they are...somewhat important...in the continued existence of a country.
So objectively, there is a correct way to prioritize those items if we're talking about being antifragile. People like to forget the Russian invasion of Ukraine actually started in 2014.
But again, the inability of the EU to agree on even a common set of values is why we never have to worry EU countries will start seriously integrating with each other. We will remain disjointed sitting ducks as we are in love with our early 1900s romantic ethno-nationalist movement stories of who we are.
You are right, but the problem with turning the EU into a real union is that it is very difficult and risky. The creation of new nations and new identities more often than not leads to violence - and they are often formed by war.
Yes, the EU is fragile, but I think trying to fix it that way would be worse.
I think 1) the rich democracies in Europe are unlikely to go to war with each other and 2) have good reason to unite against common threats so I think a military alliance is military alliance makes sense.
Yes, we already have NATO but the US is going to be ever more focused on China, and Russia is not the threat the Soviet union was so a new military alliance focused on Russia and securing the Atlantic (the latter in cooperation with the US) makes a lot of sense. Obviously different countries have different interests (the Atlantic is a lot more important to the UK than it is to most others) but also enough in common.
You can look at countries that have remained democratically stable for a long time. The UK and Switzerland come to mind. I live in the UK and we have an odd system that I used to consider a bit of a gimmick for the tourists to take photos of but appreciate more these days. Basically the fact that we have a king but with severely curtailed powers delegated to the elected folk makes it very hard for one of them to appoint themselves effectively king, especially as the military all swear allegiance to the actual king (or queen).
It's partly effective because they system wasn't really designed but evolved out of a lot of bloody power battles, going back to at least 1215 https://en.wikipedia.org/wiki/Magna_Carta
I used to think it was silly but if you look at rival European powers they had Russia with Stalin, Hitler in Germany, Napoleon in France, Franco in Spain, Mussolini in Italy etc. The UK is one of the very few which avoided having a dictator.
[Edit - I was kind of talking about the wrong thing - avoiding dictators rather than Trump types]
The UK already had a populist takeover - Brexit.
With Brexit and now this I've been thinking that if someone out there is intentionally trying to dismantle the 5 Eyes they're doing a bang up job of it. Step 1 appeal to their nationalistic or even imperial senses to make sure they piss everyone else off, step 2 stoke some internal grievance politics, step 3 get them to unload an entire AR15 magazine into their leg (to paraphrase Dril).
It’s been known since the 2000s that it is in Russia’s best interests to weaken the UK-EU link. Russia was a major contributor to the Brexit cause, but it seems this topic quickly gets swept under the rug by British parties, red or blue.
That is because both were manipulated and ashamed of it. Russia is too sophisticated to play just one side. They have centuries of experience playing various ethnicities within russia against each other to maintain control. In the 2016 US election, Russia would have had a strong plan either way, what the alternative would have been and if would have succeeded, who knows, but it is note worthy how many members of the US administration, including its head, were formerly democrats.
Brexit and Trump are both proxy wars of subversion, with traitorous support from a cadre of extreme reactionaries in both countries spending huge sums on social and trad media to manipulate public opinion in a self-harming direction.
It's very impressive in its way.
Although the winners won't get to enjoy their victory for long, because climate change is going to roll right over everything over the next few decades.
Yes, extreme reactionaries like the United Auto Workers union who showed up in some quantity at the tariff show last night.
The reality is "left wing" parties have completely abandoned their traditional working class demographic - both through encouraging manufacturing to be offshored and allowing in mass unskilled labor to compete with them. During the Bush era I thought working class folks were voting against their self interest when they voted Republican. That's not the case anymore.
It's convenient to try to play this off as some kind of foreign influence thing, but the Democrats did this to themselves.
While there is a lot of good thoughts about what the democrat party did wrong to lose the last election. I feel your comment places all the blame on them. They did not force republicans to go down this road. This is not the inevitable outcome of a broken democrat party. The republicans went down this road, and so did their voters. They chose this, many times. There were many opportunities for the republican party to rid itself of this ideology but they chose power.
So yes, the democrat party has had many failings over the past decade if not more, but that doesn't make this a binary choice between Trumpian policies and democrat failings.
I guess. I was thinking more of dictatorship rather than populists getting voted in. We may well get Farage voted in some time.
Oliver Cromwell doesn't count?
And all the kings? Henry VIII for a start.
The UK has a monarchy with severely curtailed official powers. But it's a front. The UK is effectively run by the Crown, and the aristocrats have huge land, property, and investment/financial empires, own all the main media outlets, and set policy through their clients in the political system.
The aristocrats are narcissistic, shockingly racist, and often rather stupid - good at tactics like manipulating elections and news cycles, but contemptuous of most of the population, and clueless about how to build an economy based on growth and invention instead of rent-seeking and extraction.
It would also help to have a population without a deep-seated beef going back to the civil war. You arguably have two separate 'America's split down that historical line that might not ever see eye-to-eye and, just like the US itself has installed dictators or favourable governments by funding disruption abroad, it is open to be exploited the same way.
It's not really split down the historical line of north and south. What you are actually seeing are urbanization rates, with more urbanization in the north east (this was true and a factor during the civil war too). You can look at the county level voting maps to see this exists in the north too. If you look at only state level maps, then you lose that precision. It's not a north vs south thing, it's and urban vs rural thing.
I think there might be something to it: if you look at the correlation between commitment to maga beliefs and affection for the confederate flag, my guess is it would be fairly high
You might be surprised how many confederate flags are flown in rural Union states. You'd probably have an even higher correlation with the Gadsen. Weak correlations are everywhere, we're looking for the strongest, which appears to be urban vs rural.
Albion's rotten seed was never unified as one. Seeing the civil war as some unique historical genesis of the split-- instead of a national shotgun-wedding of sorts is completely backwards.
It wasn't much of a shotgun wedding. Yes, it was a common enemy/cause during the revolution, but then took years of debate for the constitution and years more for the bill of rights. Over time, we've forced more and more homogeneous (federal) laws. The more laws you pass, the more likely people are affected in the outgroups under the splits you mentioned and it compounds. All the concerns about states rights and small states being less powerful are still concerns for some groups of people today. We've essentially been eroding the initial status quo that had been agreed upon.
Personally I think calling it a shotgun wedding is one of my best metaphors of the week and perfectly evokes what I was going for. Contemporaries from like Lincoln's 2nd inaugural of course would call it finer things, like a national baptism etc. but shotgun wedding captures the borderer element, too. I like it and stand by it.
Oh, you mean re-unification after the civil war. Sure, I can see that. I though you meant the initial creation of the country.
To be fair this strategy will work if other countries cannot tolerate tariffs for long enough to come up with non-USD trade that is accepted by everyone. Which to be fair may take them a very long time.
If they fold and remove tariffs on the US (so the US can drop the tariffs on them) before coming to an agreement because the economical pressure of tariffs is too high, then this will result in the largest market expansion the United States has ever seen.
My point is: yes lots of negatives can happen, but let’s also look at what happens if it works out so we are intellectually honest about what’s going on here.
> If they fold and remove tariffs on the US
The issue with this is the "reciprocal" tariffs that were announced are not related in any way to tariffs imposed by other nations. According to the administration, they set the tariff rate for each country as (trade deficit / (imports * 2)). Obviously the country in question cannot undo this even by zeroing all tariffs with the US, because none of this is based on tariff rates.
It's not really only about tariffs. It's about the net effect on all barriers of trade, such as currency manipulation, subsidies, regulations, etc. The formula (trade deficit / (imports * 2)) means that countries actually have to address the root of the problem and prove it before the US reduces their tariffs.
Having a trade surplus doesn’t mean you’re cheating.
If I make products better/cheaper than you, I’m going to sell more to you than you are to me.
Ditto if I have some valuable resource you need that represents a large share of my economy. The fact that you need my germanium more than I do doesn’t mean I’m ripping you off.
I agree that a deficit could be healthy and fine and doesn't mean that the other country is cheating. The problem is how some countries have ruined it for everyone else by exploiting the current system. For example, after the first round of Trump tariffs, Chinese companies began moving factories to Mexico in order to take advantage of USMCA.
A thought experiment. Imagine a small poor country far from the US, of 1 million people, where the average income is $3000 annually ($3 billion total household income). Imagine a factory in that country that produces shoes beloved in America.
Those shoes are so popular in America that Americans buy $1 billion of those shoes every year. In order to address the problem as stated, this hypothetical country would have to spend a third of its household income purchasing products produced in some of the highest-cost conditions in the world. To do so, they would have to shut out their local trading partners from whom they currently buy goods at prices they can afford. This would have the effect of making them even poorer.
Does this make any sense?
If you make an exception for this hypothetical country, then countries such as China would come in and build factories there and bypass their own tariffs. You're back to playing whack-a-mole.
I’m not talking about making an exception. I’m suggesting that a trade deficit can arise for reasons that have nothing to do with manipulation.
Also, the administration created the loophole about which you worry by creating a 24% tariff gap between China and the new 10% baseline for most countries.
Except that because the rule is clear, China will anticipate that doing this in another country will result in eventual increased tariffs. They will be able to see ahead that it's not worth making a big investment for that purpose. The optimal strategy changes to do more business with the US and/or build factories in the US.
(so the US can drop the tariffs on them)
That would require other countries trusting the promises of the current administration, yes? How much credibility does the Orange One have on the world stage?
British tariffs come to a weighted value of 1.02%. That's what the US is worried about, 1.02%. Seriously.
> If they fold and remove tariffs on the US
Part of the problem is that Trumps's definition of tariffs doesn't make any sense. VAT isn't a tariff but according to Trump it is.
Does he seriously expect other nations to just get rid of VAT? Or somehow replace it overnight with some other system all just to appease the US? Because that's the only way you can lower 'tariffs' to zero.
It just won't happen and we'll be in a continual standoff until Trump concedes that trade barriers are not in fact a good thing for anyone. He'll never admit it, but it wouldn't surprise me at all if the illusion of a 'deal' is struck in order to save face and reverse this mess once it becomes clear it's not sustainable unless you want to shrink your economy and destroy others at the same time.
So much for making America great again. It looks like they're doing the exact opposite.
Looking forward to ”great” as in ”great recession”.
Make Another Great Depression
Make America a great mess.
Good. Time for this idea to die finally.
Not surprising from someone who could bankrupt a casino
A casino? Didn't he bankrupt like 3 casinos?
It was four.
Look at Atlantic City. Trump (among others) did that to that city. That is what the US will become. It is heart breaking.
Yes, but it's even worse than you think.
As these countries move away from the dollar, there becomes a glut of US dollars in the world, triggering inflation like we have never seen before. Ignoring the barriers to trade that the tariffs represent and what that will do with our productivity. Ignoring the additional cost of an uncertain market future (because all decisions are made from the gut and could change tomorrow). The massive stagflationary impact of foreign countries unloading the 75% of US dollars they hold would effectively kill them US economy. The tariffs wouldn't even matter because you effectively couldn't give US dollars away -- they'd be worthless internationally. No one that is not rich could afford to import anything.
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
I think it is misleading to speak in terms of enemies even if that plays to the fears of US isolationists. It is good rhetoric but I think it obscures the truth, There was a time when the stability and strength of the US made the dollar a good choice for friends and enemies alike. The world is changing and the current US administration is accelerating some of those changes. China is going to play an increasing role as the US turns inward but I doubt they will ever replace the US dollar as a reserve currency. The Euro is the second most held currency after the dollar and there are probably a few others ahead of China.
> Our debts would suddenly become existential because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy.
Can you elaborate on this? Every other country does not have the luxury of having its currency be the reserve currency but still manages to both inflate that currency when needed and import good just fine.
If America's reserve status goes, they will face the same constraints, except with way more debt and far less experience managing currency risk.
If India buys a widget off Brazil it will probably be paid in dollars. Therefore, people need to own dollars. Thus a demand for US debt. This lowers the potential interest rate. Other countries who's currency is not a need for people to buy, their debt is purchased by the attractiveness of its offering (i.e interest rate). If US dollar is no longer required than government bonds have to be attractive. Also, not all sovereign debt is issued in the home countries currency, which means that the printing press doesn't help. US debt is very large, interest repayment are close to military spending. Without the reserve currency that would get worse. Something like 68% of world holding is dollar 17% Euro, nothing else of note.
The other side is that as there is a demand for dollars. The value of the currency is higher than if it wasn't which increases the price of exports and reduce price of imports. Trump might want to weaken the dollar.
> Foreign countries buy US dollars so they can trade with other people
Who are those other people and why do they want to be paid in USD so badly instead of their own currency in which they presumably pay their employees and taxes? I never understood that.
In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars? Way back in time, US Dollars were one to one based on gold in fort knox. Right? But no country has a gold reserve now. Most countries have a dollar reserve to back the paper money they print themselves. This is the main reason the dollar hasn't collapsed already.
[edit] someone who graduated college with an economics degree please come and correct the following vague and possibly totally wrong perceptions I have as a subject of the American empire /edit
The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve. Only the US gets away with having no actual reserve ...because a combination of military might and cultural strategic dominance has allowed it to BE the reserve for everyone else. This is why it somehow makes sense for America's economy to be based entirely on consumption rather than production.
OP is right. Whichever superpower controls the levers of global trade is the one that can sell debt and enforce the currency regime.
Some of us think that it's a lucky thing that it's been America, rather than a more authoritarian power, who had held that control for the past 80 years. Europe would not have recovered from WWII otherwise, and be living behind an iron curtain. Anyone who controls global trade after America is likely to be worse from a human rights perspective.
It seems that other currencies have their own peculiarities; for example, when Russia sold oil to India for Indian rupees (to show that they don't want dirty American currency), they found out that you cannot transfer them outside of India or convert; you need to spend them locally.
I wonder can China use this to make Yuan a new world currency (we all buy Chinese things anyway) or they cannot do it or doing this is not beneficial to them?
China maintains a soft peg on the yuan in order to keep their industrial output cheap.
Part of the way they do this is with heavy currency controls. Those currency controls make it difficult to do international trade with the yuan.
But worse from Chinas perspective you can’t maintain a peg if your currency is used to trade goods, particularly fungible commodities because the commodity itself becomes the medium of exchange and derails the currency peg.
That would be disastrous for their exporters and their economy is not in a position to sustain that currently.
It's likely not beneficial to them, for a couple reasons.
First of all, they can print Yuan. They want people to buy those pieces of paper for something of value. It doesn't do much good to have people send all that paper back in exchange for phones and tablets and stuff. Then they would've just got back some paper they printed in exchange for something that took time and resources to make.
No, they need something physical or at least valuable for that paper. Such as local labor. Then their own population can spend the paper internally, because it's in theory exchangeable for something external. When China buys stuff from the US, it spends dollars. Which it buys from the US not with Yuan, but with computer parts. It pays its own people Yuan to make the computer parts... but the Yuan is only valuable because the government holds dollars and euros to buy stuff that their citizens can then buy for Yuan.
This is why Trump's overall foreign policy and particulatly his tariffs scheme risks destroying America. If at some point enough countries decide that the USD is too unreliable, they may look for the next best paper to trade. That would be catastrophic for the US which may deserve it in any case, but it would be truly terrible if the alternative were a currency privately owned and manipulated by the leaders of a dictatorship. Perhaps the world isn't stupid enough to do that, but the size of China's economy compared to anything else would make it tempting.
I'll stipulate right now that if China were a democracy with civil rights and a fair legal system, I would have no problem with it taking over world trade from the US. But currently it's a repressive authoritarian state.
> I wonder can China use this to make Yuan a new world currency
I suspect a strong precondition for this is to switch world oil trade away from the dollar, and that is currently enforced by a combination of military power and "winner takes all" network effect mechanics of the trade.
China has 2 currencies - Yuan for foreign trade and RMB for internal exchange
I can definitely imagine Yuan being used more
RMB and Yuan are two names for the same thing. Maybe you're thinking of FEC? That ended in 1994.
> if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars?
I would have assumed the fisherman in the Philippines would like to be paid in Philippine peso.
The fishermen will get paid in pesos but the company will be paid in dollars. And the company will probably put their dollars in a bank outside the Philippines, which only accepts dollars, euros or swiss francs.
If the fishermen could be paid in dollars, they would probably prefer that.
And the fact that they'd prefer that to being paid in Rubles or Renminbi is the underlying guarantor of American economic power... which, if it goes away and was replaced by Chinese power in the south china sea, would be catastrophic for the fishermen as well.
Where does the Russian company get its Philippine Peso from?
Russia overall may have exported some stuff to Philippines but it’s a huge country. The specific company would now need to find a way to acquire a highly illiquid currency available in tiny numbers which would be expensive.
Instead, they simply buy dollars which are highly liquid, available in huge numbers, until now absolutely reliable, and accepted by everyone.
Trading in dollars was at the end of the day cheap.
but it's not easy to come by large amounts of Philippine pesos in Russia, cause no-one wants to hold significant amount of foreign currency they can't use for anything else. In some cases it may even be legally problematic.
That's why international trade uses "strong" currencies, which are very liquid: you can generally get USD/EUR and then trade them for anything else with a limited spread. Good luck converting Hungarian forints to Lao kips.
Being cut off from USD is why news of Russia resorting to barter[0][1] have occurred in the news since they got cut off from the US trading system
[0] https://www.newsweek.com/russia-oranges-trade-barter-pakista... [1] https://www.reuters.com/markets/first-russia-china-barter-tr...
I think that is (used to be) higher risk: Internal events could make the peso lose its value, but the dollar was pretty stable?
(Probably it'd be a pretty big fishing company, exporting to a far away nation like that. Not a single person in a small boat)
Edit: I suppose riffraff's sibling answer is better
For this the Russian buyer would have to previously sell something to the Philippines and accept pesos. Why would they accept those pesos if they are not generally accepted elsewhere?
> The value of a country's money is backed by a combination of how much they produce and how much foreign currency and assets from other countries they hold (euros, dollars, gold) they have on reserve.
I think the simplest way to think about it is simply supply and demand. Currently there is constant high demand for USD due to its reserve status as you said (supply is also growing btw , deficits, printing of money etc). If demand goes down, there will be too much supply so the Dollar will naturally weaken against other currencies. As far as I know the fact that one USD equals 0.95 Euros (or whatever) is simple market forces of supply and demand.
> Only the US gets away with having no actual reserve
Money is a credit. The US didn't get away with anything. Being a reserve currency has its advantages but the US is holding these liabilities with assets inside the country itself: https://en.wikipedia.org/wiki/List_of_countries_by_net_inter...
> In simple terms, if you're the Philippines and you're selling fish to Russia, would you rather have Rubles or US dollars?
I can easily see why Rubles would have been unacceptable several decades ago, but nowadays with the speed of financial markets why not set the price in the seller's currency and at payment time the buyer can trade enough of their currency for the seller's currency on the currency markets to get the payment?
The challenge is that for a lot of countries, the forex markets for their own currency aren’t deep enough to settle all of their international trade.
Consider a country that has a large trade imbalance—they import a lot of goods and have very few exports. When a business in that country tries to import goods, say from the Philippines in Pesos or from Germany in Euros, the business will have to go to a forex markets and sell their local currency to buy the foreign currency.
Who’s going to take the other side of that trade? Normally, if a country exports a lot of goods, then foreign businesses will need to buy the country’s local currency to pay for them, and that provides a market for exchanging Pesos and Euros for the local currency. But the country doesn’t export very much, so other businesses in the Philippines or the Eurozone don’t have much use for the business’ local currency, and that means that there isn’t a large market of people selling Pesos or Euros to buy the local currency.
This example is a bit of an edge case where this fictional country runs a trade deficit with all of its trading partners. In reality, you’ll likely have a trade deficit with some partners and a surplus with others. If you decide to denominate some of your international trade in US Dollars, then you’re able to use the excess dollars coming in to your country from your exports to finance your imports. It’s a lot easier than hoping that you can sell enough of your local currency or the currencies of the countries you’re exporting to to buy enough of the currencies of the countries you’re importing from.
In some ways it’s similar to the hub-and-spoke model of airlines. If you want to get from small town A to small town B, there might not be enough traffic in both directions to warrant a direct flight. But if there’s a hub X, then there might be enough traffic between A and all the other flights into X to make it worthwhile to fly from X to B and vice versa. There might not be enough balanced trade between two small countries for there to be a deep market in their currency pair, but if you have both imports and exports denominated in US Dollars then you can generate an internal market in your country for exchanging your local currency for USD.
So how about a decentralized currency that no one controls? Preferably digital. If only we had the technology ;-)
Power abhors a vacuum. No such thing can exist without some state eventually dominating 51% of it. We've just tested this out since 2009 and it's already obvious that no crypto can escape state control, because the ingress and egress points are already under state control. Short of establishing your own colony on the moon or Mars, this ain't gonna happen.
Luckily, it's still possible to change governments. Sometimes, in some places. Maybe not for much longer. But the idea that crypto will free us is a fantasy that at this point is mostly being peddled by secret police agencies in name-your-country.
This is a gross misunderstanding of what a currency actually is.
A currency is a social construct. It has no inherent value beyond what people who trade in it place on the currency.
As a result people don’t want a currency whose rules of trade are defined once and it’s unable to respond to actual world events.
If you have a currency that is indeed responsive to changes in the world then there needs to be someone who you entrust with making those changes.
At that point it doesn’t matter whether that currency is digital or cash based. I mean, in actuality even the USD digital trade is order of magnitudes greater than its physical trade.
The U.S.’s monetary institutions and its role as a trade promoting superpower is what makes the dollar stronger. Now that those institutions are not as reliable anymore and the U.S. is clearly not a trade promoter anymore, the dollar is definitely at risk.
A currency is a social construct but it doesn't just come down to people who trade in the currency in a decentralized sense: the US govt imposes taxes on economic activity, and demands those taxes be paid in dollars (as other states do in their respective currencies), and this is enforced by the coercive power of the state, which is ultimately based on its military strength, since that's the ultimate guarantor of the continued existence of all the other institutions of the state.
Of course, there's more to it in the complex system of the global economy, but the power of the state is still an important central factor in a currencies' strength - it's not just about collective perceptions of value.
> Anyone who controls global trade after America is likely to be worse from a human rights perspective.
Next thing you know they might start sending innocents to megaprisons in El Salvador and lose track of them.
don't get me wrong. I'm writing everything I'm saying because I desperately do not want America to go on a trajectory where it loses all credibility and becomes as bad as all the other human rights abusers.
I think most Americans have no idea how much power their country wields. And it's horrific that they're susceptible to the kind of small thinking jingoist nationalism that doesn't befit a country so large built on an idea of cohesion.
I'm sorry, but the US has an abysmal human rights record.
It has a per capita incarceration rate lower only than Rwanda, Turkmenistan, Cuba and El Salvador (which is a prison subcontractor _for_ the US).
It has started more wars than any other country since the second World War.
It is the only country to have used a nuclear weapon in anger.
It has a death penalty.
It supports numerous regimes with abysmal human rights records, Israel, Egypt and Saudi spring to mind, but that's just `head(3)`.
It has bombed it's own population, shot its own students, had racial segregation in living memory.
Given its scale and reach, I'd suggest that the US is, in fact, the world's greatest human rights abuser.
I'm struggling to think of a country with a worse record.
This is easy. We're sitting here texting on an American platform and both willing to say that the imprisonment rate in America is abysmal, that in its history America has supported awful dictatorships and racist regimes.
You can't do that in China or Cuba or Russia. You can't even mention it or you would be black holed and your family would be taken away in the night.
I'm in America and I have no fear of telling the authorities what I think.
As awful as some of the things America has done in the past 249 years are, you really can't compare them to the actions of non-democracies and authoritarian regimes. To do so is an insult to the people who struggle every day as prisoners under those regimes. You can hate America with all your heart, but you can't reasonably compare its foreign policy to that of Napoleon or Hitler or Stalin. You can't say that America ever attempted a Great Leap Forward leading to the starvation of 40 million people, or the Holodomor, or the Holocaust, or the Rwandan genocide or even the current genocide against Uighurs by China. Even the British empire looks incredibly cruel by modern American standards.
Is it still a big world power dominating other smaller countries? Definitely.
America has acted as if it were a global empire in its own self interest. But it's probably been the lesser of most evils, certainly throughout the 20th Century. What it is or may be now, it's harder to say, and we'll find out. But comparatively speaking, only a person who hadn't been to the countries you listed would make the claim that it was worse to have America running the world.
Someone's going to run the world, you know.
> Someone's going to run the world, you know.
The entitlement in that statement is jaw-dropping. No, no one needs to run the world.
And I definitely, definitely can compare US actions to Hitler and Stalin. Vietnam alone, over fifty years ago, ignoring everything that's gone on since was 1.4 million deaths, more than Auschwitz, about a third of the Holodomor.
In the 20th century, leaving aside WWI and WWII, America fought its native population, and in Mexico, Cuba, Nicaragua, Haiti, the Dominican Republic, Korea, Puerto Rico, Vietnam, Lao, Indonesia, Lebanon, the Congo, Bolivia, Cambodia, Granada, Libya, Panama, Iran, Iraq, Somalia, and the former Yugoslavia.
These are troops on the ground wars, in the twentieth century alone, which are a matter of public record. We're not even at the War on Terror, small scale secret stuff, or counting the viscous regimes the US has propped up. Or sanctions, or internal repression, lynching, assassinations and the like.
We don't have a body count as the US stopped counting in Vietnam, but I'd wager if we took all the deaths for which the US is directly responsible, it outstrip would outstrip Nazi Germany and the Soviet Union combined by an order of magnitude.
[Breathes] To the initial point, and speaking from somewhere where one's political views can definitely get one locked up. The (debatable) free speech of Americans means nothing to those not protected by US law, which is most of the world.
The American human rights record may look passable from the inside, but from the outside it's just another monstrous empire.
>No, no one needs to run the world.
Previous to the current unipolar hegemony of the US, it was the bipolar days of the US and USSR, otherwise known as the Cold War. That gave us Vietnam, Afghanistan part 1, Korea, and the Greek, Lebanese, Nicaraguan, Angolan civil wars. Before that it was a multipolar system of competing empires, fighting and carving up sections of the globe, which gave us both world wars, and countless wars before that. Unipolar hegemony provides stability and reduces interstate violence. The idea that Russia, China, and the EU competing for power and influence is a better situation does not ring true for me. The war in Ukraine is the first major interstate territorial grab since the end of the Cold War, and that is only the beginning in a multipolar world.
Right. Next question being, of the current contenders for crown in a unipolar world, which one would you want to live in - and which would you think your children and their children had a chance of improving and being free in, rather than being slaves? Because if there's a better option than America, I'll move there.
Everything changes. The America of 20 years ago is different from the America of today, and will be different in 20 years again (I have no idea how). Likewise for Europe (either individual countries or the EU). Will Argentina finally get of the constant ruin from decades of unchecked leftism and become a world power in 20 years - who knows. Some of the changes will be good and some bad. There are things to like and dislike about every option. So far I'm holding out hope that the US and Europe both overall remain good choices. 20 years ago I was expecting China to become a good choice, but now they are not. I didn't even think of Vietnam 20 years ago, but they have some good signs (I'm not sure if there are enough). There are a few countries in Africa that are doing good things even though the continent as a whole is a string of one bad thing after another.
Well argued.
Unipolarity has however also seen considerable brutality, in the places the empire cares about (Iraq, Afghanistan, Libya) and the places it doesn't, like Rwanda.
My point was made in frustration at the flippancy of the parent comment. The attitude that "someone has to run the world so it might as well be us" is precisely the source of the misery that the US, and every other empire, has inflicted on the world. It's a justification for untold evil and had to be challenged.
I'd further argue that the war in Ukraine isn't the first interstate territorial land grab, far from it. What else was the War on Terror?
The main characteristic of the (pre-Trump) US empire is that it doesn't incorporate territories, it plants bases and friendly governments. With varying degrees of success.
>Unipolarity has however also seen considerable brutality, in the places the empire cares about (Iraq, Afghanistan, Libya) and the places it doesn't, like Rwanda.
We should probably view these in context to alternatives. Just looking at Afghanistan, the 20 year “War on Terror” is estimated to have killed approximately 200,000 people in Afghanistan and Pakistan. In contrast to the Soviet Afghan War, which was half a long, but resulted in between 1.2 and 2 million people killed, an order of magnitude more bloody.
Your comparison of the US and “every other empire” and equating Ukraine to the War on Terror is the same lack of context argument. The US “soft empire” of economic pressure, military protection, and clandestine regime change is not comparable to empires that literally would invade, conquer, and rule over other countries. The US does not own land in Afghanistan, did not annex and take control of oil or other natural resources in Iraq. Just because something is bad, doesn’t mean it is equivalent to other bad things and I think it is very clear that the US has been much “less bad” than the previous alternatives.
I'm sorry, but going back to my very first post on here, staying in living memory, the US has a vast litany of egregious human rights offences to its name. This is an objective fact of record.
The notion that it's any better than a hypothetical does not address the core point that the US government, has in actuality caused more suffering, to more people, in more countries, over a longer period of time than any other since the end of WW2.
I don't want to see another empire, but the world won't be sorry to see the back of the US.
> going back to my very first post on here…address the core point that the US government, has in actuality caused more suffering, to more people, in more countries, over a longer period of time than any other since the end of WW2.
Lets look at that.
>Vietnam alone, over fifty years ago, ignoring everything that's gone on since was 1.4 million deaths
This ignores that the USSR was on the other side of this war, so those deaths are shared equally.
>Cuba, Nicaragua, Korea, the Congo, Cambodia, Lao
These are all Cold War proxy wars with the Soviet Union, a direct result of duopolistic fighting.
> the former Yugoslavia
The Yugoslavian wars were internal/civil wars over nationalism and involved extensive ethnic cleansing. The US stepped in and ended the wars after a fairly short bombing campaign.
>We don't have a body count as the US stopped counting in Vietnam, but I'd wager if we took all the deaths for which the US is directly responsible, it outstrip would outstrip Nazi Germany and the Soviet Union combined by an order of magnitude.
Mao’s Great Leap Forward is estimated to have caused 30 to 45 million deaths. Stalin’s Great Purge murdered between 700,000–1.2 million. Stalin also forcibly deported 15 million people as part of his Dekulakization, and cause 20 million deaths total. This claim that the US has killed orders of magnitude more people has no basis in fact.
A majority of the wars were proxy wars, and as horrible as they were, they were less destructive than wars of conquest they replaced. The Napoleonic wars killed 6.5 million with muskets and cannons. Meanwhile, the Iraq war, the worst US war since the fall of the Soviet Union, resulted in less than a third of the deaths in Korean or Vietnam wars.
Listing the United States Superpower misdeeds only sound horrible when you ignore the context of what the other Superpowers were doing. At it ignores the amount of violence in a unipolar US world compared to duopolistic and multipolar worlds.
Can we summarize international politics like this: once a nice person gets a gun, he realizes that there is no need to be nice anymore?
Ok. Breathe.
What would have happened if the US hadn't entered WWII or hadn't remained in western Europe to stop the Soviets, or hadn't responded to the invasion of South Korea?
Presumably, someone or something besides what we politely call liberal democracy would be running those places, mmm? Probably in the manner in which either Germany or the USSR was run at the time, or in which North Korea is run today?
Perhaps after murdering all the intellectuals and landowners and shop owners, they would have come to some phase of neo-communist authoritarian capitalism like Vietnam or China now, (or if the Nazis had won, maybe their kids would have agitated for free speech and minority rights!) although it's debatable whether a Stalinist or Maoist country could get there without an evil capitalist villain to push it toward perestroika.
I'm not defending America sending troops hither and yon to defend banana companies.
But you say it's breathtakingly entitled to simply state that someone is going to run the world, and I think it's just a plainly obvious fact. By someone, hopefully you understand that I mean a polity and not a person, and ideally a group of nations with a commitment to the rule of law and civil rights. That would be as good as it has ever gotten in the long dark history of the world.
FYI I'm writing from a former Soviet state and need no lectures and whatifs on matters of the USSR.
A US-led unipolar world existed between 1989 and 2025. Multipolarity is the norm, even the British empire was truly top dog for like 50-100 years at best.
Attempts to control the world are what lead to the sort of acts of barbarism, exemplified by the US, that are the subject of this conversation.
The US is, once more, the greatest human rights abuser in living memory, in large part because it believed it should run the world.
The main learning from WWII, which America has consistently eroded over its period at the helm is that on a global scale, multi-state governance based on mechanisms like the UN, the international criminal court etc should be the mechanism for global governance. Not some state with a manifest destiny complex's self interest.
> on a global scale, multi-state governance based on mechanisms like the UN, the international criminal court etc should be the mechanism for global governance.
The UN is not for “global governance”, it is to prevent the nuclear holocaust that would be WWIII by giving super powers a place to resolve conflicts. The international court at the Hague is only able to try war criminals, for example from the Yugoslav Wars, because the countries were not powerful enough to just ignore it. Just because we were able to try and convict Slobodan Milošević, doesn’t mean that China or Russia would ever extradite a former head of state for trial.
They did Bibi, which was good. Growing a pair in its old age.
