Agree long-term. And as a libertarian the tariff war is antithetical to our ideals.
They are indeed a net-zero sum game....BUT sometimes you win by losing the slowest.
Sometimes you have to knock over the checkerboard, just to show that you can. And just as importantly force other parties to reveal their hands. I think hes just playing "political aikido". Thats a game we will win.
I don't see Trump using tariffs as some ideological bent. It's not as much about using tariffs as a way to reset trade, but more about resetting EVERYTHING. In most cases, if one person in a "boat" starts shooting holes in the bottom, you shouldn't start shooting holes to fix it...unless you have an extra boat and the other party doesn't, and you have a life preserver to save anyone you "need" on the "new" boat.
I wouldn't get too "worried" by what all these so-called experts and politicians are saying.
They're the same people who want us to keep doing what got us $40 trillion in debt and hollowed out our manufacturing base, while they fattened their wallets, all the while the American worker became more productive but got paid less
OK, I'll sit back to have my knuckles swatted...;)
that's the "chemotherapy for the global order" argument people have been advancing. i struggle to swallow that whole because 1. trump is just not that smart of farsighted. he's just not. he just likes to create chaos and bet that he can use it to get something. 2. i sincerely fear that trump is an actual mercantilist. he seems to believe that tariffs = health industry and vibrant production. i guarantee you you he is not even aware of the shape of the ricardo issue, much less how to parse it. he thinks his last round of tariffs worked.
You are greatly appreciated, but I think you are wrong about tariffs. And I forgive you, because you are right about so much else. Economics is not a science where you can say anything, with certainty re cause and effect. It’s an artificial construct focused on a nebulous, extremely complex, opinion-based system, somewhat analogous to the weather. No one is ever completely right or wrong when they talk about “economics”.
Most importantly, your starting point is wrong; this is all about the $37,000,000,000,000 +/- national debt, and the US’s continuing deficit spending - economics is just one bog-down-able aspect of the problem.
Trump made his move, and as usual, all the hostiles are doing whatever they can to hurt him. The die has been cast and will continue to roll for at least a few months. Let’s see what happens then.
The opposite is more likely if growth and productivity suffer, which will lower tax revenues and result in higher spending, not even to mention a recession.
Because they are (effectively) a tax. Tariff money goes to the Treasury and directly decreases the deficit by the same amount. It is the most basic of arithmetic. This is also why tariffs are literally not inflationary, no matter what people say. Yes, prices for some people go up, the the value of the dollar also goes up as the deficit is reduced.
Ok, that really is the most obvious step, but what is the next step?
As you can see right now, tariffs already had an immediate adverse effect on financial markets, which results in lower capital gains taxes--and given the moves so far, the loss in that revenue alone would be larger than any realistic gain from tariffs.
But that is not all. Next, consider the lower growth from tariffs (as productivity takes a hit, producing stuff we are not that comparatively good at and investment tanks given the overall uncertainty) and resulting lower employment. The net result here: yet lower income and FICA collections, and higher transfer spending.
If it were to come to a recession, the deterioration in the fiscal deficit would be much higher (that is what os meant by the government budget being an "automatic stabilizer.")
the budget deficit will turn even more south if there is a major financial market disruption and/or the recession goes global. And that is before one even considers the potentially lower attractiveness of US assets to foreigners, which could drastically worsen interest outlays.
And all that a small amount of tariff revenue? nuts
" tariffs already had an immediate adverse effect on financial markets,", What has had the major effect on Financial markets,(stock market), Is the fear that is being spread by the Dims, the resistance, and the MSM. A recent data I saw suggests that 10% of stock holders own 88% of the stocks while the remaining 12% is held by the next 40%. Half the population owns no stocks. The 10 % are not selling or may have sold a few days ago to reap profits. Now they are buying at fire sale prices. The useful are following the script provided to them by these elites and the MSM, as usual.
I believe you will find that many companies buy parts and materials from overseas to use in their final production. Those costs going up by large amounts will cause all manner of problems, regardless of what nonsense the lefties are crying about. It has certainly been a huge focus of my company's concerns the past few months.
But why would the "Dims, resistance, and the MSM" wait to put on shorts until Trump levies tariffs? If all it takes is them shorting the market, why did they wait so long?
I think the Occam's razor explanation works best: markets sold off when tariffs were launched because tariffs are bad for the economy (and this markets)
Actually very simple, they do not want the negative credit for doing so. The MSM is not very bright and they just amplify the narrative and that is to blame Trump.
That assumes people will continue to buy imports and pay the tariff. In most cases they ill turn to how cheaper domestic suppliers or do without. Government created scarcity is not economically productive on a net basis...
In some ways the tariffs are there to encourage local industry and discourage spending on foreign goods. The tax collected goes to US treasury. That’s why 150 years ago tariffs paid the bills and there were no personal income tax.
150 years ago the federal government was 1.5-2 percent of GDP. Last year it was 23 percent of GDP. Meanwhile, imports were less than 14 percent of GDP. There is just no way tariff revenue can meaningfully finance the government anymore.
Government being 23% of the GDP is obscene from both a moral and economic perspective. From an economic perspective government is entirely parasitic on productivity. That’s why taxes and fees are always accrued in the cost columns for profit and loss. Don’t go reductio ad absurdum on this. Of course, SOME government is necessary: defend the borders, protect the currency, and provide for national defense. All the stuff the Biden president puppet didn’t do. But government, producing nothing, should have NO PART of a GDP measure of production of wealth. Secondly, to consider Government spending part of GDP is wrong morally as well. That regulatory costs and judicially forced transfer payments from producers to the government are considered a measure of growth and productivity is obscene because it is an effective subsidy on taking from producers by force. Another term for taking by force is tyranny, and anything you subsidize, you get more of it. Long term any government that doesn’t limit its growth will become cancerous to its citizens. So, tariffs aren’t ideal, and won’t solve our soft tyranny known as liberal democratic globalism, but we have to start somewhere and nothing tried in the last 80 years has had any effect.
All I did was to counter the claim that tariffs can finance the government in any meaningful way. They can't, and they impose additional inefficiencies.
Of course, there is a very good economic theory and empirical (ie.e, non-moral) discussion to be had that the government is too large. It is and that is resulting in a drag on economic and social well-being.
But that has nothing to do with tariffs.
Also, the System of National Accounts (SNA) is not a moral issue either, but an internally consistent system aggregating various data sources into measures of annual flows of values added; they are arrived from the expenditure-, production- and income side, and removing government from any one or two of those will result in an inconsistent and incoherent mess.
There are serious discussions on how to improve the SNA, but again they have zilch to do with tariffs.
That government is 23% of GDP and is considered part of the GDP is an inherently moral issue. And to discuss an inherently moral issue in an entirely amoral fashion is like discussing God without mentioning faith. It can certainly be done, but the results are less than they could be.
GDP and the SNA are a man-made pragmatic data-reliant system to attempt measuring the annual change in a country's value added. By convention, it assumes that production equals expenditure which equals income, all on a macroeconomic basis. You remove government from one of them, and these measures no longer hold up. For example, if government expenditure no longer counts, won't social security income count either?
That is it--no magic nor morality. GDP doesn't measure well-being, happiness, "sustainability" nor human achievement, just value-added. But it is pretty darn good at the latter.
I think the corruption and wasteful spending found over at DOGE is contributing to that bloated number. That and $60 Pentagon toilet seats, or bro giveaways in inflation reduction act if you prefer.
last year the federal government spent 4.4 T(!)trillion dollars. Just checked DOGE's website, and they have identified 0.14 trillion in savings. Throw in a high estimate of .2 trillion in tariff revenue, and one would only need to find another 4 trillion in other revenue.
The numbers are just WAY too large for tariffs and DOGE to make a macro difference. At least, DOGE has major benefits in fostering efficiency, and productivity and cleaning out DC's self-dealing Augean stables. Tariffs do exactly the opposite.
You specifically said tariffs are anti-productivity and anti-efficiency. Is that what you meant? How do tariffs contribute to the increase in DC Augean horse poop? Thx
Tariffs misallocate resources (gato has a nice 4-panel diagram in his article showing how they result in deadweight losses).
Moreover, tariffs create new politically favored winners and are thus rive with new corruption possibilities that never seem to go away. Just look at US sugar barons.
So, once new tariffs come around, they create rents for benefitting industries, these industries pay politicians to keep tariffs around, and those politicians can use these contributions to get re-elected. Classical self-dealing DC stuff.
In contrast, undisturbed market allocation fosters competition and productivity, rather than political rent-seeking.
Sounds like your tawk’n standard issue corruption rampant and rife already in the country across the board, in every sector. Maybe DOGE should become a permanent fixture, not simply a visitor. I’m in Cali. We need Cali-DOGE. It’s frigging everywhere in everything.
Ah, but the opposite is true. "Tariffs" will bring back industry and with that, more real good paying jobs. Taxes from those industries and an increase of GDP will help to decrease the deficit in the long run.
If that is true, why don't we see this anywhere else in the world? Consider India, one of the countries with the highest tariffs and protected industry. Other than utterly uncompetitive products, and super-rich protected oligarchs, the country has nothing to show for it.
My favorite example is that we could certainly raise a competitive pineapple-growing industry in Alaska. All it takes is (massive) subsidies and tariffs. And of course we would see Alaskan employment in the pineapple industry surging. What is less obvious is the resultant employment and productivity losses elsewhere in the economy, from the misallocation of resources.
Same with tariffs. And the cat had some examples in his text: how about the 800k per year new washing machine factory job?
Exactly. Every country in the world has high tariffs, but every country in the world is also massively poorer than the US. Germany is the pinnacle of productivity in the EU, and in a good year it would ranks as out 5th or 6th poorest state, and most years it is dead last. India is a mess. China is a mess. Apparently tariffs and an internal market of over 1 billion people aren't enough to have a decent economy.
Money goes to treasury & reduces debt. A goal is also to reduce interest rates as treasury has a record # to roll over this year. Lower rates would help immensely. Good points here: https://x.com/tanvi_ratna/status/1907880105369845865?s=46
For the debt to be paid down you have to free up some surplus cash flow which means you have to spend less than you earn.
It’s not clear that tariffs will increase revenues in the short, medium or long term but that’s not because they never have it’s because they’re being applied to the former hegemon who is the biggest debtor nation the world has ever seen and has the worst balance of trade the world has ever seen, and MAY have the least fiscally disciplined population the world has ever seen (in terms of being willing to suffer short term agony, and medium term hardship, in return for long term prosperity).
The damage from more than a century of profligacy is not going to be undone in 4 years or in 12 years. Are Americans capable of maintaining a difficult course for longer than that? It’s hard to believe.
It has also allowed tailpipe environmentalism to pop up where we pretend our 'greening' is real. It may be real for us - debatable - but it certainly is not for those where mining for rare earth metals are mined or where the production takes place.
And politics is not a science, Without facts OR truth you can't even have a discussion if the data is wrong. We know nothing but what we are told. This is all mental masterbation but almost no ones ego here would allow them to admit it.
That's utter nonsense. The Austrian school of econ relies on logically deduced truths from irrefutable premises to arrive at objective, universal truth.
