Would You Tell the Democrats to Keep the Trump Tariffs?

[Econ4every1]

Yes, but careening back and forth, perhaps it would be better just to keep the tariffs.

Tariffs need to be called what they are, an import tax. If you run a business and buy something outside this country the business pays the tax.

Will those businesses move to the US? Even Libertarians recognize something called "comparative advantage". When comparing two nations, some nations just have an advantage. Take rubber for instance, few people are aware how important natural rubber is. Synthetics exist, but they are, in certain applications simply not as good. Go to YouTube and search for a channel called Veritasium - Rubber. He created an in-depth piece explaining in detail what I just said.

We cannot make natural rubber in the quantities needed here in the US, and even if we could, the price would be much, much higher. This is the result comparative advantage. Right now the natural constituent parts of rubber is mostly made in SE Asia and a little from Brazil.

Now imagine there are 100' of thousands if not millions of products like this. And the further down the production stack (base materials vs near finished goods) the greater the impact a tariff has.

So even for goods you could make in the US, what if it costs 2X more? And that's not just a wild hypothetical, many products aren't made here because they cost less to make other places.

One thing that no one ever talks about is the criminal networks that will spring up as a result of lower cost goods made abroad. Black market goods that will be smuggled into the US to avoid tariffs. If anyone is worried about boarder security, tariffs create more incentives to violate the nations boarder security. If we spend billions or hundreds of billions securing boarders from black market smugglers, then all the money the government collects in import taxes get spent in the administration of tariffs and boarder security? That's insane. Higher prices and higher costs with zero net benefit.

What kind of deal do you think these Countries have been giving us?

This is part of the problem. Global trade is a complex web. To try to boil it down to a single idea of "a deal" oversimplifies what's happening to an extent that hard to put into words.

I don't mean this to sound like an asshole, but that's almost certainly the way this will come off, but the way you've asked the question, and in fairness the way that most people are thinking about this question, is so overly simplistic as to make any explanation a class in how to understand the question you've asked. Now look, I commend you for asking the question and I genuinely respect anyone who is searching for answers. Forums are not a great place to find unambiguous truth, but they are a great place to get many opinions. Your intelligence will not be measured in your understanding of what you are being told, but your ability to evaluate the answers given and then try to corroborate with people who are qualified to give authoritative answers.

However, in fairness, this question of tariffs has not been tested in a world dominated by globalization. There are certainly predictable negative effects and as I said, I'm trying to keep my eyes out and stay aware of positive affects, but as someone whose spent an embarrassing amount of time studying something that I do not get paid to understand, I cannot see a path to a net positive.

Trump all wrong? We must remember no-one is all right or all wrong.

Of course not. When your country does 100's of billions of dollars in global trade there will be dozens, perhaps 100's maybe even 1000's of strong positives that people will point to as evidence of the success of tariffs, but these need to be measured in the the broadest context possible before we make any judgements about success or failure and for every significant success, I predict multiple failure that will far eclipse any of the benefits.

 

[Econ4every1]

I would say, "Tax the rich and keep the tariffs."

That's just it, tariffs are, in affect, a tax on everyone, especially those with less disposable It is a LIE to say that a foreign country pays the tax It is a LIE to say that businesses pay the tax, the tax is paid at the point of sale by the consumer.

I hear lots of opinions, but no data, no proof, no link.

What will you accept as data?

For example, if we point to tariff revenue of ~$183 billion as of this writing. Is that good?

Well, that means that US businesses have been charged $183 billion in import taxes that the business paid. There are countless examples of pro-Trump, pro-tariff business owners online expressing their frustration over the fact that despite their goods being made entirely in the US (something they though would shield them from the increasing costs), they are seeing (realizing) that their costs for transportation, and machinery skyrocket.

I sincerely wish I had saved a video of a Montana knife maker who made a video showing the cost (actual invoices) to buy a furnace to make his products had increased from Roughly $500k to $640 in one year from 24-25.

He buys the furnace from a supplier who paid the import tax to the US government and passed it to the knifemaker, who in turn will increase the prices of his knives which in turn will result in higher prices to consumers.

Can we make furnaces in the US? Look, maybe, but what we cannot do is tariff the world and expect the 240 million working aged people here in the US, to do the work of the billions of other people who make stuff and send it to the US. We cannot home grow ALL of the products that we're tariff'ing. It's quite impossible.

So the deal we get in the US is two fold, the second of which is something people generally take for granted. 1) Lower prices. 2) Choices.

There are so many choices of products that do similar things here in the US poor countries don't have these choices even if they have similar products to say nothing of the sheer number of goods (and range of qualities) and services available to us here in the US.

 

[Econ4every1]

"How much manufacturing is actually coming back stateside? Is it all Trump hype?"

Even if it were possible to bring some things back to the US, and, I should note that I do think there are things that the US should bring back for strategic reasons, but even if you want to do that, it has to be a carefully planned and executed. As not to destabilize markets and introduce market fears.

The current administration rules through fear, force, exploitation and people, including businesses are, IMO, placating the current administration though announcements (like the Foxconn example I gave). Remember the fuss over Carrier moving to Mexico? The end result was 1/3 of the saved jobs were moved within 2 years and the State of Indiana is paying for the remaining workers in the form of millions of dollars of tax incentives. Lastly, the parent company of Carrier has federal contracts they didn't want to lose, so were these jobs "saved" just a favor to the administration. That sounds like corruption to me.

It's also worth pointing at that AI and automation will be required to compete for any business brought back to the US. That means fewer workers, though the tech sector will benefit, the benefits will not be realized by the blue collar class of workers.

Take Tesla, probably one of the best examples of AI and automation in the US when looking at legacy car makers.

From AI "It is fair to say that Tesla's innovations in manufacturing automation, particularly in casting and vehicle architecture, have significantly reduced the number of employees and steps required to produce a vehicle. They learned that the goal isn't simply to replace humans with robots in an existing process, but to fundamentally rethink the process itself to make it simpler and more efficient for a combination of human and robotic labor."

The point here is that any attempt to bring back large scale production in the US will almost certainly have to be much more efficient (requiring fewer people). And again, it's not that this is all bad, it could be a good idea, you just cannot do it all at once in the brute force manner the administration is trying to do it.