Unfortunately the world bodies like the UN are overwhelmingly stocked with dictatorships ranging from Angola to Russia which have no interest in civil liberties or human rights. While they frequently claim the US to be the world's greatest human rights abuser, as you have, they perpetrate mass murder on their own citizens. The living memory of my family from Odesa, who survived the holocaust, who survived the famine, to see the invasion of Ukraine and the butchery of Hamas, while the culprits and murderers themselves run the United Nations and ICJ, and while people trying to survive are told they are the worst war criminals in history by the people whose history is one of ceaseless murder tells me that it's better to be American and, if necessary, spit out all those organizations for their lies.
In the past 249 years? The genocide of Native Americans was on the same scale as any of the atrocities you listed. Slavery too.
In recent years? I'd say the War on Terror was one of the deadliest things in 21st century so far.
Ok. Name a country 249 years ago that wasn't a conquering power, that didn't commit atrocities and that didn't have slavery.
You can't. They didn't exist.
Name one that opened its doors to immigrants, has the most diverse population in the world, progressively enhanced civil rights and enshrined freedom of speech, built a rule of law into its practices, and most importantly, name a single country that has had a peaceful democratic transition of power for more than half that time.
The US's atrocities and slavery happened much more recently. And kept happening while other countries moved on to modern social democracy.
And are still happening today, under the thin disguise of for-profit prisons and no-work = no-healthcare.
The US has a long history of murdering people who are too politically progressive and/or get in the way of corporate profits.
Racial segregation was still considered normal in the 1950s. There's still a huge swathe of the population who can't cope with the idea of anyone who isn't rich and white, ideally a man, with political power.
As for immigrants - there are some people in El Salvador who won't agree with you.
If you change the parameter to a more accurate <%50 of time the country has existed> you can include plenty of post colonial nations to that too.
Plenty of African ones none the less, Botswana, Ghana, Cameroon, Senegal.
Comparing that last list of countries, I do not think any has as strong protection of free speech as the US has. On the other hand the UK seems to be a LOT less racist - I think the other countries are some where in between the US and the UK.
Most of the listed countries do much better than the US in the free speech index:
https://rsf.org/en/index
How is the index calculated?
I definitely disagree about the UK. We have nothing like the constitutional protections the US has.
The other country I know well, Sri Lanka, is fairly bad, but has got a lot better in recent years and that does not seem to be reflected in the change (I cannot see a history so maybe it got better and fell in the last year) and I find it hard to believe it is really just a few places away from the likes of Yemen or Belarus.
Looked at it. It is really an index of press/journalistic freedom, not free speech in general with is far broader (private individuals, right to protest, etc.)
The quantitative part will have issues with data quality, and it focuses entirely repression of journalists and the media. It will be heavily distorted anywhere there is prevalent self-censorship.
Canada does not have freedom of speech.
Well, given that countries are a relatively new thing, that's a question that's complex to answer.
I think what you mean to say is name a European country that wasn't doing all that stuff, because most of the world wasn't. I can name a European one actually, Ireland.
That last bit doesn't sound so great to the non-US ear. Immigration, seriously? Ask MLK or Mahmoud Khalil about free speech. Democracy in America is a whole long conversation, but let's say it's at best of debatable quality.
whew. Well, I and almost everyone I know are the sons and daughters of legal (and some illegal) immigrants to the US. Among us, a small group: Irish, Austrian, Persian, Jewish, Russian, Mexican, Filipina and Haitian. I've actually only met a few people in my life who claimed their family had been here more than 3 generations. My grandparents were illegal aliens who were granted amnesty. As such, almost everyone I know is very pro-immigration. We're all aware that there are nativist forces out there who think America is just a white christian nation, but I don't run into them much.
As far as deporting visa seekers who lied on their forms and are shilling agitprop for terrorist organizations? sure.
Ireland wasn't a country until what, 1916 or something. That's like saying the Czech Republic never invaded anyone. It's not quite clear it was due to any moral high standing, obviously when you're not in any position to do so it's easy to say you never did. What Ireland did excell at was terrorism, (er, anti colonialism) similar to the early anti-British forces in Jewish Palestine, although you wouldn't know it since the IRA went off to train in Iran.
San Marino, obviously.
Definitely the worst human rights abuser in history followed by the British, French, Germans, etc.
uh... are you being ironic?
Do you know what's going on to average citizens in North Korea?
https://en.m.wikipedia.org/wiki/The_Aquariums_of_Pyongyang
Do you know that showing ANY anti-war symbol in Russia against the invasion of Ukraine will get you arrested?
Do you know how many Tibetans put their lives on the line to organize resistance in Tibet, now, against the genocidal CCP?
Do you know anything about the civil war in Sudan?
So
if the worst human rights abusers in your mind are America, the UK, France and Germany, is that because those are the only countries you can name? Or because you don't understand what the rest of the world is?
It's scale. North Korea is mainly abusing North Korean human rights, the US has brutalised many more countries, not incidentally including Korea.
Yes, I'm very familiar with the Russia situation, but are you trying to say all arrests in the US are completely justifiable? Despite their apparent arrest-happiness, they've a much smaller prison population than the US.
China, I know less about, but let's call the Uighurs and Tibet equivalent to say, Iraq and Libya, the US has done far more besides.
Having worked in the aid business, I'd say I'm sadly a little familiar with Sudan. For example I know they've been victims of US sanctions which have created and exacerbated the famines and economic misery paved the way for this war. The US even lobbed a cruise missile them once.
This sounds obvious: No country extends civil rights abroad that they don't extend to their own citizens. If Russia or China can't even give their own citizens a fair hearing for exercising their opinions against the government, what hope have their colonial subjects?
The US has dominated the western world for 80 years, much of that in battle against adversaries who were much more brutal to their own citizens. Which by extension means more brutal toward innocent bystanders who fell under those adversaries power.
It's a form of confirmation bias to assert now that all the world's maladies and wars stem from American interventionism. One can easily imagine a counter-history in which any of the forces America fought against had run over neutral countries without opposition.
The very fact that South Korea and Taiwan, Germany, Japan, France, the UK, Norway, et al, are democracies with relatively decent human rights records and not, like, slave states subjugated to totalitarian regimes... does that fact not put hundreds of millions of human lives lived in dignity and freedom on our side of the ledger? Unless you think those lives would have just as well have been spent in a concentration camp or a gulag.
> One can easily imagine a counter-history in which any of the forces America fought against had run over neutral countries without opposition
There are examples of that. Tibet, North Korea, Vietnam, Afghanistan, Warsaw pact countries.
On average the US side was MUCH better. There are examples that go the other way (e.g. Afghanistan) and that were bad enough it might have been better with the other side (many South American dictatorships)
South Korea was torn apart by a brutal US-led war; Japan nuked, twice, by the US. For every country where US barbarism has led to stable, peaceful societies, there are countless ruined shells: see Iraq, Afghanistan, Syria, Libya for recent examples.
As far as the outcome of WWII is concerned, I'm presuming this is what you're referring to, Europe owes just as much to the Soviet union in the fight against the Nazis, they gave many more lives. Does that go on the Russian ledger?
> It's a form of confirmation bias to assert now that all the world's maladies and wars stem from American interventionism.
At no point have I claimed this. My claim is that I struggle to think of a country that has a worse human rights record than the US, which I'd lightly tweak for living memory.
Still struggling.
What rights does Russia give its citizens? Any? I suppose they're allowed to live as long as they speak not a single word against their boss, and are perfectly obedient slaves...
What rights does Russia give to Ukrainian civilians? Not even a right to live.
So, from there you criticize us.
> Do you know that showing ANY anti-war symbol in Russia against the invasion of Ukraine will get you arrested?
Like students protesting against Palestinian genocide?
> Do you know how many Tibetans put their lives on the line to organize resistance in Tibet, now, against the genocidal CCP?
Like the Hawaiian sovereignty movement?
Why do you believe everything the western media tells you as they lie about everything relating to Israel and Palestine?
Your North Korea info. America is the one that didn’t allow free elections and invaded (yes I know you will say North Korea invaded. I know what people who repeat every western talking point say).
—
How do you think Africa turned out the way it did? Which people in the late 1800s decided to carve up Africa? Which people continue doing [neo]colonialism?
Why is Sudan a country with its borders? It’s the west that did that. A country can’t be free when colonizers draw the borders. Even if you try to bring in the Arab states screwing Sudan up, those states are also a cause of western colonialism.
—
Tibet was a slave society and part of China for many many years.
Most Tibetan people speak their native language. How about native Hawaiian or indigenous people in continental US?
—
Like I said in another comment. If Xinjiang had been in Europe or America. The Muslims would’ve been genocided. Thank god my people were in Xinjiang China and not elsewhere.
I’d advise you to read Manufacturing Consent and learn more about the world before saying the most typical western talking points.
> But no country has a gold reserve now.
Supposedly Zimbabwe's new currency ZiG is gold based. Not sure how many people would trust them though. They don't have the best experience with currency...
https://www.bbc.com/news/world-africa-68736155
Absolutely crazy when we see countries like China not be close to as bad as the most evil empire ever, the US. And yet somehow the thought is the US isn’t the worst with human rights.
When I was in my early 20s in Thailand I hated America under George W Bush. I had a conversation with a Tibetan guy who was on his way to sneak into China to help his village in Tibet which had been invaded back in the 50s, then colonized. He was going to help dig wells.
I said to him: "America is just as bad as China! We're becoming the same thing!" This was during the Iraq war.
He stopped me short. He said, "no you cannot compare them, at all, ever. You don't understand. I went to school at [ivy league college]. America is still a democracy. You have no idea how dangerous it is in China."
He was right. I didn't...I was a spoiled kid with good intentions, and no understanding of how much evil there was in the world. You don't have the reference point of experiencing pure evil either to say what you're saying.
Tibet was a slave society. What are you talking about? Tibet was also a part of China for many many years.
America is a liberal western democracy. Just because you disagree with the democracy of China does not make it true.
You know in Tibet, 90%+ of people still speak their native language. Do you know how many indigenous people in Hawaii or the continental US speak their native language? Not close to the same.
I am Muslim. I see what the west does to Muslims. I have looked into Xinjiang. If Xinjiang was near Europe or in America, the Muslims would’ve been genocided.
Because you can easily and cheaply convert USD to any other currency, and because it is the usual currency for international trade you can use it to pay someone else.
Suppose a British company imports tea from Sri Lanka and Kenya, blends and packages it, and exports it to retail chains in multiple countries. If all the buyers pay in the same currency used to pay the suppliers the British company does not have to convert more to GBP than required to meet its costs (and profits!) so loses less on converting currency at all. The usual currency used for this is USD.
So rather than:
customers currencies -> GBP -> suppliers currencies
we have customers currencies -> USD -> suppliers currencies.
Edit: I have not explained very well in the bit immediately above. The point is that the British company will not need to convert the currency at all as they will be paid in USD and will pay in USD. In most countries you get better rates converting to USD, and its easier to hedge this way. Even more so if there is a longer supply chain as then you get
A's currency -> B's currency -> C's currency to D's currency
vs
A's currency -> USD -> D's currency.
There are a few wrinkles on this in that customers may already have USD accounts, and suppliers might keep some money in USD, but obviously customers will be paid by their customers in their own currency, and will pay their staff and most other costs in their own currency.
There are both hard and soft reasons for this.
Hard reason: Oil was traded in U.S. dollars. This was basically built off America’s status as the only open superpower and its military strength.
Soft reasons: U.S. political stability (yeah, it’s hard to understand that now after the past decade, but generally the U.S. has been extremely politically stable with Presidents largely maintaining their predecessors foreign policy even if they didn’t agree with them), US company culture which is much cleaner than the rest of the world (American companies are far less likely to bribe, for example), and strong financial institutions like the independent Fed and the publishing of reliable and open data.
Other currencies are not always great: for example, being under sanctions Russia sold oil to India for Indian rupees; then it found out that you cannot simply take rupees abroad or exchange and you need to invest them locally [1].
But I also wonder what's wrong with other currencies and why they are not used more often.
But of course, current US move will greatly help recent Russian efforts in persuading other countries to switch the trade from US-controlled dollars.
[1] https://www.asianews.it/news-en/Delhi-pays-for-Russian-oil-i...
>But I also wonder what's wrong with other currencies and why they are not used more often.
I think that they are less stable and more controlled by their countries of origin. The US has, relative to the rest of the world, an exceptionally stable political system, little control over the dollar, and a huge economy.
This is called the euro dollar (look it up, it had nothing to do with Europe).
In short: when two non us countries trade, eg., oil they settle on USD.
So for south Africa to buy oil from Kuwait, they need USD.
Eurodollar is cyberpunk. Don't you mean the petro dollar?(nevermind found Eurodollar instead of "euro dollar" now :) )
I don't mean petro dollar.
And you are more than welcome to use the internet if there are terms you don't understand: https://en.wikipedia.org/wiki/Eurodollar (Edit: I see you found d the article, will leave the link for other who are in doubt :) )
They are different concepts.
That was the part of Bretton Woods agreement, 1944.
https://en.wikipedia.org/wiki/Bretton_Woods_Conference
Look up the petrodollar.
If I'm Romanian and my currency is leu (RON) and you're Mexican and your currency is pesos (MXN), you don't want my RON since you can't use it for anything except for imports from Romania and I don't want your MXN since I can only use it for imports from Mexico.
If we both agree on USD, I can go to any other country which wants USD (all of them) and buy whatever I want.
Trading in USD means that all your transactions become known by a third party (US). That is why everyone should be interested in cutting out the middle man.
they dont have to be its just more convenient.
That's the case for everything except for bartering or using commodities (gold, etc) as intermediate trading mediums.
God damn you nailed it. All the stupid wars for nothing. Rarely do I see anyone talk about these shenanigans as the mechanism to end the reserve status of the $ and the end for influence and affluence. It will breed a lot of resentment from some Americans thinking the world is against them. They could be used for war.
One thing I don’t understand here, genuine question: If, hypothetically, US manufacturing was to become so competitive that the trade deficit would go away, would that have the same disastrous effects for the US dollar as a trade/reserve currency? Or how would that work?
It's impossible for both things to be true. For the dollar to be the reserve currency countries need to accumulate dollars. They can't do that unless more dollars leave the US than come back.
The problem is that countries don't just take the dollars and sit on them. We're on the third iteration of solving this intractable problem:
Try 1 was gold. The US was running out of gold and Nixon had to end redemption of dollars for gold.
Try 2 was assets (think the Japanese buying everything in the 80s). That was unpopular and the Plaza Accords put an end to it with significant damage to the Japanese economy
Try 3 is government debt. But it's the same fundamental problem. The US isn't ever willingly going to give back assets for this debt. Everyone agrees with the polite fiction that the US will and so things are fine. But if they ever expect actual stuff for that debt it will all break down again.
Thanks. These hints led me to https://en.wikipedia.org/wiki/Triffin_dilemma.
US manufacturing is better than it ever has been by all measures except number of people working in them. This means that there isn't much need for someone to get good at putting a nut on a bolt and other such mindless work that is skilled only in that with a lot of practice you can get really fast as doing it. People who don't want to spend a lot of years in school are thus not doing very well because there isn't much need for people who don't want to use their brain.
Not all measures: https://www.marketwatch.com/story/this-chart-shows-the-drama.... It may not have declined in absolute terms, but it still hasn't kept pace with the rest of the economy.
It's typical Empire Hubris: thinking you can get away with anything because you are special.
Trump doesn't really know what he's doing. He surrounded himself with yes-men that know perfectly not to contradict him.
The global Dollar order was built to American advantage. Trump is dismantling it for no reason. If the dollar order crumbles, the US will discover it has much lower productivity.
There is no American exceptionalism: it's just Dollar exceptionalism. No Dollar, no exceptionalism.
I agree, losing reserve currency status would make American gdp / living standards to come way closer to Europe for the simple fact it won't be able to permanently increase its debt deficits. However its far from clear losing reserve status is going to happen, sure some countries will try to diversify but others are probably too tight inside the American umbrella (for defense for example).
But yeah, surprises can happen so interesting times.
> would make American gdp / living standards to come way closer to Europe
Why are you making it sound like EU is a third world country? Are you aware that living standards are higher in many European countries than the US, right?
> Are you aware that living standards are higher in many European countries than the US, right?
If we measure the total pie then its much smaller in Europe than in the U.S (I mean total wealth/gdp per capita). Only small countries like Norway or Switzerland have high gdp, in France or Germany its almost 50% lower than in the U.S.
Now the pie does not distribute equally in the U.S that's true, but still, there are tons of millionaires in the U.S and I mean pretty regular people (doctors, finance, software devs etc) that had they lived in Europe they would have been comfortable and nothing more. think something like 100k Euro a year (at best) instead of 3-5 times as much which is what they make in the U.S. If the U.S loses reserve status there just won't be enough money to go around for those salaries, or if there will there will be a horrible inflation, either way it just wont be sustainable.
P.S - lots of middle class people in the so called rich European countries like Germany or the Netherlands cannot afford heating anymore. So no, it is definitely not third world but its also not particulalrly rich. The main advantage though is Europe has mostly free healthcare and the U.S is an absolute mismanaged mess in that regard.
No. They’re not, anywhere in Europe. This is a mystifying talking point based on wishful thinking and vastly overestimating the non-monetary value of a larger social safety net. The median US citizen is much, much richer. The first quintile US citizen is fairly comparable to first quintile Europeans in income and in-kind transfers.
But it is certainly the case Trump is trying to bring US income down to something closer to EU levels, which will hopefully cause Congress to get its spine back.
> others are probably too tight inside the American umbrella (for defense for example).
The UK is reconsidering. If the bloody UK is not confident, who else would be? They might be too tight inside for now, but that is a strategic weakness and it will only go one way. Short of the US making it a satellite, it will only loosen.
> I agree, losing reserve currency status would make American gdp / living standards to come way closer to Europe
Why do you think that the standard of living would become better after losing reserve?
Have to say I disagree there. It was American exceptionalism first which then led to the dollar being popular.
But a large degree of the exception was being excepted from being blown to smithereens during WW2, which is the kind of opportunity that doesn't usually come around twice.
> which is the kind of opportunity that doesn't usually come around twice.
On the contrary, it most definitely did come around twice (hence the 2), and those same geographic advantages are still at play, barring thermonuclear war. It wasn't pure chance that Europe combusted in WW2, Europe had been on fire off and on for hundreds of years. Its geography just lends itself to large scale conflict.
The recent period of peace is an exception, but it's not the first exception and there's good reason to suppose this one won't last forever either.
I could say the same about the period of peace in the USA which is only from 1865 (Edit: 1865 is the civil war, but thought hey let's look, and it seems there were conflicts with Indians up to 1924!) . It is an exception, because before that it was "the wild west", with various conflicts around.
And not sure how this will play out long term, I don't get an impression that USA states are so aligned on everything.
Since you edited to reply to my comment I'm stuck leaving a second reply: the conflicts with Indians were not at all the same as the kind of total war we're talking about with the wars of religion, Napoleonic Wars, and the World Wars. The subject of this thread is wars that lead to mass destruction of national power and lead to other countries taking the lead.
For future reference, it makes for much easier reading if you just reply to me instead of editing your comment to respond. This isn't a Notion doc, it's a forum, and I'm not leaving feedback on an artifact, I'm engaging you in a discussion.
> I could say the same about the period of peace in the USA which is only from 1865
You can't really compare a period of 160 years to a period of 80, especially given that there's war in Europe once again so the streak is already broken.
80 years is actually shorter than the gap between the Napoleonic wars and WW1 (~100 years), and only represents one generation that lived and died without a local war. On the other hand, 160 years out of 249 is 64% of the existence of the US spent in one continuous period of no widespread local conflict, and represents 5 generations that were born and died without any war on their doorstep. How is that an exception?
> Europe had been on fire off and on for hundreds of years.
The point was that armed conflicts also happened on North American soil (even if consider only USA soil) for long time, so not so different for what happened in Europe. The last period of peace is as much an exception for one as it is for the other given a significant part of the history of the continents.
Also, if we think of countries, there were various European countries that did not participate in or had fights on their territory, during neither WWI or WWII (Ireland, Sweden, Switzerland, Portugal, Spain) and some of those did not have a war on their soil for similar as USA ...
> The last period of peace is as much an exception for one as it is for the other given a significant part of the history of the continents.
But... it's not. 160 years of straight uninterrupted time without total war out of 250 makes no-total-war the norm, not the exception. >50% of the last 250 years have been spent in one continuous period of people not having to wonder if bombs would be falling on their heads today.
That's totally different than Europe, whose longest gap between total war was the 100-year gap between Napoleon and WW1.
> Also, if we think of countries, ... some of those did not have a war on their soil for similar as USA
Yes, but those are each the size of a US state, so unsurprisingly didn't lead to them taking the place of world superpower.
If you're going to be criticizing my argument it would be helpful to keep in mind that I was replying to this:
> But a large degree of the exception was being excepted from being blown to smithereens during WW2, which is the kind of opportunity that doesn't usually come around twice.
You're taking things in totally different directions that aren't relevant to the question of how often the US will continue to be the largest Western country with no threat of total war on domestic soil.
> doesn't usually come around twice.
There is a _2_ in WW2 :)
Sadly looking at history these "opportunities" come around quite regularly.
Big beautiful oceans
> He surrounded himself with yes-men that know perfectly not to contradict him.
Stephen Miran is believed by some to be the "mastermind" behind this. I'm not sure Trump has ever had a singular original idea.
Looks like he learned that from Putin, who also surrounded himself with yes-men which lead to him thinking he could take Ukraine in 3 days.
Although it now seems as if that was massively inaccurate, things were very near to turning out completely differently in the first days of the war: https://www.youtube.com/watch?v=QlttS0N7uVA
> thinking you can get away with anything because you are special
Might have been the case some many years ago. Not anymore with many nations not all that far behind.
>Not anymore with many nations not all that far behind.
Nothing has changed. The dollar simply has no alternatives. The EU? After the freezing of Russian assets? Uncompetitive. BRICS? Even worse, you have one dictator literally controlling all monetary policy. Gold and bitcoin are too volatile.
What about Chinese Yuan? China seems like an economically strong country with reasonable trade policy. Also, BRICS has at least two dictators.
By BRICS I've mean China and the Yuan. And in China there is exactly one person, who is deciding how reasonable or unreasonable any policy will be tomorrow.
Well, China's international policy seems to be more consistent than that of a certain democratic country.
Do you know how many taxes on many goods European Union has introduced? Was that "empire hubris" as well?
Why don't you enlighten us?
Not only America will be poorer. Everyone will be poorer
That's the point, people need to be poor and desperate enough to fight a (world) war.
And they're backing down on just enough woke stuff due to the concern about the lack of participation of checked-out-of-society White men in said (world) war.
Everyone puts taxes on some sectors. It's economic policy. Trump is not doing economic policy. He's using a simple formula to ideologically reduce trade deficit. No matter the consequences!
Trust the experts: America will be poorer because of these tariffs.
Why don’t you show some data supporting a more clearly-stated theory? All countries use economic policy, but there’s usually some kind of strategy involved - for example, the EU has a tariff on American steel and aluminum because that was retaliation from Trump’s earlier tariffs. Similarly, a lot of the EU agricultural duties are both protecting local industries but also enforcing quality or safety standards (this is also the reason for the Australian beef imbalance the President mentioned: they have a strict mad cow containment plan American producers dont follow).
The American action doesn’t follow a discernible strategy other than the fantasy that we can somehow “win” every trade relationship. That’s why you see massive taxes on poor countries we buy a lot of raw materials from - Madagascar can’t afford to buy the kind of expensive goods we primarily make, but we love to buy vanilla, so that trade “deficit” is both voluntary and to our mutual benefit.
"because inflating our currency to pay for them could result in functionally not being able to import goods required to run our economy."
You can't inflate your currency to payoff a debt that's due in in a different currency. As soon as you inflate your currency, the exchange rate changes.
The US issues debt in dollars and repays those debts in dollars. The purchasing power of dollars can change due to inflation. If you suddenly increase the global supply of dollars by 2x, dollars that existed prior to the increased supply will be able to purchase less.
That's true for domestic public debt. But in the scenario given by the parent where the dollar falls out of favor, it is assumed that we could be issuing public foreign debt in foreign currency. Even if it was still domestic currency, the FX rate would matter to the foreign investors. Interest rates matter. So does inflation. Money supply is less relevant than the actual inflation it generates. Most debt instruments rely on the interest rates that fluctuate based on monetary policy to combat inflation. Eg your interest on debt will increase as your inflation rate does. Even the world bank will jack up your interest if your currency has issues, such as rampant inflation.
> it is assumed that we could be issuing public foreign debt in foreign currency.
That isn't how it works. You issue bonds, denominated in your own currency, and promise to pay the bearer of the bonds a coupon (interest) and repay the full amount (in USD) at the end of the bonds life.
Unless I misunderstood what you're saying.
There are multiple structures for foreign debt instruments, of which your definition is one. Even using your example, the "(in USD)" is the part that might change if USD falls out of favor as the context of this chain is discussing.
> If you suddenly increase the global supply of dollars by 2x, dollars that existed prior to the increased supply will be able to purchase less.
I don't think this is true. The US issues currency in two forms:
1) Deflating dollars
2) Treasury notes
At the time you've issued a T-bill worth $1B, the effect is pretty similar to printing $1B. If interest rates are in-line with inflation, it's a safe way to maintain foreign reserves. If interest rates are higher -- long-term, the US has a problem, and if they're lower, the foreign government has a problem.
But issuing treasury notes is not too dissimilar from printing physical dollar bills.
This comment is good, yet it also reflects a lot of what I dislike about political discourse online.
You've identified a potential severe negative consequence of a change or new policy, but you write as if this is a guaranteed logical corollary and there is no scenario where this consequence does not materialize. This creates an alarmist rather than genuine and analytical tone.
Describing tariffs as a "decapitation strike" feels hyperbolic and even perhaps conspiratorial. Saying this guarantees Chinese hegemony is exaggerated and ignores all the other equally (if not more) significant factors influencing both American and Chinese trajectories. Applying Dalio's broad thesis to tariffs specifically is a stretch -- tariffs may exacerbate tensions Dalio describes, but they aren't necessarily the coup de grace to hegemony.
Basically, you're highlighting real risks and issues, but packaging them in language that overstates their likelihood and doesn't take into account any other factors at play simultaneously. If your goal is to paint a doomsday picture of the future, this works well. If your goal is to understand the impact of tariffs on the world, there's too much emotion and speculation and not enough hard analytical work here.
Yeah, the whole "decapitation strike" talking point betrays a serious bias. It also implies something which no evidence is provided for. The idea that foreign actors got someone elected, then managed to get that person to implement a specific strategy that rapidly destroys the dollar as a reserve currency, all for the benefit of the foreign actor, is quite the stretch.
They don't need to hold USD long term to complete transactions. Transaction demand does not explain why the dollar is the global reserve currency.
Major question is then, what currency should be reserve?
Euro? - Nowhere near as stable as the dollar, and some quite shaky fundamentals and history? Yen? Pound? Swiss Franc?
I suspect Yuan will be unpalatable.
The Euro is already a reserve currency and makes up about 20% of worldwide reserves. Which is of course not as much as the dollar which is about 60%, but these numbers could of course shift.
So is the Yen, Pound and swiss Franc - many currencies are. What's your point?
Pound is about 5% if I remember correctly, which is a higher weighting than the Euro for trade:reserve holding ratio.
The new reserve currency won't be a single country's currency but a basket of currencies, where the ratio contribution of component currencies gets adjusted every once in a while.
Ok and who will administer the basket? I'm not saying it's impossible just a bit impractical perhaps.
It is just economically clueless people talking nonsense.
Whatever basket we come up with has all the same properties that cause the Euro to not displace USD but worse. Much worse.
Indeed.
BRICS has been proposing a sort of basket mechanism. Bitcoin is not yet thickly enough capitalized. The historical standard was gold for 3000 years, and that's what backed the dollar until that was "temporarily suspended" in 01971. That's the default.
Perhaps we should dust off Keynes' Bancor proposal? :)
https://en.wikipedia.org/wiki/Bancor
Wasn't an implementation of Bancor attempted on Ethereum?
Bitcoin would be the most fair choice for a new reserve currency. It has equivalent properties as gold but is more practical to use, and there's no geographic inequality to mining it.
No government could benefit from manipulating it. How cool is that ?
> there's no geographic inequality to mining it.
Apart from having access to cheap energy which is collocated with... specific geographic features like geothermal / hydro energy which not all countries have access to.
Okay, it's not perfect equality but it is way, way more equitable than geographic features like "gold mine in your backyard"
Is Bitcoin even a currency? Who spends it? And who keeps it stable?
Gold was the reserve asset for most part of human history and was less spendable than bitcoins (harder to divide some gold than to send a fraction of a bitcoin).
Who keep it stable ? Well, who keeps gold stable ? Once an asset becomes the reserve asset, it becomes the standard and other things are priced in that unit, or in units derived from it (here's a kilogram of beef, I'll sell it to you for 2 British pounds which are worth x units of reserve asset)
But maybe you're talking about the stability of its inner properties (its supply, for instance). That for sure is not as stable as gold's. But is its distributed consensus stable enough ? That's a good question. So far, so good.
It's a reserve. The coupling of reserve and currency is a historical accident, not a fundamental reality
It’s more deflationary than gold due to hard fixed supply plus breakage.
Of course a middle school level view of currency is "cool".
Strong argument you're making here, thanks mate
The Chinese yuan is not a viable reserve currency. Why? Because it's pegged to a basket of other currencies. It should really inflate in value but Chinese government policy is to undervalue it to aid exports. Exports are ~20% of China's economy. It would devastate the economy if the yuan was allowed to freely float, or at least float with the level of central bank management that other developed nations' fiat currencies have.
China has repeatedly tried to activate a consumption economy (like the US) but the Chinese just save and buy real estate, in part because there is no retirement benefits so they have to self-fund that.
So what currency? Currently, there is no viable alternative to the US dollar. It is backed by the largest economy in the world AND the US military.
You might find people who talk about BRICS like it's a real thing. It is not. It's just a group of randomly selected countries meant to sound nice (literally, South Africa is only there for the S sound) with no unified policy or currency.
It's not the euro either. Europe ultimately is still dependent on US defence and beholden to US foreign policy.
pretty much every source in the world disagrees with the idea that China doesn't have a retirement system
https://www.cfr.org/blog/what-chinese-pension-system-and-why...
>It's just a group of randomly selected countries meant to sound nice
Source? Pretty sure BRICS is comprised of the largest regional economies that specifically aren't in the first world, that make for useful alliances for Russia & China specifically.
Africa for a long time didn't have any serious economic contenders for something like BRICS other than South Africa. Nowadays Nigeria is a closer contender on the continent. And of course you have long histories of South African politicians having spent their time in exile during Apartheid in places where they learned to call each other "comrade" even to this day in their political parties. It's not an out of the blue arrangement.
Brazil as far as I'm aware seems to be by far the most economically active in South America too?
India seems like third fiddle to Russia & China in this arrangement as a large economy in Asia.
IMF does have Speecial Drawing Rights that kind of, but not really, acts as a global currency
I’m past the point of thinking people are just being crazy or paranoid. Any baffling move this administration makes, I just ask myself: what would Russia want?
And without fail, it explains the unexplainable. This move is a prime example. This doesn’t help the billionaires in America, it doesn’t help ANYONE in America, but is sure is a massive bailout to a Russian economy that was on the verge of collapse.
I agree tariffs are harmful and counterproductive, even if they're applied by the other side. My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.
It is interesting to note that none of this panic applied when US trading partners imposed tariffs on US.
But if this is part of a larger shift in terms of funding the government, I would be somewhat open minded. For instance, if instead of taxing income, we had tariffs that play a role of basically a sales tax, I think that has some benefits. For one, I think tax policy should encourage productive work (income) as opposed to consumption (sales). So a shift from income to consumption taxes would be a positive development. You can make adjustments so that its progressive (i.e. tax credits to cover the first N dollars in consumption tax). The big problem is the geo-political effect less trade might have and the effect on the markets.
> My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.
The thing is that we don't. That 39% Trump claims Europe is levying on US goods? It doesn't exist. I've heard they include VAT in this which makes no sense because it applies to all goods including those made locally. That is not a trade tariff. It's just internal taxation.
However I've also heard they calculated it with the trade deficit (which in itself makes no sense, it's not a tariff) but in the case of the EU that makes even less sense as Trump always quotes the deficit on goods, but ignores the deficit on services (eg IT) which is highly in favour of the US.
Also when I hear people say "they don't buy American cars in Europe", we do have American brands like Ford and Tesla. Ford just sell smaller models designed for our market here. Those big SUVs and pickups are not suitable for our traffic or environment.
The average effective tariffs on US imports to the EU are 2.7%, whereas for EU imports to the US they are 2.2% (i.e. weighting the various tariff rates by their respective trade volume). So there is a minor imbalance, but imposing 20% (and claiming 39%) is ridiculous.
I agree that if it was part of a grand bargain it wouldn't be so large, which makes me think its either just an insane opening play or it's being used to change how the US funds itself (the second part of my response)
Time to learn Mandarin
然后呢？
The only other currency that comes to mind for global trade is the Euro but even that seems impossible?