Trump made one of the single greatest unforced errors in US history that fortunately will be knocked down by the courts for violating the major questions doctrine and the lack of any emergency as required under the IEEPA...
i agree with gym. economics is not scientific, it cannot and has not ever made accurate predictions. Some of its postulates are absurd, like “do whatever is good for the consumer”. Anyone whoever fell out of a womb is a consumer, a hole in the ground is a consumer if you throw things in it. The value should be placed on production and producers. It’s like when politicians talk about helping “citizens”..no, you need to listen to tax-payers. you can’t have government without tax-payers and you can’t have an economy with producers.
Also, all these counter-arguer’s should point out how the current system has worked so well, The rust belt, massive unaccountable government blob, total dependence on would-be enemies. The current system is on the brink, maybe the scientific foundations it was built on are faulty in some way, just maybe?
I think we need to differentiate between creation of value, and creation of wealth; a minor, farmer, shoemaker, or construction worker, creates value - a hedge fund, stock broker, advertisement, or sales agent creates wealth.
Tariffs are a tax. ALL taxes are ARBITRARY. Right now, EU prioritizes VAT and the BS Carbon taxes. They don’t want to lift them just because of the added strain of the new Trump tariffs.
I won’t cry for them though. Europe is the KING of all manner of taxes. If they find they have to remove some taxes to accommodate the new US taxes I won’t be sad. Too bad. Not sad.
"he seems to believe that tariffs = health industry and vibrant production”. This statement seems, to me, to indicate you think Trump wants tariffs. I feel Trump is just using tariffs to end tariffs. You drop your tariffs and we’ll drop ours. There will be a lot of pain initially, but in the long run we will be better off.
Yup. And as I wrote above, it's working. At the time I'm writing this, Israel has signed zero tariffs both ways and the EU, UK, Japan, and Italy have all announced they want to as well. That's the majority of our non-China trade right there.
Michael Every, Yanis Varoufakis and Oren Cass are all good reads on the topic.
Everything is connected. Shut down the border and restrict cheap labor undercutting wages. Shipping office in White House. Panama Canal, Greenland, mineral deal with Ukraine. This is strategy not tactic. It is about so much more than buying cheap sh!t from somewhere.
Here's a recent Oren Cass article, referenced in this weekend's "Saturday Comment & Review #187" (Niccolo Soldo, "Fisted by Foucault") -- https://bit.ly/4lA35VE -- a good read about tariffs.
On Monday, European Union leader Ursula von der Leyen has said that the European Union is ready to offer "zero-for-zero" tariffs in trade negotiations with the United States for industrial goods.
I trust her less than the distance I can throw her. She's playing games with language. She said zero for zero on all industrial goods, which means that they would still tariff things that are advantageous for her to tariff.
I have a more detail comment on this below, but in a nutshell, each of us plays many roles in this Tempest we call life. Sometimes I am a consumer, sometimes a shareholder, sometimes a taxpayer, at other times an employee or just a citizen.
Each of these characters has different, sometimes contradictory needs. What benefits me as wage earner may not benefit me as a shareholder. What benefits me as an individual taxpayer may not benefit as a citizen. It's very nuanced.
The modern tariff structure is a remnant of the post WWII days when we rebuilt Europe with the Marshall Plan and granted them open access to our large market while allowing protection for their fledgling industries. But there was no sunset clause for this. This imbalance in trade should have been addressed 60 years ago. It is every nation's prerogative to generate tax revenue how it wishes. If it prefers consumption taxes to income taxes, so be it. If it prefers it the other way around, knock yourself out. If it seeks a little of each, it has that option available too.
Trump has excellent economic advisers who have been studying this for a long time. Our Country was in a nose dive twards bankruptsy and Globalist takeover. Trump has shown his sincerity of love for this Country. Im placing by bet on Trump
You are eggheading this too much. Even if Trump isn't aware of all the nuances his people are.
There is a certain minimum core of industry we have to maintain in order to NOT have to result in Armageddon level measures in a crisis.
In 1940 America dominated petroleum and steel. After much back and forth early the next year Japan was embargoed. And that was it. The war that was really its own thing and not connected to the European war, a war that had started halfway through the previous century, was off and running because one side gave the other no choice but attack or surrender.
of course the chaos was already there, but sure, Trump has a larger spoon to stir it! I had hoped that a few people in his surroundings would temper his wild windmill thoughts, but I see that a few have already dropped off the boat, and I think by the end of his 4 years, the boat will be filled with garbage just like the former time. One thing - everyone is afraid of him, because you never know what he will do next.
Your argument is that you think he’s dumb?? Interesting. That is beneath you gato. I wonder what kink of monetary gains (or losses) are skewing your perspectives.
He's been inserted, they all have a job and his job is to help the elites and Israel. That's all. The rest is BS to fool the little brains. This guy is the biggest globalist there is. He is Klaus Schwab. You didn't see the video of him praising Klaus? Come on. The always Trumpers are as stupid as the always Biden'ers at this point.
The difference, one is largely God fearing and loves american Ideals. The other side has very little God and is some version of Woke. Those are the followers. The leaders are laughing their collective asses off at all of you who think any of this shit is organic and unplanned.
Whatever they have planned, IT IS NOT good for the American people.
I like reading Mises and Bastiat and am generally in the Austrian econ family, at least on a micro level. However, analyzing the current system with that ideological framework is fraught. We live in a system of printed money, over valuations of stocks, and a mass arbitrage game for the "haves". A bubble pop was coming to an overheated market. I am curious how the trade negotiations and ultimately an investment in real world capital goods/factories shakes out. If these are combined with a promised cut to income tax...cool.
Libertarians (am some form of one myself) are famously ideological in that they expect the world to be the Scottish Enlightenment and free market but it is instead a Machiavellian Rube Goldberg machine.
I'll wait and see and then react not the other way around.
i'm a "pragmatic" libertarian. the reason they can never win is bad leadership and even if they did have good leadership, they'd spout about abolishing child labor laws for the next 10 years.
yet I continue to send libertarian groups money...
for example I'm all about immigration but not illegal immigration that becomes a threat to our sovereignty.
the trade imbalances are similar in some regards, but they could be "fixed" by measures other than tariffs.
Agree. I am onboard and will be patient. No way to continue or live with the current situation. Now pass the permanent tax cuts, slash waste, and downsize the government while riding these rapids. It’s bold.
You have stated exactly why I am no pure 'libertarian'. I don't want child labor and dark satanic mills openly spewing waste that poisons our own food. I would like to think we have evolved past that as a species, but one glance at places that do not have these laws proves otherwise.
No, I haven’t. You’re right though most of their leaders lack charisma to say the least but they could be the most erudite spokesman and their arguments would fly over the heads of 70% give or take of the US population?
The target of Trump is not global trade but the de-financialization of the markets . He has 9T in debt that comes due this summer. The use of tariffs is politically palatable and perhaps patriotic appearing(America First) to crash the market and create a deflationary moment to refinance the debt using longer term 10 year bonds rather than Yellin's idiotic refinancing debt using 1,3,6 month T bills. That's what a third world country would do.
This is the short term rationale to stabilizing our debt. I seriously doubt he will maintain punishing tariff rates on most all countries except China. China sends three million packages a dayto the US mostly under de-minimus . Anything shipped into this country under $800 dollars was not only duty free but never searched . Hence the flood of fentanyl components and other products considered national security risks.
Default on the debt. That would solve the problem. First, it would destroy a huge amount of dollar-money needed to deflate the US economy, second nobody sane would ever loan the US money again, or at least not for a while, removing temptation from future spendthrift Governments.
You need to look at who holds the debt.The only part of it you could get away with defaulting on is the debt China holds. Which is OK. They owe us for the Wuhan Plague.
The tariffs seem counterproductive. With the caveat that China controlling trade in certain sectors (Pharmaceutical, Drone manufacturing, Rare Earths) has real Geo-strategic implications.
IF (big if) we saw quick deals with bordering countries (Vietnam, Taiwan, etc) there's a potential case. A sort of reversal of China's belt and road initiative.
Even with that potential there are more ways for the tariffs to go wrong than for them to go right.
Chaos and uncertainty reign with some people saying "trust the plan".
What the plan is though seems to change minute to minute.
Ultimately we need to migrate away from China to other Asian countries.
I suspect China is the only country, at the end of the day, that will end up trying to fight us in a trade war. The key, as you say, is rerouting around them.
I appreciate Thomas Sowell's assessment that they unleash uncertainty and retaliation, but I also look at the reality of the last few decades and see a lifeless landscape. Industries and manufacturing moved out of SoCal and NGOs serving the drug addicted moved in sucking up great wads of taxpayer money. And then we have the dirty supply clains. I resisted an iphone for the longest time because it had a dirty supply chain linked to slave labor. Do students protesting against the treatment of the Palestinians with their iphones know any of this? As the melting witch said in the Wizard of Oz, 'what a world.'
A quick blip in a local headline said LA "LA County Reaches $4 Billion Tentative Settlement in Thousands of Sexual Abuse Cases
If approved, settlement will be the costliest in County history, with long-lasting budgetary impacts."
This is on top of millions, or is billions can't keep up, of funds that disappeared through NGOs dedicated to homelessness and just happen to have some connection to LA officials. Where Greed meets Need should be LAs motto.
I guess when you reference having to knock over the board I took it as at least potentially supportive. Personally I would have been OK using the threat of tariffs as an economic nuke with a threat of mutually assured destruction.
Its more like we went ahead and launched the nukes.
The funny thing is you could likely address the trade deficit by slashing federal spending something it looks like we are not really doing.
Ultimately I fear this is the last chance to right the ship, and the opportunity is being squandered in an inferno of ego.
So forgive my saltiness on this one. Its just so dumb.
"The funny thing is you could likely address the trade deficit by slashing federal spending something it looks like we are not really doing."
We are not 100 days into Trump's presidency and DOE is being eliminated as just one example to counter your statement. Am I incorrect in thinking DOGE has done a lot of cutting given the relatively short time they have been working?
I think the senate bill cuts a few billion. It would be nice if we applied the energy to cutting spending that we are applying to tariffs especially given doing so would deal with his trade deficit fascination. You could kill both birds with that stone.
Because we have already launched the attack, and damage has already been done. Between retaliation from China, international boycotts, and market sell offs there has been legitimate economic damage. If you want to argue it’s totally different because we don’t have 100 years of radioactive uninhabited villages well ok I guess.
The analogy was not meant to be literal in every sense. The point is tariffs at this magnitude are an economic nuke, and they were launched in an act of clueless dipshittery based on the output of a third grade math worksheet without making any effort whatsoever to use them as leverage first.
I guess the question is do you see this as a water balloon like impact? I don’t. I mean one time in college we filled up water balloons with scalding water and threw them at each other from a balcony as they ran across the parking lot like some kind of organic game of ground skeet, but I don’t think thats what you are going for.
I'd say that so far it's like a water balloon attack. Lots of people shrieking and running around, wet garments, minor upheaval with certain people outraged, but not much else.
I think what we've seen so far is pure political aikido -- using the enemy's own actions to destroy themselves.
Trump and his wrecking crew has a method of operating which the Russians call "razvedka boyem" - reconnaissance through battle. You push and you see what happens and then you change your position.