BTC
> It is the definitive end to it, and the birth of Chinese hegemony.
I think you’re spot on about the risks of the tariffs (I’m not really sure where I stand on them today), but your arguments don’t produce this conclusion. China is far more protective of its markets, nobody has or will have any interest in trading in any Chinese currency, and tariffs from not just the US but other nations will continue to exacerbate existing problems at home for China.
Companies like Temu came into existence because global pullback on purchasing Chinese manufactured goods is resulting in job losses, and instead of having factories go under the Chinese government would prefer to sell products that very quickly fall apart or are built extremely cheaply or with very poor environmental practices to at least get some money.
Further, while these tariffs seem questionable and everyone is piling on Trump (which is deserved, with prejudice, in my mind), let’s not pretend that the EU, Japan, and others are saints here. They do enact trade barriers to protect their own domestic industries as well. On the tech side for example there’s simply no argument that the EU is fining US tech companies just because they happened to enact policies and rules that the US companies break all the time. Some portion of that is a shakedown or a form of a trade restriction.
The narrative with the president is about us vs them. The problem here is the enemy is within.
The EU may be awful, Japan may be an unfair partner. But when you play with a handgun and shoot yourself in the foot, that’s on you.
This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies.
This was done by Trump, nobody else.
Like GP said - America's enemies.
Ah, light bulb slowly going on. I was thinking Russia, North Korea or China. The traditional enemies.
I agree on Russia, but wouldn't be so sure Trump isn't a Russian asset.
Is Trump not their US representative in chief?
That's an over-simplified answer. There are many people who share in the blame. Him for doing it as a visible catalyst, everyone who voted for him, presidential advisers who recommended these disastrous policies, and those who sat idly by and let the country be destroyed without acting to prevent it, especially those with greater-than-ordinary power who failed to act.
The buck stops here - Harry S Truman. He had this sign on his desk when he was president.
Here is an explanation of what it means:
https://www.trumanlibrary.gov/education/trivia/buck-stops-he...
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade.
But then they sell it back. What you’re describing is not a trade deficit. To produce trade deficits they need to actually trade with the US. Buying forex does not do that.
> If trade stops occurring in US Dollar, which is a consequence of the stated goal of our current ruling regime, that would be the coup de grace on this country's hegemony. It is the definitive end to it, and the birth of Chinese hegemony.
Nobody will use Chinese currency because it doesn’t float and it’s subject to tight capital controls. Nobody in their right mind would switch to that from outside of China.
You can argue that China could become a hegemony anyway, but that is because everyone wants to trade with them, not because they want to use their currency in 3rd party transactions.
Foreign countries buy USD through trade. Japan needs dollars for international trade so the US Treasury prints dollars and gives them to Japan and in return Japan gives the US Nintendo Switches or whatever. Those dollars go into the international trade system and some of those dollars will just circulate internationally indefinitely and won't ever make their way back to the US, hence the perpetual trade deficit. This is a great deal for the US because at the national level they effectively got those Nintendo Switches for free.
It’s not for free. It’s in return for being under the US security umbrella, which costs the US about $800 billion a year
Of course that umbrella could soon be gone, so it would be a moot point
The umbrella could already be gone. There are big question marks over how much the in-practice umbrella looks like the Ukraine war where the US State Department provokes something then Japan gets flattened in the crossfire. How much should they be paying for that?
People are coming out of the 90s mindset where the US was substantially more important than its competitors. It was easily worth paying for US protection then because it was obvious the US could back it up with muscle. Now the calculation is a lot less clear.
Of that 800 billion, where is the money spent? If it goes to US military/industrial complex, it is basically a creator of US jobs.
So it doesn't cost the US anything.
This is "broken window fallacy"[1] territory. In economic terms defense spending is mostly waste because a lot of it doesn't get used (hopefully) or gets used to blow other stuff up causing net damage. The fact that it creates jobs is better than nothing, but spending the same money on infrastructure would increase the future productivity of the country.
[1] https://en.m.wikipedia.org/wiki/Parable_of_the_broken_window
The defense budget is a social support program that conservatives will agree to. Rather than just providing people a basic income and healthcare directly, they add the hoop of holding down a job to access it.
It also is meant to keep American industry active (to some degree) in case it is needed.
No one else can project conventional military force anywhere on the global like the US. China is getting there but not quite yet. India and Russia are still regional.
The Europeans couldn't deal with a few land pirates practically in their backyard.
That’s not how that works. If Japan needs USD it goes to the forex market. That market represents a massive trade flow.
It doesn’t matter which currency you pick in that world apart from capital control. As long as it’s reasonably stable you flow through it with many billions of dollars a day with ease. The conversions are effectively free because the spreads are tiny.
Using the US dollar to trade between two countries that are not to US does nothing to the the currency. It just shifts a deficit.
People trade in USD because the US is the largest of large economies. Everyone trading in USD understands already that the US can manipulate its own currency. But they take a low-risk bet that it probably would have far less incentive or inclination to do so than an authoritarian state like China or a small economy like Argentina. Capital flows to the US because the dollar has been "safe"... it inflates, but predictably slower. The Chinese regime is more than capable of opening the illusion of free markets and making 50-year promises not to interfere with free trade and capital, tempting foreign investment, only to break those promises with an iron fist.
Regardless of the response from China, America is showing that it is irrationally willing to cede its incredible advantage for no decipherable reason beyond that some logarithmic curve of population idiocy has crossed the already absurd hockey stick of its own national wealth. It's a realtime lesson in the ancient rule dating back to the fertile crescent, that civilizations destroy themselves from within before they're conquered from without.
That doesn’t matter. In modern forex markets you can convert 50 million yen to USD. Do a trade with another country for EUR or whatever. Then convert it back to USD the same day.
These markets are extremely liquid and the longer term trends of the USD value are irrelevant because players can move in and out so quickly. They can even preemptively take short positions or buy options on futures markets to completely derisk an event while holding USD.
This is why “petrodollar is good” analysis in modern forex is completely off-base. At this point it’s become a great flag to indicate someone who doesn’t understand forex and trade at all.
Of all of the things valuable to the US, the petrodollar is about as far down as renaming the Gulf of Mexico the gulf of America.
Should be understood as buying dollars for goods.
Also us trade is not bilateral.
The usd that are exported from the US, is not used to buy gods from the US. They are used to buy gods from other countries.
I think you’re somewhat missing the point, which is that the collapse of the dollar as the reserve currency around the world will eventually lead to default of US debt, which has cascading consequences domestically and internationally. This is the direction the US is heading if it really continues to alienate its allies and try to “fix” its trade deficit.
However, the OP was wrong about the fact that China will become a hegemony, for reasons like you mention, and so what’s likely happening isn’t the change of hegemony, it’s the beginning of the end of the era of the American Empire and to a likely a multi polar world. It’s going to take another world war, in some form, to create enough of a vacuum to give us another superpower/hegemony like we have with the US currently.
Is not the US export higher if they take into account all the Software and software as service they sell?
was thinking the same thing. US is a giant in software.
Software is easily pirated. It is official policy in Russia now to pirate the software used by enterprises (like SAP, Autocad etc), to own the western libs.
Not if its SaaS, which is where the world has been going for a decade now at least
Does it follow that Yuan would replace USD? Could it be the EUR instead?
The RMB does not float. It would be virtually impossible. More likely: EUR will share the title (more than ever) with USD.
A big, resounding AMEN.
Something tells me that both China and Russia know all this and yet, the US administration is completely blind to it or are naively playing into their hands.
Naively? They are actively acting in bad faith to destroy the US from within
I'm convinced Trump is 100% sincere in his belief that his economic ideas are brilliant and will lead the US to a golden age.
I think his (and much of the far right's) mind is characterized by:
- a deep incuriosity and unwillingness to learn about the world
- extreme overconfidence in his own judgment
- an understanding of the world as being pervasively zero-sum (shared with Putin); your loss = his win
- obsessive preoccupation with the dynamics of humiliation: he feels an extreme need to be perceived as strong and to humiliate his enemies, and he greatly fears being humiliated
I feel like these characteristics explain most of his policy. The idea of tariffs arises from his zero-sum mindset: the only way to gain is by making someone else lose. This is of course factually wrong, but he's too incurious to learn from history or economics. And, of course, he's massively overconfident, so the thought that someone else could know better does not occur to him. And once the ball is rolling, his fear of humiliation will ensure that he has to stay the course. His perceived enemies (which is everyone) have to come crawling to his throne, begging to have their tariffs reduced while praising his brilliant policies, and then he might consider it. So if that doesn't happen, his only options are (a) perpetually retaliating with ever-increasing tariffs, disregarding the consequences entirely; or (b) capitulating in the trade war (lowering or abolishing tariffs) while not admitting that it's a capitulation ("don't worry, my brilliant policy fixed the mass influx of fentanyl and illegal immigrants from Canada, so now we can drop the tariffs on Sri Lanka" or something similarly incoherent).
He’s a spoilt brat who’s never been told no. That’s all it is. He grew up rich. He’s never had to develop himself or face adversity. He’s even been able to fail, over and over again, and still come out on top.
That only explains part of his behavior. Something peculiar to Trump's mindset is the pervasiveness of zero-sum thinking. There is nothing about growing up spoiled that necessarily creates this mindset; in fact I'd expect the opposite (by which I mean, I wouldn't expect people who are never forcibly confronted with scarcity and zero-sum competition, to be obsessed by scarcity and zero-sum competition).
That may be true, but I’d argue that’s just plain stupidity. Animals and toddlers exhibit similar behaviour - not understanding that collaboration and sharing can lead to overall better outcomes.
Due to lack of adversity, his theories have never been tested, only reinforced. He thinks he’s been flying the plane his whole life when really it’s been on autopilot.
You’re describing a similar real life version of Kendall Roy but, remarkably, with even less adversity.
Stupidity is a necessary but not a sufficient condition for believing in Trump's particular delusions. You can be stupid and not delude yourself into thinking that others must lose for you to win.
What this analysis is missing is Project 2025. The Heritage Foundation and a hundred other conservative thinktanks, as well as half of Congress are all in on a singular plan to transform America into a backwater shit hole. Trump might earnestly believe these things, but he is not the source of most of his ideas. They are spoonfed to him.
I agree that Project 2025 broadly sets the agenda, but when it comes to tariffs specifically, I'm under the impression that Trump is singularly obsessed with them and the conservative think tanks are, even if they're pro-tariff, uneasy with how far he's going with it.
Ha. Good point. It's analogous to summoning a demon, isn't it. They thought they could control it.
Don’t forget Curtis Yarvin and his band of billionaire Silicon Valley VC adherents.
People are arguing about the economic rationale here and forgetting the philosophical.
They’ve broadcast a desire to send as much of the world to a new “dark age” as possible so they can sweep in and “save it”, reforming it as they desire. Vis a vis Prospero
I agree. Also a lot of Trump's eccentricities would seem to come from Peale and Positive Thinking https://www.cnbc.com/2020/07/10/how-self-help-author-norman-...
That basically pushed the belief that if you believe something enough the universe will make it so, such as 'I won in 2020'.
There are those in the States who want to devalue the dollar as a pathway to greater industrialization and domestic productive capacity. The idea is to make the US labor force competitive with the rest of the world.
Problem is, reigning in wages for labor after decades of encouraging rampant consumerism and being in the middle of a cost-of-living crisis especially for housing seems like a political earthquake in the making.
Like many of Trump's ideas, maybe they could work if carefully managed over a long period of time so as to give the economy time to readjust but these are not careful managers and patience is not their virtue.
I’ve mentioned this on HN before and I agree. Going backwards will not result in the US going upwards, doing the things that made the US successful until are not the same things that will make the US successful in the future.
Many factory blue collar jobs left the US two decades ago and most of those aren’t coming back yet somehow Trump is infatuated with this idea too.
> There are those in the States who want to devalue the dollar as a pathway to greater industrialization and domestic productive capacity. The idea is to make the US labor force competitive with the rest of the world.
> Problem is, reigning in wages for labor after decades of encouraging rampant consumerism and being in the middle of a cost-of-living crisis especially for housing seems like a political earthquake in the making.
My guess those people are fine with basically converting most of the American labor force into indentured servants but normally politicians wouldn't go for it. Trump probably assumes he is immune to any reaction, let's see.
Some say it's quite deliberate.
I have a hard time telling this alleged incompetence apart from actual malice.
Hehe silly stupid Trump and all his cronies being so naive and silly ! Do we already forgive him?
He. Was. Literally. Spewing. Russian. Propaganda. From. The. Whitehouse. When. Zelenskyy. Visited.
Also there's no tariffs on the billions of $ imports from Russia. Funny that.
> This is a decapitation strike (Timothy Snyder: Decapitation Strike -- https://archive.is/1xkxK) on America by our enemies
Decapitation Strike seems to be not a general principle that is applying here, but the title of a specific polemic against the Trump administration. Just mentioning for clarity, as it sounded like a general thing warned about in past times that's applicable here.
It makes sense why Trump's family is investing opportunity into crypto like "American Bitcoin" -- they want to separate themselves from the dollar.
I said before that Trump would be the Gorbachev of the USA, if he knows it or not. He is dismantling the system under the disguise of reforming it.
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
There you go... "Deutsche Bank says risk of a dollar confidence crisis" - https://www.reuters.com/markets/currencies/deutsche-bank-say...
When the history is written I think the Citizens United decision might be pegged as the end of the American republic. It allowed endless amounts of dark money including foreign money to pour into US elections.
In any case, I think we're seeing the beginning of the Chinese century.
1) Chicago-school interest groups successfully putting people on courts and in the legislature to all but completely eliminate anti-trust enforcement, starting in the '70s. TL;DR policy used to be that a company holding too much market share was per se bad for the country and that the government could act on it, the shift added more tests making it slower (so, also more expensive) and harder to successfully enforce anti-trust, so much so that we all but stopped doing it.
2) Failure to send Nixon to prison.
3) Loss of the Fairness Doctrine under Reagan.
4) Failure to send a whole list of Reagan's folks (and maybe Reagan) to prison over Iran-Contra and other misdeeds. And those same names keep popping up, making things worse for the '90s and '00s. This was a huge mistake.
5) The Democrats totally surrendering economics policy to a newly farther-right [edit: more accurately, a set of policies championed by a certain set of pro-capital right wing interests—we recently saw this totally overthrown by right-populist policy, when Trump took over the party in 2016, which was the most remarkable development in US party politics since the '80s] Republican view, in the '80s, and adopting basically the same policy. This set the stage for the current backlash, because this all-in neoliberal shit was never popular, but persisted because both parties supported it.
6) Loosened media reach ownership rules in the early '00s.
7) CU
8) Nobody at any point finding a way to dismantle the Heritage Foundation and Federalist Society (if you're wondering "how", it seems the NRA had been doing all sorts of illegal shenanigans for a loooong time—I'd be absolutely floored if these two don't have some big ol' skeletons hanging around)
9) We all watch a coup attempt live on TV (re-watch some of the news footage if your memory is fading, it remains shocking) and then the Biden administration dicked around during the six months or so when it might have been possible to go after the leaders of it.
10) The Internet putting intense pressure on the news media, leading to even more profit-focus than before (and see also the loss of various controls above) with nothing done to try to mitigate that.
11) Extreme centralization of control of the narrative online under a handful of platforms (and the narrative is "whatever gets us more eyeballs", see again #11) and nothing done to fix that.
> This is a decapitation strike [...] on America by our enemies.
From within. Make no mistake: whatever influence has been or is behind, this is entirely driven by USA citizens.
My long term wish is in 40 years, after civil wars/world war and rebuilding efforts, that we discover a better alternative to democracy; we have gone all in on it the past 200+ years and is utterly exploitable in the information age, as the populace gets less informed and more malleable to any malicious actor. It is a pretty fatal problem if the success of your government model depends on citizens not being total idiots.
My anarchist wish is that we figure out that large states have large benefits but also very large downsides. A country as big as many Western countries have simply no business existing, as they are unworkable. How is it realistic to have a functional government for 300 something millions souls and an area the size of the United States?
> A country as big as many Western countries have simply no business existing, as they are unworkable.
I don't know why you would single out western countries when China and India make most of them look like tiny.
I quite like the idea of our debts becoming real. Then we can’t live in the dishonest fantasy where we just print money and ignore debt anymore.
I assure you that the fantasy of this being a band-aid rip-off moment will turn sour when the sore becomes infected and you're living through a depression.
I believe that's Trump's plan. According to the Triffin Dilemma, the source of US budgetary deficits are due to the USD being the world's reserve currency. Once that's not the case, trade should rebalance to a healthy surplus.
> This is Russia's and China's liberation day.
There's no reason to believe that Russia will not continue to be a declining, stumbling, brain-drained backwater hawking a nuclear arsenal over its current borders, Belarus, and The People's Freest and Greatestmost Republic of Donetsk-Luhansk.
There is a somewhat small chance Donetsk-Luhanks escape in the next 5-10 years. Let's see.
> This is a decapitation strike on America by our enemies.
> if foreign governments spend money, they can elect their preferred candidates.
> We institute regime change in other counties, and I see no reason to believe we are immune.
Do we really need such conspiracy theories? There's a much more mundane explanation, which is well-documented:
"Trump’s Love for Tariffs Began in Japan’s ’80s Boom" https://www.nytimes.com/2019/05/15/us/politics/china-trade-d...
"Allies and historians say that his admiration of tariffs is one of his longest and most deeply held policy positions."
In the 1980s, Russia still had a state-run socialist economy, and China was just beginning to grow (albeit quickly) after its 1978 economic reforms. These countries did not purchase Donald Trump's policies.
If you're concerned about foreign influence and foreign money in American elections, you should be much more worried about Australian Rupert Murdoch, for example, who founded Fox News, or South African Elon Musk, who just spent a whopping $250 million to elect Donald Trump and is now personally dismantling the US government (although Musk's money didn't help in the local Wisconsin election), or Israel, which has had one of the most powerful and well-financed lobbies in Washington for decades.
The Pax Americana died during the first week of the Trump administration when he proceeded to turn on practically every single one of US' long standing allies and dissolve NATO for all intents and purposes. All the soft power disappeared right there.
Perhaps the world will be better for it in the end, but it's definitely a turning point. A new world order will emerge and America won't be at the helm.
I'd feel a lot better about it if more countries held values of free speech and democracy. If mainland China were like Taiwan, great. Unfortunately I fear those might just end up being viewed as instruments of America's decline.
I don’t get why it matters what currency people use - all currency is exchangeable, isn’t it? What does it matter if you buy something for dollars or pounds or euros or yen?
If I’m buying 1 barrel of oil for $100, does it matter whether I convert my USD into 150 of this currency or 50 of that currency, according to the current exchange rate, before I pay? I still get 1 barrel of oil, and the seller still received an equivalent to $100 in exchange?
>> Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we make.
This is called Triffin Dilemma- And in many lies at the core of the most basic question every power in history has faced.
That is- You can either be a Geo Economic Super power or a Geo political Super power, You can't be both at the same. You have to chose to be one. China seems to be chosing the former. USA chose to be the latter, but can't seem to be sure about its choices so far.
> Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD
I'm not convinced it works like that. When a foreign country buys something from another foreign country using USD, the seller country then receives that USD. The seller country then use those dollars do buy something else from a third country - unless they have imbalanced trade and keep accumulating the dollars, like China does. But, in general case, there's only a need for a limited number of USD in circulation to serve as "working capital" for all foreign exchange. There's no need to keep getting new dollars, as the old ones get recirculated.
It is not correct that an Asian business doing business with a Italian company first exchanges their currency to USD by selling the US goods then using that USD to complete the transaction.
I agree with you that the current situation in the world really benefits the US and the current policies seem to undermine that.
> It is not correct that an Asian business doing business with a Italian company first exchanges their currency to USD by selling the US goods then using that USD to complete the transaction.
The only way around that is the EUR. Otherwise, most countries have very little connections to one another. Even neighbors will trade with USD and settle in New York.
I think the dollar is around 50% of foreign trade - but anyway I am not arguing against that, I'm saying that it isn't related to trade deficits.
> If trade stops occurring in US Dollar
If I understand Trump correctly he wants a weaker U.S dollar to make American exports more attractive. I'm not sure though he wants it to become THAT weak that its on longer the reserve currency. However, simply abandoning the Dollar will prove quite difficult for many countries because there is no clear alternative (the Euro perhaps but it has a tiny market share currently) and also I'm certain Trump will threaten to remove American military support from anyone who dumps the Dollar - so Europe will probably stay, Australia, Canada, Saudi and quite a few more.
It's not "dumping the dollar" that would be a concern. It's bumping US federal treasury bills (the US debt) which are mostly held by China, the UK, Luxembourg, and Canada. If the latter three just dump their T-bills in retaliation (and do nothing else) the dollar will bottom out. Also, the likely buyer is China. End result: China owns the US and the RMB becomes the new reserve currency.
China would need to remove capital controls to make this work, and that seems unlikely.
The EU would need to issue eurobonds, and that also seems unlikely.
But then this whole decade has been one unlikely thing after another, so who knows?
> and also I'm certain Trump will threaten to remove American military support from anyone who dumps the Dollar - so Europe will probably stay, Australia, Canada, Saudi and quite a few more.
Europe already has the mindset US military support is no longer a given. Europe is already re-arming. I wonder if additional threats by the Trump administration are going to make much of a difference. Even though it will take atleast half a decade to re-arm the main adversary, Russia, is currently in no shape to launch any kind of new offensive against a European country.
> I'm not sure though he wants it to become THAT weak that its on longer the reserve currency.
Intentions aside, with big moves like these the question will be how much control he has over what happens next.
> Europe already has the mindset US military support is no longer a given. Europe is already re-arming.
As you said it will take at least half a decade (which sounds quite optimistic to me actually to go from barely any forces at all to independence) and then there are many more unsolved questions like where does Europe get all its energy from - Russia again? It will have to be a mix of U.S LNG and the rest I suppose from Arab/African countries. Or you could be right , and everyone will dump the USD - I think not though. Europe isn't in good shape as it is, I'm expecting more carefulness going forward.
BTW - I'm not advocating for anything here, I have no personal skin in the game and I think Trump is a horrible bully. I'm just not certain he's a complete idiot yet.
That's just economist flowery language for - If you're willing to work for less, more people would hire you.
The world disagrees with your assessment that this is going to be bad for the dollar. See recent movement of 10Y.
The entirety of this scheme, in its soft and hard power forms, was financed by the parasitic impoverishment of the US populace. Everything the commenters on this site complain about: Runaway inflation, unaffordable housing, extreme financialization, excessive military budget, enrichment of the top, unaffordable healthcare, unjustifiable wars, all of it has partial or total roots in the money printing, artificially low interest rates, colossal trade deficits, and military adventurism that underpin the global US dollar reserve scheme.
I think it apt to boil it down to a binary choice: Either we give up our global empire and allow the multipolar paradigm to emerge for the chance at domestic prosperity, or we grip the iron to the bitter end and force the entire country to become the dystopic open-air homeless cities of the west coast.
Why is it a binary choice? This is just reductive. The idea that we couldn't maintain American hegemony and return more of the benefits of it to the middle/lower classes seems silly.
This is about tearing down a system / world order that a lot of people are angry about, with little thought to how to replace it and make it work for the citizens. The global economy has changed, manufacturing capabilities in the west will never be competitive again for a wide variety of products, and those jobs are not ones that regular Americans want anyway. Just like they don't want the farming jobs that illegal immigrants are doing.
This vision to essentially return America to a idealized view of 1900 is in for a rude awakening.
A wild claim, and then zero explanation as to how it would work, plus the same old tired talking points. If you're trying to convince the populace NOT to democratically give up the global empire, this is a poor attempt.
"The dystopic open-air homeless cities of the west coast"? Hyperbolic much?
My on-the-ground experience visiting Portland, Seattle, and LA in just the last few years showed me all I needed to know. I'm not being hyperbolic. Compared to the rest of the country, it's not even a contest.
>The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Its also the golden prize for America's victims, it has to be said.
We can't keep propping up the USA as a moral position to aspire to, when that state continually gets away with mass murder and human rights violations beyond the scale of any other peer.
The USA is the worlds #1 funder of terrorism, and violator of international law on the subject of war.
So its not just about 'enemies'. Its really about victims.
I certainly wont disagree with the US not representing any moral heights especially now, however do you have sources for the US being particularly egregious in relation to its peers in its actions?
Anyone who has been paying attention to the body count since the illegal invasion of Iraq in 2003 can tell you that the rest of the world has a long, long way to go to catch up with the atrocities committed by the American people across the globe, from Iraq to Afghanistan to Syria and Libya, Pakistan and Somalia and Yemen (which the USA and its partners were mass-murdering for 15 years already before the current conflict), and now .. Gaza .. for which the American people are very definitely responsible as major funders and supporters of that particularly vile act of mass murder.
But if you want to inform yourself, follow https://airwars.org/ and look for reports on the matter by trusted sources, such as the Physicians for Social Responsibility, which has produced casualty reports for all of America's illegal, heinously irresponsible wars.
This report for example, from 2015, demonstrated the magnitude and extent of the crimes committed by the American people in Iraq alone - and things have gotten a lot, lot worse since then:
https://psr.org/resources/body-count/
Russia is the number one war criminal in the world. Of course now that Russia owns American leadership, we can partially blame them for American human rights abuses.
The number of civilian deaths in Ukraine doesn't come close to the number of civilian deaths in Iraq, Afghanistan and Palestine caused by the US.
That is correct, and this is a terrifying fact to any American nationalist who believes their country can do no wrong, as evidenced by the downvotes of an absolute truth.
>Russia is the number one war criminal in the world.
This is absolutely incorrect by sheer statistics, alone. Anyone making this claim is simply utterly ignorant of the actual statistics, and I challenge you to overcome that personal limitation.
Russia has a long, long way to go to catch up to the +million murders done in Iraq, alone - where the USA has murdered 5% of Iraqs population with its wars (including the continuing deformed baby deaths as a result of the widespread distribution of depleted uranium all over Iraq).
The USA is a major funder and supporter of the mass murder of Gaza - Gaza is just another Mosul, just another Raqqa .. Israel would not be getting away with mass murder if the USA hadn't set the precedent for war crimes and mass murder in multiple other theatres. Russia, too, follows the USA's lead and uses the USA's own prior inculpability for multiple illegal wars to justify its actions.
This is why it is just so dangerous for citizens to allow their nations to commit war crimes and crimes against humanity, and allow those politicians responsible for such acts to go unpunished. This is why it is so irresponsible for the American people to allow their nation to degrade the capabilities of the International Criminal Court, and to fail to prosecute their own war criminals.
Because, if you let your nation do it, you are giving carte blanche to any other nation in the world to do it too. And that is precisely why states such as Russia and Israel are wilfully committing mass murder - under the cover of the prior unprosecuted crimes of extraordinary magnitude committed by the American people and their representatives.
If you want to do something effective about Russia and Israel, Americans, you must first prosecute your own war criminals and establish the international precedent for those prosecutions which can be used against Russian and Israeli war criminals, also. Leaving your own war criminals unpunished gives a free ride to all other nations, who will gleefully follow you into the madness - and have done so now, for 25 years of the utterly atrocious "war on terror", in which the American people gave themselves the ultimate right to destroy any state their callous rulling class - factually fundamentalist racists - decides is inferior to their own.
I agree that the US bears significant responsibility for the ~5% civilian deaths in Iraq. These were through:
1) Direct combat fatalities (~15% of casualties)
2) Failing to stabilize Iraq post-invasion
3) Enabling conditions for prolonged conflict
However, attributing all excess deaths solely to the US oversimplifies the role of insurgent groups, regional actors, and preexisting sectarian tensions. The invasion’s destabilizing effects created a chain reaction with shared accountability.
Furthermore, calling it murder is disingenuous. Murder requires both premeditation and deliberate intent.
A lot of people fundamentally misunderstand why trade happens in USD and what creates demand for USD.
For example, you hear people say that the US invaded Iraq because Iraq was threatening to denominate oil sales in the euro. This particular conspiracy theory used to be more popular ~20 years ago for obvious reasons. Even if true, it's absolutely no threat to the petrodollar. You could sell oil in euros and what would most sellers then do? Immediately convert those euros into USD.
Trade occurs in USD because there's demand for USD not the other way around.
What really underpins the USD is the US military and the US still being the largest economy. So the USD will remain the global reserve currency up until the US collapses and/or another power rises to displace it, which really means the same thing at this point. That might ultimately be China but it's not yet and the Chinese yuan is wholly unsuitable to be a global reserve currency currently.
> until the US collapses and/or another power rises to displace it, which really means the same thing at this point. That might ultimately be China but it's not yet
I imagine the Euro is a contender also even though the EU it's not one homogenous power.
> and the Chinese yuan is wholly unsuitable to be a global reserve currency currently.
Curious why you say this? I was considering holding some EUR and CNY in the event that one of those becomes a replacement for USD
The euro isn't a contender for two main reasons:
1. Europe is still dependent upon the US military and, as a consequence, is beholden to US foreign policy; and
2. No unified fiscal policy.
As for the unsuitability of the yuan, there are several reasons:
1. The yuan was once pegged to the US dollar. It's now pegged to a basket of currencies instead. This, by definition, makes China a currency manipulator because you wouldn't need to peg the currency otherwise;
2. The yuan is undervalued by this manipulation. It should really be more expensive, making China's exports more expensive. China does this to maintain their export competitiveness. If anything, increased demand for the yuan would be unwelcome as it would increase the pressure to appreciate the yuan;
3. China runs a trade surplus. It's basically inevitable that the country with the reserve currency will run a deficit;
4. The US running a government deficit is actually kind of a good thing for maintaining a reserve currency. China, for example, holds trillions in US government bonds. Do you really think they want to upset that apple cart?
The Trump admin wants to devalue the dollar substantially, enact protectionism and maintain its reserve status. I can see them succeed with the latter two, but with these actions, the world has no choice but to move away from the USD as the reserve currency. It will take many years, but whatever replaces it certainly won't be to the US's advantage.
>The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
At this point, who is *not* America's enemy?
Maybe Russia, that's the only country which has not been slapped with tariffs. Apart from Russia, there are nuances. There are peaceful enemies like the EU, Canada, Australia etc. and there are threatening enemies like the Houthis or Iran.
You should read the book lol
My take on all this is that everyone seems focused on the U.S. dollar’s dominance, the empire, trade deficits, and exchange rates. And sure, there’s some validity to that, but the real issue, or really the real goal, is getting people back to work.
You might not see it, and maybe I don’t fully see it either, but as office workers, bureaucrats, and technologists staring at screens all day, we’ve lost sight of the fact that America no longer produces like it used to. Yes, there are still people out there working with their hands, feeding the country, and running small industries. But broadly speaking, the U.S. relies heavily on other countries for complex manufacturing — for actual building. Shipbuilding is just one obvious example. A lot of critical industries have withered to the point where they can't even meet domestic demand, let alone compete globally. Meanwhile, other countries are pushing forward in tech, producing better, more efficient, more productive products — and pulling ahead.
It’s not happening all at once. It’s a slow decay. Generational knowledge industrial skills, trades, machinists are all fading. And when those go, the backbone of resilience and self-sufficiency starts to collapse. A nation that can’t produce can’t stand. Export power becomes a dream.
And I think part of the issue is that we’ve become lazy. People don’t want to work anymore — they want things handed to them. Entitlements, bonuses, luxury homes, multiple cars, the works. But someone has to build all that. Someone has to maintain the food supply. Someone has to assemble the vehicles. Someone has to keep production alive. Yes, technology can help fill gaps, and we’ve done amazing things — and still do — but America’s edge in tech? That’s slipping away. China has surpassed the U.S. in key areas of advanced technologies, auto manufacturing, aerospace, and absolutely obliterating in shipbuilding. U.S. industry? Ashes in many places.
So what’s the answer? Unfortunately, hardship. Nobody likes to say it, but raising prices and tightening the belt forces people to make hard choices. And when that happens, the jobs that matter won’t be office jobs or desk jobs — they’ll be builders, machinists, welders, factory workers. Producers. And those jobs will start commanding the wages. People who’ve been unemployed or living on subsidies will be pushed — or pulled — back into that kind of work. Slowly, painfully, maybe, but steadily. And maybe, just maybe, we’ll rebuild that base. Maybe industry will return. Maybe factories and production will grow again.
That’s the end goal here; even if we don’t like how it’s being done. Even if it’s painful. Even if it doesn’t work the way it’s intended. Because maybe we’re not as strong as we think we are. Maybe we fail. It’s happened before — look at the USSR collapse. It was a fake economy built on fake production and apathy. They endured 20 years of hardship, and they’re still trying to catch up.
So yeah, that’s where I think we’re headed. Is Trump the guy to do it? He’s doing it. Someone had to. Is it the right way? I don’t know. Is it going to work? No clue. Will we succeed? Who knows. Or maybe we just keep punting the problem further down the road; business as usual — until it breaks completely.
But either way, the path forward is either a slow crumble followed by a rebuild, or a brutal reset with the hope of rebuilding something stronger on the other side.
That’s just my two cents.
Not one single job was moved offshore by a foreign country. Every single one was moved offshore by an American business looking to reduce costs and increase the quarterly bottom line.
Now they're run out of jobs to move offshore and they're looking to the government for the next handout. This time, it's by adding a new tax on Americans on what they buy from overseas.
The people to blame for the economic problems are rich Americans, and the solution is to increase taxes on poor Americans, but the story is that the problem is foreign devils and the solution is to make them pay. The misdirection is working and the magic trick is successful.
> Not one single job was moved offshore by a foreign country. Every single one was moved offshore by an American business looking to reduce costs and increase the quarterly bottom line.
That’s something I haven’t thought about. Is there a 25% tariff on importing knowledge work? In the consulting world that would make onshore teams more competitive. Well you’d need about a 500% tariff to make it close.
> Every single one was moved offshore by an American business looking to reduce costs and increase the quarterly bottom line.
> This time, it's by adding a new tax on Americans on what they buy from overseas.
If adding/increasing tax on product oversees increases the costs of said products, wouldn't American business look to reduce cost by moving back to America?
If I understand correctly that's what Trump is trying to do.
Right but American wages and worker conditions will also need to fall drastically to make it competitive with Asia post tariffs.
Millions of Americans returning to shit tier factory conditions is not a victory.
Yes, this is the theory. Also to return manufacturing to the US, for jobs but also for national security. If a major war breaks out, which is more likely than in the past 2 decades, we can't effectively fight without a strong manufacturing base.
US businesses who offshored all the US manufacturing jobs now have their day of reckoning. The government can't really say, "move your jobs back," without some sort of constitutional change, they can only incentivize businesses do so, ergo tariffs on offshore labor / goods.
"A nation that can’t produce [physical goods] can’t stand."
Based on what evidence?
"And I think part of the issue is that we’ve become lazy. People don’t want to work anymore"
Americans work more hours per week than a majority of countries. Low-paying factory jobs are off-shored because they're low-paying.
"So what’s the answer? Unfortunately, hardship."
You probably should do more research on the subject, and successful onshoring regimes that have been implemented by other countries. If you, for e.g., determine that America needs to produce a certain quantity of semi-conductors to insulate from various natsec risks, there are ways to tackle that problem and usually they don't involve hoping an onshore industry magically appears because you've haphazardly shivved trade across the board.
> And I think part of the issue is that we’ve become lazy. People don’t want to work anymore — they want things handed to them. Entitlements, bonuses, luxury homes, multiple cars, the works. But someone has to build all that. Someone has to maintain the food supply. Someone has to assemble the vehicles. Someone has to keep production alive. Yes, technology can help fill gaps, and we’ve done amazing things — and still do — but America’s edge in tech? That’s slipping away. China has surpassed the U.S. in key areas of advanced technologies, auto manufacturing, aerospace, and absolutely obliterating in shipbuilding. U.S. industry? Ashes in many places.
It has nothing to do with "people being lazy" and everything to do with poorly-run companies combined with globalization.
This started in the 70s/80s with American auto manufacturers. The Japanese cars were much more fuel efficient and a much more robust build. The line worker wasn't responsible for that, management is.
Then the global free trade / NAFTA in the 90s. Ross Perot was as popular as he was, because a big segment of the US population saw this coming.
That all seems built on some romantic notion that a job making physical objects ("working with their hands") is fundamentally better than a job providing a service ("staring at screens"). But it's not obvious there is a lot of factual support for the idea, either on the level of individual jobs or the economy as a whole. You could certainly use protectionist barriers or subsidies to try to force industries like ship building back to the US, but would the US really be economically better off overall if you did so?
That said, it's really irrelevant since Trump's current approach isn't looking to support specific industries or outcomes, it's just across the board tariffs on everything. We're not just going to have to build our own ships or cars, but grow our own coffee and bananas. Targeted, strategic tariffs and subsidies on the industries we want to support could be arguable, but this is not that.
The US can use internal policies to support the industries and skills you mentioned. Tariffs as implemented, and greatly damaging longstanding relationships with allies, will have the opposite effect. The existing lead in services will be lost, consumption will drop, and the increase in production of goods due to tariffs won't offset it. I would recommend you read the outcome of the Smoot Hawley tariffs.
I hate this mindset that Americans are lazy, they are usually some of the hardest working people in the globe. The wealthy are greedy, and wealth and power continue to concentrate at the top while infrastructure, working conditions and public services crumble. I don't fault anyone for not wanting to contribute to that, quite the opposite. I don't see how the jobs you mentioned are going to start commanding better wages when everyone has to rush to do them because there are no more options.
Yes... and no. Having own currency as a global reserve currency has its disadvantages too. For instance it keeps value of the currency high, what makes whole USA production noncompetitive. USA exports two things: internet services (all those Googles, Facebooks, etc.) and military equipment.
The problem is that internet services are making rich small group of people (owners, software engineers), military production is a niche, so there is a big group of people who lose jobs, are on low paying positions, as being, say, a car factory worker, does not bring enough money. Those people voted Trump, so Trump is trying to solve their issue by bringing back production back to USA, and the way to do this is twofold: make USD weaker and make foreign goods more expensive.
All this was not a problem till early '00, when USA didn't have much competition (basically Western Europe and Japan), but the times has changed and USA is seeing that. BTW this is not a Trump thing, Obama, Biden administrations were also noticing that and taking actions, like (in)famous Obama reset with Russia to be able to expand trade over there. "Pivot" to Asia - failed Biden project of Indo-Pacific, that was supposed to convince Vietnam and others to follow USA job regulations, what would make their products more expensive. Surprisingly, they told Biden to go away...
Another thing is that for years USA was in a sense donating European industry, for instance taxes on European cars in USA were 2%, while taxes on American cars in Europe (that is European Union) were 10%. Trump puts this to an end.
>Another thing is that for years USA was in a sense donating European industry,
Sure and Europe is not at all donating to US arms industry or to US tech sector? Europe is pretty liberal about letting US dominate those domains inside the EU, without opposing that. Plus in geopolitics it simply follows the US, that's sort of been the deal.
Seems like this US leadership thinks it can both have its cake and eat it.
Tech giants have no competition in Europe and no capital to do so. In some ways, what Trump is doing is a call to arms for the EU to kick their economies into shape. We've been stuck in 0 growth for years, the UK is in a 0 growth trap since the GFC.
> For instance it keeps value of the currency high, what makes whole USA production noncompetitive.
But devaluation of the currency will hurt people who have savings in this currency, and cause higher inflation, right? On the other hand, paying back loans and mortgages becomes much easier.
More people are in debt than have savings, the government itself included. Populism (of both left and right varieties) is surely associated with inflation.
You conveniently omitted the 25% tax on European light trucks and SUVs in the US. Which is the biggest car market segment.
The US has levied a 25% tax on imported light trucks since 1964, and 2.5% on passenger cars. The EU levies a 10% import tax on all cars from the US.
It is a self inflicted damage. Do not blame anybody else that Trump and the people that chose him. Good luck Americans.
There is no American hegemony in this current day and age. Probably dead like 15 years ago.
Say what you well regarding Trump, he understands this.
Trump is a smart man to spot problems, but he surely didn't know how to do it in a way that doesn't lead to self harm. He crazes for a bombastic firework that demands for all and any attention.
The US version of capitalistic economy has driven its internal inequality to the point the political system can no longer sustain it, while in the meantime, doesn't have an established social safe net, as major European countries have. So the populace elected Trump to root it up.
It is absurd, it is ridiculous, but deep down it is logical. Weird and dangerous time ahead.
I can't imagine any person having listened to Trump even once would in good faith claim he is a smart man
If he isn't a smart man, he can't be US president TWICE. Or being book smart is irrelevant. He didn't talk the way the political class prefers for sure, but it doesn't matter.
I judge things by outcomes, even Trump doesn't lack any credentials.
Rats and cockroaches are great survivors; neither are particularly smart.
The analogy is good but you picked up the wrong example. Rats are quite intelligent https://www.burgesspetcare.com/blog/rats/how-intelligent-are...
> If he isn't a smart man, he can't be US president TWICE.
or, maybe those who voted for him are dumber than him!!
Getting a job, aka campaigning in elections, is very different from knowing how to do the job! During the 2024 campaign, he told everyone whatever they wanted to hear—cheap prices on day 1, a reduction in inflation, home loans, and the end of wars. He fooled and lied to everyone. Burnt by high prices, people trusted him. Sure, he could be called "smart" to con the voters, but still too DUMB to understand how the government works especially in the US. Every day, he picks a new fight with someone :-)
Trump isn't smart, he is an idiot, but an useful tool to others so they made sure he gets elected a second time.
Yep, people behind Trump are the ones we should pay attention to. They are the ones with long term plans.
"You don't need to pass an IQ test to be in the Senate."
This is why I don't get why my EU people are attacking Trump - he singlehandedly gave Europe political capital to rebuild itself as an independent player on the international stage. He created an environment where tighter EU integration might take precedence over petty interest squabbles. For example in what other scenario would Germany making massive investments in military be politically acceptable ? Even talking about military on EU level ?
Framing this as purely a win for China and Russia is very partisan, this has potential for all non-US countries to get away from under US thumb long term and at least for that we should be grateful to mr. Trump, from his foreign policy it seems like he is not interested in those games as he views them a net loss for US.
And the Greenland situation is showing us exactly what happens when you position yourself as leech on US military/NATO.
I don't think anyone has a problem with europe being a more independent player, it becoming a necessity is what people are upset about. I'd rather have germany make massive investments in infrastructure and health reform than its military.
This line of thinking is exactly what got us into this situation. If you want to outsource your defense how can you be surprised when you get ignored in the Ukraine discussions and when the US feels free to just annex parts of your territory. What's your recourse ?
The 'outsourcing' has always been for the benefit of US defence corporations.
There were a number of occasions in the 50s to 70s when the US stepped in directly to neuter world-leading aerospace projects in the UK, forcing the UK to buy from the US instead.
Virtually all of the cost of the UK's Trident deterrent goes to the US.
And it would be unwise to write off the EU, especially now there's a mass exodus of researchers from the US.
>There were a number of occasions in the 50s to 70s when the US stepped in directly to neuter world-leading aerospace projects in the UK, forcing the UK to buy from the US instead.
Exactly, and with the recent moves Trump administration is directly calling out EU to arm - so a good development in my book.
It’s weirder than this though. Why would Europe need to rearm? If it’s to defend against potential enemies, why is the US cosying up with those same countries?
> If you want to outsource your defense
It's not only that
Outsource defense to USA
Outsource production to China
Make yourself critically dependent on raw materials from Russia.
Exactly Europe is on a downward spiral into irrelevancy - Trump moves actually give the idea of a relevant EU space.
The same arguments can be made for free trade, and i think most would agree that the world is better off with international trade than without.
There is no free trade, EU was tariff heavy and protectionist since forever, in fact that's probably the primary motivator for creating it - a single European market where they get to control the imports. Trump is brash and escalating it suddenly but this game is not new.
I'm all in favor of Europe merging more tightly, scale brings a lot of benefits - moves Trump is making are forcing EU members in this direction where they otherwise wouldn't go so easily for petty interests.
> There is no free trade, EU was tariff heavy and protectionist since forever
To add to this as an EU citizen, try and buy any good from the US as a private EU citizen: not only will you be visited with a bill for 25 percent of what you paid, you will also pay a truly staggering "handling fee" to essentially state-sponsored grifters (here in Denmark called "Told") that will ensure you never buy anything from the US again.
The US had de minimis allowing US citizens to buy most anything they could imagine from abroad without additional fees on import, which Trump has now thrown out the window, but I can't help but feel we're getting our just desserts here.
> This line of thinking is exactly what got us into this situation.
This is exactly right and it is insane that people don't see this. The dysfunction that Pax Americana has inflicted upon Europe must go away. A continent that cannot defend itself is not a sovereign continent.
>This is why I don't get why my EU people are attacking Trump - he singlehandedly gave Europe political capital to rebuild itself as an independent player on the international stage.
What a completely baffling statement. It's like saying the left arm should be grateful that the right arm cut itself off of the body because now the left arm has to strengthen itself. Sabotaging the alliance system that has prevailed since World War II leaving both Europe and the United States more dangerously exposed and compromising the safety of our shared democratic values that were once the bedrock of our alliance.
It's so obviously catastrophic that I can't fathom how someone would try to portray this as a win other than out of an appetite for a JV debate team sophistry. Europe is banding together not out of positive diplomatic achievements, but in the same sense that they would band together if a meteor is headed toward Earth and you're asking us to thank the meteor.
Having a lapdog status since WW2 is an alliance ?
EU and US are not two hands of one body.
Some say many EU politicians are compromised by Russia and China...
I know squabbling is the norm for European countries but I feel there are some recent big own goals. Crazy how we can't get our crap together in such times. (Crazy opinion: UK needs to be in the EU again to be the grown up in the trio of UK, France and Germany)
The UK will need a lot of time to be seen again as a grown-up, after electing a string of buffoons and cutting off its nose to spite its face. Even though Starmer looks more stable, a large part of that look is due to his opposition being in complete chaos and functionally useless.
> I feel there are some recent big own goals
I'm not sure I know what you mean. Do you mind elaborating?
Because they would prefer functional pro democratic world rather then constant struggle for domination with fascists from Russia and USA at the same time. EU people don't want to become poorer or suffer, not even to "own the USA".
Europeans you talk about see Russia as a threat. They are not fascists themselves, so Germany having to arm itself more because Russia just got new ally is not a good news.
> EU people don't want to become poorer or suffer
So when you get other people paying your defense bill, don't be surprised when your territory gets annexed and you get left out of the conversation on the Ukraine issue ?
Do you think that’s the motivation, or the new relationship with Russia? Why are new tariffs not applicable to Russia, Belarus and North Korea?
Probably to give Russia concessions in the Ukraine negotiations.
In my opinion Trump is trying to do everything he said he would in his campaign, he is trying to get the war in Ukraine over ASAP and be the peace bringer.
Even in the leaked Vance messages you saw his view on Europe, which I have to agree with in that case. They feel like they are getting screwed in the EU-US relations and they are looking to pull support, ignoring what the OP said about them being the reserve currency/global police. I guess they see that as a bad deal.
I think big picture Trump sees Russia as a regional player and China as US main rival so he doesn't really care about pushing Russia or "winning" in Ukraine. The minerals deal looks like he wants to show he got something for the money spent compared to Biden.
Well, EU did paid and supported Ukraine. EU are not the ones who allied themselves with Russia and tried to bully Ukraine into giving them minerals for nothing in return. America is the only country that took others in NATO into war under article 5. Ukraine was also left out of that conversation, this was just Trump being openly pro-Russia.
None of that has anything to do with tariffs.
>EU are not the ones who allied themselves with Russia
Need I remind you that Angela Merkel set the stage for all these Russia moves by building german "green transition" on Russian "green gas" ?
From what I'm seeing in Trump moves he doesn't care about Ukraine or Russia much other than showing his supporters how he ended the war that "Biden let happen" according to him. And the minerals deal to show he got their money back that Biden was giving away for free. Not really seeing any Russia alliance other than not buying into the Ukraines vision for the outcome of the war.
I did not said they are perfect and prescient and saint. They are not like Trump.
Trump who openly admires Putin. His latest moves were literally trying to steal from Ukraine with nothing in return. Who even declared America free from Russian meddling.
They are just not like the guy who tried to extort the Ukraine to hurt his political ennemies, they are not openly praising Putin, they are not giving concessions to Putin ... while lying on TV in front of Ukrainian president ... and then having complete meltdown when he factually corrects you
Like common ... Merkel and Trump are here completely uncomparable.
Because it's a bit like someone telling you that they're going to burn your house down so you can claim on the insurance and you'll be better off.
It might be technically true in some circumstances, but I still don't want some jackass burning my house down thanks, I like my house. That's why I live there.
Because the EU does NOT want Germany to arm, remember what happened the last couple of times ?
Both the French and the Poles are urging Germany to rearm. As well as the EU, actually, through both the commission and the parliament. The whole "European countries are afraid of Germany invading" argument is not really a thing.
For context: the French and the German have been alternatively at war and allies since the times of Clovis and Charlemagne, a millenium before Bismark made modern Germany a thing (in occupied Versailles, in what was perfectly calibrated to be a complete French humiliation). And the Poles were on the wrong side of brutal occupation and a genocide during WWII. So both countries would have good reasons to be very skeptical of a powerful Germany.
> the EU does NOT want Germany to arm
The EU is not worried about Germany re-arming, as the world has changed dramatically since WW2 and we have much stronger bonds in Europe than we did when Nazi Germany was around.
I'm not a history buff, are you alluding to anything?
Last century there was the big two, World War One and World War Two. If you go back further it’s more complicated, but the short answer is that Germanic states got into wars with their neighbours a lot. The Wikipedia article has categories.
https://en.m.wikipedia.org/wiki/List_of_wars_involving_Germa...
https://historyguy.com/How_Many_Wars_Were_Fought_Between_Fra...
To be fair, everyone was warring. War was normal
https://en.wikipedia.org/wiki/List_of_wars_involving_the_Uni...
It was normal and Germany/Prussia was good at it.
Oh wow, I had no idea! I recommend googling "Adolf Hitler" also.
This is so stupid.
The US rearmed Germany immediately after WW2 to be a buffer against an invading USSR.
We literally put Nazis back into command as long as they were willing to fight the Russians again.
Nobody in NATO was ever afraid of a militarized Germany, except maybe Germans.
The real traitor is Biden who handed the presidency to Trump and only cared about covering himself and his family asses. I think that was the point where you realize the democrats have just given up and did their part of selling the country. Some people must be now moving Bitcoin, Gold and other valuables out of the country before the big unveiling kinda like what happened with the soviet union.
I have made a post about this after the election that got flagged: https://news.ycombinator.com/item?id=42755700
If you are still unconvinced that big fundamental changes are happening: https://goldprice.org/
> The golden prize for America's enemies is to remove the US dollar as a global reserve currency.
Why is the reserve dollar good for Americans? Arguments in favor of reserve currency status make the U.S. economy seem utterly fake. It’s as if the world is paying us to maintain borders frozen in 1945.
It stops them from having to address their national debt, has allowed for incredible spending and the arguably pushed humanity forward with the wonderful inventions. Without it, it will be interesting to see how the future unfolds.
> Ray Dalio's Principles for Dealing with the Changing World Order feels prescient
Maybe Dalio is right, but a lot of his data was sketchy [1].
My personal theory is that Dalio somehow benefits from saying nice things about the Chinese regime.
[1]: https://youtu.be/s1iv0q_SW3E
What most people don’t see is that we are basically under “shadow austerity” to correct for the not so hyperinflation we saw post COVID.
It is a combination of post WW2 Britain (China is the US in that analogy) - this helps to explain the Canada and Greenland issue; and Volcker era stagflation economics. It will not get any better in the short term, but there is likely to be substantial growth in the long term as a result.
What that means is the fed likely won’t reduce rates, and it may reduce its rate decrease to 1 this year, if even that. It is entirely possible the rate doesn’t come down at all.
Expect Layoffs to come, as the fed doesn’t seem to care about unemployment as its target is on inflation. Many zirp era businesses and funds will fail. Less cereal and eggs for the same dollar.
I am really hoping we don’t start to de-anchor from 2% inflation as a result of all this. I wonder how various US infrastructure projects can and will be financed. Reduction in entitlements. Possibly some type of mandate to hold treasuries.
Are we surprised? If anyone watched the presidential debates VP Kamala Harris told us about this.
From September 2024:
"What Goldman Sachs has said is that Donald Trump's plan would make the economy worse. Mine would strengthen the economy. What the Wharton School has said is Donald Trump's plan would actually explode the deficit. Sixteen Nobel laureates have described his economic plan as something that would increase inflation and by the middle of next year would invite a recession."
Emphasis on that last line:
btw the US Congress can stop this anytime they want.Inheriting a strong economy beating all expectations that was just about to end its fight with inflation and burning it all away in a pump and dump crypto scheme fashion, while doing nothing (or even working to expand) unprecedented wealth inequality. Good luck, going to need it. The world reserve currency status is faltering, and so will the benefits it allowed US economy.
The economy has not been 'strong' since at least 2019.
CPI is a joke that just subs out everything when it gets more expensive. Oh food is only up 3%, let's ignore we were pricing beef and eggs and now we're subbing in chicken and tofu.
Inflation has been borderline runaway from 2019-2024. Just ask anyone who isn't rich.
That's the part where "unprecedented wealth inequality" comes in. By most metrics, 2024 was an excellent year and the US was far ahead other developed countries [0] in growth, labor market, consumer spending, net household wealth, and much more; the fundamentals were solid and no figures could point to a major economic downturn at that point, certainly not in a predictable manner. In 2025 the 90th percentile accounts for over half all consumer spending, the median household hasn't reaped the same benefits high-income, high-spending ones have. There is no indication this will change, and may get worse with the current and proposed policies.
0. https://www.ft.com/content/1201f834-6407-4bb5-ac9d-18496ec29...
> just about to end its fight with inflation
Inflation will decline only when the deficit declines.
If there is a deficit at all. Looking at the monetary flows it seems most of the deficit outflows where just flowing back into the US through the stock market.
Interest is paid on the deficit, and once the interest gets large enough, there's a runaway doom loop.
It depends on who is spending. If American consumers or the American government borrow to consume, what you say is right.
But it was US monetary policy for decades now that the deficit doesn't really matter, because the world trusts the US and loans the money back.
> If American consumers or the American government borrow to consume, what you say is right
Consumer borrowing is paid back, so it does not contribute to inflation. Government just issues more debt to pay off the debt, and that leads to collapse.
> US monetary policy for decades now that the deficit doesn't really matter
AKA kicking the can down the road. The bill will come due.
The US economy was not strong in 2024. Cost of living was literally the most important election issue, and it is what decided the election undoubtedly.
It's partially because elites said 'the economy is great! look at my stocks!' while consumer goods had increased in price by 100% or more in only 4 years.
Agree with everything you wrote.
It’s almost like Trump and his administration are trying to purposely hurt America.
I don’t want to be melodramatic, but if Russia had a ultra long-term plan to hurt America, it might look like this.
Here we go.
My dumb ass invested money in usa stocks when trump got elected because trump is pro business, right ? Should have invested in Asia, today china is the usa from 40 year ago.
It doesn’t matter where you invested. Everyone’s taking a haircut.
Not EU weapons manufacturing and defence industry.
China would be very risky. Trump in his previous term declared a trade war with china, and there is every reason to think he would again. China is also make geopolitical moves that give a significant chance of war in SE asia. I wouldn't invest there.
Now investing in Brazil or something might make sense.
Notably none of Russia, Belorussia or North Korea.
Really starting to look like the US senior leadership is compromised
Yeah cause those are already sanctioned...
All of those already have heavy sanctions. Additional tariffs do nothing since it's already effectively illegal to do business with them.
There are several billions in trade with Russia. Higher than Ukraine currently, and Ukraine got a 10% tarrif.
Time for the EU to float the idea of the PetroEuro.
Side concern: how impactful must the tarrifs be to make a noticable dent in global trend, and a noticable dent on climate change ?
(I mean, it would not be noticed by the USA anymore, since they're not into that whole "science" stuff, but I heard that Europeans have learned how to make a couple satellites on the side.)
The way I see it, it is more like a very-high initial negotiation position. From here on, each country will be dealt with individually. You accept our terms and get 5% discount on tariff ! Every country has a set of red lines. Fewer the red lines better they will be placed in one-to-one "trade agreements".
EDIT: Someone from white-house explicitly declined tariff to be a negotiation. Next few days will be interesting.
Maybe if the US would clean up their production to what people actually want to buy it would help.
EU does not just randomly target US products. No EU company would be allowed to sell food with the same processes (GMO, prohibited additives, medication traces, ...)
The US is just running into these restrictions more than others because of their (lack of) health and safety standards being at odds with other markets.
So, if the tarrifs lead to the world actually being able to buy something produced in the US with the dollars they were forced to accept, something real besides war equipment and (stale) IP bits, the problem would sort itself.
At least the EU has discovered 'sovereignty', after ignoring it to the hilt for the last 55 years. Ringing up the concept even a year ago was at best met with a shrug and more often with a 'conspiracy theory' label. Sadly I don't even think they mean it, but I would be pleasantly surprised.
Damn it was hard looking at my portfolio today... I hope thing's change in the long run though
By chance could it be that US is still angry at those British tea tariffs?
Am I wrong to intuit that tariffs against everyone is less bad than tariffs against a few, because now the rest of the world has even more potentially willing replacement trade partners?
Trump really thinks America is in the 1950's. He thinks people want to work at factories doing manual labor. He doesn't understand that we DON'T want to work at factories. Americans like our plush corporate office jobs building intellectual property. We aren't oxen doing physical labor.
And we designed it that way. We pay thousands of dollars to each citizen in our public schools to teach them calculus, literature, world history, and science, so that they DON'T work at factories doing manual labor like we were oxen. We're supposed to be doing more valuable jobs in intellectual property and services.
It's going to be hard lesson to be learned by Trump and his working class supporters when the inflation hits them because our economy doesn't have any workers that want to work at factories, but it'll have to be a lesson they learn the hard way.
The correct economy is to let people do labor they're best at. If a foreigner can make a shirt cheaper than an American can, LET THEM. Our economy is already taken by the people that design the shirts.
We have plenty of workers that want that kind of work, we're just deporting a good chunk of them.
We have less than zero workers who want to do the physical labor of factory jobs for prices paid to workers in places like China and Vietnam.
Especially given the luxury lifestyle that even the poorest suburban 20-something American male lives in today. They get to play video games all day and watch any movie at home with any food from around the world that can show up at their doorstep of their parents home at a moments notice. The aristocrats of 150 years ago could NEVER imagine such luxuries.
And Trump expects our population of suburban aristocrats to work hard at factories...
Yes. Outsource the manufacturing. We have important intellectual work to do like optimizing ad sales.
Hey now, we're also using AI to automate debt collection phone calls.
He has repeatedly invoked the 1890s actually. Big fan of McKinley.
> It's going to be hard lesson to be learned by Trump and his working class supporters
They won’t learn any lessons.
The impacts will be felt years from now, when the Democrat are in power, and… you know the rest.
Well, the unfortunate beauty of touching the incredibly hot stove of Tariffs is that the pain is immediate and obvious. So assuming that these tariffs go through as is, we'll immediately launch into one of the worst recessions we've seen with price increases unlike anything Americans are used to.
A tariff of some +x% doesn’t cause a +x% increase in retail prices. The ratio is somewhere between 2:1 and 10:1 for most products, depending on the markup, local value add, taxes, etc…
The real damage is business uncertainty, inefficient capital allocation, etc… all of which takes years to fully impact the economy.
Uncertainty will be priced into the price of things moving forward, I’ve already started adding 10-15% to my BoM over today’s prices to account for the possibility of future price increases and I’m definitely not the only one.
This is only true in the ordinary situation of using tariffs. Such as targeting specific markets or exports in order to bolster the local market.
Tariffs on literally everything have an immediate outsized impact as businesses need to rapidly readjust and renegotiate prices on everything. Not only that but there's the second order effects too, such as Trump's interactions with Canada resulting in destroying tourist and seasonal travel from up north to the border states.
Pretty sure the broadcast plan as been to make more Americans oxen for the cart…
These tariffs are a disaster, but this is is quite a neoliberal take. So if we aren't the oxen, who is? Vietnam? And that's morally acceptable?
Yes. They - or other poor countries - are. And it's their responsibility to grow their citizenry in a neoliberal world. Economics doesn't care about liberal concern tools.
China eliminated poverty through neoliberalism. The rest of the world can, too. This is the benefit of neoliberalism: it lifts the world out of poverty through free trade and self-selected efficiency.
China didnt eliminate poverty, it merely shifted dirty work to other poor countries (other SE asian countries). Just like the US did. Just like all countries will do until they run out of poor countries and the pyramid scheme of globalization collapses.
Not everyone gets to have a cushy intellectual office job. Somebody has to do the coal mining.
I did not know that having most of your industries run in part by government under five years planning was a neoliberal method.
It exactly is. Neoliberalism is a mix of free market policies and government planning and intervention when that fails.
Oh, you didn't think neoliberalism was free-market libertarianism, did you? If it was that, it would be called that already.
Capitalism needs justification. Neoliberalism is an awful policy. Do I need to school you on the history of US foreign intervention?
You think eliminating poverty is an awful policy?
What you just did is called a straw man.
Besides, many countries are not poor by accident.
https://en.wikipedia.org/wiki/United_States_involvement_in_r...
https://en.wikipedia.org/wiki/Foreign_interventions_by_the_U...
So, none of that matters to what I said, since I specifically talked about eliminating poverty. That's what a "straw man" argument actually is, when you decide to argue against something else entirely, like foreign intervention, instead of poverty.
Now you're getting it. Adamantly trying to focus on "eliminating poverty", when my original comment was about the morality of neoliberalism, is a straw man argument. I'm glad that after enough contemplation you have come to understand this.
So, if you'd like to address my original comment, I'm all ears, otherwise this discussion is a complete waste of time. Before you do that, though, it would be prudent to learn about what neoliberalism actually is, and why foreign intervention is directly related to it and your original premise. Once you do that, we'll be able to have a fruitful discussion.
An excerpt from The Divide:
> People commonly think of neoliberalism as an ideology that promotes totally free markets, where the state retreats from the scene and abandons all interventionist policies. But if we step back a bit, it becomes clear that the extension of neoliberalism has entailed powerful new forms of state intervention. The creation of a global 'free market' required not only violent coups and dictatorships backed by Western governments, but also the invention of a totalizing global bureaucracy – the World Bank, the IMF, the WTO and bilateral free-trade agreements – with reams of new laws, backed up by the military power of the United States
https://books.google.com/books?vid=ISBN9781786090034
You DO believe in eliminating poverty, right?
You are fixated on a straw man, clearly too ignorant of the subject material to have a discussion on this.
I provided resources. Read them and get back to me, otherwise there is no reason to continue, since your aim seems to be controlling the narrative and not actually engaging in substantial discussion.
This doesn’t sound like you want to eliminate poverty?
You complain I brought up the straw man of poverty, but that's the entire point of neoliberalism: to make people wealthy. It's NOT to start wars or bring disease or famine or whatever. It's an economic system designed to bring about wealth, as demonstrated by neoliberal policies that removed poverty from much of the third world.
This is why I don’t trust socialist: I have never heard a socialist say “I want to eliminate poverty”. And in fact, they seem to take pride in being impoverished while being ashamed of any bit of wealth.
It’s Ok to have nice things. You DON’T have to be poor.
We don't care if people are rich. We are if they are poor, and we believe that's a problem.
And our track record of eliminating poverty around the world over the last 50 years through neoliberal free trade should be celebrated, not discouraged.
You're welcome.
Again, I have no interest in engaging with someone who is clearly extremely ignorant about neoliberalism and US foreign policy, and who is fixated on engaging in straw man arguments. Stop embarrassing yourself and let it go.
Instead of congratulating yourself on your sheer brilliance all the time and how you like to declare yourself to be superior, maybe look at why your arguments aren't convincing to others?
I'd recommend you take a point-by-point look at what you're saying vs what I said and see if what you said had any relevance to any of my literal sentences.
Let it go. You're not even discussing the subject matter anymore, and are arguing about the meta. No one is thinking in terms of superiority except yourself. This is a toxic discussion, and it is over. Have your compulsive last word.
Look at what you wrote. Nothing you stated had any relevance to neoliberalism. I talked about neoliberalism eliminating poverty, and you brought up invasion.
Neoliberalism is what I say it is, not what YOU say it is.
Additionally, you have yet to answer why you believe poverty shouldn’t be eliminated.
Because we all know there is no amount of factory manual labour going on in China.
Did you even think for a second before writting this?
Oh you prefer China went back to Mao's Cultural Revolution agrarian economy from the 60's before neoliberalism?
Did YOU think for a second about what you wrote?
You said america worked hard to get rid of manual factory jobs and then you gave the example of China as a state that followed their neoliberal example. But China is the Earths factory and they have hundreds of millions doing manual factory work. You contradicted your own arguments. Not sure what you are asking me right now.
I specifically said China eliminated poverty, not factory jobs. Not sure where you got that from.
The neoliberal trajectory is a gradual growth from agrarian economy to a services/IP economy. Factories are a step along that way.
> Americans like our plush corporate office jobs building intellectual property. We aren't oxen doing physical labor.
> So if we aren't the oxen, who is? Vietnam? And that's morally acceptable?
> Yes. They - or other poor countries - are. And it's their responsibility to grow their citizenry in a neoliberal world.
Here you clearly state that the way for vietnam to stop being oxens is by growing in a neoloberal world. Then:
> China eliminated poverty through neoliberalism. The rest of the world can, too. This is the benefit of neoliberalism
You praise China for growing this neoliberal world, but you forgot that Chineese people are still oxens.
Oh I did not know the Chinese economy stopped growing?
This is an example of moving the goalposts.
https://en.wikipedia.org/wiki/Moving_the_goalposts
It's impossible to engage meaningfully with you if you're going to rely on argumentative fallacies and ignoring everything that is said to you.