Is it a dangerous game, as you point out, YES.
But Trump likes results and id rather him shake it up in order to educate the public on how inequitable the trade policies are and to get the other parties to reveal their hand. I think that's what his stupid chart was on "liberation day".
I guess the thing is I’m not sure trade is all that inequitable in aggregate. Also given the cartoonish nature of the way the actual numbers were derived, I have a hard time seeing this as tactical wizardry.
It does have a reconnaissance by battle feel. I agree with that, but I don’t think its an appropriate tactic for battle in say a hospital ICU or orphanage playground where you would have lots of civilians as collateral damage.
In any case I think its also the wrong tactic period. If you have specific demands make them. You know exactly what they are doing that you object to. Thats the way an adult man should handle it.
If they say no, and you want to retaliate OK, but this pre-discussion lashing out is the kind of drama I would expect from a 19 year old girl pissed at her boyfriend. She’s not a tactician. Shes just on her period.
See, I'm okay with it, in the short-term, because just look how much focus has been put on it. Discussion is better than doing nothing at this point...and I'm not one for doing something just to do something.
I think going through this exercise has the potential benefit of revealing just how perverse the financial incentives are across the board in this country.
I mean its definitely Trump doing Trump, but you know sometimes you have to reign it in based on context. I like to drop f bombs. Its me being me, but I can recognize its not appropriate on the kindergarten field trip.
I get your lets just see what happens take, and that it was necessary to get results. My position is you could have escalated gradually or at least tried direct demands first, and gotten the same results or at least no worse. Instead we moved right into the retaliation phase.
I mean the advice I would give my children is going to defcon 1 immediately is a bad idea. You don’t throw punches unless you have to. I’d want an extraordinary explanation before I believe that rule doesn’t apply here.
You’re right. They were probably in intense negotiations with everyone, they all failed, and nobody ever breathed a word about it. Yes this is plausible.
Ryan…..curious. I have read this SS and also Childers take….
How do you see this influencing or playing out for big tech….like Gates/Microsoft and other companies that do business all over the world and have taken their production to countries with cheaper labor….
I am not an economist of any sort (sadly—just never studied it or took the time to research) but it strikes me that the globalists in the tech sector pay no attention to borders….in terms of doing deals, except to go where they can make the cheapest product and deal with the least amount of regulatory matters. Then they sell it in the states. Meanwhile, the American middle class is disappearing….which destabilizes the US, making it ripe for the fin/tech sector to continue its coup relative to our governance (grants, NGOs, being their lab rats) because we are beholden to them for both $$$$ and tech to maintain the “lifestyle” Americans have become accustomed to in shopping at Walmart.
The stabilizing middle class in America has been decimated….and COVID made things worse, in addition to shredding the social fabric. And we saw with COVID exactly where the fin/tech elite/globalists with their NGOs, think tanks, foundations, etc. interests lie. And it is far from “protecting the public” and more like controlling and manipulating the masses to advance their agenda.
Not sure about tariffs, but not sure how we remedy any of this.
But have worried for some time that the fin/tech globalists who really control the levers of power are just waiting for their moment to crash for good the systems as we have known them….as a means of getting the public to accept the technocracy and automation that puts them squarely and publicly in the driver’s seat with their beloved AI calling the shots.
“Ultimately we need to migrate away from China to other Asian countries.”
So I currently work for an electronics distributor, and in semiconductors this has been underway for a while. Companies have been concerned over the political uncertainty with China so they’ve moved their fabs to Malaysia, Vietnam, Indonesia, seem to be the big ones. What they haven’t done is bring production to the US.
Can confirm, I work for a place that sells interior construction materials (tile, flooring,etc). The companies we work with have been moving out of China since Covid. Many are now in Vietnam, etc. The move was happening even before the tariffs were proposed. We keep getting notices about tariffs from our suppliers, but it seems very, very few product lines are affected and the ones that are are easy to find substitutes for.
I wish they'd bring more back here, but getting things out of China to places that are better regulated (ie, less slave labor) is a start.
Any government interventions (ie. tariffs) are fraught with overhead, waste, fraud and abuse. However if someone can buy your widget for X but I can only sell mine for X+tariff, I will sell less over time and as a consequence be less wealthy. I honestly would like to hear from Gato or others smarter than I how else to get other countries to reduce or eliminate tariffs and other import restrictions without the tit for tat game of trade wars.
No swatting required, but don't forget Trump's team has added in VATs that we pay on /all/ goods and services as if these were tariffs targeting US goods, and that they calculated the tariffs based on the difference in trade, not actual customs' quotas.
What you (and we) should worry about is the EU's response. The current leadership are globalist creatures afflicted by TDS in the fourth stage, and might well do stupid crap out of spite, rather than trying to finagle a win/win-solution.
As an aside, have you noticed how the climate change-threat seemingly has gone away? Suddenly, lowered production and consumption and fewer super-cargo ships burning diesel, and less air freight isn't a good thing anymore. It's almost as if the people pushing the climate hoax and the 11% who owns 90% of the US stock market are the same people.
Personally, I think lowered taxes on domestic production would be a better way to go, especially if combined with some rule about content of food/consumables: the more real and local, the lower the tax, trending to zero if it's within a given distance. Seems logical to me, trade-wise and environment-wise: buy milk from the farmer up the road equals good for the community and the environment, when compared to buying papaya from the other side of the planet?
To paraphrase the intro to the excellent Timothy Hutton show, "Tariffs provide... Leverage".
Israel is signing zero tariffs right now as I write this, and the European Union, Japan, the UK, and Italy have all announced they're next in line. So this entire post is already not even a thing.
Bonus word score: China's stock market crashed extremely hard today. Xi's got big trouble. You love to see it.
Right, at the most fundamental level it's about the devastation that outsourcing wrought on the entire Midwest for the benefit of coastal elites who love economic theory as long as it means the money flows towards themselves.
Exactly. Since slavery is illegal in the US, slavery profits are now extracted from Chinese workers and illegal aliens at the expense of free US workers who have to compete with them. Globalism is just a way to continue slavery under the guise of "efficiency".
The fundamental question is whether US national interests mean the interests of coastal elites, or the interests of all US citizens.
This is all similar to ancient Roman history. Livy documented patrician opposition to land reform and that sounded a lot like current US patrician opposition to tariffs.
Is it possible to have a middle class without an industrial base?
Trump is also pushing deregulation, lower energy costs via domestic energy production and attempting a stronger dollar policy—are these things enough to offset any price increases from the tariffs?
Are tariffs mostly paid by foreigners or by consumers? If demand curves are downward sloping, don’t they in theory get paid via smaller profit margins of foreign companies? (I suppose that depends on the product.)
Is it not true that our domestic producers are hurt by foreign countries’ trade policies?
It is really something for the media and all of these other countries to cry foul for US imposition of tariffs when they’ve put up trade barriers to our goods for decades. We never had free trade to begin with and that’s Trumps point. I believe he’d remove tariffs for any country that would do the same.
Even assuming something needs to be done, I think its fair to expect some actual thought went into the details. I literally did more complex analysis in grade school than what went into these tariff formulas.
The expert class has no doubt let us down, but if that is your issue you should expect smarter, and better decision making. We divided the trade deficit by imports to get our tariff rates isn’t that. Its the same circus with a different clown.
No knuckle-swatting from me. If we want to import 100% of our underwear from VietNam, fine. But I'm not fine with importing motor vehicles, boats & ships, armaments, etc.
If Nam or someone else were to cut off our supply of new underwear, I'm sure we could get by while every American woman who knows how to sew produces new products in the basement (and after seeing the $$ flow in, wonders why she didn't do it sooner). But ships, tanks, cars, engines, drugs, etc. MUST be domestically produced. Other nations aren't reliable enough, and starting up a new producer is too costly and time-consuming.
That is not the world I want for future generations, and we need not have it: that is the whole point of competitive market systems.
The hollowed-out manufacturing sector is another red herring. Manufacturing's share in both value added/GDP and employment declines as an economy gets richer beyond a certain point, which the US and other advanced economies have long surpassed. Adjusting for that trend, the US has an above-normal-size manufacturing sector.
And finally, the benefits of a heavily protected and heavily tariffed manufacturing sector are obvious in India, where for example you can still buy a 1930s design Royal Enfield motorcycle. More modern options? Not really. Why would anyone want to go down that route?
Im not worried about it. You seem to be taking that sentence out of context.
It will take care of itself. I don't claim to know if Trump thinks tariffs are the answer long-term...because they're not...but i do know this, he's not going to continue doing anything that cost him politically. I doubt he's playing 12D chess...but i believe he has his reasons...and they're not just tariffs for tariff sake.
I'd also like to give him the benefit of the doubt. If you go back over the last 9 years he's been right most of the time, even when it appeared he may be wrong.
You and me are not going to disagree, I'm a "Hayek" principles type of guy.
Any strict analysis on principles is doomed because Human Action. The market is addicted to Keynes and is by nature political, thus prone to emotion, greed and corruption. I don't think anyone can say Trump is truly playing 5D chess but his actions are probably tilting the rigged board in favor of domestic cronyism rather than globalists at least.
Thats a strawman argument. But even if it were not your assertion proves my point.
I don’t know any more about Trump’s real plans than anyone else does. But it seems to me that Trump wants to stymie trade with China. Call it the Russia model. Before the Proxy War, Russia’s economy was over-reliant on foreign investment. Biden’s sanctions made foreign investment impossible, and the unexpected result was a renaissance in Russia’s economy, as Russian billionaires —cut off from their London townhouses and Swiss banks— were forced to invest at home.
Cut off from the West, Russia didn’t wither. It de-globalized and re-nationalized - and it worked. In just two years, Russia rocketed from mid-level doldrums to the top of the world’s wealthiest countries list. Once an ailing, foreign-dependent economy, Russia is now independent, politically stable, economically self-sufficient, and - despite all expert prediction - stronger than ever.
Or the gambit could be disastrous. If Trump pushes too hard he could force the world to dump the U.S. dollar as world reserve currency. And that would kill the U.S.'s supreme dollar advantage.
The gambit was in direct response to the world (BRICS, specifically) dumping the US dollar as the national reserve currency and rallying behind China yuan. Sure, it may fail, but it certainly can't cause a problem that already existed and was inevitable.
Nah. Let’s force those to the table. We will have free trade with some, like Vietnam, Taiwan, Canada and others, and the loser will be China.
I see no issue with that. China has been undermining the US, taking IP from our creators, backing Russia, and dumping products into our markets crushing our industries for years.
The goal isn’t full-scale protectionism, it’s to make deals with countries who will treat us fairly. They exist, and there are enough of them to support our consumers in the lifestyle to which they are accustomed.
so, let's pursue negative sum policies to make american great again?
how about we focus on positive sum activity like cutting regulation, shrinking government, and driving real growth? china will fail all on it's own. have you seen their debt levels?
why punish the US consumer to accomplish what will happen anyway?
Well we could always raise income taxes and cut entitlements as you suggest. While I agree with the theory, I am but 48. Boomers rule this nation, and we are not cutting SS or MCR. Full stop. Not happening.
What other solution do we have?
Before you answer, drive through NC, Southern Va, and SC and observe the devastation from all of the factories, some of which closed less than 20 years ago.
no, we can't. hausers law pertains and raising income taxes does not result in more revenue unless you're going to actually start taxing the american middle class.
upping the top tax brackets has no effect on tax recipts in the US. it just slows growth as people shelter more. 75% of americans pay no net federal tax. our system is incredibly top heavy, by far the most progressive in the OECD.
you cannot use net negative activity to drive recovery. it's just not possible.
if you want resurgence, cut regulation, esp the EPA. that did more to harm US industry then any foreign issues.
tariffs do not cause recovery, they destroy it further. you might get one factory back, but if the cost to other amreicans if $700k per job, where's the path to prosperity?
We could eliminate the EPA entirely, and all regulations (while we are dreaming, why not?) and there will be no “resurgence” so long as it’s more profitable to move jobs to China or some other foreign country.
Sorry but I just flatly disagree with that point, even though I would love to see a lower regulatory burden.
I don’t know how you can say tariffs cost 700K per American job yet say eliminating the EPA will cause a resurgence.
(I work in tax equity, and did so when everyone had the vapors over the solar panel tariffs, which ultimately had no discernible impact, so I am cynical here.)
It appears to me (but I'm not nearly as astute as you) that along with the tariffs, they are also working on all those other items you list?
I read somewhere (I read a lot and honestly can't remember where), that many of our manufacturing companies have kept much of the tools, machines, molds etc that they need and can actually ramp back up easily! I'm sure some update would be needed but the one year expensing would help that.
From my "uneducater" consumer position, it appears to me that tariffs are just a portion of a larger plan. I see many things happening and I for one am all for it.
I have a whole different outlook on the solar panels... we used to design/install residential solar systems for our custom home clients. IMO, based on degradation, lost of productive land (farm and forests) possibly forever... UTILITY solar and wind should be disrupted and DISCOURAGED EVERYWHERE. It's a scam dependant on government/taxpayer incentives. Without the incentives, it will die.
We are on the same page - even though I work with a lot of solar clients in the tax equity world (we go where there is work to do!)
There is a lot of American ingenuity here. We can take back what we lost over the last twenty years. Even now I see examples, like when a new wipes plant moved in to Rockingham County a few years ago, and literally everyone wanted to work there.
I used to audit many of these plants. The men are there. The facilities are there, and strategically located. It could happen really fast.
We still have some, like Nucor, who are hanging on to this day. We just need a President on our side to fight back against China’s abuses.
Ugh, "how about we focus on..." is a distraction rather than an argument. We can indeed and are currently focusing on various things at the same time, including those you've listed.
What people don't want to hear is that we have to make the American worker MORE productive (even though we are #1) through innovation, efficiencies, etc.
Only way to do that is to lead the field in the "law of increasing returns". Sorry. Just the way it is.
Nonetheless, it's how we became the wealthiest nation with highest standard of living in history.
The only way tariffs could help in that transformation is if it was a temporary part of a larger strategem to give a boost to onshoring and retooling in order to jump start and accelerate innovation.
All the money we send to Europe (including our own military expenditures in defense of them, and the tariffs we pay on our goods we sell there, and the opportunity cost of not selling our goods that have prohibitive tariffs) are subsidizing their socialist policies, open borders letting in haters of western civilization, and months-long vacations and holidays away from productive work. Time to make europeans great again by removing much of those subsidies.
Because without jobs that pay a living wage, the US consumer will not be able to afford any products, regardless of how cheap they are. We have destroyed the lower and middle class's ability to find a job that can support a family. This is the root of our crime and drug problems as well. Those things also incur a cost to society. Providing good paying jobs for average people makes society better. Why are fertility rates in the toilet? Because people have no hope of being able to afford a house or support a family. We have to get these (or equivalent) jobs back to the US or the whole thing will fold.
Do you think tariffs are a dollar-for-dollar pass-through to US consumers?
There's much evidence to be found, even in Trump I, that there's a dynamic as yet unmentioned in this thread: Currency exchange rates. And when tariffs are introduced by the net importing nation that also holds the strongest global currency there's movement that favors the net importer, strong currency holding nation.
Purchasing power of foreign goods goes up. More French champagne for the same dollar. The cost of imports goes Down. Tariff increase becomes a net wash for the US consumer. The Frenchies, Fascist German and UK Nazi's, Chinese Marxists get the short stick. A tariff/trade war they escalate is them taking that stick and shoving it in their moving bicycle wheel.
The US wins this. Other nations can choose to reset their tariffs and make concessions or crash their own already teetering economies. Maybe that gets their citizens to overthrow their totalitarian governments?
Do you have any idea how large China's manufacturing sector is? Good luck replacing more than one-third of all global industrial output. I see plenty of "issues" with that.
I know how big our industries here used to be, and it was only 20-30 years ago industries like furniture, textiles and auto parts started moving away from the US. We could bring it back. We have the facilities and the manpower.
But the point is not to re-shore everything, it’s to make trade fair. China has not been fair with us. We have other trading partners for these things, if China can’t be a fair trading partner.
How much are you willing to pay for furniture, textiles, and auto-parts? Do you know that the same structural shifts happened in the EU and are now happening in China, which has long ago stopped being the low-wage producer of choice? Of course, we can bring all these back--in the same way we could develop a pine-apple plantation industry in Alaska--but the costs would be enormous, both in price, but also in higher-value production forgone (the workers and capital must come from somewhere). And you may well be accepting much higher prices, but I doubt that that is the case for the US consumer in general.
And fairness? Why not accept that others are harming themselves (via tariffs, non-tariff barriers, industrial policy subsidies) and we can do the things the others still cant do and pay top dollar for (e.g., finance, high-end jet engines, etc)?
Chinese auto parts are known to have a 50+% failure rate brand new out of the box in some categories. Many of the best mechanics on YouTube have the magical secret of ordering real OEM parts from Japan or Germany and those work when repeatedly putting in $10 Chinese specials didn't.
Producers will charge what the market will bear. Just like they do right now.
This is why the corporate interests are crying, because corporations are going to bear the brunt of this. Incidentally, the stock market is also saying this.
If only we could all work in high-end knowledge jobs. I do, but it’s not realistic.
The question is what will the market bear? I guess that fully bringing back US textiles/furniture manufacturing will raise prices by a whole lot (these are labor intensive industries, and even the minimum wage in North and South Caroline is 15 times higher than the average wages in the Bangladesh textile industry, and I doubt that there are many new takers for a hard minimum wage job in states that already have very low employment).
The market (that is the consumer) won't bear these multiple higher prices, and firms will not produce, and the consumer is left with the lower supply they can produce at still much higher prices than if we had not tariffed.
I don't know what corporate "interests" are. Those who are crying are those whose retirement nest egg seems to be cracking and others who can't afford higher prices.
I used to agree with you, but I don't any longer. First, government spending always equals taxes - you can pay for government with debt, inflation, sales taxes, tariffs, income taxes, but you're still paying for government. Nobody can prove that tariffs are uniquely awful as all taxes have similar deadweight loses. Second, taxing trade limits the government's ability to tax because trade has to compete with alternatives. It's a lot harder to avoid income taxes than tariffs, so I think government is smaller when it's depending on tariffs, and history seems to back that up. Third, free trade hasn't persuaded others to drop their tariffs, so it's worth trying something else. After all, tit for tat is very successful in theory and practice, so if higher tariffs lead to lower tariffs, I'm for them.
government spending does not always = taxes. it has not equaled taxes in the US for decades, it runs trillions above them.
when in the last 30 years has "lower tax income" shrink the US government? never. it tends to grow in such periods by running up more debt. i'm all for lopping 90% off the size of the US government, but how in any politically plausible way can you do that? it's nearly all entitlements and debt service. we could cut discretionary spending to 0 and still be running a deficit.
I agree, as long as it's a gradual phase-out where current recipients get theirs. I've planned my entire working life as if SS didn't exist, and that's true of most GenXers I know, but lots of older folks (including my mom) didn't.
well if you were in the generation that was going to pay for it all, you might have a different opinion.
not your fault, but genX will pay for it all.
trust me it's painful to pay into it for 35 years and pretty much know it'll be bankrupt by the time I'm eligible for it.
so I'll have funded it my entire working life for two previous generations, and get nothing out of the money i could've put to work somewhere else with far better "returns"...even if i did receive the "entitlement" in the end.
that doesn't seem fair...and that's why I've made plans otherwise.
yeah, at no time in my working life (beginning in 1989 at 16) have I considered social security deductions anything but a non-returnable theft from my pay to thinly fund old people's retirements.
the idea that I'd ever see it back looked ludicrous, even in high school where I was barely informed at all about the money and political structures I was going to be subjected to as I became independent from the parental units.
I do agree that reducing tax receipts has not constrained govt spending. However, running a deficit does not mean that tax payers were relieved of the obligation to fund the deficit spending. Deficit spending = taxes in a different form - debt (delayed taxes) or money printing (a tax on savers).
The only place to save real $$$ is slash defense budget 50% or more. This would have added benefit of reducing global advenurism. Close the foreign bases and bring our soldiers home to retire.
That's the conventional wisdom, and I'm all in on seeing the Pentagon get their DOGE audit good and hard, but there's a *lot* of federal spending outside of defense. Like the USAID color revolution money that installed Zelensky and uninstalled Jair Bolsonaro, and was attempting to throw Trump in prison. Now that that money's cut off, the EU's various attempts to keep that playbook in flight are nakedly obvious.
1- There is room to reduce Medicaid/Medicare entitlement expenses, through efficiencies and fraud reduction.
2- The best we may be able to do on the debt is to slow its growth, and let GDP gradually come back, proportionately.... analogous to the way the payment on a 30 year fixed mortgage gets "smaller" over time, relative to increasing values and income.
Look at it this way: govt could send soldiers door to door to take your stuff; that wouldn't be a "tax" but it's a tax. Inflation steals, debt steals, taxes steal, stealing steals. It's all stealing.
I'm just generalizing Ricardo Equivalence Theorem to include INFLATION, but spending always = taxes because government has to get the $ somewhere & anywhere govt gets the $ is a kind of tax.
Nope, debt & inflation are also taxes, just more cleverly disguised taxes. By definition, government spending = taxes, whether you tax via inflation or debt or taxes. Just as supply must equal demand, spending must equal taxes.
Extremely well argued that tariffs do indeed impose a dead weight loss on citizenry. However, it seems to me that you do not make the case that tariffs are worse than income taxes, which also impose the same losses and are clearly subject to the same crony corporatist favoritism, only that they cannot realistically fully replace the revenue provided by income taxes. You properly point out that tariffs allow industry groups and politicians to impose policies that enrich themselves at the expense of the overall welfare of the consumer. Those exact words apply equally if not more so to income and other taxes. High tax Democrat cities and states provide the clearest extreme illustration of that - income taxes, sales taxes, property taxes among others, unilaterally and stranglingly imposed to extract ever increasing amounts to corruptly enrich governing politicians and their friends while further entrenching their stranglehold on control. There is no question that drastically cutting government spending beyond simply reducing the tremendous fraud, corruption and waste is the perhaps unattainable solution, but why shouldn’t tariffs be part of the revenue equation? Is there some reason it must be an all or nothing matter? Are tariffs worse than income and other taxes? If they have the potential to achieve some potential benefit by leveraging others into better behavior toward us, is that not worthwhile as a replacement for some amount of income taxes? At the margin, is there a case to be made that we are better off with a government funded by some combination of selected tariffs and income taxes rather than one funded by income taxes alone?