I agree with this. People seem to forget that factories and other manual labor positions were hard to fill. No one wanted to do them anymore in America. I don’t remember the timing, but there were articles about the whole situation. Well, those jobs went to other countries.
Bush Jr. was all about outsourcing to India and other countries. The India population were thrilled to take office gigs for Microsoft and Google and any other tech company.
The whole “put me to work” in middle-America doesn’t exist anymore. They don’t want to do that type of work.
I do think a missed opportunity is not increasing defense manufacturing in the US. That could mean a lot of jobs and skill-based jobs. NASA is another failed opportunity where it could be a huge skill and labor opportunity for America. I remember the thousands of workers on the shuttle program being devastated. I’m not saying we need another shuttle program, but the next evolution of NASA, aerospace, and defense would be great for jobs and America.
We have no one left thinking about the long-term big picture for America - and we now have a president trying to destroy America. Any current politicians are focused on just staying in power, more so than they ever have.
I think Bill Clinton was the last president to focus on America.
Even Obama failed to deliver to the American people. He was too focused on drone strikes.
> I do think a missed opportunity is not increasing defense manufacturing in the US.
They are trying to. But zero chance EU capitulates on this:
https://www.reuters.com/world/us-officials-object-european-p...
> Even Obama failed to deliver to the American people. He was too focused on drone strikes.
I agree how Obama continued Bush's "war on terror" was a disappointment, but to state that as the reason for his relatively limited accomplishments is profoundly unserious. The Mitch McConnell's strategy was to do anything Obama did for no other reason than to make him look bad, because McConnell realised that Obama had the potential to be the most consequential president since FDR, with broad public support.
They used every trick in the book to hold up votes, to not schedule votes, voting against popular policy they themselves supported just a few years ago out of principle, etc.
I don't know how anyone could have forgotten this; the Republican party was not serious good faith participant in the democratic process long before Trump came along.
Obama was completely blocked by Republicans. That is when they started to oppose anything accross the aisle on principle.
Looking forward to the retaliatory tariffs, which seems to be only language this administration understands.
I guess it will eventually be the year of FOSS software, I am only waiting for the administration going back to export restrictions in software as well.
I guess we Europeans have to get our stuff from elsewhere than a nation hostile to the world with an insane unpredictable leader. China may also be authoritarian, but at least they are stable.
The coolest thing to read are american takes that are like "hey this might be benefiting us for that obscure reason", totally ignoring the fact that you betrayed your allies. Land of fhe free my ass. The only ideology the US has is nihilistic greed paired with hyperindividualsm and transactionalism to the point where Americans think if someone else is getting a thing you are hurting.
If the US was a kid it wouldn't invite others over because it wants to eat the birthday cake alone. And then it shits on all the cakes at the bakery because it wants to be the only kid eating cakes. If that is the American idea of how to lead a great life the rest of the world is better of without it.
> totally ignoring the fact that you betrayed your allies
The US is following the example of its mentor, the UK. Perfidious Albion allied with the Germans and Russians to fight the French (Napoleonic Wars), then allied with the French and Russians to fight the Germans (WW1 & WW2), then allied with the French and Germans to counter the Russians (Cold War). Great powers don't have permanent friends, nor do they have permanent enemies, they only have permanent interests. Europeans were simply naive[0], thinking they were the equals of the world's hyperpower for some reason, just because our post-WW2 dealings were executed with substantially more carrot than stick. It's just normalcy bias. Somehow Europe didn't think they would ever end up like the South Vietnamese, the Hmong, the Kurds (against Saddam, in 1991[1]), the Afghans, the Kurds again (against the Turks[2]), and now the Ukrainians. Some argue there is more than a bit of latent racism involved, not expecting the White People Countries to be abused by the Empire the same way Brown People Countries are.[3]
> If the US was a kid it wouldn't invite others over because it wants to eat the birthday cake alone.
This is why I often state that Woodrow Wilson is the worst President in American history. Besides shackling us with both the Federal Reserve Banking System and Federal Income Tax, he dragged us into Europe's internecine bloodshed and normalized that interventionism despite Americans largely being comfortable with sticking to our own hemisphere. In 1913, the US already had the world's largest GDP, with a GDP per capita roughly equal to Imperial Germany and about 75% of the UK's (assuming Copilot isn't lying to me on this data). Imports were only 4% of GDP compared to 15% in 2023. I think the wealthy elite who are siding with Trump are charting a plan to return the US to the same kind of domestically-focused economy, but we don't have the sort of natural resources nor human capital to ensure a decent quality of life on a short timeframe (or perhaps even a longer one) given the "shock treatment" that they are implementing.
[0] https://www.youtube.com/watch?v=Eh1zmDi0qN0
[1] https://en.wikipedia.org/wiki/1991_Iraqi_uprisings#U.S._radi...
[2] https://en.wikipedia.org/wiki/Operation_Claw_(2019%E2%80%932...
[3] https://www.aljazeera.com/opinions/2022/3/1/covering-ukraine...
> I think the wealthy elite who are siding with Trump are charting a plan to return the US to the same kind of domestically-focused economy
You're delusional, if you think there is any kind of plan going on here. Nobody knew any plan beyond "tariffs" and ideas about invasions coming out of thin air. The tariff numbers are a complete joke.
No, there is no grand scheme, hidden behind an act of absolute incompetence. It's just a short-term money/power grab for the already rich. An attempt to turn the world's "hyperpower" as you put it, into a second-world oligarchy. This may end up in total disaster, that is, a thirld-world oligarchy, if you look at China. But it's hard to actually look at China from the West.
Half the people complaining about Trump's actions say that it's all according to Project 2025, and half the people say what you're saying, that's it all chaotic incompetence with no plan.
I suppose the worst-case scenario is elements of both are true. They've got a fucked up playbook but can't even execute it correctly?
For the record I also don't think they are likely to succeed, I'm just trying to assess what/how they might be planning, or what direction they think they can take the country in. We can agree that they probably won't get the results they want and that America is in for a very rough ride.
> Half the people complaining about Trump's actions say that it's all according to Project 2025, and half the people say what you're saying, that's it all chaotic incompetence with no plan.
I think this is a misunderstanding (not sure if it's on your part of on the part of some of the complaining people): the Trump admin's agenda and strategy are clearly following Project 2025, for the most part. But Trump's tariff obsession does not originate there. I'm quite certain that even the most pro-tariff of the conservative think tanks are uncomfortable with how far he's pushing it.
I get the impression that the zeal behind Project 2025 is not motivated by their economic ideas but mostly by their perception of being in a culture war that they are now on the cusp of winning (they aren't). They deeply hate and resent the "liberal elites" (academics, journalists, etc) who they feel have too much influence on American culture, and the dream that keeps them going is not merely defeating these liberal elites electorally, but utterly destroying them. To "put them in their place", as it were.
One thing that would derail their plans is if Trump lays waste to the economy early in his term, so that he's likely to lose the midterms and a Democrat becomes the next president, and perhaps even making their political movement unviable for years or decades. So even his pro-tariff supporters are uneasy now: the tariff policy is so extreme that it is likely to interfere with their overarching goal.
You might enjoy your Chinese overlords more then. Time will tell.
As if the things the US produces aren't predominantly made in China already. Cutting out the middleman can't hurt, especially if the middleman behaves like a mob boss.
I actually stopped buying from Amazon and went to either the producer's site or Aliexpress. Literally the same products but without the middleman.
I once needed to claim warrantee on a broken charger and after navigating all the dark patters Amazon just referred me to the producer's website. It's not even convenient.
oh the irony
He who is free of sin..
The admin's think is that any negative trade balance is 'exploiting' the US. Logically, the opposite would mean US is exploiting others. So the only 'proper' balance is zero, which requires managed trade. An obvious impossibility in this age. There are ways to rebalance, they require time and patience and thought (the latter seems most lacking).
US says there was an imbalance in trade, and that is true only if we look at goods. If we look at services, I think the picture changes.
What if the EU and rest of the world starts adding taxes to financial and IT services provided by the US? What if Amazon cloud and Netflix start costing 20% more?
And let's not forget US is printing dollars which are being used for worldwide trade and the rest of the world subsidies their inflation and their economy through that.
Let's not forget US exported the 2008 crysis and most of the world payed for that.
I don't think US will like if the rest of the world stops using US dollars, stops using US financial services and stops investing in US economy by buying shares, bonds, securities.
Interesting what happens to tech valuation. A large part depends on global reach, 'infinite' scaling and a winner takes all probability.
Trump is going for a 1-2 punch. First tariffs and then tax cuts to soften the blow of price increases. It also puts republicans in a choke hold to force the tax cut legislation through, because the fallout of tariffs with no tax cuts would be a death knell for the party.
Maybe in a sim city game this would balance out, but it's a tall order for a real world scenario. Prepare for a bumpy road ahead.
> It also puts republicans in a choke hold to force the tax cut legislation through, because the fallout of tariffs with no tax cuts would be a death knell for the party.
I mean, they could vote down the "emergency" Trump is using in order to obtain the authority to enact these tariffs instead, and that would be so much less work. But of course they won't go against their Dear Leader.
omg do you think elon started playing simcity recently, trying out all these ridiculous things, and now he's advising donald to do same in the real world, because he's convinced it'll work based on the simcity experience?
It’s all a grift for the wealthy anyway. He doesn’t care about the hurting 50k a year worker. Low income MAGA voters are just fodder for Trump to enrich himself and the wealthy around him.
Did the "de minimus" exemption on small packages from China go away, and are all those now going to have to go through customs clearance?
What will happen is the same as when my govt. added GST (sales tax) on all imports with no de minimus exception [1], the overseas retailers will agree to add it on at checkout so their packages will sail through customs.
From a practical perspective I can’t see any other way.
Closing the “GST loophole” as they called it didn’t help New Zealand retailers, but did increase tax revenue and raise prices for consumers.
[1] There is an exception if the retailer does less than a certain dollar figure of exports in total to New Zealand.
I wonder how long it takes until this trade war moves to the digital stage. It wouldn't be surprising to see that software license fees start increasing if this tit-for-tat continues for much longer
and it’s all thanks to a16z and co
I'm European. While it's pretty childish to paint the US and the EU as two human being with a "relationship" it's of course pretty jarring to see a country that has for my entire life been the undisputed cultural hegemony simply check out of the world stage and suddenly treat everyone on "their" side (culturally, politically and economically) like an enemy, or at the very least an abuser.
I'm not an economist, but I don't think you have to be one to realize that kicking the entire global economy right between the legs will lead to a recession -- just look at the supply chain issues that echoed for years after Covid, and the massive "quantitative easing" that had to be done to avoid a recession.
The abandonment of trade partnerships I could live with, I'll make it through a recession and every country is free to elect their own politicians and make their own fiscal policies, dumb as they may be; I don't get my "feelings hurt" by Americans wanting to bring back manufacturing jobs -- although I have issues understanding the reasoning.
What worries, and actually saddens me, is the complete doing away with of values, that I do think have existed in the past. The US has never been a beacon of exemplary behavior, and I understand that "nations have no friends, only interests" -- one needs to look no further than the US treatment of the Kurds for an example of this -- but it's unbelievable to me how so many Americans can not see the American self-interest in making Russia pay for what they've done in Ukraine.
Russia has been the main antagonist of the US for the entire post-ww2 era. It's a totalitarian state and an obvious enemy to the US. Invading Ukraine was a massive mistake, and all the richest country in the world had to do to basically risk-free damage their biggest antagonist, was to keep pressing a dollar-button together with the EU. No boots on the ground, no Iraq- or Afghanistan scale disaster, just military and economic support for a country that could end up being an extremely close ally. There is literally zero chance Russia could win a war of attrition with this dynamic. Instead, it's like the Soviet union in the 70s would have given away Cuba for free and instead threatened to invade North Korea.
In the end, I think what makes me uncomfortable is that I truly do not understand what it is that the average American (or voter) wants, because the actions of the US on the international stage makes no sense to me, yet so many Americans seem to cheer it on.
Most Americans just don’t care that much about international affairs.
Quality of life has been going down for most Americans over the past few decades. It's harder to buy a house, raise a family, etc. on a modest income. Increasing cost of goods has outpaced wage increases but there are probably other factors at play too.
Americans lived in a world where all you needed was a decent job and you could have a good life - defined by what I said above. That's not the case anymore and they're upset about it - they're looking for someone or something to blame.
The republican party chose to blame immigrants and the democrats chose to blame lack of DEI. This fractured the citizens into two camps who can seemingly find no middle ground anymore.
Meanwhile, the wealth gap continues to increase and the middle class is shrinking. But neither political party can run on a platform of reducing spending AND higher taxes on wealth. They'd lose their funding sources - so they're stuck with immigrants and DEI.
Meanwhile, Trump sees an opportunity to extract wealth from the working class by reducing government spending and diverting those savings to corporations and the wealthy. Moderate Americans feel a bit powerless given how quickly our long standing legal and government structures seem to be deteriorating.
I was told the average voter wanted cheaper goods (especially eggs). One candidate lied and said you'd get that day 1 (like someone running for class president who promises free ice cream at recess every day), the other was realistic and used coherent words to describe their policy.
Our loss.
> I truly do not understand what it is that the average American (or voter) wants,
there's no such thing as an average American voter
My take on this is the right wing media re-defined the word “woke” to create an enemy, and take the propaganda to full blast to convince the average idiot that “woke” is the ultimate threat to society, and nothing else matters. Add to that the vicious religious practices and the false prophets who financially benefits from the brainwashed, to make it harder to question the new paradigm. That’s what the average american/voter was told to “want”: destroying woke by all means. What “woke” actually means, and the fact the definition is so vague (meaningless?) is the true weapon.
#1 Per our Constitution, USA has minoritarian rule baked in.
There's many anti-democratic choke points: Electoral College for POTUS, Supreme Court, US Senate, gerrymandering effect on US House, long history of systemic disenfranchisement, etc. aka Vetocracy per Francis Fukuyama.
#2 ~6m Biden voters stayed home in 2024.
There's a sizeable cohort of infrequent voters and a huge cohort of non-voters who self disenfranchise. Due to nihilism (voting doesn't matter), both parties are the same, low motivation, whatever.
#3 Like most everywhere else, our information ecology is broken, fragmented.
The audience for "traditional" media's news is tiny, compared to social media. The Dems focus on "traditional" whereas GOP have successfully embraced "social". So for all the billions spent every presidential election (political advertising), most voters don't ever hear from Democrats.
Therefore, US voters are mostly unable to correlate policy positions with politic parties. So mass politics really comes down to marketing and vibes.
#4 Addressing these "legitamacy" issues (government by consent of the governed) is wicked hard when one of our two political parties has been utterly opposed to democracy and effective governance for decades.
https://shwin.co/blog/why-i-dont-discuss-politics-with-frien...
Is there going to be a hearing into the stock transactions of any the cabinet related to this news? Seems to me like some people could make some significant money on information like this.
How can companies, importers and ports even implement these tariffs so quickly?
Do these tariffs go into effect immediately?
Trump must be a Russian asset. There can be no other explanation. To weaken NATO, remove U.S. dominance by withdrawing forces from bases worldwide, abandon maritime security, weaken the dollar, and implement hostile economic policies that maintain the dollar as the world’s currency, it seems that the final step of “America First” is to make the dollar the sole currency used only in the United States.
He's a psychopath. But I'm willing to compromise.
He's a mentally ill Russian agent.
So now that the impacted countries will respond with tariffs, are there any chance they might include tariffs on digital services like AWS and Azure, or will they only target physical goods that cross the border?
I don't know how these things usually work in the best cases, and it seems like we're living in exceptionally stupid ones right now.
Foreign countries will probably start taxing Google/Facebook ads if not outright banning US tech companies from operating. When that happens, watch the whitehouse roll back everything
Or escalate? Roll back defense guarantees.
I don't know how I feel about this overall. But I do want to recount something from my childhood.
I'm American. I grew up in the rural Midwest. The truth is that much of this country is a depressing shell of its former self. The town I grew up in is all but dead -- about 12,000 people still live there, though. The nearest big city, previously a hub of manufacturing innovation, has been on a steady decline for decades. Since the 70s, more and more powerful drugs have been flooding into the broad geographic region, decimating entire communities and creating generational cycles of poverty and addiction. It's an absolutely brutal combination that has totally killed almost all innovation and output in huge swathes of this country. Candidly, even if you brought back manufacturing to the area, the local population is so dependent on drugs that you'd struggle to even find workers today.
Today's drugs are so powerful that addicts would rather live in total poverty with drugs daily than have a high-paying job without drugs. Every small business owner in these regions knows this, but the true scope and severity of the problem can otherwise be hard to fully notice and appreciate. It's not possible to operate a small business in these regions without encountering the drug problem on a regular basis.
Do I think tariffs are going to fix this? Honestly, probably not, for the simple reason that Trump is old and won't be here much longer even if he tries to install himself as a dictator. The winning strategy for much of the world is to likely wait this out to some degree -- best case scenario for others is that this will just get reversed or significantly mitigated in 3.5 years, which is the blink of an eye on global timescales.
Nonetheless, my heart goes out to the incredible loss this country has experienced over the last few decades. It's truly heartbreaking and devastating that we've sold out so much of the country for short-term profits to such a degree that we can probably never break out of the cycle without severe pain and sacrifice.
I see the drug problem in my midwest city too, it's literally on my doorstep on occasion.
The country is also not struggling with high unemployment or stagnant wage growth.
Multiple things can be true at once. Tariffs are a solution to an imagined problem.
And fwiw - reshoring has been happening already, through congressional action (CHIPS, IRA), rather than presidential decree, and was doning so without wrecking the economy.
The reshoring efforts you're talking about will not come remotely close to restoring what was lost and what could have been. We're so far behind outside of software and finance it's almost unfathomable. To grasp the full cost that has been paid, you need to imagine a scenario like all of NYC, Seattle, Austin, Denver, Silicon Valley, San Francisco, etc., just don't exist at all. That kind of scale is what we've lost out on -- not in software, of course, but in most other industries.
Fly-over country should have been the site of the greatest industrial and manufacturing innovation the world has ever seen. We threw away one of the greatest opportunities in history to juice stocks for a couple decades.
That sounds nice, but "bring manufacturing back" isn't a plan. Details matter.
I think that’s part of what I find so frustrating about this. There’s an alternate history where we’d have a national effort to invest in domestic industry, especially outside of a few areas which are doing well, but that just wouldn’t look anything like this.
A good example I saw was living in New Haven years back, where they were struggling to build businesses around the Yale community. There’s a ton of unused industrial area, especially as you go east, but they didn’t have the right combination of funding environment, local workforce, and infrastructure so in practice everyone went to NYC or Boston, or SF, and the state of Connecticut kept losing out.
Fixing that would be huge, but tariffs won’t do it unless you also invest in those other things and also something like antitrust protection so the key decisions aren’t made by a handful of gigantic companies.
The lack of longevity to these tariffs is part of the problem with them. Why would anyone invest in a factory when everyone knows these tariffs are likely going to be short lived, making any capex wasted. Capital is going to try to wait this out. It's short term pain and long term pain.
The problem isn't not enough money. It's not enough distribution of money. Income inequality in the US is at 1929 levels.
I understand the emotion, but emotion alone will not get us out of this. Here is a very similar post from someone much like you:
https://news.ycombinator.com/item?id=43565630
It makes a lot of good counterpoints.
This theme of "small town USA" is dying everywhere, even here in Upstate New York. Drugs and lack of opportunity has a chokehold on everywhere in America.
Real problem is budget deficit not trade deficit. Trade deficit matters to countries who can't control the supply of dollar.
The country that prints dollars doesn't have this to worry about.
Main problem is budget deficit and the huge pile of debt.
One thing we know for sure Trump will never back down or admit he’s wrong. So how to invest in this 4 year regime to survive or even thrive?
Here's the brilliant formula they used to determine those tariffs by the way:
https://xcancel.com/orthonormalist/status/190754526581875103...
https://xcancel.com/corsaren/status/1907554824180105343
It's trade deficit divided by total exports divided by 2
This feels fairly close to Idiocracy (2006).
So many people around the world have been hurt by the terrorist US government. This lessening legitimacy will hopefully provide them some sort of justice.
This article has more information, such as
> The 10% rate would be collected starting Saturday and the higher rates would be collected beginning April 9.
https://apnews.com/article/trump-tariffs-liberation-day-2a03...
And as tech guys we always wonder if the world is a better place with AI Agents taking over. My guess is that even gpt-3 would have come up with a better solution than this.
I'm wondering how this protectionist trend will impact overseas hires. Will US companies continue to hire talent remotely outside of their borders? Will they be incentivized to only hire in the US?
More businesses will be incentivised to locate in the US, to avoid tariffs, but they'll still be incentivised to hire from outside the US due to cheaper labour (there's no tariff on wages).
> there's no tariff on wages
It is _really_ difficult to pay wages to internationals (As most people involved in remote work know).
Usually you need to setup a subsidiary in the country you want to hire in - or convince the "employee" to be a contractor.
In the end this is not "wages" that move over borders - but services. And these can indeed be tarrifed.
Thank you, nonvoters.
Trump is very popular among low-information citizens. If you corralled more of them into voting, he would have won by more. Call me an elitist, but at this point we'd be much better off if ignorant people stopped voting.
The only people who matter in an election are the voters so I'm always perplexed so many feel comfortable blaming non voters for the problems voters made.
This non voter shaming is quickly eroded as soon as you ask voters if non voting is an issue. They will report it that is is a huge problem. Then ask what candidates or parties support mandatory voting and you'll get crickets.
That's because it has nothing do with tackling the perceived problem of non voters and all to do with virtue signalling that you vote.
what is stopping everybody from exporting to the one guy that knuckles under completely and circumvent the circus?
The US Administration is dead. America is occupied by creatures that simply want to destroy the current world order, sow chaos, and profit from that by means of power and utter hate and disrespect for ordinary people, who live from paycheck to paycheck. Keep advancing AI, so they wouldn't need to employ humans to kill other humans.
White collar jobs will be destroyed by AI/AGI. But the US workforce consists of a large portion of white collar workers.
To replace the coming destruction of white collar jobs, manufacturing and industry jobs must be brought back, along with new resource collection initiatives (e.g. mining). They will be needed anyhow to build robots, drones, and other machines to compete with China and India, technologically and militarily.
Globalization will be effectively dead, remaining trust in the petrodollar will be destroyed, therefore so will Pax Americana. Expect more wars.
There have been rapid recent advances in robotics, both classical industrial robotics (advanced by rapid iteration with digital twins and simulation environments like Omniverse), and humanoid robotics (pushed forwards by Boston Dynamics, Figure and a lot of other recent entrants). So if we really do achieve AGI that would take over white collar jobs, manufacturing jobs will likely too be taken over very soon thereafter.
In your scenario white collar jobs will be destroyed globally.
So effectively you would be paying people to work in manufacturing even though it's no longer necessary.
You may as well pay a basic income instead.
Would be good to know -
Who are the people coming up with these specific rates?
How are they modeling this system?
I am certain they didn't use any liberal math or science or history to arrive at these numbers. It's all just made up by incompetent yes men.
It's trade deficit divided by total exports divided by 2.
According to the BBC reporting, it appears that for each country he's charging 50% of the tariff they place on US goods coming into those countries, or a baseline of 10% for some countries like the UK.
(sorry, this is a BBC live news ticker link):
https://www.bbc.com/news/live/c1dr7vy39eet?post=asset%3A3a34...
And a picture of the chart they had showing the per-country tariffs:
https://www.bbc.com/news/live/c1dr7vy39eet?post=asset%3A7f78...
its not tariffs
Trump took the trade surplus the US has with those countries and calcuated the percentage from that.
The trade deficit the US has with those countries, or the surplus they have with the US, as a percentage of the country's total exports to the US.
It's an incredibly simplistic calculation that definitely doesn't equate to the country's tariff rate.
Interesting - I haven't seen that mentioned in any of the coverage, do you have a source for that?
A lot of comments have already mentioned that. You can also calculate it by yourself.
For example, in 2024, the total value of US trade in goods with China was approximately $582.4 billion, comprising $143.5 billion in exports and $438.9 billion in imports. [0]
(438.9-143.5)/438.9=67.3%
[0] https://ustr.gov/countries-regions/china-mongolia-taiwan/peo...
what would happen to US??? I mean you cant ignore US market right now
so is this enough that factory gonna comeback on US soil??
Let's imagine they do come back. Let's say you have a toaster factory in Vietnam, which allows the US company to produce low-cost toasters for about $100. The factory workers earn $1 per hour. Now, due to the tariffs, a toaster will cost $146. And you say, "Okay, they just need to move their factory to the US and then the problem will be solved - no more tariffs. " Fine. Do you really think a US worker will work for $1 per hour? Even if you automate 80% of the factory, you still won't offset the 46% tariff. You will never get a toaster priced at $100. More likely, it will be $300.
I like to ask, "What would a Russian agent do to try to dethrone the USA as a global power?"
* remove support from historic trading partners
* break up NATO and similar military alliances
* convince the world to distrust USD as default reserve currency
* specifically make it harder to trade with China who makes a lot of our junk
* remove a lot of the federal government workforce from their positions
* convince those involved in Ukraine to back out so that the mineral-rich regions in the east can be appropriated
* destroy the image of "democracy" and "free speech" by flaunting legal processes and crushing dissent
I could list and think of more, but these are most illustrative IMO.
Man the stock market today was a slaughter house.
Unfortunately in America they choose a dictator for 4 years with a parlement made up of puppets so it is what it is.
I encourage everyone to contact their reps and demand a bill be advanced to return tariff authority to the Congress.
There are enough GOP reps opposed to tariffs to get a discharge petition.
Are they more opposed to tariffs than they are in support of their king Trump?
I'm betting the number of Republicans in Congress who will oppose Trump is in the single digits at this point.
I would bet that most of these tarrifs won't exist in <6 months. This reeks negotiation tactics from Trump.
He's been playing this game for 2 months now with Canada and Mexico, and so far he's loosing. US & business are loosing even more.
Keeping this kind of tarrifs, would be absolutely moronic even by Trump standards. That would be economic and financial suicide for the US.
This is not a game. Others will not take it as a game, and will retaliate. You can only play the bully for so long before others start treating you as a bully, and stop backing down, even after you have backed down -- as they never know when you are bluffing.
Doesn’t matter if they’re gone in 6 months. The damage is done, businesses will see the United States as too unstable and unreliable to plan long term goals in. We will pay the penalty for decades. Even if you get a new administration, that administration can be gone in another 4 years.
Oh on that we agree - the damage to US reputation and reliability is already done and it will take decades or a world war to repair it.
We will not be alive to see it restored to its former glory ever again.
At least I lived long enough to see the liberals who spent the first 55 years of my life bashing the US (often correctly) for imperialistically stomping all over the rest of the world, using its massive military to force its currency and culture on other nations, and meddling in the elections of sovereign nations to create puppet governments (just to name a few of our favorite activities), turn to pining for the former glory of the US empire.
That wasn't on my bingo card.
Oh yes, it’s over for them. If they make it out of this administration, they will never be that liberal again.
No tariffs on Russia, interestingly enough.
All actions by this administration point to Trump working in cahoots with Putin, which we were told was "a hoax".
The White House dressing down of Zelensky, and this week Russias investment chief in the US, and just scads of obvious daily reminders that Trump has no bad words for his pal. Odd.
Tariffs on our friends and allies while he speaks of dropping sanctions on Russia and meanwhile levies no tariffs upon goods from Russia, zero. Odd.
Countries like North Korea and Russia are already covered by sanctions
There are secondary tariffs on those countries who buy from Russia and Venezuela or Iran. i.e. if you buy oil from Venezuela, then your export of clothing will invite 25% tarrifs.
Are the two mutually exclusive? Because using the same formula they apply to other countries, Russia would have tariffs as high as 84%. (I confess to using an LLM to get me the data.)
for starters, countries will sell to the UK , which will resell to the US at the lowest tarriff rate. Great for the UK, but stupid.
I try to sympathize with trump's deglobalization agenda but it is probably exactly what it seems to be : a colossal stupidity.
Just shipping goods through the UK does not make them UK-origin. They have to have a "substantial transformation".
Do you have a reference for this? If they’re requiring substantial transformation, how is this assessed and enforced?
It's pretty complicated and case-by-case, and I'm no expert.
https://www.trade.gov/rules-origin-substantial-transformatio...
"Johnnie Walker Champagne"
That’s good, but if you want the really good stuff: Rolls Royce Champagne
In that example, the UK would soon run a trade surplus, and presumably the US would increase their tariff.
The Hawk-Dove game is a wise framework to consider. When both are Hawks, both get harmed. When one is a Hawk and the other a Dove, the Dove gets hurt, and the Hawk laughs. I hope both can be Doves, bringing tariffs to zero and making all great again.
As someone interested in "curious discussion", what are some of the positives we can take away from this? Is this a new standard for economic policy?
Autarky is just bad economic policy because comparative advantage is too powerful. Nobody benefits from this. The US loses and everyone else loses. The US loses the most however, both economically and in soft power.
This isn't even the China model. Slapping tariffs on raw inputs guarantees that US industry cannot compete internationally. This is more like the North Korean model.
While there are positives to targeted industrial policy, there are no positives to autarky.
> The US loses the most however, both economically and in soft power.
Yes. It loses most because 10-20% of world trade is for value added in the USA. The one exception is the USA of course, because their percentage is 100%. So USA is 100% effected, the rest of the world is 10-20% effected as they continue to happily trade with each other without tariffs.
I dunno about everywhere else, but in Australia the effects are already noticeable. Trade with the USA is dropping, and trade with Canada is growing.
> This isn't even the China model
It's 1400-1840 China model
https://en.wikipedia.org/wiki/Isolationism#China
Buying American stocks and companies is about to be a lot cheaper.
It may reduce consumerism in the US and therefore be beneficial to the environment.
Well it's positive for various countries that benefit from an end to US dominance over the world. :p
So for the US itself? The theory would be that the tariffs will increase US manufacturing sector. But the cold hard truth is that it isn't the 1830s anymore and last time tariffs were tried happened to line up exactly with the Great Depression.
Even an competent administration would have great difficulty making tariffs to restore manufacturing work in the US, if that is even at all possible. It fails because other countries just put the same tariffs back on the US.
So with the Trump's administration some kinda of serious economy meltdown is almost certainly the result.
It is possible for things to simply be foolish. Insisting on balance is not the same thing as curious discussion.
I can't think of any positives.
Trump is saying the positives are the it will force companies to build stuff in the US, thus increasing our domestic manufacturing and increasing jobs. I don't see that happening in a significant way, but who knows?
But if that does happen, then the huge amount of revenue that Trump thinks is going to come to the government's coffers won't happen, and that revenue is meant to offset some of the tax breaks for the wealthy, so we're kinda screwed either way.
These guys are untrustworthy liars. I assume there are thousands, possibly tens of thousands of carve outs for the tariffs, based on bribing the POTUS or approved affiliates.
we've spent the last 50 years basing our currency in foreign manufacturing, seems like a good way to tank the dollar to me
Mistake in headline: tge article says 54% rate on China. 34 looks like a typo.
Apparently it is 34% on top of current 20%, bringing it to a total of 54%.
But who knows with these guys.
Current tariffs for China are 45% because the original 25% tariffs from Trump I never went away and the 20% from Trump II are in addition. Source: have two containers en route from China at the moment, will be paying 45% on them.
I am not an economist but I see two things 1) usa has a huge debt, 2) this feels a lot like VAT applied on a federal level, without calling it VAT. Ok "VAT on imports". Why not.
Obviously this is being sold as a trading surplus BS, etc, but if you look at EU, the surplus is ridiculously low when you consider goods and services (something like 50B).
I don't think it's the worst idea ever, I just dislike the useless hatred that this guy is spreading around and all the idiots believing him. But hey if he hadn't done it, people would have said he is a socialist :)
There has been a lot of speculation about why this is being done, given that even a young child could understand that a grocery store is not taking advantage of you when you exchange your money for goods. Some say that it doesn't need an explanation, because the President has so much power that caprice and a little bad advice from a cabinet member is all it takes. That is not a complete picture, though, because power in the US is spread out enough that while only the President needs a reason to do something, many others must have a reason to allow it.
Here's one idea for a "why are his supporters allowing this," sort of explanation. In the US, educated professionals hold way more importance than the global average, due to the US's status as an exporter of services. They tend to vote for liberal (in the European sense) policies, whether Republican or Democrat.
If you wanted to destroy liberalism in the United States, you would have to drastically reduce the importance of higher education and professional labor. This can be done by placing very high taxes on the import of goods and base resources, so that young people who would have become engineers have to become miners, loggers and machinists instead. While I do not think this is true (blue-collar workers do not live up to the ultraright's "noble savage" sort of fantasy about their preferences and are actually just like anyone else... but if you're an elite you don't know that firsthand), it sounds plausible that enough of the people who are important for a season might believe it, and support it as a plan to remake American culture, not in their image, but in the image of a fantasy they share.
This works together with the strategic need to decouple from trade with a country before invading them, dramatically increasing the number of opportunities for self-aggrandizement through the threatening of war, high-stakes diplomacy, negotiations over individual prices... which also offer some respite for elected officials who would otherwise take an unending beating in the news over consumer data.
how long before we start seing this reflecting in prices?