You forgot the newest of the “deadweight” taxes: the abominable “bag” taxes where the state/local governments demand that the merchants charge for bag/s and paying $0.15 for a bag that doesn’t last fifteen minutes….. :P
1. Not all taxes have similar deadweight losses. The wider the tax base (and thereby the ability to avoid taxes via macroeconomically unproductive adjustments), usually the smaller the welfare loss. So a VAT or simple flat tax have much lower deadweight losses than a tariff per unit of raided revenue.
2. As you mention yourself, there is a transversality condition in that government spending has to be paid, as a last resort via the inflation tax or default. And governments using the latter options usually have small tax bases. So a small tax base relying on tariffs is hardly re-assuring.
3. Others using tariffs does not mean we have to as well. That was the entire point of the cat's article... Also, the last time we tried tit-for-tat in the 1930's beggar-they-neighbor tariff and debasement cyscels, it didn't work so well.
This is a complex discussion but for me there's not enough here about economic realities ancillary to the main narrative. We're told that it's fine to run a trade deficit and given the example of a consumer and his grocery store. But Kroger isn't offshoring critical productive inputs and skimming the incremental margins from doing while it skips out on 1) offshore production frequently accompanied by slave or child labor, environmental impingements etc. America itself would never tolerate; 2) how the money traders themselves benefit from the financial engineering surrounding big trade deficits because money flows upward (WSJ: "But there is a more constructive way to look at a trade deficit. The $918.4 billion deficit reflects an equal $918.4 billion capital surplus. This demand for U.S. assets boosted the value of American stocks and bonds"); 3) how the average factory or company town worker frequently loses livelihoods and self respect via offshoring.
None of this is to say that tariffs are *the* answer. But something has to be done about the situation. This essay seems to counsel for more of the same, but the same is not working. Bessent put it well when he told Tucker that "the distribution of equities across households: the top 10% of Americans own 88% of equities, 88% of the stock market. The next 40% owns 12% of the stock market. The bottom 50 has debt."
Yes, you and Bastiat are right: tariffs are bad. But we have lost our manufacturing base and depend on China for spare parts, pharmaceuticals, and fentanyl while our major exports are Treasury notes. Standard Econ theory does not assume a current state of Debt > GDP, interest rates > growth, and a dying manufacturing base. Is our current path sustainable or are we teetering on the edge of a debt spiral apocalypse? The causes of our current sad state of affairs are mostly government spending, regulation, and rising minimum wage laws. While a clean solution would just roll those policies back, will politicians touch those third rails? Tariffs, while less than ideal and likely painful/inflationary in the short run, may be the only feasible least-worst policy option that has a chance of rebuilding our manufacturing base, increasing growth, and returning to a sustainable trajectory.
What about the fact that the fin/tech elite have been saying for some time that in the near future automation will be the way of life?
In light of that, what does the tariff war mean?
After all, between AI and innovations in technology some envision less and less need for humans in the area of service or product delivery to the public?
Probably you'll get lots of "abandoning Trump" comments for this one, and quite honestly, this whole thing is beyond my ability to understand all the nuance, but I will just make a couple comments:
"you’ll will have a large lifetime trade deficit with the grocery store. you will buy much from them. they will buy nothing from you"
sorry, but this seems a bit click-baity for you
"it provides a better cost of capital for US companies, lets them grow, makes them more competitive, enriches shareholders and underpins pension plans and endowments"
probably true, but I'm genuinely hoping my kids and future grand kids will be able to live lives that are more than just hollowed out amazon consumers
"if you cannot fluently explain the difference between <big sentence that you are not smart enough>..."
this is sort of a bad look from a person (cat?) that spent the last several years saying that the "experts" have held us captive
I have studied economics and in fact one of the most interesting books I ever read was The Worldly Philosophers, so I understand the argument about dead weight losses etc. I do, however, believe that two factors that are almost never discussed are 1) how investors learn about where to invest, and 2) the multiplier effect of factory jobs.
If I save up $25 million and decide to build a factory in the US to make my new widget, I may enjoy a year or two of profit. Then a Chinese company copies my idea, builds a factory in China, which also prohibits my US made product from being sold there, and undercuts me. The I go bankrupt. The second time I save up $25 million I might be a little more careful, but could then still decide to build that factory in the US. Then the story repeats. But by the third time, I will have learned my lesson and will never invest in a US factory again.
I am also unsure if the knock- on effects of having manufacturing in the US are captured by the analyses showing a cost of, for example, $800k per US job created. The single factory job creates several others, in local retail, and also in supporting industries. My factory needs local vendors to maintain and upgrade my equipment. So if, perhaps, three other jobs are created per factory job, then the $800k per job becomes $200k.
I am no economist, but it seems to me that these two factors, among others, are not sufficient discussed.
this seems an overly rudimentary analysis. if you build a factory where it's that easy to undercut you and take your market, then why shouldn't you lose you money? you entered a commodity business as a high cost provider.
if you cannot compete here, you could not compete in china either.
learning not to engage in malinvestment is beneficial.
meanwhile, if we erect a tariff and keep you in business, you're just extracting subsidy (in the form of above market price) from the government who is granting you a form of monopoly/oligopoly. that's a net deadweight loss to society. the higher prices paid for goods exceed your extra profit.
there is nothing special about factory jobs in terms of "creating other jobs" and that is already factored into the analysis on cost. a job running a hotel would do the same.
in fact, moving from capital and resource intensive jobs to jobs that are less so tends to be a benefit. we did not offshore factory jobs because of tariffs, we did it because they were not great jobs and provided less value than other jobs.
this 1950's myth of "great factory jobs" was a very brief period in time post ww2 when the US had the only intact manufacturing base in the world, demand for our products was near infinite, the workforce small, and competition low.
that's never coming back, nor should it.
we lost 99% of farming jobs too. it made us much richer. US industrial production is near all time highs, we're just doing it with fewer people because productivity is better. this idea that "adding more people would be good" is a bit like saying a construction site should ban shovels and make people dig with their hands because the knock on effect on employment is good. but it's not. pay is a function of productivity and using up so many resources to dig increases the cost of labor in all other markets by using up limited supply of people.
lgm - We made refrigerators back in the 1950s that lasted 50 plus years rather than five, washing machines that lasted decades, wonderful wool blankets & cotton textiles, well-made clothing, reliable small appliances, sturdy tools and so on.
Auto industry and other factory jobs helped to create a solid and prosperous blue-collar middle class where people took pride in a job well-done. This all lasted much longer than a "very brief period" and it lifted many people out of what would have been poverty. It also did not require people to be saddled for life with unpayable student debt.
On the subject of factory jobs being no better or worse than service jobs, it is my understanding that the multiplier effect of different jobs is quite different. I certainly hope that the analysis we have both seen do reflect this, but I have not seen evidence of it.
And I agree that US manufacturing output is at or near an all time high independent of the number of workers in the US who are employed by manufacturers. It is, as you point out, similar to farming where employment continues to decrease despite the output of farms continuing to increase.
"the higher prices paid for goods exceed your extra profit.
there is nothing special about factory jobs in terms of "creating other jobs" and that is already factored into the analysis on cost. a job running a hotel would do the same."
Are the skills required to build and maintain a complex supply chain to run a factory the same skills required to run a hotel? If they're not, is the value of the skills to build a complex supply chain to a society higher or lower than the value of the skills to run a hotel? Your implicit assumption is that the value of production knowledge is 0.
It was OK to overlook this in an age when Stockbroker Ricardo could hand-wave about industry so he could do more financializing. Your analysis of the value of knowledge is a little like Warren Buffett not investing in tech companies because of the excess of goodwill over tangible book value.
One thought here is whether cheap goods have caused consumers, particularly in the U.S., to overconsume. This reduces both savings and investment, particularly in the middle class. And cheap goods are often cheaply made, which means they wear out quickly (partly via planned obsolescence) and consumers end up spending more over the long term than they would buying a quality product up front.
I suspect some of that is a cultural issue that needs to be solved, but there is an argument to be made that we need to encourage consumers to buy less and to save / invest more. And shifting cheap foreign goods to quality domestic goods can perhaps drive more sensible purchasing at all levels, and also reduce the gigantic amount of waste.
Another thought is that different countries don't operate with the same regulatory frameworks. Putting aside their usefulness for a moment, if companies in the U.S. have to deal with things like minimum wage laws, expensive healthcare, environmental regulations, etc., whereas a country like China doesn't (or at least not to the same degree), do we just have a situation where, even without tariffs, we are imposing a loss on businesses and consumers because of our own regulations?
Finally, perhaps in a global political order, there is some value to shifting trade from certain countries to others. Others with more knowledge in this area may have a better view, but one could certainly make the case that shifting trade from countries like China to friendlier countries like Mexico and Canada can be beneficial, particularly if that increased trade comes with certain guarantees from Mexico and China to substantially increase border security and play ball on deportations, etc.
I agree on your first point- it will be interesting to see how consumption habits change. I think a key part of the argument that gato is making seems to be that more expensive goods are a punishment, therefore the greatest good for the consumer is the cheapest good. While I see the point from an economic perspective, I am not sure I agree from a moral perspective.
As you point out, is it the greatest good for the consumer to be able to buy lots of poorly made items? Potentially dangerous items (magnets and other dangerous components in toys come to mind)? Furthermore, is it still the greatest good for the consumer if the items they can purchase cheaply are made by slave labor? I don't subscribe to the "own nothing and be happy" WEF worldview, but I do think there is a middle ground between the huge amounts of wasteful consumption we see in the US and the more dire forecasts on future purchasing power being bandied about. I don't believe that Trump has explicitly made this point, but if we can drive manufacturing and production back to the US at some level and clean up dirty supply chains, on balance I would say that is better even if goods are more expensive.
It's a deadweight, a net loss in prosperity. But we are a prosperous people. Really prosperous. And we can survive trillions of deadweight loss pursuing a crazy carbon free, net zero future and remain prosperous as long as the nightmare is never fullfilled.
There are 55 primary copper smelters in China. There are three in the US, and one isn't operating. The US ships most of its concentrated ore off-shore for smelting. We destroy our primary industries with insane environmental? Environmental what? Lawsuits. It is not even the insane rules, it is the damned lawyers and their neverending lawsuits of uncertainty.
If Trump will fulfill his promise of a, "Golden Age of Energy Dominance" we will survive the tariffs and the will create immense opportunities to reestablish the US's resources as one of the foundation stones of our prosperity. If we are trading the juggernaut of environmental deadweight for the mosquito-like annoyance of tariff deadweight. We will be okay. Huge net gain.
The beast we have to kill is the environmentalist plaintiff's bar. Sensible rules that are static. No more existential energy crisises. A free market in energy. Mines galore.
The people who are against tariffs have had more than 30 years to do something to help the poor and working class. They have done nothing, they have achieved nothing. The poor and working class have been screwed over by the current system, so bravo for Trump for trying to change it and do something for the people who have gotten nothing.