Naive question of a foreigner: I see a lot of approval on the youtube comments to Trump's liberation day speech and over at twitter. Now the consensus on HN is diametrically opposed. My question: why do some people think that this is a good idea? Why is there such a huge rift in US society and how do you plan to bridge this gap?
This anecdotal, but I feel like YouTube applies a positive sentiment filter to its all of its comments. Somehow on most videos I watch never see anything critical at the top of the comment section.
Can this be an arbitrage opportunity?
One thing I don't understand. US is much bigger than most countries. Why would a country the size of Belgium (~12M people) needs to import as much as it export from the US in order not to have tariffs > 10%?
You could flip this around. Why would a country the size of Belgium need to export as much as it imports from the US?
Not sure I'm following. Isn't that supply and demand?
What I'm saying is that if total exports to the US is a function of the difference between the US and Belgium population size, then why wouldn't imports be a function as well? Belgium has less people buy things to import, but also less people to sell things to export. It's not clear to me what the mechanism is that these two functions should be so different.
Canada has only 41 million people, 1/8.5th of the US population, but it's a big country so it has lots of resources to export.
It’s a good time to enroll in grad school and get an economics phd.
So no soft landing anymore
Wild
My understandings reading some comments. 1. Prices will increase 2. US will need to manufacture things and they will need a lots of workers. There will be shortage of workers because factory pays minimal wages. 3. Factories will have to offer higher amount of salary that will increase price
Ultimately prices increases for everything and working class will suffer more.
Don't forget that you first have to build the factories and somehow resuscitate the knowledge that died a few generations ago. A factory isn't just a big warehouse full of low skilled people, you need machines we don't have anymore, processes we lost, &c.
All of which sounds ok until you factor in timelines. In takes years to spin up new factories and supply chains.
Choking the existing options when replacements are years away is a guaranteed way to ensure economic carnage
More likely that prices will go up and wages will stay the same.
Factories take a long time to build and businesses know that Trump is erratic and therefore have no idea how long these tariffs will be in place for. So opening a totally new and otherwise unneeded factory is a big risk. (Some companies have made recent announcements about opening factories in the US but largely these factories were planned to meet existing marker needs, just not yet decided where they would be.)
The price of a product will only go down when the majority of demand can be met by tariff free means. Until then a US company will sell a product at the same price as the imported, tariffed product because that's what they do. Same happened during the recent inflationary spike. Businesses put prices up more than their costs went up as they had an excuse.
Large businesses hate putting up wages and the level of desperation in the US is such that there is a large pool of people to fill low paying factory jobs. The post-pandemic wage increases were noticeable for the opposition to them and that was a very short 12-18 month spike, with wage growth now back to normal.
Yes, either way, the working class, indeed the median American, suffer.
It's a scheme for the top-top to once again, not pay for anything because they pass the cost along. The W2 class gets to redistribute amongst themselves.
Nasdaq composite is down 5.6% at the time of writing this comment.
I honestly think Trump is doing this just to enrich himself and his friends. Stock market crashes always end up transfering wealth from the poor to the rich.
cui bono? It is clear that the american taxpayer is not profiting from this but neither seem the billionaires. So who does?
Those that are long Gold
Are we gone flag this one too? Or just all the articles chronicling certain crypto invested tech billionaires pushing in this direction?
The attempts to force a mineral deal on to Ukraine, and also the attempts to get hold of Greenland, start to make sense if you assume that the Trump administration is preparing for a permanent global trade war. Higher costs for mineral imports would hurt the US economy the most.
Number one rule of combat is that you need a very good homegrown industrial base. In order to be great country it needs to be combat-ready. If you apply that lens, what Trump is doing will start making sense. He is trying to revert globalisation and free trade in order to make the USA manufacturing superpower again. Not sure whether this will be successful or not, as China already has an order of magnitude advantage in manufacturing.
Complete tariff list - https://cdn.xcancel.com/pic/orig/3B0CC9EA63B82/media%2FGnjqy...
What happened to Canada?
At the moment, the automotive tariffs still stand and go into effect ... tonight? tomorrow?
Looks like they got cold feet on a blanket Canadian tariff.
But the whole process is so chaotic and subject to mood swings that I expect more holes and carve-outs than a block of PDO emmentaler.
Canada already has a customized tariff.
They responded with a middle finger plus a boycott and the message was received loud and clear ?
You obviously don't put tariffs on your own states /s
An interesting observation is that the tariffs are half of what the other country is charging. Does that mean this was a common strategy across the board? Or was strategic importance of goods considered?
>the tariffs are half of what the other country is charging
And that figure is questionable. Read "including currency manipulation and trade barriers". This is the same presidency that believes the "EU was made to screw USA over", and accused them, Japan and practically every other major economy of manipulating their own currency to harm US. It's improbable that rate has any basis in reality, but surely a detailed breakdown of how they came to that number will be published.. not.
> And that figure is questionable.
It's made up. It's based on our trade deficit with them, which has absolutely nothing to do with tariffs.
Exactly. Calculation for actual figures is based on trade deficit, everything else is just a fat lie. "White House officials said its levies were reciprocal to countries, such as China, which it said charge higher tariffs on US goods, impose "non-tariff" barriers to US trade or have otherwise acted in ways the government feels undermine American economic goals" (from BBC) Non-tariff barrier usually means regulation US exporters don't like, including data protection, EU not wanting to buy junk food from the US, most of which apply to EU companies the same way anyway... There is no point in asking for a reduction of these tariffs, and will probably never happen.
There’s a 0% chance other countries were charging tariffs across the board on US goods at the rates claimed.
The EU simply doesn’t charge 40% rates on the bulk of US goods. Let alone the random countries that all somehow have 10% tariff rates in the US.
It's even wild to consider that countries like Ecuador are taking advantage of the US. An absolutely absurd idea.
Let's not forget the biggest of EVILs, Lesotho, with its 50% tariff. Mr Trump has just noticed that they have cornered the US economy. (A strange coincidence, Trump has recently said nobody has ever heard of Lesotho being a country...)
The numbers are not accurate.
Yeah, no, those numbers in the left column are not correct.
The list of countries lists Taiwan separately from China, but also lists Heard Island separately from Australia.
Also includes British Indian Ocean Territory. The only people who live there are on a US military base on Diego Garcia.
Trump is going at this with a big ask. I anticipate that these percentage numbers will settle much lower in the end.
Meanwhile the options level upgrade I asked e*trade for at 8am (before the 4pm announcement) so I can buy puts is still pending at 8am the following day.
TIL one should configure brokerage accounts well in advance of events.
I like the idea of tariffs but only if followed with income tax cuts.
How did the value added tax (which is paid by all companies including domestic ones) become the same as import duty?
The only way that you can make that tariffs charged to the USA is the level Trump claims (ie. 39% in the EU) is if you include VAT.
He has talked about VAT, but in terms of how they ended up with those numbers, people noticed that the claimed rates don't have anything to do with the actual tariff/VAT/etc. rates, they're just based on the relative size of the US trade deficit with each country.
The gloss will be "this way captures all the various unfair things they're doing to us that are the cause of all these trade deficits" but that's just, well, gloss.
Some of the workers won't understand that EU companies also have to pay the same VAT in the EU, so they think it's correct reasoning.
People keep making the mistake of thinking that there is any sort of logical consistency to Trump policies.
Trump has had a thing for tariffs for like 40 years now.
People keep making the mistake of thinking there is no logical consistency to Trump policies.
He has an agenda.
What is that agenda?
To go down in history as this great figure who increased American territory and the power of the executive branch while making America this economic giant that doesn't depend on the global economy, because he thinks economic policies still work like they did in the 19th century.
To have as much fun as he can in his final years.
He's most entertained by messing up anything good he runs into.
I know he's a very different person with very different interests, but I can think of little worse than spending ANY years having to put on a suit and makeup every single day.
What if instead of "a suit and makeup", you consider it what it actually is?
A clown costume.
An ill-specified, inconsistent agenda that he and his cabinet lack the IQ to achieve.
Maybe that applying VAT to imports is done asymmetrically? If, for example, I'm a US citizen importing a european widget, will federal and state sales tax be applied on import?
If they're not, then this might be why they're considered thus.
Not really, because the point of tariffs is that they apply only to imported goods, creating a preference for local ones. If VAT is applied equally to imported and local goods it's not a tariff, it's a tax that consumers pay in any case.
Uhh... Whether you're a citizen isn't a factor. There's no federal sales tax, although these tariffs act as an import tax that will increase the wholesale costs. And state sales taxes don't apply to imports or wholesale transactions, they are retail tax (or also often a use tax if a sales tax wasn't previously imposed).
VAT is not only a retail sales tax, it'll apply anytime the widget is somehow modified (value is added).
VAT is not paid by companies. It is paid by consumers and collected by companies. The US have the sales tax, which is similar.
It absolutely does not make sense to count VAT as a "tariff". I am sure they know it.
No, VAT is actually paid by companies (and also consumers of course), it's one of the subtle differences between VAT and sales tax.
The "thought experiment" you can make is the case of something not ending up being sold. In a VAT regime the manufacturer will have already paid the VAT on the inputs but since the customer hasn't paid the VAT on the finished product the manufacturer won't get their money back on the VAT they already paid (there might be other tax rebates or write offs, but that's a different matter)
In a sales tax regime the tax is only paid by the final consumer so if the manufacturer doesn't sell the product they are not out for any additional tax
Still doesn't change that neither of those are a tariff by any definition
VAT = Value Added Tax. Tax should be paid whenever there was value added to a product/service, and it was sold.
The manufacturer has paid VAT, and will get back the paid VAT from the tax authorities. It then adds value (value added tax). It has to charge VAT of the full amount. So, the company in the chain pays VAT over the profit of that product/service. For example (assume 20% VAT):
Company 1 creates something with 0 cost, and sells for 100. Needs to add VAT (20) and pay that to the tax authority. 20 has been collected.
Company 2 buys it for the 120, packages and labels it, then sells it for 180 but needs to add 36 VAT. The company will file a tax return of 20-36, so will effectively have to pay 16 to the tax authority. Another 16 has been collected.
Consumer buys it for 216 and doesn't get any VAT back.
Effectively, 20 + 16 = 36 VAT has been collected over time. The tax return can only be done by companies with a VAT registration. In some cases the VAT burden can be inverted in b2b transactions and within the EU. This is there so companies don't have to do cross-border tax returns.
A VAT-registered company is either able to purchase VAT-free or is refunded the amount of VAT it pays (by offsetting against the VAT it has collected, up to getting actual refunds).
Effectively VAT is only paid by consumers.
NB: in you example if the company has paid more VAT than it has collected in the period then it gets an actual refund.
> Effectively VAT is only paid by consumers.
Yes, absolutely, in 99% of cases that is true. But conceptually there is a difference.
> NB: in you example if the company has paid more VAT than it has collected in the period then it gets and actual refund.
Yes, which is what I said as well. But the refund in itself is an additional step on top of the tax system and the money does get paid by the company in the first place. There is indeed a difference in how the cash flow of a company looks like.
That's the entire point of VAT, to make tax evasion harder by making everyone pay at every step and figuring out later the refunds
This is not a criticism of VAT or anything else by the way, as I said, in 99% of cases the company will get the VAT fully refunded and not pay anything on net over the fiscal year
My company pays VAT surplus to government every quarter since the VAT we collect on our products and services is higher then the VAT we pay for our purchases. How are we not paying it?
"Paying" is a bit too ambiguous term. Let's say we go to have a lunch, but I forgot my wallet at the office. You pay my lunch and once we are back at the office, I pay you back. Who paid my lunch, you or me? Your company pays VAT in the technical sense you paid my lunch and your company does not pay VAT in the economical sense I paid my lunch.
You are answering your own question: companies collect VAT from consumers and pass it on to tax authorities.
Then, as the company is VAT-registered what it purchases is either VAT-free or VAT paid can be deducted from the amount of VAT collected from consumers (as you said).
Bottom line: companies do not pay VAT on their own purchases, they only pass on VAT collected from consumers.
Obviously companies do make actual payments to the tax authorities but the point is that these are not from their own funds, they only effectively act as tax collectors.
You are right I suppose. We pay it and then we can get some of it returned.
You get all of it returned. 100% of the VAT you paid on things you as a company bought you'll get back from the tax office.
And when selling products, you'll send 100% of the VAT collected from consumers to the tax office.
VAT doesn't affect a company (besides the bookkeeping).
Not if you include trade barriers like the DMA, a law which is used to milk US technology companies through vague court rulings with arbitrary fines.
The EU is the undisputed king of vague laws that are applied principally to competitors with arbitrary fines.
How do you implement GDPR? Don't ask us, but if you violate it watch out!
How do you comply with DMA? Don't ask us, but if you violate it watch out!
Can't we sue the President or something? What if he made it like 200% to really try to fuck the country over?
I have a doubt for some years about the US, but never really got good info on it (maybe because it’s a silly doubt).
So, when I sell something to the USA (on eBay) for instance. It doesn’t pay VAT automatically. Do Americans pay VAT when it’s delivered?
But, when an American buys something locally, they do pay VAT, correctly?
We used to not pay anything for stuff, for instance I bought items that were dropped shipped from China under a certain value but that has ended. https://www.wsj.com/livecoverage/trump-tariffs-trade-war-sto... Sales taxes are on a state by state basis and online companies are required to collect it from the buyer and forward/report it to the state. Local purchases all have sales tax paid to state governments, some to city in urban areas. Some food items are exempt. A state can choose to not have a sales tax but most do IIRC. There is no federal sales tax. Until these tariffs which are essentially taxes.
Walton family, owners of Walmart, run the company by exploiting the labor force and social safety nets like welfare. Walmart is the largest company with the most employees on some sort of welfare. Tax payers are propping up their stock. This allows them to retain more of the profits versus sharing them and removing their employees from the welfare system. None of their listed actions have to do anything with globalization to retain their wealth.
Taxing the wealth and redistributing helps. Saw this in the 1950-1960s with building of new infrastructure to replace the aging or expand the supply to offset the demand. Using the money to pay for new training so lost jobs can be replaced where jobs are needed helps too. Even the simple act of ending starvation in children increases their intellect for the next generation and helps support the future. This method will never be perfect. These are band-aid solutions that have actual results.
Reality is that the inequality is a social problem masquerading as an economic problem. Society has moved to from respecting empathy and humanity to respecting greed and power. People mind set is anchored to, “That person is quite wealthy so they should be smart and some god must love them for it.” Reality is that person exploited a labor force to maximize their wealth. They are not more intelligent nor does some god like them better. Look at how many rich people fell for Elizabeth Holmes’s blood testing scam while a person that actually studies blood understands parts per millions in looking for test markers. A vial of blood or more is needed versus a drop.
Want to fix the system? Start looking at the wealthy with disgust and damnation. Demonize them for being the driving force in economic inequality. Move back to honoring and respecting empathy and humanity. Real intelligent people have empty. It lets them be placed in the shoes of others when they will never can experience it themselves.
I would also caption the wealth gab in the USA as modern day segregation. The world happiness index shows that equalizing the rich and poor creates a better sociality. Respecting the wealth and demonizing the poor is the complete inverse of a better society and maximizes soar.
PS. Why do people think bulling trade partners will be beneficial? Say you are store owner or product producer and you keep trying to bully me to by your products. I will not and go the competition, even with higher costs or deem the product or service not worth it. I already started boycotting USA bourbon manufacturers with their arrogant and bully statements during the Tariff Wars.
Do good, demonize extreme wealth. Irony is so many GOOD Christians even ignore Jesus’s statement on this matter with pretending Matthew 19:24 doesn’t exist.
I honestly didn't expect that Americans would simply... choose to be poor.
The US particularly has an extremely large population of men (10s of millions) who don't work. Who knows if they'd be doing "low skill" manufacturing if somebody was around to hire them. But if you actually wanted this to work you would have started by subsidizing american raw materials.
Why is there a focus on men not working? I have seen it in at least 3 comments in this thread.
Latest bls stats show men unemployment at 4.2% and women unemployment at 4.1%
https://www.bls.gov/web/empsit/cpseea10.htm
You have to go back more years to see the trendline. BLS has a different chart showing the male participation rate dropping while female participation rate has remained fairly constant over the past decade.[1]
By my rough estimation that's ~7M men unaccounted for by simply not participating in the 'traditional' labour force. Keep in mind that it could also 'simply' be that a lot of those unaccounted men are working but in ways that the government(s) at different levels are unable to reliably track.
There have been some articles and attention picking up on this trend over the past few years.[2]
[1] https://www.bls.gov/charts/employment-situation/civilian-lab...
[2] https://www.nationalaffairs.com/publications/detail/educatio...
[2] is an interesting article, but it doesn’t go into why male participation rates are going down more than female rates, outside of the fact that men are much more likely to be convicted of felonies which makes work prospects worse.
Anecdotally what I have seen most in men are the shut in NEETs who live with their parents and/or collect disability and play video games all day. Why this is uniquely a phenomenon for men is unclear to me, but on the other side I know of lots of trophy wives who just go to yoga class and salons all day and do not produce economic value, and they are not put under the same microscope as NEETs.
I believe the miscommunication here is that "total people not working" and "total unemployment" represent different subsets of the population. That is to say, there are people who are not working who aren't looking to work and aren't categorized as part of unemployment.
Civilization has always operated on the idea that men must work for it to function properly. When less people willingly work it can be detrimental for future welfare. The way that unemployment is interpreted by the public now is not very accurate. The gig economy has grown massively since 2020, which counts towards labor statistics, but its arguable to say if they should. The number of small or local owned businesses have grown substantially since 2020 - but is that because of a surplus of opportunity or people looking for ways to make additional money? The quality of the labor matters.
Tesla in Berlin employs 12,000 workers and can produce 5000 cars a week.
The US will need a lot of factories to employ 10s of millions of workers.I also imagine new factories will employ less workers due to increased automation.
I'm interested to see how this plays out.
This isn't the 1950s, factories are mostly automated: https://www.youtube.com/watch?v=blW-Fa4a10g
That's the whole reason we went all in with tech and automation
There are around 200m working age americans. So 100m working age american men. You are claiming that 20% of working age american men (at least) are playing video games all day (I assume that being in school or raising children or whatever is acceptable activity)? Where are you getting these numbers?
disastrous
I am not a specialist; but isn't that the most "green" policy ever ? I mean:
- Tariffs will increase the price of virtually everything -> By law of supply and demand; global trade and production will decrease, leading to less CO2 production
- This effect will be stronger for stuff coming from far away (little for Canda / Mexico; more for EU; huge for China). So companies will have a tendency to rely on local producer (even at a higher price). This again will lower transoceanic shipping. Other countries will probably retaliate so this effect will go both for inbound and outbound shipping. Again; less CO2 production
- More money for the government. There more stuff you buy, the more tariffs you pay, so rich pay more than poors. Which again is what green parties are looking for.
I might be very wrong about this; I am not a Trump supporter in any way - and to be honest I ma not a fan of green parties either - but my initial reaction is that if we look at the conclusion of the policies; the results are looking to align quite well. Of course the surrounding storytelling is extremely different; which puzzles me a bit.
Yes.
If you're into green policies, then tariffs are aligned with what you'd probably want, at least on some level. Though it's more complicated and by no means a slam dunk. One could say that producing things locally in more places is less efficient (lower economies of scale, etc.) which might result in more overhead per item, which might outweigh the extra transportation, etc. General assumption is that an unconstrained free market arrangement encourages system optimizing itself. But then there's a question what is it optimizing itself for, and that's definitely not ecological impact.
A change like that in a global economy has tons of non-linear effects, many of which it need to play over time, etc. Some changes are more easy to predict confidently, many not so much. But barely anyone argues from first principles, and its typically just tribal screeching on both sides.
There's a lot of speculation that the Switch 2 would be atleast hundred dollars less without this nonsense. The Japan exclusive version of the Switch 2 seems to support this, with it's restrictions that insulate Japan, support the notion that English actually isn't needed in Japan (nor any other languages), by releasing a version of the Switch 2 that is far cheaper but only allows you to play games in Japanese.
I think it is a mistake to approach this policy as if it is about other states. One sign that it is not is that it seems to be based on a crude, almost simplistic calculation, something like trade deficit divided by exports, with a ten percent blanket tariff on states with trade surplus or no trade.
Applying the same policy against everyone indicates it's not about them, it's about the usian 'us'. Another way to look at it might be as sanctions, but instead of applying them on another state, applying them at home. And sanctions are usually a means to influence oligarchs and industrialists in a state, which probably means this is a policy directed at those groups in the US.
Why would you want to hurt US industrialists and oligarchs? Because then you can ease their pain in exchange for their loyalty. This is the logic behind castles in Europe. It's a place where the king decides the taxes, taxing illoyal barons or whatever more than loyal ones, and if they militantly disagree, shut the door and have them expend their resources on a hopefully futile siege and then be weakened anyway. Similar policy was common in colonial settings too, if the colony was uppity, tax them harshly.
The world is changing fast anyway, the liberalist hegemony wasn't going to extend far into the future for many reasons, like climate change and the general rise of autocracy worldwide. Having guarantees of loyalty and stability from the state apparatus at home when the world order inevitably crumbles while burning some bridges that would likely fall apart anyway, instead of wasting resources keeping up a charade defending some 'status quo', has a kind of logic too it.
Just like Trump said, he could shoot someone on the street and the bootlickers here would still justify it.
This thread is all you need to know that PG types are ok with losing 10-50% of their equity's value as long as they can play tribal politic games.
PG is on X every day pretty much going "Why is trump doing this? There must be a reason!"
The media has been perpetuating that that tariffs are borne by consumers. This is partially the case, but not entirely: US dairy in Canada is not 3 x the price of Canadian dairy despite the 200% + tariff.
Bad example. Most dairy imports from US -> Canada are not subject to the tariffs.
This video goes over the details of the thresholds and how those dairy tariffs work: https://www.youtube.com/watch?v=0lURdVBCBo8
In short, nobody is paying 200% tariffs.
Admittedly without knowing much about our dairy industry and supply management, isn't this flawed logic? If a 200% import tariff means Canadian dairy can also be sold at a higher cost, then it's still the consumers bearing the cost--they are being denied access to cheaper dairy altogether.
It really also depends on how a product is imported. Is dairy imported into Canada as a ready to sell retail product, or as bulk 'raw material' for local companies to turn into consumer products. In the latter case the tariff is less significant to the final price since most of the price the end user sees are local markups rather than the cost of the raw ingredient.
> The media has been perpetuating that that tariffs are borne by consumers
They’ve not done that enough. The title is literally “34% tarriffs on China”. Heh, not __on__ China but 34% import tax on products which come indirectly or directly from China, imported by $country residents or companies.
You'd think that experts before this time would have considered this already, and rejected it.
Every single move by Trump towards the world economy has always been a bad one. Too bad to be mistakes.
They're not listening to the experts, and it's intentional.
"Reduces trillions of foreign debt, also causes double that in inflation"
Vietnam and Israel already agreed to remove tariffs on USA imports. Thailand is opening negotiations today.
It’s simple - remove import duty from USA goods and the USA will remove tariffs. Reciprocal trade.
Russia defeated the UK with Brexit.
Russia defeated the US with Trump's policies.
Where's the internal opposition?
Since the Nixon admin ended the dollar standard the world has basically been pumping the US economy in so many ways, enabling US imperialism.
1)Dollar standard guarantees countries will absorb US budget costs, since they all have to have dollars they have to accept their money devaluing as the US creates artificial inflation.
2)People buying the US stock market due to no fears of free trade, now why would a Chinese or citizens of certain other countries EVER risk buying US stocks? the trade has become so flimsy if even possible anymore, this is a cold war 2.0 at full scale, 54% tariffs on China are not a joke, that almost kills trade entirely, it wouldn't surprise me if China cut relations at some point now or if it keeps getting worse.
The real reason for this tariffs is a very Thucydides trap moment, ALL these tariffs were primarily targeted to China and countries that could potentially be a "threat" again if China were to "fall" economically, example: Japan, SK, India.
Oligarchs are for it because they want to eventually privatize the stock market and go back into a weird pseudo aristocracy, where they control the most powerful corporations in the world, just like back in the 1800s. (notice how Elon keeps SpaceX, Neuralink and others private?) Since the 90s unlike the rest of the world the stock market has halved in size in the US and the trend will keep going until only a couple individuals control the US economy.
This whole plan however has a flaw, it assume China won't eventually pass the US technology wise, but in the event that it happens, what then? will you not trade with China then? if that happens then you become basically North Korea where you are isolated from the latest technology, as the gap grows you get further and further behind in your standard of living. If that scenario happens it would be catastrophic for the US.
The blue collar workers are fine with enduring a bit more pain for a few months or even years as this pans out. Specifically if the investment classes (who will be most harmed) suffer more. Long term goals are other countries lower their tariffs with the US, more US manufacturing, a temporarily devalued US dollar to more easily pay down the national debt, and a renegotiation of the terms by which the US provides military protection to other nations. People who already had little if anything to lose not being able to buy cheap foreign goods they weren't going to purchase anyways for a chance to see if this works out, while seeing the tech bros, academics, and investment bankers squirm, rage, and seethe? Though I'll get down voted into oblivion, the unmitigated despair and outrage on display in these comments just make my smile that much wider.
If there's one upside to Trump, it's that he might turn a lot of left-wingers into passionate free traders. Who would have thought.
Americans would want to have high value-added activities done in the USA, and low value-added activities done abroad. Tariffs are being marketed as trying to achieve that goal.
The five strategic areas/sectors identified as a priority for repatriating activity into the USA are pharmaceuticals, forestry, steel/aluminum, automobiles, and semiconductors.
How is forestry a high value added activity? Are we including furniture manufacturing, or maybe residential housing construction in that sector?
Are we including all of the byproducts of steel and aluminum in the steel/aluminum strategic area? I assume it's not just the raw materials?
Is software included as part of the semiconductor sector?
The bull case for the USA is 1. Reshoring actually happens 2. Other countries actually drop their tariffs/trade barriers 3. A new golden age of Pax Americana/free trade ensues, with Americans exporting their high value manufactured goods worldwide
The bear case for the USA is 1. Republicans get hammered in the midterms 2. Entire world raises tariffs against the USA 3. American factories close en masse 4. USA dollar is devalued and reserve currency status is threatened
Historically, the pattern seems to be: 1. Acquire global empire 2. Promote free trade inside that empire, benefiting high-value added domestic activities and limiting high-value added activities in areas outside the core of the empire 3. Run out of money due to the costs of fighting wars to maintain the empire 4. Military power declines 5. Through one or more wars, another power takes over
Proponents of tariffs argue that Trump is trying to take us back from Step 3 - run out of money to Step 2 - promote free trade. In order to understand this thinking, it's important to understand that your empire's colonies aren't supposed to be allowed to promote their own industries and limit free trade by enacting duties on your own high value exports. To enforce free trade, you then fight wars, you can send gunboats (Opium Wars) or invade (Gulf War). But you can't invade and fight everyone, and rising powers protect their own industries through various measures as they build up.
But power is most powerful when it's not used. The threat of action is much more powerful than the actual action. That's why I'm more than surprised and not too happy that tariffs on a large scale have actually gone forward. Ideally, the threat of tariffs would be used to actually cause other countries to drop their tariffs, and free trade ensues. I'm not sure about historical examples of this working for getting other countries to drop their tariffs. You could certainly try suppress the growth of other countries, I'm not sure how well that works in a global marketplace scenario.
The flip side of that is that if you threaten for too long and never actually do anything you may lose some credibility. But I don't think anyone is arguing that the Americans are gaining credibility by enacting tariffs. It's a big world, and unless Americans have the power to influence their trading partners not to trade with others, then everyone can just trade with each other instead of trading with the Americans.
Pushing Vietnam into Chinas arms I see. Oh America.
Matches the expectation analysts have had from December 2024 [0]
"In the baseline scenario, we assume that the US will raise its effective WATR against Chinese goods by a total of 20 percentage points over 2025-27. We expect the effective tariff rate on China to rise by 5-10 percentage points in 2025, owing to the imposition of tariffs related to fentanyl smuggling disputes. Mr Trump will further phase in tariffs from late 2025 with a wider range of excuses and policy tools, eventually bringing the effective WATR facing Chinese exports to about 30% by 2027."
[0] - https://www.eiu.com/n/the-impact-of-us-tariffs-on-china-thre...
For China maybe, I doubt any serious analysts were expecting this high of tariffs on most other countries, like Mexico, the UK, and Canada.
The methodology of counting non-price barriers on certain goods then applying it across the board on all goods as tariffs is bonkers. Doubtlessly they aren’t including all the non-price tariffs the US imposes on other countries either.
I’m extremely skeptical the EU has effective tariff rates of 40% on all US goods, and furthermore skeptical that if so the US doesn’t have countervailing effective tariff rates at the same rate.
It is not a conspiracy anymore. Problem - Reaction - Solution. Start a war in the middle of Europe and Gaza. Tariffs. Recession - Panic - Digital ID, Social scoring, CDBC, Digital dollar, AI governance, tech feudalism. That's all folks. :)
Just leaving this here from 2023...
"In America, estimates say that Chinese suppliers make up 70-80 percent of Walmart’s merchandise" - https://retailwire.com/discussion/walmarts-open-call-continu...
Walmart has been trying to strong arm China into eating the cost of tariffs.
https://www.bloomberg.com/news/articles/2025-04-02/walmart-k... | https://archive.today/Q5CNc
"Hey China, pay the tariffs or we'll go to another country."
"You mean the countries with tariffs even higher than ours? Best of luck."
Walmart is a drain on communities anyways, aren't their employees on food stamps at some ridiculously high rate?
It’s not like mom and pop stores are equipped to source things locally any better than Walmart. They would also be relying on the same imports from abroad, but would not have the bargaining power that Walmart has.
I’d rather buy from Walmart than Amazon. At least Walmart pays local taxes and has some level of quality assurance on their merchandise.
I’m assuming you mean you prefer buying local vs online because Walmart’s online marketplace has the same level of qa as Amazon it seems.
> aren't their employees on food stamps at some ridiculously high rate?
Welfare like food stamps is a subsidy /against/ Walmart, not for it. You are supporting the employees by paying for their food, which means they can negotiate for higher wages, which means Walmart pays them more.
An example of the other kind would be literal wage subsidies, which are sometimes paid so companies will hire mentally disabled people.
I'm taking bets, do you think the tariffs will:
1. be rescinded/paused in [0,2) days;
2. be rescinded/paused in [2,4) days;
3. be rescinded/paused in [4,7] days;
4. not be rescinded/paused.
3.5) rescinded/paused [30-61) days. There will be some bluster, and then announcements with the large trading partners like Japan, South Korea, etc., that some new deals have been struck.
that some new deals have been struck.
I believe that was the plan all along. He's just doing it aggressively with tariffs.
5. All of the above.
If Paul Graham is calling out conservatives for being driven stuff other than data, then you know people are losing it lol.
Usually on here you see a bunch of apologia for when republicans do inane economic policy and I am not seeing that bs on here for once...
Guess Trump really wasn't the crypto, AI, chips, wtv you wanna say president lmao. But nah all the naysayers just had TDS.
Guess Wall St and others are going to have to re-learn that sound policy beats vibes.
I guess I didn’t want to buy any new tech anyways.
Thanks Tim Apple.
Can always vacation somewhere you can pickup gear and bring it back with you. Not customs advice.
This is how a lot of people around the world live their lives. Dubai wisely provides this as a service to surrounding countries, to their great enrichment.
It creates a lot of incentives for corruption though.
It’s not at all uncommon in Latina America from my understanding for wealthier people to fly up to Miami, buy a ton of iPhones for family and friends, then bribe the customs agents to look the other way.
If you bring back goods worth more than $800 it has to be declared and a duty paid.
Judging from the changes (currently paused) to the de minimus shipping rules (also formerly $800) I’d expect the threshold to be lowered substantially. Possibly arbitrarily while I’m on a trip and have already bought the goods.
The risk being if detained by DHS for who knows how long is not worth saving $400 on a MacBook personally.
It is highly unlikely my iPhone or Macbook will be checked for newness when on my person, or the iPads in my kids' hands. I'll just time these purchases around trips to Mexico or Europe.
Anything more powerful I will rent or colocate outside of the US in a rack somewhere, moving bits instead of atoms. In short, unless you spend a lot on tech, or tech that isn't portable, workarounds in some cases are available. Certainly, if you’re trapped in the US (or you need goods that are impossible to import on your person), you’re hosed and will be exposed to the tariff costs.
I am allergic to kowtowing to stupidity.
It was reported that they're getting rid of that as well.
As long as it is less than $10000 in value. It is an interesting point though, if tourism outside the country will increase just for shopping.
Well, US has a "beautiful ocean" around which makes this plan a little costly.
When I lived in San Diego, tons of people would walk or drive across for better deals - teenagers would even take the trolley and walk over since their money went so much further. I’ve heard that this is also common in Washington and Maine.
If the savings is enough, it’s guaranteed that people are going to try this. San Diego claimed a 158% increase in egg seizures last month, there’s no way you aren’t going to have people try that with iPhones.
https://www.npr.org/2025/03/28/nx-s1-5342554/eggs-border-sei...
In Washington/Maine it's typically Canadians shopping in the US - groceries are cheaper in the US unless the CAD is doing particularly poorly.
~19M people live on the US-Mexico border alone in the US [1]. I am not ignoring nor unsympathetic to those who cannot, for whatever reason, make a trip outside of the US happen, but surfacing it as an option for those who can. When you are trapped within a suboptimal system, you have to find ways to hack around it.
[1] https://www.southernborder.org/border_lens_southern_border_r...
Ah, so like good old times in the Eastern Bloc ;)
My parents did certainly smuggle a fair bit on their trips. I'm so happy Americans can learn that experience too! :> (I don't. Why are you hitting yourself.)
25% on South Korea, 32% on Taiwan, 36% on Thailand, 46% on Vietnam
What a massive and moronic blow to our soft power.
>25% on South Korea, 32% on Taiwan, 36% on Thailand, 46% on Vietnam
Harley Davidson moved some of its production to Thailand in 2018 to avoid a 31% tariff the EU had on US manufactured motorcycles, announced in 2024 it was moving more production there, and prior to today had plans to sell the Thailand produced bikes back into the US, as the US had a 0% tariff on bikes. Not surprisingly Thailand has a 60% tariff on imported motorcycles.
This tariff jumping is real. I guess we will see how it works out for the US.
Just think how many companies moved production from China to Vietnam to avoid China tariffs, and now tariffs on Vietnam are larger than on China.
It's just going to be a game of whack-a-mole as production and dumping shift to the less taxed countries. In the end, manufacturing won't shift to the US while labor costs are too high for factory workers. And the only way to remedy that is tanking the currency.
Tanking the currency is literally step 2 in their plan.
https://www.nordea.com/en/news/mar-a-lago-accord-explained-a...
It's obviously the only real end game to this policy. Asia needs to divest itself off US bonds, which China has been slowly doing the background of late. No matter how it plays out, it's looking like higher interest rates, inflation, and foreclosures for everyday citizens and SMEs are going to be on the cards for the US, and it's going to take something akin to religious faith for people to tolerate the hardship on the way to this promised renewed prosperity.
Note that the new 34% China tariffs are on top of the existing 20% blanket tariffs Trump has already imposed on China, so it's really 54%. https://x.com/EamonJavers/status/1907540655871521264
Bessent didn't sound too sure in that interview. Given how many members of the cabinet lie on camera flagrantly multiple times a week and how even the numbers on their little poster were total BS pulled from thin air, I'm not gonna give him benefit of the doubt.
This underscores the difficulty companies have trying to navigate through this. Even if Trump doesn't change his mind tomorrow, as he's liable to, he's only around for another four years and for most companies that's not enough time to justify a supply chain overhaul.
What's the actual strategy behind the current US administration slapping tariffs on everything? Feels like they're handing them out like Halloween candy. Is there a long game here, or is it just managed chaos and alienating trade partners for short term optics?
They claim that they are "reciprocal" tariffs, and their chart shows them at exactly half the tariffs they claim are imposed by the target or 10%, whichever is higher. But it is suspicious that the column on their infographic showing the foreign tariffs has fine print indicating that includes other non-tariff things that you can't easily calculated as a neat rate the way tariffs are. And, some people running the numbers have determined that the quoted foreign "tariff" amounts are consistently the US trade deficit in goods with the target country divided by that country's exports to the US, with a minimum of 10%.
So, despite being labelled "tariffs", the actual basis for calculating the "reciprocal tariffs" has nothing to do with tariffs.
A rebirth of mercantilism. Peter Navarro is a huge fan of it, and in his heterodox fever dreams, laments that most of the world abandoned it several centuries ago. In his mind, a net surplus of currency is every bit as important as having a strong military. People like Lighthizer have drunk the coloured sugar-water.
Here is what they say anyway:
https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...
https://www.whitehouse.gov/presidential-actions/2025/04/regu...
https://www.whitehouse.gov/fact-sheets/2025/03/fact-sheet-pr...
People like Navarro believes a non-trivial amount of manufacturing can be coaxed back to the US from China and Vietnam.
Only if we tank our currency and create a huge population of people willing to work for a buck oh five.
That's a sacrifice they are willing others to make.
Kill people's savings, might happen. Discretionary spending is about to get clobbered. Restaurants may be at the top of that list, and travel.
I rather doubt Walmart is going to increase the price of only Chinese made goods 25%. I think everything goes up 25% and they pocket the margin as long as they can get away with it.
> Kill people's savings, might happen.
It doesn't work because it's basically illegal to be poor in America, or rather to live like a poor person in a developing country. Because of theories about gentrification and such we just banned everything like SROs, company dorms, etc.
It worked for a little while in the 2000s because earlier flight from cities had left a lot of empty housing open to gentrify, but none of that is left.
There's a few classes of people left like supercommuters and people who live in RVs in the Amazon warehouse parking lot, but not going to run a big factory like that.
You clearly have never lived in Louisiana.
https://www.ft.com/content/fba87dd3-514a-41c2-b2b9-ea597ffbd...
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
The TLDR is Miran sold to Trump US can Plaza Accord everyone, devalue USD to reindustrialize US, draw down US debt/commitments, keep exorbitant privelege... all by slapping tariffs (Trump's fav hammer) to scare countries into signing (converting) existing US commitments to "century bonds" in US favour while tying them to US orbit for foreseeable future. Is US strong enough to coerce others to sign on? IMO doesn't matter, this seems like plan specifically tailered to Trump preferences and ego, so as long as Trump thinks so Miran gets the job.
E: there is logic to the plan, logic that appeals to Trump -> US strength and monetary manipulation skills can force others to fall in line. And TBH countries have fallen in line in the past.
Yeah that’s not going to work. America is about to find out that the era of bully pulpit is over. Why work with a recalcitrant and quite frankly obnoxious US when you can cut bilateral EU/Asian deals?
I'm on the side of free trade and dont think there is a single policy. The strongest arguments I can think of are:
1) raise tax revenue in a way that partially falls on foreign nationals
2) reduce trade deficits and foreign purchasing of treasuries.
3) Increase relative power if other economies are damaged more than the US. There are situations where zero and negative sum strategies are optimal, like war, where it is better to have a larger % of a smaller overall pie.
4) stimulate demand for us labor
> 2) reduce trade deficits and foreign purchasing of treasuries
None of the GOP budgets reduce the deficit. Trump’s blew them out even further.
Im talking about trade deficits, not budget deficits. Im not convinced trade deficits are a bad thing to begin with, but that is a whole sperate can of worms.
My understanding is that yes, the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue. Would you agree?
> the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue
Not the debt, the deficit. The debt is the card balance. The deficit are new swipes. Nothing in the current policy package is about deficit (let alone debt) reduction.
(Valid on trade deficits. I guess we can run trade surpluses if we give up dollar hegemony. That, of course, means no more deficits.)
> My understanding is that yes, the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue. Would you agree?
Let me see if I am following. The tariffs are ostensibly about spurring domestic industry so that American companies can flourish and we don’t have to pay tariffs on imports of foreign goods in the long term. Is that right? If so, then long term, aren’t we hoping that the “tariff funds” are small? But they are simultaneously supposed to supplement revenue to pay down debt too?
And they are trying to push through a massive tax cut. So.. yeah unclear what the goals are here
Trump is using century-old misinformation about tariffs to raise tax revenue to pay for tax cuts on the wealthy. In reality, it's an added tax on all spending that accelerates inflation.
Tariffs are theoretically supposed to encourage domestic production, but rely on the false premise that all raw and intermediate materials can be sourced domestically at a cost below the import price. That has generally proven to not work unless tariffs are in the hundreds of percent. But at that level, import taxes tend to poison entire sectors due to supply lag instead of drive domestic economies.
Interesting, do you have a source to get more information about this?
It's a bit difficult to nail down direct citations for what is basic knowledge of how tariffs work in reality. It's covered in AP/college macroecon and U.S. history classes.
Wikipedia's articles on Smoot–Hawley and the Tariff of Abominations both have sections on their effects.
In short, we'll see a brief rise in the domestic economy, then a sharp recession. One of the reasons SE Asia, BRICS, and the EU have been so active to disconnect themselves from the U.S. is they don't want to get caught up in the U.S. economic failure like they did in the 1930s.
This type of approach is called protectionism, the Wikipedia article is pretty good and goes into the implications of it: https://en.wikipedia.org/wiki/Protectionism
Category error to think there's a strategy. Trump doesn't even know what a tariff is. People try to project a strategy because it's probably too discomfiting to believe that the greatest superpower the world has ever known elected a complete nimrod king.
It's hard to have insight on what the US admin is thinking behind the public facing statements, however this might be of interest:
Why Trump’s tariffs are better than you think — and much worse
subscribe! https://www.crikey.com.au/2025/03/06/donald-trump-tariffs-im...
or read now, maybe subscribe later: https://archive.md/H46RG
Can we please stop acting like Trump and MAGA behave rationally?
It's not just soft power. It is also economic power. Also, note that there is a baseline 10% on all countries.
Really curious on how it will blow-back on Americans. Because, make no mistakes, it will.
The cost to move these industries to the U.S. exceeds the cost of these tariffs. The market will pass the cost of what are import taxes to the American consumer, resulting in inflation.
True, the shareholders will take a pay cut too, because something less than 100% of American consumers will just suck it up without changing their behavior. But in aggregate, we will all save less.
If inflation takes off again, maybe eventually there's some monestizing of debt. But in less than 4 years these tariffs will go away, which is why companies won't spent billions of dollars investing in state side manufacturing that'll take maybe 5 years to plan and build. Therefore I'm not sold on the montizing debt motivation yet.
Why in 4 years they will go away? Is that assuming the new administration will reverse course? It’s my understanding that generally country don’t lower tariffs voluntarily. They are usually bargaining chips.
We have tried this before about 100 years ago. Supply chains and economies were not nearly as interconnected as they are now. Read the history of the Smoot–Hawley Tariff Act.
> It’s my understanding that generally country don’t lower tariffs voluntarily. They are usually bargaining chips.
Tariffs are a tax. Tax on us, the people buying goods.
It's a massive tax increase. People are slowly waking up to that fact.
Rolling back the tariffs is giving everyone a tax cut. Well, tax cut back to baseline of what everyone expected.
As people realize that they are the ones paying the tariffs, this is going to be very unpopular.
Tariffs may not even last 4 months. Trump demanded Powell reduce interest rates, the FRB declined. The might be Trump's way of forcing the Fed to reduce interest rates, by inducing a recession with massive inflation. And then Trump takes the tariffs away once the Fed gives him what he wants.
FRB won't reduce interest rates if there's inflation alone. They'd only reduce interest rates if the economy also slows down into recession territory.
That's the short term view.
In the long term view, they are the biggest tax increase in the history of the country, therefore they are potentially the biggest tax decrease in the history of the country. Political fodder, even for a corpse.
>Tariffs may not even last 4 months.
(c) Should any trading partner take significant steps to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters, I may further modify the HTSUS to decrease or limit in scope the duties imposed under this order.
https://www.whitehouse.gov/presidential-actions/2025/04/regu...
Written as if he was a king.
"I can do whatever I want, whenever I want. Bow and appease me".
Yeah but we Europeans told you for decades that your presidency is dangerously overpowered. Guess some things you have to find out yourself.
Even the Americans, the State Department has (had?) people whose job is to help with nation building and they'd learned that if you copy-paste the US model you're basically just setting up a dictatorship in advance, the "President" will seize power, whoops.
It's impressive they got to forty odd Presidents with only one civil war so far, but it's just luck and it didn't last.
https://duckduckgo.com/?q=Tom+Wolfe+%22dark+night%22&t=ffab&...
100% I have been raving about this for as long as I remember. Most folk nod, but say "it could never happen here".
It depends.. For some goods possible to just immediately raise prices, for others, business will try to compensate from another source.
As example, Daimler stated, they will cut cheapest models from export to US, so some segment will got less concurrent market, and probably prices will raise.
Probably, this is because Daimler have much higher profits on expensive models, so they could just lower profits on them. Other variant, also possible, expensive niches are more tolerant to price raise.
For small countries, tariff raise nearly guarantee prices rise, but US is big country, things are not so simple.
You mean there might be some niche product that:
1. has no US parts in the supply chain
2. has a importer that is willing to sacrifice itself for the greater good
A faint drop of hope in an intergalactic ocean of despair.
You are just asking things not matter. So you are not looking for truth but you are looking for create more despair.
Be calm, ask right questions and you will got truth.
But can't you feel the liberation?
The full list:
https://www.cnbc.com/2025/04/02/trump-reciprocal-tariffs-cou...
10% tariffs on the Heard Island and McDonald Islands which are uninhabited, and can be reached only by sea, which from Australia takes two weeks by vessel. And also 10% on Svalbard and Jan Mayen which is also uninhabited. That will teach them not to ripoff the USA!
Oh NO tariffs on Russia or Belarus. None.
Both Svalbard and Jan Mayen are inhabited. Jan Mayen only by about 35 people, though. Svalbard has both Norwegian and Russian settlements, but of course entirely too small to have impact on US trade.
Svalbard imports a lot of snowmobiles though, given their population. From what I know a substantial fraction, if not most, are from Polaris so made in the US[1].
[1]: https://www.polaris.com/en-us/snowmobiles/owner-resources/he...
"A lot" is rather relative here given the total population is around 2.5k people.
True but I think relative numbers are relevant in this context.
Those first two islands aren't even thought to have been visited by any human for many years!
That makes the fact that they were able to rip off the USA in trade even more outrageous! :-)
Can't hear you! USA. USA. USA.
Politically it's going to be just like how most everyone fell into line fervently supporting the Iraq War when the corpo media told them to. Then after the unavoidable truth finally seeped in, equivocation and rationalization from "I didn't really support it" to "we were misled". With a lot more visible economic pain, of course.
Then that anger from having been "tricked" will be used as raw energy to drive the next con, and so forth. A broken clock is at least right twice a day, but these low information voters will sabotage themselves every single time.
> but these low information voters will sabotage themselves every single time.
It is generally not cool to blame the voters. There was a ton of misinformation preceding the Iraq war as you point out, but even then there was a massive popular opposition to it. Hundreds of thousands protested against the war before the invasion in New York and Washington DC. Some polls showed that 5% of all Americans participated in a rally or a protest in the weeks leading up to and following the invasion. And despite that popular opposition, among politicians there was a bipartisan support and just a handful of MPs opposed to it. Meaning the public was never really given a choice. In short, the Iraq war was the fault of the politicians and the politicians alone, the voters came nowhere near it.
https://en.wikipedia.org/wiki/Protests_against_the_Iraq_War
Yes, I went to a few of those protests. Despite the popularity of opposition, there were still plenty of people arguing in support of attacking Iraq. In fact I'd say that most people were in support of it. "They hate us for our freedom", "fight them over there instead of here", and general reflexive arguments supplicating to power. That's the dynamic I'm talking about.
Whether invading Iraq would have still happened without that popular support is besides the point. The point is there was full-throated support from many people, who would reflexively reject dissent while parroting corpo media talking points, and who then only came to see what a poor idea it had been over time.
Effective total tariffs on China will be 54% effective 9 April. No way US does not go into recession...
And wait for the response from the trading partners...
Correction: average tariffs on China prior to today was 42% https://www.piie.com/research/piie-charts/2019/us-china-trad.... This means after today, average tariffs on China will be 76%.
China is already in a Great Depression, and this tariff hike guarantees China to be in 30+ years of economic depression.
Between the US and China, I would be putting my money in China, who by the way, leads in AI.
"I Just Saw the Future. It Was Not in America." - https://www.nytimes.com/2025/04/02/opinion/trump-tariffs-chi...
America's leading supply chains just went up in smoke. The fallout is going to be pretty funny from an international POV, methinks.
Might cause a global recession, though. And that might be less funny.
Don't worry, acoording to Trump this will generate billions and billions of dollars and America will be rich as it never has been before. /s
The more I think about Trumpian strategies the more I suspect that he got some friends together (or they came to him) and decided they'll short everything, then he'll do this for a while. He and those friends would be able to 'generate billions' that way, by legal insider trading (since we learned that anything he does "in an official capacity" is legal and he can pardon anyone who ever got caught).
Last term he did some tax on bauxite that had a similar effect of costing billions to a whole industry that processes or buys aluminum, but one of the few bauxite mines in the US, run by a Trump ally of some kind, made bank.
Yeah, billions and billions: https://youtu.be/u_aLESDql1U
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As a EU citizen, I think this voter ID argument is absolutely insane.
a) Republicans did the math and figured out that a lot of people who vote Democrat didn't have IDs. Old black people, in particular, were not likely to have IDs. Republicans also did stuff like accept fishing and hunting licenses for voting, but not university ID. None of this is a secret. A think-tank called ALEC came up with it. In-person voter fraud, the only kind of election rigging that voter ID laws prevent, is next to impossible in the US system and basically never occurs on more than a one-off basis.
b) A lot of those people who didn't have IDs have either gotten IDs or died off by now, so the Republican advantage of voter ID laws has faded.
c) Given (b), Republicans have moved on to other tactics like voter purges, shutting down registration offices and polling stations to create long lines in urban districts, gerrymandering, and limiting early voting and mail in voting. One of their favorite tactics is limiting early-voting mailboxes to one per precinct, whether that precinct has 1,000 voters or 1,000,000. You can guess which way the crowded urban precincts tend to vote.
The whole idea is just to put their thumb on the scale enough to discourage some small % of voters in the swing states that determine our president every four years. If you live in California, no one cares how you vote for President.
Tory party did this in the uk. Old people bus pass is allowed. Student id card isn’t.
Bus pass is issued by the government though. Student id is issued by the college. I know because I made one at the student union to help with getting into nightclubs (allegedly).
And here we created fake state-issued driver's licenses when I was in college.
(Wish I could find a photo of a giant, fake driver's license on foam core with a rectangle cut out for the person to stand behind when a photo was taken.)
Can we have some numbers/citations on the proportion of democrat and republican voters without ID? Because I've heard that it will benefit Democrats and is a Reoublican own goal.
Nearly everyone has a driving license, so the percentage without ID must be really small.
Elderly do not renew license to avoid eye test that gets driving taken away.
With how many top tech CEOs lining up behind Trump, I wonder how much of Californian democratic support backed by staunch belief, rather than political expediency.
Stats show that Tech workers mostly vote blue, but as you move up the corporate ladder they slowly start to vote more red because their increasing wealth gradually makes them more and more in touch with the forgotten factory workers in the rust belt and angrier about the handful of trans athletes ruining women's sports.
As a French I used to think too, "what's the big deal", "it has never been an issue here". But that's because we are used to it and getting an ID is easy and almost automatic. Whereas in a country like the US, it means missing several days of work, driving potentially hundreds of kilometers, and their geographic segregation means it's easy to make getting an ID harder for black people than for whites.
As a European I also find insane elections are held on workdays (in France it is always on Sundays), that you may have to wait in line for hours to vote, that voting stations may be hours from where you live, etc.
> As a European I also find insane elections are held on workdays
That's not really an issue, if you have enough polling stations. Denmark typically have elections on a Tuesday (but can technically be any day of the week). We have 80%+ turnout, one of the highest in the world, for countries without mandatory voting. The day of the week doesn't matter, IF you ensure that it sufficiently easy for people to vote.
If you actively try to make it inconvenient/impossible for people to vote, then it doesn't matter if it's on a Sunday. My take is that part of the US political system need as few voters as possible to turn up in order to have a chance of winning, so they will make it as complicated and inconvenient as they need it to be.
I do enjoy the idea of making election days days off, days to celebrate. But yes, it usually takes me about five minutes to vote in the Netherlands, so I don't really need the day off.
In a country where "some" people work two or three jobs to make ends meet, Sundays vs. workdays does matter.
In canada, if you don't have an id, you can get someone who knows you (and has an id) to swear an oath you are who you say you are. You can also register at the same time you are voting.
Seems to work fine. I dont think we have ever had any issues with that system.
Even more radical: in Australia you turn up at one of many polling stations with no ID whatsoever and vote.
It works because voting in Australia is compulsory. They must have your name on their list, they cross if off it and hand over the ballot paper. The checks and balances you might expect and done after the event, making it fairly secure.
Only of those checks is you did vote, and a fine follows if you didn't.
You need an ID to do basic tasks in USA as well, everyone with a normal life has them.
Around 21 million eligible voters in the US do not have an ID that is acceptable under their state's laws.
And exactly what obstacles they are having with getting one?
Usually it comes down to travel and the challenges of documenting eligibility which can require additional travel and expenses.
https://www.brennancenter.org/our-work/research-reports/chal...
> Nearly 500,000 eligible voters do not have access to a vehicle and live more than 10 miles from the nearest state ID-issuing office open more than two days a week. Many of them live in rural areas with dwindling public transportation options. > More than 10 million eligible voters live more than 10 miles from their nearest state ID-issuing office open more than two days a week.
https://www.democracydocket.com/analysis/how-id-requirements...
> According to the study, between 15 and 18 million people in the U.S. lack access to documents proving their birth or citizenship, which can be integral to acquiring other forms of IDs.
This can force circular dependencies: for example, older black or Native American people who were born when they weren’t welcome at hospitals might never have been issued a birth certificate so they first need the travel, expense, and difficulty to get one from the clerk where they were born. Poor people are far more likely not to have bank accounts, so they can’t establish their in-state residency that way, etc.
None of these are insolvable problems but the people pushing restrictions haven’t been willing to put effort into solving them and often make things worse by cutting office locations and hours in ways which disproportionately impact poor and minority voters.
A google search tells me that around half of people in the USA do not hold a passport. Domestically most people rely on drivers licence as their ID.
> Domestically most people rely on drivers licence as their ID
So show your drivers license at the voting booth? Why is that unacceptable?
Any form of ID held by the average voter will be unacceptable to the GOP, because it won't limit voting access from the people they don't want voting.
That doesn't explain why democrat run states like California can't have a sensible voter ID law that accepts such identifications?
If they just said "accept more IDs" instead of "stop voter ID requirements" people wouldn't think its a problem, but that isn't what democrats are saying.
The crux of the argument is that voting is a right, and voter ID laws create a unnecessary burden to exercising that right given the extremely low levels of individual voter fraud. Do I need my driver's license to practice free speech? Do I need my passport to be allowed to be an atheist?
It would be different if we were solving a problem with voter ID laws because then you're balancing rights with real pragmatism. You can as hypothetical about it as you want, you can go down the slippery slope fallacy if you want, but the evidence shows us we do not have an issue here.
It would also be different if IDs were easier to come by, because then the burden is not disproportionate to the problem. But neither of these things are true.
Instead we're just enacting barriers to the use of our constitutional rights, barriers to participation in society, not to solve a problem but to enact a political end.
What problem are you trying to solve here? Republicans say the problem is people voting who are ineligible, Democrats accuse them of trying to make it harder for democratic voters to vote.
> What problem are you trying to solve here
People using others papers to vote, that is much harder if you must display a photo ID together with the papers you received that says you are allowed to vote.
Voting without an ID is like opening a bank account without an ID, its just dumb. Oh wait, I heard you had that as well in USA, which is why you have issues with identity theft...
> People using others papers to vote
Except every analysis has shown people are not doing this. Oddly, the few times there have been real cases, it's often GOP voting more than once or for their dead spouse or some such.
Think of it, if someone is truly not eligible to vote, why expose themselves to additional scrutiny for a single likely inconsequential vote?
Where fraud could happen is at scale, and with DOGE getting access to all systems and dismantling the agencies that guard against voting fraud, I feel that once again we're seeing that every accusation is an admission.
What analysis has shown that people are not doing this? All I have seen is that there aren't a significant number of convictions, but that doesn't really hold wait if you aren't actually trying to catch/prevent people from doing it. If it never happened, there wouldn't be a standard well known practice of casting a provisional ballot if you have already "voted".
I don't think a driver license is a valid voting id in the US, because you don't have to be a citizen to get one.
When you show your id they check if you are allowed to vote, the id is just to identify you as a person it doesn't mean everyone with an id gets to vote.
I misunderstood what my West Virginian friend wrote me then, from my understanding the new ID laws will require an ID as 'proof of citizenship' to register to vote, which a driver license isn't. Those who vote among his group are a bit mad about it.
Not everyone has drivers licenses, especially poorer folks, especially minorities. The requirements for drivers IDs are now to get RealIDs and some of these folks don't have access to things like birth certificates and other requirements of getting a RealID.
There's also additional requirements of your gender matching your ID (which eliminates many transgender folks), your name matching on all documents (good luck if you're a married woman), etc.
Folks are rightly pointing out that these laws are engineered to suppress votes, and you seem to not be willing to listen to understand why.
> Folks are rightly pointing out that these laws are engineered to suppress votes, and you seem to not be willing to listen to understand why.
Are you saying democrats will engineer these laws to suppress votes? Is that why democrats don't have voter id laws? The GOP isn't relevant here, we are just wondering why democrat states can't seem to do this.
Why argue about this, when you can read a well written blog post that discusses this matter in detail? https://www.lwv.org/blog/whats-so-bad-about-voter-id-laws
It's getting complicated for married women. Every name change since birth has to be documented to get a Real ID.
A black woman jumping between three jobs to make ends meet in Alabama doesn't have a "normal" life, then. Too bad for her! And for millions like her, in a country where elections are decided by single-digit majorities.
Hard to imagine that woman could get 3 jobs without an ID.
Go to the USA and talk to black women, and ask if they have ID and if it was difficult to get.
Said Black woman needs an ID to get jobs and collect benefits like SNAP, WIC, etc.
Most states where voter id is mandatory also have policies where you can get a free ID and even a free ride to a location to get your ID. They implemented that in South Carolina and after the first few years, nobody used it.
Because you have to have an ID to do almost everything else in the country so everybody already has an ID and opposition to voter ID makes no sense.
"Free" ID generally means there is no fee paid to the issuer of the ID. It can cost hundreds of dollars to get the documents that you have to present to the issuer to get that "free" ID.
Also many states have accompanied their stricter voter ID requirements with reducing the number of offices that process applications and with reducing the hours they accept applications so that even if you can get a free ride to an office you might have to take an unpaid day off from work to do so. That can be a significant loss for many poor workers.
> Because you have to have an ID to do almost everything else in the country so everybody already has an ID and opposition to voter ID makes no sense.
Yet many millions get by without an ID [1]. A lot of things you probably think cannot be done without an ID actually can.
For example how can you cash a paycheck without an ID? You need an ID to open a bank account. An answer is you can cash checks using a third party endorsement. You don't need a bank for that. You just need a trusted friend who has a bank account. I'd guess that this is what the 6% of Americans without bank accounts do (23% among those making less than $25k/year) [2].
How about getting a job without ID? First, there are a lot of people who don't need jobs (e.g., the stay at home partner in a household where one partner works and the other takes care of the house). Second there are a lot of job that pay cash and are off the record.
Also there are a fair number of people who once had ID but no longer do. It has been a very long time since I've actually needed to show my driver's license to anyone.
My banking is all online, as is my check cashing (my bank has a great "deposit by photo" function).
When I signed up for Medicare, Medigap, and a Part D plan that was all through ssa.gov and medicare.gov, with no need to show ID. That was apparently all covered by when I showed ID years ago when I set up ID.me as a login method for my ssa.gov account. It will likely be the same when I apply for Social Security benefits. Afterwards all my interaction with SS and Medicare should be through ssa.gov and medicare.gov.
If when I'm older I am no longer fit to drive and let my driver's license expire and don't remember to get a state photo ID then there is a good chance I can live the rest of my life comfortably without ever running into anything where that causes problems.
The simplest way, though, to see that it is possible to get by reasonably well without an ID is to note the large number of undocumented workers that the current administration is trying to kick out. They are able to come here, find places to live, and get paying jobs all without a state issued photo ID.
Whatever they are doing citizens can do too.
[1] https://www.voteriders.org/analysis-millions-lack-voter-id/
[2] https://www.cnbc.com/2024/08/02/23percent-of-low-income-amer...
This makes no sense. You can literally register to vote at the DMV and I know very few adult Americans, of one ethnicity or another, who don't have a driver's license.
You dont know many poor people, or very young people.
I work a furry convention in the Southern US, about 3% of our attendees have some ID related malady - can't get a timely appointment at DMV, missing core documentation, unable to prove residency, etc - nevermind rural voters who may live hours from a DMV.. which they can't get to without a license (assuming they can afford a car) or a ride. No bus service to speak of either.
Its a huge issue, I'd 100% support voter ID if getting an ID was free and easy, without it I'm skeptical.
Yeah, see the article about "RealID" yesterday. The first step is to require an ID, and the next step is to make it harder to get. For example, a married woman without a perfect paper trail of name changes? No Id.
I unironically keep an original copy of those documents in my safety deposit box because of this. In theory I should be able to go to the courthouse and get another copy but if 40 years down the line they've lost them I'm screwed.
I feel bad for the people in states that don't require court orders for this because they apparently have the worst time trying to update accounts.
I'm with you
What state do you live in? I think this argument is very frustrating when people who live largely in blue states (like California) that don't up any hurdles to getting an ID, can't imagine the level of dysfunction that is intentionally executed in other states in order to prevent people from getting IDs.
Yeah, everyone you know has a valid ID because you don't live in a battleground state that is currently fighting electoral welfare. Republicans don't care to put up barriers to getting an ID in California, Texas or New York.
> I know very few adult Americans
Do you think there's a chance there's a selection bias to your random sampling of the population?
It's easier if you just tell me what the bias is.
Incidentally, there are many less privileged people around me and, let me tell you, they're not going to work on foot.
Most people are friends with people like themselves?
The selection bias of extrapolating an entire country (not to mention one as large and diverse as usa) by using your friend group should be very obvious.
Yet I wasn't talking about my friends. I live in a large city and get to see many people I don't know every single day.
Incidentally, my friends are much more likely to not need to drive at all (tech or otherwise who WFH) than the average person around me.
Do you often ask people you don't know if they have a driver's license?
> live in a large city
Ah yes, large cities. Famous for their rural populations.
You're not arguing in good faith.
Wait, are you telling me that rural populations have less proclivity to drive?
I'm just pointing out obvious ways in which you have selection bias here.
FWIW googling, allegedly 1 in 10 people in rural america do not have a license. Or at least that is the claim floating around the internet. So yes, i think figuring out if this is a real issue should include both checking on rural and urban people, along with many other demographics. It is not obvious how this situation differs between urban/rural.
Do any of them take the bus to work?
Just read all the answers in this thread. Your PoV is far from reality, especially at a time where elections are decided by single digit margins.
RealID documentation requirements are a PITA. I have a birth certificate and passport and valid DL and it still was a nuisance the accumulate the required point allocation. People without those golden documents can be very hard pressed to meet the bar.
> This makes no sense. You can literally register to vote at the DMV.
https://www.politifact.com/factchecks/2016/feb/19/john-olive...
> driver's license
Republicans are trying to make it so that the vast majority of drivers' licenses do not work either. You may have to get a new one, with passport-level paperwork.
That politifact page literally states there are close by DMVs that are open every week. Not sure what point is trying to be made.
Around 9% of US citizens 18 or older do not have a non-expired driver's license. It's even more for various minorities [1][2].
[1] https://cdce.umd.edu/sites/cdce.umd.edu/files/pubs/Voter%20I...
[2] https://papersplease.org/wp/2024/06/07/who-lacks-id-in-ameri...
I only mentioned DMVs to point out that even if you didn't set out to get a voting document, you can still check the box and get it.
In other words, it's not "people need driver's licenses to vote".
Aren't poor and dumb usually republicans tho?
The poor disproportionately votes left. Somebody who is poor and lives without a valid ID that meets voting requirements is also not necessarily dumb.
Cities. It's cities.
Almost 10% of eligible voters do not have access to citizenship proof at ready[0].
Trump changed voting rules to require proof of citizenship[1].
Disenfranchising 21 million voters makes sense now, no?
[0] https://www.brennancenter.org/our-work/analysis-opinion/213-...
[1] https://edition.cnn.com/2025/03/25/politics/voting-proof-of-...
>Whereas in a country like the US, it means missing several days of work, driving potentially hundreds of kilometers
Where did you hear this? When I lived in Pennsylvania, it was really easy to get a state ID. Just go into the DMV, show them your documents, pay the fee ($42 now), and you have your ID within the hour. They had centers all around the city, and they're open on Saturdays. Personally, I think this is an extremely weird hill for Democrats to want to die on. Most independent and swing voters think its a reasonable requirement.
I'm from Pakistan, and the solution to 'it's difficult for people to get ID' was so simple even 3rd world poor illiterate country could do it: just go to them instead.
Our ID department has buses with computers and cameras/fingerprint machines on them, they go to remote villages and stuff and take everyone's bio data, then return a few weeks later and give everyone their cards.
There is literally NO valid excuse for NOT implementing voter ID.
NONE.
If we can do it, the richest country in the world can do it.
Such a pathetic hill for American Democratic party to die on.
That’s a government that’s interested and motivated in getting people an ID.