All the rest of the debate on tariffs is bullshit, and reeks of economic elites trying to hang onto their privilege at the expense of the poor and working class. Enough. They have gorged themselves at the trough for far too long, and now it is time for others to benefit from the system.
Bravo, Donald! Keep the pressure on, and do not give an inch to the tariff whiners. They've had their time and now it is time for them to STFU and get out of the way.
I don't usually post, so this may not go well, but I will try anyway since I am in Puerto Rico with my boricua wife.
The purpose of these tariffs is two-fold: one, to bring high-paying jobs back to the US, and two, to fix our supply chains, which, as we witnessed during COVID, are vulnerable. Even our weapon systems use Chinese-sourced products.
This is a once-in-a-lifetime opportunity to rebuild our manufacturing base augmented with AI and robotic technology and control our supply chains.
Economic theory states that a 10% tariff has the following impacts: 4% is absorbed by the tariff-paying country. Another 4% is negated by relative currency appreciation. That leaves 2% for price increases. These numbers vary by the relative economic power of the two countries, with the advantage going to the trade deficit country.
We do not have to wonder. We can look at recent experience. During his first term, Trump imposed a tariff on China, and the prices for those goods rose by 0.7%. The UAW has looked at these numbers and supports what Trump is doing.
Before you can have “free” or “fair” anything you have to take out the “fake”.
The US and World economies have been built upon fakery and fraud in the form of money from nowhere.
That fraud has to be shaken, hard, to get it out of the system. That is what this reckoning is. A great sorting exposing reality from falsity.
The whole world is broke and broken because they’ve been playing fast and loose for decades with not only other peoples money, but from fake money printed on top it propping up their fake economies.
Everyone has skin in this game, and their own demons to confront, as Trump works to establish an actual economy based on reality.
The status-quo has been patently unsustainable and headed for a cliff.
The economic ship has to take a hard, fast and dramatic turn to avoid the edge of that cliff, or we all go over it.
And time is not on our side.
I’ll take this hopefully temporary beating over the alternative, which is CERTAIN RUIN.
Victor Davis Hansen has a much better take on this one. There are a lot of moving pieces in the restructuring (or recovery) of our economy. Tariffs are just one of them. My big concern is China and the fact that we (and the rest of the world) are funding their "take over the world" war machine with the tariffs we pay.
Seconded. As others have noted, there is more to this issue than decent jobs / a low Consumer Price Index. The 90s promise of open trade with China was that liberal markets would lead to its social liberalization and the weakening of the CCP. That has not happened. So much for those prognostications.
So sure, the math is indisputable -- given the premise we live in an open-ended free market sandbox. But nation-states still exist, and they differ from grocery stores in inportant ways. As for Ricardian comparative advantage, eg trading English textiles for Portuguese wine, did that math still apply when Napoleonic forces invaded Portugal in 1807 and occupied it for two years?
good point. which reminds me, others have noted elewhere that tho substack seems uncensored, some if not many of the authors are controlled op. i do not know if this is true, but have seen evidence that backs it up.
"...concentrated interests gang up to inflict diffuse harm upon the many, taking $10 each from 300 million people such that they might make an extra $500 million themselves. the fact that this taking cost $3bn is not their concern. that gets swept under the rug. it’s someone else’s problem."
This is an accurate description of what has been done for decades in the US. The "swept under the rug" part is the $36T debt. The "someone else" is the middle class.
The worst part of the crime is that the "stolen" money has to be paid back by our kids and grandkids, or we go bankrupt. As stated, the usurping class doesn't care either way, as long as they are on top of the pile.
Economically, they didn't produce a damn thing or even provide capital for the most part. That's why the term "stolen" applies. It's good work if you can get it.
Bottom line is none of us really knows DJT's thinking, or how this will all shake out. It sure looks like a lot of countries suddenly are lining up to negotiate trade deals and tariff reductions. Maybe that was the whole point. I am still skeptical that we're going to eliminate the income tax, but maybe it will blunt the impact of extending the tax cuts. Eliminating waste and fraud, reducing regulations, and regaining energy independence may put off the inevitable reckoning. but the underlying dirty secret is NO ONE has the stomach for seriously reducing spending. Until we do, I think this is all moving deck chairs on the Titanic.
Agree long-term. And as a libertarian the tariff war is antithetical to our ideals.
They are indeed a net-zero sum game....BUT sometimes you win by losing the slowest.
Sometimes you have to knock over the checkerboard, just to show that you can. And just as importantly force other parties to reveal their hands. I think hes just playing "political aikido". Thats a game we will win.
I don't see Trump using tariffs as some ideological bent. It's not as much about using tariffs as a way to reset trade, but more about resetting EVERYTHING. In most cases, if one person in a "boat" starts shooting holes in the bottom, you shouldn't start shooting holes to fix it...unless you have an extra boat and the other party doesn't, and you have a life preserver to save anyone you "need" on the "new" boat.
I wouldn't get too "worried" by what all these so-called experts and politicians are saying.
They're the same people who want us to keep doing what got us $40 trillion in debt and hollowed out our manufacturing base, while they fattened their wallets, all the while the American worker became more productive but got paid less
OK, I'll sit back to have my knuckles swatted...;)
that's the "chemotherapy for the global order" argument people have been advancing. i struggle to swallow that whole because 1. trump is just not that smart of farsighted. he's just not. he just likes to create chaos and bet that he can use it to get something. 2. i sincerely fear that trump is an actual mercantilist. he seems to believe that tariffs = health industry and vibrant production. i guarantee you you he is not even aware of the shape of the ricardo issue, much less how to parse it. he thinks his last round of tariffs worked.
You are greatly appreciated, but I think you are wrong about tariffs. And I forgive you, because you are right about so much else. Economics is not a science where you can say anything, with certainty re cause and effect. It’s an artificial construct focused on a nebulous, extremely complex, opinion-based system, somewhat analogous to the weather. No one is ever completely right or wrong when they talk about “economics”.
Most importantly, your starting point is wrong; this is all about the $37,000,000,000,000 +/- national debt, and the US’s continuing deficit spending - economics is just one bog-down-able aspect of the problem.
Trump made his move, and as usual, all the hostiles are doing whatever they can to hurt him. The die has been cast and will continue to roll for at least a few months. Let’s see what happens then.
please show how tariffs will lower the deficit.
The opposite is more likely if growth and productivity suffer, which will lower tax revenues and result in higher spending, not even to mention a recession.
Because they are (effectively) a tax. Tariff money goes to the Treasury and directly decreases the deficit by the same amount. It is the most basic of arithmetic. This is also why tariffs are literally not inflationary, no matter what people say. Yes, prices for some people go up, the the value of the dollar also goes up as the deficit is reduced.
Ok, that really is the most obvious step, but what is the next step?
As you can see right now, tariffs already had an immediate adverse effect on financial markets, which results in lower capital gains taxes--and given the moves so far, the loss in that revenue alone would be larger than any realistic gain from tariffs.
But that is not all. Next, consider the lower growth from tariffs (as productivity takes a hit, producing stuff we are not that comparatively good at and investment tanks given the overall uncertainty) and resulting lower employment. The net result here: yet lower income and FICA collections, and higher transfer spending.
If it were to come to a recession, the deterioration in the fiscal deficit would be much higher (that is what os meant by the government budget being an "automatic stabilizer.")
the budget deficit will turn even more south if there is a major financial market disruption and/or the recession goes global. And that is before one even considers the potentially lower attractiveness of US assets to foreigners, which could drastically worsen interest outlays.
And all that a small amount of tariff revenue? nuts
" tariffs already had an immediate adverse effect on financial markets,", What has had the major effect on Financial markets,(stock market), Is the fear that is being spread by the Dims, the resistance, and the MSM. A recent data I saw suggests that 10% of stock holders own 88% of the stocks while the remaining 12% is held by the next 40%. Half the population owns no stocks. The 10 % are not selling or may have sold a few days ago to reap profits. Now they are buying at fire sale prices. The useful are following the script provided to them by these elites and the MSM, as usual.
I believe you will find that many companies buy parts and materials from overseas to use in their final production. Those costs going up by large amounts will cause all manner of problems, regardless of what nonsense the lefties are crying about. It has certainly been a huge focus of my company's concerns the past few months.
But why would the "Dims, resistance, and the MSM" wait to put on shorts until Trump levies tariffs? If all it takes is them shorting the market, why did they wait so long?
I think the Occam's razor explanation works best: markets sold off when tariffs were launched because tariffs are bad for the economy (and this markets)
Actually very simple, they do not want the negative credit for doing so. The MSM is not very bright and they just amplify the narrative and that is to blame Trump.
That assumes people will continue to buy imports and pay the tariff. In most cases they ill turn to how cheaper domestic suppliers or do without. Government created scarcity is not economically productive on a net basis...
In some ways the tariffs are there to encourage local industry and discourage spending on foreign goods. The tax collected goes to US treasury. That’s why 150 years ago tariffs paid the bills and there were no personal income tax.
150 years ago the federal government was 1.5-2 percent of GDP. Last year it was 23 percent of GDP. Meanwhile, imports were less than 14 percent of GDP. There is just no way tariff revenue can meaningfully finance the government anymore.
Government being 23% of the GDP is obscene from both a moral and economic perspective. From an economic perspective government is entirely parasitic on productivity. That’s why taxes and fees are always accrued in the cost columns for profit and loss. Don’t go reductio ad absurdum on this. Of course, SOME government is necessary: defend the borders, protect the currency, and provide for national defense. All the stuff the Biden president puppet didn’t do. But government, producing nothing, should have NO PART of a GDP measure of production of wealth. Secondly, to consider Government spending part of GDP is wrong morally as well. That regulatory costs and judicially forced transfer payments from producers to the government are considered a measure of growth and productivity is obscene because it is an effective subsidy on taking from producers by force. Another term for taking by force is tyranny, and anything you subsidize, you get more of it. Long term any government that doesn’t limit its growth will become cancerous to its citizens. So, tariffs aren’t ideal, and won’t solve our soft tyranny known as liberal democratic globalism, but we have to start somewhere and nothing tried in the last 80 years has had any effect.
I am not making moral arguments.
All I did was to counter the claim that tariffs can finance the government in any meaningful way. They can't, and they impose additional inefficiencies.
Of course, there is a very good economic theory and empirical (ie.e, non-moral) discussion to be had that the government is too large. It is and that is resulting in a drag on economic and social well-being.
But that has nothing to do with tariffs.
Also, the System of National Accounts (SNA) is not a moral issue either, but an internally consistent system aggregating various data sources into measures of annual flows of values added; they are arrived from the expenditure-, production- and income side, and removing government from any one or two of those will result in an inconsistent and incoherent mess.
There are serious discussions on how to improve the SNA, but again they have zilch to do with tariffs.
That government is 23% of GDP and is considered part of the GDP is an inherently moral issue. And to discuss an inherently moral issue in an entirely amoral fashion is like discussing God without mentioning faith. It can certainly be done, but the results are less than they could be.