Now imagine the opposite. A government that’s not interested but rather is motivated in denying some people an ID. Why it increases that’s party likelihood of staying in power.
The US doesn't have a national id card, and the people who want to force ID for voting are the strongest block against having one, for religious reasons. What you suggest is impossible in the US.
I think it's on purpose to rather limit the voters than empower them.
No, I think that's just a republican boogie-man.
I think democrats started out with good intentions, helping enfranchise black voters a part of the civil rights act .... but somehow they have made it their morality point and refuse to accept that it is no longer fit for purpose.
They should made no voter-ID a temporary measure and created proper voter-IS systems in the meanwhile.
lets see where this whole thing heads to. May be in the end we will see the birth of a true democracy, which is social and where the strong ones will take care of weak ones. At least it should be .. in a dream :)
The problem is that we don't have those same systems for getting an ID.
There's no "government comes to you" to give you an ID. And, many Democrats would love to make it easier to get an ID, but the Republicans often deliberately make it harder to get an ID.
They shut down offices and reduce hours of locations, so people have to travel farther and take more time off work. They increase the bureaucratic requirements and hurdles, so people are more likely to need to take multiple trips.
I personally wouldn't have a problem with making a voter ID a requirement to vote, if we could also agree to make it as easy as you describe to get an ID. The problem is the GOP wants to require getting a voter ID and simultaneously make it harder to get an ID.
The problem in the US is they are not doing this if anything they are reducing the number of places you can get an ID.
The US is not a monolith, it's a collection of 50 states....
Democratic states collect taxes and implement policy independently, they CAN do this, at least in their own areas.
Start there first!
https://youtu.be/rHFOwlMCdto?si=OjoxCfE1noxvw3Fz
I have been a John Oliver viewer from the first season, and my comment will be the same as what I said 9 years ago: This is bullship.
Start small, but START. Start from Democrats accepting what every LEFT leaning person the rest of the world accepts: Photo ID is necessary, not to reduce voter fraud or whatever, but necessary to increase TRUST in the system.
It's a cost, just pay it. Yes you will lose 'face' to republicans, don't care.
Start small, start with free/cheap photo ID in deep democratic cities (I know local govt providing service, what an idea!).
Once saturation reaches 80% plus, start enforcing voter ID laws to cajole the last 20% to start applying, carrot and stick. Start offering door-step service for those unable.
Democrats pay taxes, don't they? start using them.
Spread to other cities in democratic states. So what if it takes 10-20 year? Times passes like nothing.
And once you have SET the standard of cheap, reliable access to Photo ID... and when democrats in power in the federal government again, they can use that to help implement cheap photo ID elsewhere, but even if Missouri doesn't get voter ID, it doesn't excuse democratic states NOT having it.
The fact that the DMV is only open three days a month or whatever? If it's a democrat led city, FIX it. If it's a republican city, you can come to it later.
But NOT starting, as some sort of fake 'rights' issue? Bullship.
Start. Start Small, Start NOW. in 25 years you won't even remember this.
So democrats should spend all this money, time and resources solving a problem they don’t have. And for what purpose? Nah I will rather my Democrat state focus on human welfare and giving people opportunities to progress in life
> Nah I will rather my Democrat state focus on human welfare and giving people opportunities to progress in life
That sounds like it would be way easier if those people had id's...
The UK Labour government was opposed to Photo ID it was the right wing that introduced it.
It is an Anglo-American thing not to have PhotoID probably related to never been invaded in the last two hundred years.
The issue is that to get back in power the Democrats need votes top overturn Republicans and so the IDs in Republican states matter those in Democrat states do not. So better top show full disapproval as they won't lose any seats over that and can keep some pressure up.
I feel this same issue was behind Brexit.
Some people in the UK had the same 'oh no we are being outnumbers' sort of mentality, and without mandatory ID, they had no sane voice in their head to tell them 'don't be silly, we track people with cards'.
It's funny how much the existence of the card gives the masses a weird sense of peace.
Would you like to remind them also what NADRA has Ahmedis sign (half-nama)? I don’t think John Oliver would be very happy about that…
And? That's bigotry, a totally different issue from accessibility.
The population WANTS this piece of bigotry, heck our ancestors voted for the damn thing it, it's literally the 2nd amendment of our the constitution.
You can't blame NADRA for including it in their forms, they do it on government demand. Heck, I had to sign the damn thing to get my damn passport, there is no escaping it.
But NADRA also has vans that go village by village providing photo-ID on the doorstep. And THAT is accessibility.
Do I wish this piece of bigotry wasn't in on our forms? Yes. Today Ahmedis; tomorrow Shias; day after who knows, it might be me.
Does it mean CNIC are BAD? NO, they are perhaps the only actually part of cour damn governance, being able to provide ID.
We could obviously do better, but NOT having ID is crazy.
I think the problem there is that in Pakistan where they do this they can reasonably assume that everyone in that remote village is a Pakistani citizen - they probably don't need to see your birth certificate to get you an ID, right? In US they want to see proof that you are a citizen and you are who you say you are, which is what (some) people have an issue with, even if you sent buses with all equipment on them to random american towns people just might not have the right documentation on them to pass the checks.
But yes, I agree, it is a pathetic problem for a 1st world country to have - just sort it out.
> they can reasonably assume that everyone in that remote village is a Pakistani citizen
absolutely not! we have had massive migrations both from India (after independence) and Afghanistan (after the russian occupation). This is NOT a given.
Things have NOT been easy... and in fact dare I say, our ID department is rather dumb and stupid. I personally have had MULTIPLE issues with them.
But we have been doing SOMETHING, and the fact that the US doesn't... is insane.
Alright, how do these mobile offices confirm who they are issuing the documents to then?
iirc, they use other people as verification.
When a child is born, the parent has to get them registered at the local council office. And then when my first card was made at 18, my dad went with me as verification, he attested that I was child #X as per the family tree, they confirmed someone with my name was in that family tree in their records, and used that as verification for me.
If parents are not available they can use relatives, as long as there is a family tree link. Not sure how they do it otherwise, but there is some system for refugees etc too.
Do you have a more precise exemple of a state in which it is that difficult ? And a source ? I really find it hard to believe.
Not the OP but here’s an example: https://www.reddit.com/r/stupidquestions/comments/1ghrsbq/co...
Basically you need very specific letters where your exact name and address must match but those are issued without checking. So if one uses your middle initial instead of your name then no ID for you until you get it reissued.
In Texas they have a shortage of staff issuing the ids too so there is a 3 month delay after you apply to find out what you did incorrectly https://www.statesman.com/story/opinion/columns/2024/08/19/t...
I'm French too but I disagree a bit: first, voting if important to people, should be a good reason to get an ID, voting without an ID does seem insane, so what are they doing. Second, why black people ? Are they not human too ? They can read, they can work, they can complain, they can... get an ID card right ?
Simplest answer is they don't care, wash their hands off of the whole thing and then democrats complain that it's the requirement to identify voters that block them. But it's not a strange requirement, it's as you say, a completely normal part of being a citizen to get an ID, and a duty for a voting citizen to do what they need to do to get that ballot in.
And even if black people were somehow disenfranchised from getting IDs, it doesn't prevent the non-black people to vote rationally, in the end. So no excuse.
The issue is not that the barrier is insurmountable. The issue is that small amounts of friction become meaningful at scale in elections. Place the friction in the right spots and some people experiencing that friction choose not to bother. If the people who choose not to bother disproportionately vote for one side then there's a small electoral benefit to the other side.
Just read the dozens of links shared in these threads.
https://www.google.com/amp/s/www.cbsnews.com/amp/news/eligib...
https://youtu.be/rHFOwlMCdto?si=OjoxCfE1noxvw3Fz
>Second, why black people ? Are they not human too ? They can read, they can work, they can complain, they can... get an ID card right ?
As a black American who had crackheads in my family, I don't know anyone who was totally incapable of getting an ID card. I only ever see the argument brought up by white people on the Internet. Tyranny of low expectations. Heaven forbid that black adults be expected to shoulder some personal responsibility and figure out how to meet the basic requirements to exercise their civic duties, same as white people.
"The white liberal is the worst enemy to America, and the worst enemy to the black man." -- Malcom X
You should look a little bit closer to actual circumstances of people over the country.
https://youtu.be/rHFOwlMCdto?si=OjoxCfE1noxvw3Fz
What aspect of this video do you think supports your position, specifically?
My mother's side of my family is from North Philadelphia, same state as the first black woman featured in this video.
I spent three weeks in the US in 2021 when my mother had a psychotic breakdown and I had to put her life back together on short notice. She had lost her wallet and all ID. I got her a brand new birth certificate in Philadelphia and a NJ State ID to replace her Driver's License. This required setting up some appointments either online or via phone, and bringing some documents along, but it was manageable.
Expecting someone to have original birth certificate, SSN proof, and spouse's death certificate is....normal adult document management. I deal with a similar "burden of proof" every time I go to my local Japanese city office, or to immigration to renew our residency.
The next anecdote in the segment blasts Sauk City, Wisconsin for the ID center being closed on most days. According to Copilot, Sauk City is 96% white, with a median household income over $78,000 and a population of less than 4000. So a small middle class town of white people rarely has the ID office open? How is that supposed to support the argument that mandatory ID requirements disproportionately affect minorities again?
The second half of the John Oliver clip focuses on the voting events not the identification acquisition problem so I don't consider that part relevant and won't dissect it.
That would make sense if driver licences were difficult to obtain in US in any way shape or form, and they just aren't - almost everyone has one and it's not a big deal to get one.
Provably false.
https://youtu.be/rHFOwlMCdto?si=OjoxCfE1noxvw3Fz
And you need to do paperwork, which means you have to pay and find time. How do people with 2 or 3 jobs do?
91% of US adults have a driving licence:
https://hedgescompany.com/blog/2024/01/number-of-licensed-dr...
So forgive me for being flippant but....how hard can it be?
>>How do people with 2 or 3 jobs do?
I assume they drive to those 3 jobs, so they somehow found a way.Again, sorry for being dismissive, and I appreciate it might be time consuming at costly - but still, 91% of all American adults have found a way to do this, so my point is that driving licences(along other documents) seem like a perfectly acceptable form of ID for voting?
That's because you live someplace where the things described in the various links in this comment [1] do not happen or happen way less than they do in the US.
[1] https://news.ycombinator.com/item?id=42116609
You've fallen victim to GOP propaganda. They use 'Voter ID' as a reasonable sounding shorthand for a lot of policies that just make it harder to vote. The other responders highlighted many of them.
I don't, but we have a functioning citizen registration system; every voting eligible citizen gets sent a voting card when elections come up. That can only work if you're registered and have a known address. "Illegal aliens" don't have that, so they can't vote. Foreign nationals that are registered / stay here legally also don't get voting rights so they simply don't get the voting card mailed to them.
But also because of that registration, getting a kind of ID involves making an appointment at the county house, filling in a form and handing over a recent portrait photo. It's a bit of a hassle but nothing extreme.
If it makes you feel any better the UK Conservatives tried this under the "we have to stop voting fraud" excuse. Turns out it backfired because the oldies couldn't figure out the new requirements leading to this scandalous quote from pantomime villain Jacob Reese-Mogg:
> Parties that try and gerrymander end up finding that their clever scheme comes back to bite them, as dare I say we found by insisting on voter ID for elections.
> We found the people who didn't have ID were elderly and they by and large voted Conservative, so we made it hard for our own voters and we upset a system that worked perfectly well.
Even Boris Johnson was turned away from a polling station because he didn't have his ID with him.
It's a different culture, one which is not used to have and use a national ID, which is completely common in the EU (with the exception of Ireland perhaps?)
The UK also has strong opinions about ID.
My wife was denied the opportunity to vote last year in the local elections due to not having ID in her when we popped in on a whim.
The voting booth refused to even register this, yet the apologists claim only 1 in 400 were denied.
Seems like a sensible decision, since you apparently couldn't be bothered to prepare properly. I totally have no sympathy for this story.
That sounds fair. No ID means no way to check if she had already voted or even has the right to vote.
I mean....how do you know it's more than 1 in 400? You have one example - your wife. Any reason to believe it was common?
https://theconversation.com/almost-2-million-people-in-the-u...
The article you posted confirms the 1 in 400 number:
"We found that around 0.5% of all voters reported being turned away at polling stations as a result of lacking ID in the local elections of 2023. We also found that four times as many people (around 2%) reported not voting because they knew they didn’t have the right ID."
2.5% is 1 in 400
I know, having lived there in the past, but they are not in the EU anymore.
That’s not true. I lived there for nearly a decade and you use driving licenses for id and there are other forms for id as well that don’t include the passport.
You need ID to do a lot of stuff just like any other country.
What is not true? A driving license may be a defacto ID, but it is not a dejure, designated national ID card. It's a different system. In the EU countries the ID cards are backed by a more-or-less central civil register.
(as an aside, it would be very funny to me if the they used the driving license for electronic signing of official communication with the authorities like we use it in some countries in the EU).
There is no national id (other than passports; but most people don't carry theirs on themselves in their own country) because driver's licenses (issued by states) serve the same purpose. We don't have a non-DL id (that's popular at least).
Anyway, this is sort of by-the-by. Most adults have driver's licenses, and no one in Alaska is going to reject your Tennessee-issued DL so it is a de-facto national id.
91% of adults have a driver's license, leaving 9% of potential voters without a DL.
In a properly functioning democracy barring 9% of your voting population from voting because they lack an unrelated document (why should a driver's license be linked to ability to vote?) would be considered a major flaw.
In a properly functioning democracy ... nobody without proof of citizenship should ever be allowed to cast a vote.
You don't get it.
You may elect to have your DL as a voting document as a convenience. It doesn't mean you have to have one in order to vote. A state's Board of Elections will issue you a voting document.
40% of the eligible voters sit out every election. No one who wants to vote is being barred from anything. They don’t lack an unrelated document, they lack the proof that they are allowed to vote. We have freedom of expression and yet to purchase alcohol you must be able to prove you are allowed to buy it. We have the freedom to bear arms and yet in many states you must prove you aren’t a nut job to own and carry a gun.
>>why should a driver's license be linked to ability to vote?
It's not, it's just one of many acceptable forms of id - along with a passport, birth certificate, and probably few others.
>>In a properly functioning democracy barring 9% of your voting population
Unless they are stopped from obtaining any document then they aren't barred from anything. Most Americans don't have a passport either but no one would argue that they are barred from travelling internationally, they just have to go and get a passport issued.
> Unless they are stopped from obtaining any document then they aren't barred from anything. Most Americans don't have a passport either but no one would argue that they are barred from travelling internationally, they just have to go and get a passport issued.
Making it difficult (as the article states, this 9% do not have ready access to documents proving their citizenship) is essentially barring with extra steps.
I hate this semantics/loophole game Americans like to play, seems to be quite common in your society to use the "akshually, technically" and going completely against the spirit of something. The spirit is: this makes it more difficult to vote, it will inevitably bar some people from voting, it's just salami-slicing...
>> seems to be quite common in your society
I'm not American and I don't know why you'd assume I am - to me the fact that americans don't have ID requirements to vote is insane.
>>as the article states, this 9% do not have ready access to documents proving their citizenship
Again, do they simply not have them because they never bothered to get them, or are they unable to obtain them? That's quite a big difference.
I also hope we're not saying that if someone turned 18 and just simply never bothered to obtain any kind of acceptable ID(and there are usually many) then it's somehow unfair to not let them vote - because I really struggle to see how that would be true.
A lot of people seem to just assume that other countries have less friction (or no friction at all?) for people to vote, than the United States. My friends from other countries would find that amusing.
I get it that some states try to disenfranchise people and obviously that's wrong but the answer to that cannot be "voter id requirements are bad".
Driver's license is the defacto ID used everywhere. Which kind of makes no sense but that's the way it is. Just about everyone has one and arguments that requiring an ID to vote would disenfranchise citizens don't sound believable to me.
Just look at actual facts. There are many links in this thread.
You also seem to think everyone has a car and thus a driving licence.
And that's before talking about voter roll purges, gerrymandering and putting ballot boxes and stations away from "certain type" of voters.
>>You also seem to think everyone has a car and thus a driving licence
I don't see how those two are related. In UK driving licences are also used as de facto ID everywhere(you can even get on domestic flights using your driving licence lol), and everyone gets one when they turn 18 because just get a provisional driving licence(identical to a normal one but with an L on it to indicate learner driver), no car necessary. In effect everyone in the country has a driving licence even if they don't drive or own a car. And you just apply by post, no need to go anywhere,
Obviously it would be much better to do it like other European countries do it and just issue everyone with an actual ID when they turn 18, but what UK is doing is close enough equivalent of this. So if the US has the DMV and already has an easily accessible way for people to get driving licences......what's the problem?
This may be true in your demographic (it is in mine) but as of 2015 there were 45 million driving licenses issued and at least 55 million adults.
Old people don't necessarily have photographic driving licences in the UK.
Some would be caught out if their passport has expired.
You can use expired passports and driving licences to vote:
https://www.southend.gov.uk/elections-registering-vote/chang...
What's the problem?
Just look at the actual facts, as you say.
https://theconversation.com/almost-2-million-people-in-the-u...
https://x.com/yishan/status/1906592890845028405
This whole thread is gold. People just casually discussing why it is necessary for America to enslave the world AND it is beneficial for the world. The color revolutions were successful in other countries until the DeepState decided to bring that "social engineering technology" to home. Somehow people think they can contain such moral corruption just as plasma is contained using electromagnetic coils in fusion reactors.
Voter ID helps Democrats in 2025, it doesn't hurt them.
How do you figure?
The theory here is democrats on average are more educated, wealthier, and in more of a position to prove they are citizens. Don’t have an opinion on that. But it’s something I know many democrats around me have said.
Because of educational polarization and race depolarization, Democrats now overperform Republicans in low-turnout elections. It's been true in every cycle starting in 2018 (and in the special elections before that).
The demographics of the parties have shifted quite a bit with Trump's second term. The Republicans lost much of their educated elite but made up for it by gaining a lot of the poor folks that have hitherto been the Democratic backbone and who are most hurt by voter ID.
Trump lost the $30k–$50k democraphic by 9 points in 2016, but turned around and won it by 6 points in 2024—a 15-point swing! Meanwhile he won the $100k–$200k and $200k+ demographics by ~2 percentage points in 2016, but lost it by 5+ points in 2024 even while winning the popular vote.
It's possible that this was a one-off and not a major permanent realignment, but it's definitely not as clear cut as it used to be.
That Democrats have held both the white house and congress several times over the last decades, and didn't try to put in place some reasonable voter ID laws is really sick.
Basically the law they would need is "states can do whatever voter ID they want, if it's free and easy to get ID and 9X% of voters not just _can get it, but actually actually have it, otherwise they can't". Or they could have made a federal ID and ensured everyone gets it.
But Democrats always felt that even going ner voter id laws were a bit dangerous. It always rang like "voter suppression" to them (and in many ways it probably was). But they missed the chance to make it impossible for Republicans to abuse it as voter suppression - and here we are now, worrying that there will be voter ID laws despite many lacking ID. It's infuriating.
Why the idea of "we'll just make sure people have ID" is so unimaginable is just completely impossible to understand. It doesn't matter that there is no actual in-person voter fraud. Voter ID laws are a good thing anyway - if everyone actually has ID. It adds trust to the process and god knows the US needs a process where people actually believe it's secure, not just one that IS secure.
Does that matter as much as citizens united?
Assuming citizens united isn't going anywhere (it's not, with the current SC), then yes.
On the scale of concern, voter ID is way down there. You've already had both "prosecute main political opponent" and "storm the legislature".
Voter ID is very common and sensible. The UK introduced it recently and while it did disenfranchise people this was not to the benefit of the party in power when the law was introduced.
This historical period will be remembered by being a cause for legislation to introduce strict testing for mental illness in government positions. Ask any psychologist and it’s clear what it is, but they won’t say it publicly because of Goldwater “rule”. fact is they have the most dangerous and destructive mental illness known, and they captured the power exactly because of their disorderly mindset. Yet for months and years everyone is observing and discussing what people with a serious mental illness are doing when they are given highest post in power and unlimited money.
I don’t support tariffs at all, but calling these people mentally ill is the wrong approach.
They’re not mentally ill, they’re obsessed with power. It’s dangerous to conflate the two.
Malignant Narcissism
https://www.theguardian.com/us-news/2024/oct/24/trump-nyt-ad...
That’s called "overpathologizing".
This is very different from “lay-diagnosing” every introvert kid as autistic and every jittery kid as having ADHD.
There’s _a lot_ of reliable material from his direct actions over the years to accounts from people who’ve worked or dealed otherwise with him closely.
There’s more than enough of it to make it possible to fill in a DSM-5 questionnaire and see what the outcome is.
Dementia
This is the equivalent of the "mentally ill lone wolf" rationales given for American mass shootings.
What possible difference would a psychological test make when an pre-existing felony conviction is not enough to keep him from voting, but also to actually sit as head of state?
What is happening in America simply doesn't happen without broad-based, implicit, systemic support at all the important decision-making junctures. In 2017, several of the highest-profile executive orders were slapped down in court within days. In 2025, the government is not even pretending to abide by court rulings on their EOs, and are detaining people without charge and revoking their visas without due process.
> will be remembered by being a cause for legislation to introduce strict testing for mental illness
You’re making some bold statements about the ability of congress to pass legislation at all.
A medicalized psychiatric state is not the solution to the current lunacy. Just imagine the abuses it would lead to.
So which illness it is?
Malignant Narcissism
https://www.theguardian.com/us-news/2024/oct/24/trump-nyt-ad...
Greed? I dunno
Presumably psychopathy combined with narcissism
Nah.
Why haven't we questioned the asymmetric high tariffs imposed by the EU on America for decades?
The EU imposed a 10% tariff on US cars for decades while the US only imposed 2.5% on the EU. And this happened while the EU exerted a significant trade surplus against the US on automobiles.
I don't advocate trade wars, but I can understand the case for some rebalancing, given the historic context. Hopefully Trump will only use tariffs as a negotiating tool, and they will soon be lifted. He's a dealmaker.
Of course a lot of the vehicles that would be interesting to the US market are not classified as cars, but as (light) trucks, and have a 25% tariff applied (originally due to a minor tariff "war" in the 1960s around chicken exports). It's just wrong that the US until now has not questioned and acted upon foreign tariffs.
>The EU imposed a 10% tariff on US cars for decades while the US only imposed 2.5% on the EU.
Whose faults? Someone signed the deal, someone let the deal stand 'for decades'. Trump could have 'rebalanced' any disparities...er, 'nicely', and been annoyingly victorious. As it is, nah. Lost trust. Not visiting, either.
All the gigabrains trying to be economists ITT don't understand this is a political move for Trump's base. It is not about what is technically best or the most logical according to the academics. It is an emotional decision more than anything. It stems from the working class in America being given cheap crap from Asia that barely works in exchange for shipping the good jobs overseas to the lowest bidder.
The working class has enough TVs, iPhones, and toys. We want secure housing, good education, healthy food, and an opportunity for promotion in life. Those things can only come with good jobs that are accessible to the whole working class, not just the well educated who make up most of the service economy.
> We want secure housing, good education, healthy food, and an opportunity for promotion in life. Those things can only come with good jobs that are accessible to the whole working class, not just the well educated who make up most of the service economy.
What level of confidence do you have that the tariffs are a path to this outcome?
> We want secure housing, good education, healthy food, and an opportunity for promotion in life.
How come dismantling education, medical, various protective agencies and services will help with that?
I understand the "and 10% on everyone else" part of the tariffs.
Do you think the media is too dumb to understand that, or are they just playing games when they point out a 10% tariff in someone who does not export to the US?
can't wait to read all the bad HN takes on this one
If we could manage the country using HN experts, we'd be incredibly prosperous. People here know so much more than the actual professionals in the government.
Only a few people pointed out the obvious. Trump aims to bring everyone to table to renegotiate global commerce. Every country's economic strategy today is to have positive trade with the US and that is unsustainable.
A risky tactic, but refreshing after decades of the old tired policies that brought us the collapse of parts of US manufacturing and so much pain during COVID due to a complete dependence on foreign suppliers for... Well, everything.
I don't know if this will work. But I know what we had before wasn't working. We'll see.
Why exactly wasn’t it working for US? The country with most wealth by like every measure? It’s not enough?
Well they were only getting one golden egg a day. If they cut the goose open they could get all the eggs in one go.
This is the most mind-blowing thing to me: a bunch of multi-hundred-billionaries all standing beside a billionaire that shits in a gold toilet and is in charge of the richest country on Earth angrily proclaiming that "Everyone is taking advantage of us!"
Seeing yourself as a victim makes it easy to justify your actions.
> Trump aims to bring everyone to table to renegotiate global commerce.
Throwing the gauntlet in the dirt isn't how you achieve this type of diplomacy, as the world will just form new economical alliances with more predictable trade partners instead of wasting time trying to appease Donald Trump.
> A risky tactic, but refreshing after decades of the old tired policies that brought us the collapse of parts of US manufacturing and so much pain during COVID due to a complete dependence on foreign suppliers for... Well, everything.
By "policies" do you mean US corporations trying to make as much profit as possible by moving manufacturing to cheaper countries?
The result of tariffs, even if manufacturing for some products moves back to the US, will be higher prices for consumers even in the long run as you cannot produce things as cheaply as other countries. In a country where wages have not kept up with inflation the economic pain will keep mounting.
> I don't know if this will work. But I know what we had before wasn't working. We'll see.
Coupled with:
> People here know so much more than the actual professionals in the government.
Is funny to read; If you had those actual professionals in the government, they would be able to show you some serious predictions about how these moves will improve the economy and when you can expect the "golden age" to show up.
The pot calling the kettle black...
Current EU tariffs on US goods...
That's a bit misleading. Make no mistake, current US tariffs are UNIVERSAL. Not specific to e.g. chicken or automobiles or purebred horses. They cover absolutely everything. While you may see 38% or more tariff on chocolate, chocolate export to the EU from the US is hardly an important issue. And for dairy products, the tariff is a fixed euro amount per weight, not %.
https://ec.europa.eu/commission/presscorner/detail/en/qanda_...
https://trade.ec.europa.eu/access-to-markets/en/search?origi...
I wasn't touching the first two categories anyway, tariffs or no tariffs.
First one because I don't understand why i should risk a milk based product that has traveled for months across an ocean. Or even from another EU country, when I can buy stuff made in a 200 km radius around me.
Second one because afaik it's legal to call "chocolate" something that does not contain any actual cocoa in the US.
> Second one because afaik it's legal to call "chocolate" something that does not contain any actual cocoa in the US.
Well, no. It cannot be called "chocolate" if it is something that consumers would expect to be made from actual chocolate. However, it can contain the term "chocolate" if cocoa or another cacao product is the sole source of its chocolate flavor, and as long as consumers have a pre-established understanding that it is likely to not be made from chocolate. For example, people generally understand that chocolate cake is likely made with cocoa, not chocolate, and so it can be labeled "chocolate cake". If there is no such general understanding, the product must be labeled "chocolate flavored".
(See the US FDA CPG Sec 515.800, "Labeling of Products Purporting to be 'Chocolate' or 'Chocolate Flavored'")
Now if we could just get them to stop calling chocolate products with dairy in them "dark" (I'm looking at you, Hershey...)
Cheese is the obvious one here. I can get a variety of foreign cheeses even at my local big-box grocery. Much better options than most domestically produced cheese.
Irish/Finnish butter (Kerrygold/Finlandia) is also fairly popular here.
If properly refrigerated, milk can last for months especially if pasteurized.
You can also evaporate milk and it will last nearly forever unrefrigerated if kept dry
> If properly refrigerated, milk can last for months especially if pasteurized.
But why take the risk when you can have fresh?
> You can also evaporate milk and it will last nearly forever unrefrigerated if kept dry
Is that still milk?
Cheeses yes, I randomly buy fancy cheeses. But most of my purchases are still boring predictable recent local cheese.
> But why take the risk when you can have fresh? > Is that still milk?
Some people just find it things like evaporated milk convenient. e.g, Coffee drinkers who don't want to bother with refrigerating the cream, so they use the powdered stuff.
In the case of European butters/cheeses, they just taste despite the higher cost.
I doubt anyone would actually prefer American butter, except maybe Americans, but it could be the American producers can make it more cheaply.
So maybe just let the consumer decide ?
Weren’t things like that 25% steel and aluminum tariff added in response to Trump’s earlier tariffs, and allowed to lapse in 2020?
https://eur-lex.europa.eu/eli/reg_impl/2018/886/oj/eng
https://www.gtlaw.com/en/insights/2025/3/eu-to-impose-tariff...
Careful: The rate mentioned for alcoholic beverages (and confectionery) may include Excise Duty. Excise Duty usually have the non-discriminatory aspect of VAT : they’re also applied on local production.
Trump thinks VAT is comparable to a tariff. VATs are not directly comparable to tariffs.
These are ex-VAT.
I'm sorry, but could you provide link, where stated, VATs applied to import?
- As I know, usually VAT deducted from exported goods, but I really don't know how VAT work with import - usually on import used tariffs.
https://vatdesk.eu/en/import-export-and-vat/#:~:text=of%20VA...
>Yes, imports of goods are subject to VAT, with taxation taking place when the goods clear through customs.
The VAT is applied at the time of sale to the end consumer, it's irrelevant if the product is imported or manufactured locally.
So strange to take VAT into account when it's not discriminating between local or import. By that logic the US has a 5-10% tariff on everything too since we have sales tax in like 47 states.
The thinking may be that the asymmetry in taxes itself cause a trade imbalance. What can the country do with the extra tax money they receive compared to the lower tax country? They can spend it to fund infrastructure, goods, and jobs inside their own borders.
Ok. Taking this argument completely in good faith, does it follow that they think no country should be allowed to have any sales tax? Or that it’s an act of economic oppression for any country to have a higher sales tax than our country does? I’m just confused, do they propose every country should abolish all their sales taxes to appease this strange and pretty novel point of view.
I feel like Trump or whoever is running this import tax show has lost the plot on what they’re trying to accomplish.
Interesting that people are downvoting heavily those information. If reality does not match our view of the World, well, let's ignore reality. The truth is that EU kept higher tariffs on US goods than the other way, Trump is changing that and there is an outcry, because it was Trump who did that. If that was Kamala, nobody would even notice.
The next phase is likely geopolitical. Countries will begin negotiating directly with the U.S. administration to secure exemptions or reductions in tariffs. In effect, it’s the formation of a new American sphere of influence / empire.
To me it seems like Americans are currently actively dismantling their sphere of influence.
Exactly. The old is based on Cold War. The new sphere of influence will be probably quite different.
I don’t feel like there will be one worth talking about though if the current direction persists. If you don’t care about things like freedom, democracy, free press, the rule of law, free markets, then China seems like a much better overlord to take.
Yup, who wants to get deeper in business with a party you cannot - in any case - trust?
This breakthrough in nuclear fusion energy is a significant milestone, but it's important to remember that practical, commercial-scale fusion power is still likely decades away. Nonetheless, this achievement validates the massive investments and brings us one step closer to a potentially transformative carbon-free energy source.
I'm surprised by how many concerns there are here related to how the tariff amounts were calculated.
It seems like they used a pretty simple algorithm to do it. Isn't that a good thing? Countries were treated the same and the tariff was decided primarily by the trade imbalance (with a minimum of 10%). Would we rather them use a combination of completely incomprehensible calculations and backroom deals?
Its open season for debating whether tariffs will work, or even what the underlying motivations are. Attacking the use of a simple algorithm across the board just feels lazy and either emotionally or politically charged.
It's both simple and stupid algorithm, though.
Why is it stupid? They claim to be concerned with trade imbalances, and that those imbalances are a problem. Using those trade imbalances to calculate a tariff seems reasonable, assuming the concerns are right.
If tariffs are to be imposed, I'd at least rather be able to see how they were calculated and know it was done the same for every country.
It's stupid because trade imbalances aren't necessarily a problem, and are sometimes a good thing that you need.
That doesn't make the policy stupid, it means you disagree with the opinion that led to the policy.
The "numbers" appear to:
* Punish Ecuador, who uses the US dollar, for being a "currency manipulator", which obviously makes zero sense
* Punish Lesotho, whose population is too poor to ever afford US goods, because they export a lot of resources that we use
* Punish countries like Columbia for being big coffee exporters where there is no hope of building up a domestic coffee industry because that's not how agriculture works
* Tariff an island inhabited only by Penguins
It's just dumb.
Aren't you cherry picking to make a point though? Certainly there are impacts on other countries though, and they're likely aligned (in theory) with their stated concern that countries are leveraging trade deficits to take advantage of the US.
> Tariff an island inhabited only by Penguins
This would be a great sound bite, but its also entirely useless. If the only inhabitants are penguins then a tariff on paper means nothing, they just avoided having to write one-off exceptions.
>they just avoided having to write one-off exceptions.
They did do one-off exceptions though. They excluded Iran, North Korea, and Russia from the list.
Do we have any appreciable trade with them? I would have thought existing sanctions packages approved by congress would supersede this.
3 billion USD apparently. lots smaller than in the past, but still bigger than quite a few countries that did get listed.