GDP and the SNA are a man-made pragmatic data-reliant system to attempt measuring the annual change in a country's value added. By convention, it assumes that production equals expenditure which equals income, all on a macroeconomic basis. You remove government from one of them, and these measures no longer hold up. For example, if government expenditure no longer counts, won't social security income count either?
That is it--no magic nor morality. GDP doesn't measure well-being, happiness, "sustainability" nor human achievement, just value-added. But it is pretty darn good at the latter.
I think the corruption and wasteful spending found over at DOGE is contributing to that bloated number. That and $60 Pentagon toilet seats, or bro giveaways in inflation reduction act if you prefer.
last year the federal government spent 4.4 T(!)trillion dollars. Just checked DOGE's website, and they have identified 0.14 trillion in savings. Throw in a high estimate of .2 trillion in tariff revenue, and one would only need to find another 4 trillion in other revenue.
The numbers are just WAY too large for tariffs and DOGE to make a macro difference. At least, DOGE has major benefits in fostering efficiency, and productivity and cleaning out DC's self-dealing Augean stables. Tariffs do exactly the opposite.
You specifically said tariffs are anti-productivity and anti-efficiency. Is that what you meant? How do tariffs contribute to the increase in DC Augean horse poop? Thx
Tariffs misallocate resources (gato has a nice 4-panel diagram in his article showing how they result in deadweight losses).
Moreover, tariffs create new politically favored winners and are thus rive with new corruption possibilities that never seem to go away. Just look at US sugar barons.
So, once new tariffs come around, they create rents for benefitting industries, these industries pay politicians to keep tariffs around, and those politicians can use these contributions to get re-elected. Classical self-dealing DC stuff.
In contrast, undisturbed market allocation fosters competition and productivity, rather than political rent-seeking.
Sounds like your tawk’n standard issue corruption rampant and rife already in the country across the board, in every sector. Maybe DOGE should become a permanent fixture, not simply a visitor. I’m in Cali. We need Cali-DOGE. It’s frigging everywhere in everything.
Generally speaking you're right.
But read my reeeaaallly long comment below to @Aja
Ah, but the opposite is true. "Tariffs" will bring back industry and with that, more real good paying jobs. Taxes from those industries and an increase of GDP will help to decrease the deficit in the long run.
If that is true, why don't we see this anywhere else in the world? Consider India, one of the countries with the highest tariffs and protected industry. Other than utterly uncompetitive products, and super-rich protected oligarchs, the country has nothing to show for it.
My favorite example is that we could certainly raise a competitive pineapple-growing industry in Alaska. All it takes is (massive) subsidies and tariffs. And of course we would see Alaskan employment in the pineapple industry surging. What is less obvious is the resultant employment and productivity losses elsewhere in the economy, from the misallocation of resources.
Same with tariffs. And the cat had some examples in his text: how about the 800k per year new washing machine factory job?
Exactly. Every country in the world has high tariffs, but every country in the world is also massively poorer than the US. Germany is the pinnacle of productivity in the EU, and in a good year it would ranks as out 5th or 6th poorest state, and most years it is dead last. India is a mess. China is a mess. Apparently tariffs and an internal market of over 1 billion people aren't enough to have a decent economy.
Let's not emulate those guys.
Money goes to treasury & reduces debt. A goal is also to reduce interest rates as treasury has a record # to roll over this year. Lower rates would help immensely. Good points here: https://x.com/tanvi_ratna/status/1907880105369845865?s=46
For the debt to be paid down you have to free up some surplus cash flow which means you have to spend less than you earn.
It’s not clear that tariffs will increase revenues in the short, medium or long term but that’s not because they never have it’s because they’re being applied to the former hegemon who is the biggest debtor nation the world has ever seen and has the worst balance of trade the world has ever seen, and MAY have the least fiscally disciplined population the world has ever seen (in terms of being willing to suffer short term agony, and medium term hardship, in return for long term prosperity).
The damage from more than a century of profligacy is not going to be undone in 4 years or in 12 years. Are Americans capable of maintaining a difficult course for longer than that? It’s hard to believe.
It has also allowed tailpipe environmentalism to pop up where we pretend our 'greening' is real. It may be real for us - debatable - but it certainly is not for those where mining for rare earth metals are mined or where the production takes place.
And politics is not a science, Without facts OR truth you can't even have a discussion if the data is wrong. We know nothing but what we are told. This is all mental masterbation but almost no ones ego here would allow them to admit it.
That's utter nonsense. The Austrian school of econ relies on logically deduced truths from irrefutable premises to arrive at objective, universal truth.
Trump made one of the single greatest unforced errors in US history that fortunately will be knocked down by the courts for violating the major questions doctrine and the lack of any emergency as required under the IEEPA...
i agree with gym. economics is not scientific, it cannot and has not ever made accurate predictions. Some of its postulates are absurd, like “do whatever is good for the consumer”. Anyone whoever fell out of a womb is a consumer, a hole in the ground is a consumer if you throw things in it. The value should be placed on production and producers. It’s like when politicians talk about helping “citizens”..no, you need to listen to tax-payers. you can’t have government without tax-payers and you can’t have an economy with producers.
Also, all these counter-arguer’s should point out how the current system has worked so well, The rust belt, massive unaccountable government blob, total dependence on would-be enemies. The current system is on the brink, maybe the scientific foundations it was built on are faulty in some way, just maybe?
I think we need to differentiate between creation of value, and creation of wealth; a minor, farmer, shoemaker, or construction worker, creates value - a hedge fund, stock broker, advertisement, or sales agent creates wealth.
Tariffs are a tax. ALL taxes are ARBITRARY. Right now, EU prioritizes VAT and the BS Carbon taxes. They don’t want to lift them just because of the added strain of the new Trump tariffs.
I won’t cry for them though. Europe is the KING of all manner of taxes. If they find they have to remove some taxes to accommodate the new US taxes I won’t be sad. Too bad. Not sad.
"he seems to believe that tariffs = health industry and vibrant production”. This statement seems, to me, to indicate you think Trump wants tariffs. I feel Trump is just using tariffs to end tariffs. You drop your tariffs and we’ll drop ours. There will be a lot of pain initially, but in the long run we will be better off.
Yeah, I tend to agree.
I also think he's doing it to demonstrate how inequitable our reciprocal trade policies are, in a "show-and-tell" manner.
And just as importantly, a sort of "political aikido" to force the other parties to show their hand.
Love him or hate him, Trump is a master at this technique.
Yup. And as I wrote above, it's working. At the time I'm writing this, Israel has signed zero tariffs both ways and the EU, UK, Japan, and Italy have all announced they want to as well. That's the majority of our non-China trade right there.
Agree, generally. I think this is an interesting take if you haven't already read it:
https://www.zerohedge.com/markets/trump-shock-reverse-nixon
Michael Every, Yanis Varoufakis and Oren Cass are all good reads on the topic.
Everything is connected. Shut down the border and restrict cheap labor undercutting wages. Shipping office in White House. Panama Canal, Greenland, mineral deal with Ukraine. This is strategy not tactic. It is about so much more than buying cheap sh!t from somewhere.
Here's a recent Oren Cass article, referenced in this weekend's "Saturday Comment & Review #187" (Niccolo Soldo, "Fisted by Foucault") -- https://bit.ly/4lA35VE -- a good read about tariffs.
Thanks, Ryan. Good link.
wow. thanks for the link.
And this: https://x.com/tanvi_ratna/status/1907880105369845865?s=46
She has a Substack if you’re interested: https://open.substack.com/pub/tanviratna/p/tariffs-and-their-discontents-mapping?r=nl3ud&utm_medium=ios
"As I have put it, using economic statecraft; or, using financial Fartcraft to shift back to Warcraft."
Fartcraft* lolol.
That sounds like something my boy and his friends play in the back seat while I'm driving
On Monday, European Union leader Ursula von der Leyen has said that the European Union is ready to offer "zero-for-zero" tariffs in trade negotiations with the United States for industrial goods.
I trust her less than the distance I can throw her. She's playing games with language. She said zero for zero on all industrial goods, which means that they would still tariff things that are advantageous for her to tariff.
I have a more detail comment on this below, but in a nutshell, each of us plays many roles in this Tempest we call life. Sometimes I am a consumer, sometimes a shareholder, sometimes a taxpayer, at other times an employee or just a citizen.
Each of these characters has different, sometimes contradictory needs. What benefits me as wage earner may not benefit me as a shareholder. What benefits me as an individual taxpayer may not benefit as a citizen. It's very nuanced.
The modern tariff structure is a remnant of the post WWII days when we rebuilt Europe with the Marshall Plan and granted them open access to our large market while allowing protection for their fledgling industries. But there was no sunset clause for this. This imbalance in trade should have been addressed 60 years ago. It is every nation's prerogative to generate tax revenue how it wishes. If it prefers consumption taxes to income taxes, so be it. If it prefers it the other way around, knock yourself out. If it seeks a little of each, it has that option available too.
And make no mistake, tariffs are essentially just a consumption tax.
Trump has excellent economic advisers who have been studying this for a long time. Our Country was in a nose dive twards bankruptsy and Globalist takeover. Trump has shown his sincerity of love for this Country. Im placing by bet on Trump
Trump doesn't have to be "that smart". He only has to be smart enuf to have smarter people working for him.
But he IS that smart.
You are eggheading this too much. Even if Trump isn't aware of all the nuances his people are.
There is a certain minimum core of industry we have to maintain in order to NOT have to result in Armageddon level measures in a crisis.
In 1940 America dominated petroleum and steel. After much back and forth early the next year Japan was embargoed. And that was it. The war that was really its own thing and not connected to the European war, a war that had started halfway through the previous century, was off and running because one side gave the other no choice but attack or surrender.
This is worth the read, El Gato on unilateral free trade in the face of trade deficits with merchantile countries. The world needs balanced trade...
https://treeofwoe.substack.com/p/balanced-trade
of course the chaos was already there, but sure, Trump has a larger spoon to stir it! I had hoped that a few people in his surroundings would temper his wild windmill thoughts, but I see that a few have already dropped off the boat, and I think by the end of his 4 years, the boat will be filled with garbage just like the former time. One thing - everyone is afraid of him, because you never know what he will do next.
Your argument is that you think he’s dumb?? Interesting. That is beneath you gato. I wonder what kink of monetary gains (or losses) are skewing your perspectives.
He's been inserted, they all have a job and his job is to help the elites and Israel. That's all. The rest is BS to fool the little brains. This guy is the biggest globalist there is. He is Klaus Schwab. You didn't see the video of him praising Klaus? Come on. The always Trumpers are as stupid as the always Biden'ers at this point.
The difference, one is largely God fearing and loves american Ideals. The other side has very little God and is some version of Woke. Those are the followers. The leaders are laughing their collective asses off at all of you who think any of this shit is organic and unplanned.
Whatever they have planned, IT IS NOT good for the American people.
We are in the AGE OF DECEPTION.
Hey guys is this Simp piece he uncovers more about who Trump has modeled this tariff plan after.
https://open.substack.com/pub/simplicius76/p/trumps-liberation-day-another-pr?r=nvvvu&utm_medium=ios
I like your points, but I think the game is a little longer than just chaos.
Chaos is how you keep some enemies off balance.
Tariffs are a negotiating tool for all but China, where it is a divorce tactic.
Beware "Marmalade Cat Bad Syndrome."
Your most persistent Blindspot is your underestimation of Trump.
It’s the same, “we have to burn it down to save it” argument that Dems make.
I like reading Mises and Bastiat and am generally in the Austrian econ family, at least on a micro level. However, analyzing the current system with that ideological framework is fraught. We live in a system of printed money, over valuations of stocks, and a mass arbitrage game for the "haves". A bubble pop was coming to an overheated market. I am curious how the trade negotiations and ultimately an investment in real world capital goods/factories shakes out. If these are combined with a promised cut to income tax...cool.
Libertarians (am some form of one myself) are famously ideological in that they expect the world to be the Scottish Enlightenment and free market but it is instead a Machiavellian Rube Goldberg machine.
I'll wait and see and then react not the other way around.
i'm a "pragmatic" libertarian. the reason they can never win is bad leadership and even if they did have good leadership, they'd spout about abolishing child labor laws for the next 10 years.
yet I continue to send libertarian groups money...
for example I'm all about immigration but not illegal immigration that becomes a threat to our sovereignty.
the trade imbalances are similar in some regards, but they could be "fixed" by measures other than tariffs.
Agree. I am onboard and will be patient. No way to continue or live with the current situation. Now pass the permanent tax cuts, slash waste, and downsize the government while riding these rapids. It’s bold.
You have stated exactly why I am no pure 'libertarian'. I don't want child labor and dark satanic mills openly spewing waste that poisons our own food. I would like to think we have evolved past that as a species, but one glance at places that do not have these laws proves otherwise.
Libertarians always lose because they only offer the voter freedom…meanwhile, the voter is wanting something “more valuable”
Have you seen their current leader?
Total douche bag. Embarrassing.
No, I haven’t. You’re right though most of their leaders lack charisma to say the least but they could be the most erudite spokesman and their arguments would fly over the heads of 70% give or take of the US population?
The target of Trump is not global trade but the de-financialization of the markets . He has 9T in debt that comes due this summer. The use of tariffs is politically palatable and perhaps patriotic appearing(America First) to crash the market and create a deflationary moment to refinance the debt using longer term 10 year bonds rather than Yellin's idiotic refinancing debt using 1,3,6 month T bills. That's what a third world country would do.
This is the short term rationale to stabilizing our debt. I seriously doubt he will maintain punishing tariff rates on most all countries except China. China sends three million packages a dayto the US mostly under de-minimus . Anything shipped into this country under $800 dollars was not only duty free but never searched . Hence the flood of fentanyl components and other products considered national security risks.
Default on the debt. That would solve the problem. First, it would destroy a huge amount of dollar-money needed to deflate the US economy, second nobody sane would ever loan the US money again, or at least not for a while, removing temptation from future spendthrift Governments.
You need to look at who holds the debt.The only part of it you could get away with defaulting on is the debt China holds. Which is OK. They owe us for the Wuhan Plague.
Worth the read. Thanks for your reply.
https://treeofwoe.substack.com/p/balanced-trade
The tariffs seem counterproductive. With the caveat that China controlling trade in certain sectors (Pharmaceutical, Drone manufacturing, Rare Earths) has real Geo-strategic implications.
IF (big if) we saw quick deals with bordering countries (Vietnam, Taiwan, etc) there's a potential case. A sort of reversal of China's belt and road initiative.
Even with that potential there are more ways for the tariffs to go wrong than for them to go right.
Chaos and uncertainty reign with some people saying "trust the plan".
What the plan is though seems to change minute to minute.
We agree. Especially on China.
Ultimately we need to migrate away from China to other Asian countries.
I suspect China is the only country, at the end of the day, that will end up trying to fight us in a trade war. The key, as you say, is rerouting around them.
I appreciate Thomas Sowell's assessment that they unleash uncertainty and retaliation, but I also look at the reality of the last few decades and see a lifeless landscape. Industries and manufacturing moved out of SoCal and NGOs serving the drug addicted moved in sucking up great wads of taxpayer money. And then we have the dirty supply clains. I resisted an iphone for the longest time because it had a dirty supply chain linked to slave labor. Do students protesting against the treatment of the Palestinians with their iphones know any of this? As the melting witch said in the Wizard of Oz, 'what a world.'
The destruction of Fubarfornia is deliberate.
A quick blip in a local headline said LA "LA County Reaches $4 Billion Tentative Settlement in Thousands of Sexual Abuse Cases
If approved, settlement will be the costliest in County history, with long-lasting budgetary impacts."
This is on top of millions, or is billions can't keep up, of funds that disappeared through NGOs dedicated to homelessness and just happen to have some connection to LA officials. Where Greed meets Need should be LAs motto.
I guess when you reference having to knock over the board I took it as at least potentially supportive. Personally I would have been OK using the threat of tariffs as an economic nuke with a threat of mutually assured destruction.
Its more like we went ahead and launched the nukes.
The funny thing is you could likely address the trade deficit by slashing federal spending something it looks like we are not really doing.
Ultimately I fear this is the last chance to right the ship, and the opportunity is being squandered in an inferno of ego.
So forgive my saltiness on this one. Its just so dumb.
"The funny thing is you could likely address the trade deficit by slashing federal spending something it looks like we are not really doing."
We are not 100 days into Trump's presidency and DOE is being eliminated as just one example to counter your statement. Am I incorrect in thinking DOGE has done a lot of cutting given the relatively short time they have been working?
I think the senate bill cuts a few billion. It would be nice if we applied the energy to cutting spending that we are applying to tariffs especially given doing so would deal with his trade deficit fascination. You could kill both birds with that stone.
Uhhh... How exactly is this like launching the nukes? I mean, very much unlike launched nukes, these tariffs can be altered or removed at any time.
Because we have already launched the attack, and damage has already been done. Between retaliation from China, international boycotts, and market sell offs there has been legitimate economic damage. If you want to argue it’s totally different because we don’t have 100 years of radioactive uninhabited villages well ok I guess.
The analogy was not meant to be literal in every sense. The point is tariffs at this magnitude are an economic nuke, and they were launched in an act of clueless dipshittery based on the output of a third grade math worksheet without making any effort whatsoever to use them as leverage first.
So something like "launching the water balloons" perhaps.
I guess the question is do you see this as a water balloon like impact? I don’t. I mean one time in college we filled up water balloons with scalding water and threw them at each other from a balcony as they ran across the parking lot like some kind of organic game of ground skeet, but I don’t think thats what you are going for.
I'd say that so far it's like a water balloon attack. Lots of people shrieking and running around, wet garments, minor upheaval with certain people outraged, but not much else.
I think what we've seen so far is pure political aikido -- using the enemy's own actions to destroy themselves.
Trump and his wrecking crew has a method of operating which the Russians call "razvedka boyem" - reconnaissance through battle. You push and you see what happens and then you change your position.
Is it a dangerous game, as you point out, YES.
But Trump likes results and id rather him shake it up in order to educate the public on how inequitable the trade policies are and to get the other parties to reveal their hand. I think that's what his stupid chart was on "liberation day".
He'll lose me if this is strategy vs. tactical.
I guess the thing is I’m not sure trade is all that inequitable in aggregate. Also given the cartoonish nature of the way the actual numbers were derived, I have a hard time seeing this as tactical wizardry.
It does have a reconnaissance by battle feel. I agree with that, but I don’t think its an appropriate tactic for battle in say a hospital ICU or orphanage playground where you would have lots of civilians as collateral damage.
In any case I think its also the wrong tactic period. If you have specific demands make them. You know exactly what they are doing that you object to. Thats the way an adult man should handle it.
If they say no, and you want to retaliate OK, but this pre-discussion lashing out is the kind of drama I would expect from a 19 year old girl pissed at her boyfriend. She’s not a tactician. Shes just on her period.
In other words; Trump doing Trump...
:)
See, I'm okay with it, in the short-term, because just look how much focus has been put on it. Discussion is better than doing nothing at this point...and I'm not one for doing something just to do something.
I think going through this exercise has the potential benefit of revealing just how perverse the financial incentives are across the board in this country.
I mean its definitely Trump doing Trump, but you know sometimes you have to reign it in based on context. I like to drop f bombs. Its me being me, but I can recognize its not appropriate on the kindergarten field trip.
I get your lets just see what happens take, and that it was necessary to get results. My position is you could have escalated gradually or at least tried direct demands first, and gotten the same results or at least no worse. Instead we moved right into the retaliation phase.
I mean the advice I would give my children is going to defcon 1 immediately is a bad idea. You don’t throw punches unless you have to. I’d want an extraordinary explanation before I believe that rule doesn’t apply here.
Lolol. All true
It’s been a nice back and forth. It will be interesting to see how your take changes as we move forward.
I don't really have a take other than trying to make sense of it all. Its all speculation on my behalf.
Although I do find it hilarious that all the people who couldn't pay back their student loans are now tariff and equities experts.
How do you know what discussions have or have not occurred prior to this action?
You’re right. They were probably in intense negotiations with everyone, they all failed, and nobody ever breathed a word about it. Yes this is plausible.
Nah. We agree.
I could've worded it better for sure
Slash what? Specify.
Off the top of my head
A half trillion on the DOD
The ED
Farm subsidies
Any unspent funds from the IRA
The EPA
OSHA
CFPB
Obviously all spending on public broadcasting
The DEA
The BATF
I’d pretty much burn it all to the ground
Ryan…..curious. I have read this SS and also Childers take….
How do you see this influencing or playing out for big tech….like Gates/Microsoft and other companies that do business all over the world and have taken their production to countries with cheaper labor….
I am not an economist of any sort (sadly—just never studied it or took the time to research) but it strikes me that the globalists in the tech sector pay no attention to borders….in terms of doing deals, except to go where they can make the cheapest product and deal with the least amount of regulatory matters. Then they sell it in the states. Meanwhile, the American middle class is disappearing….which destabilizes the US, making it ripe for the fin/tech sector to continue its coup relative to our governance (grants, NGOs, being their lab rats) because we are beholden to them for both $$$$ and tech to maintain the “lifestyle” Americans have become accustomed to in shopping at Walmart.
The stabilizing middle class in America has been decimated….and COVID made things worse, in addition to shredding the social fabric. And we saw with COVID exactly where the fin/tech elite/globalists with their NGOs, think tanks, foundations, etc. interests lie. And it is far from “protecting the public” and more like controlling and manipulating the masses to advance their agenda.
Not sure about tariffs, but not sure how we remedy any of this.
But have worried for some time that the fin/tech globalists who really control the levers of power are just waiting for their moment to crash for good the systems as we have known them….as a means of getting the public to accept the technocracy and automation that puts them squarely and publicly in the driver’s seat with their beloved AI calling the shots.
I'll get back to you on this.
“Ultimately we need to migrate away from China to other Asian countries.”
So I currently work for an electronics distributor, and in semiconductors this has been underway for a while. Companies have been concerned over the political uncertainty with China so they’ve moved their fabs to Malaysia, Vietnam, Indonesia, seem to be the big ones. What they haven’t done is bring production to the US.
Can confirm, I work for a place that sells interior construction materials (tile, flooring,etc). The companies we work with have been moving out of China since Covid. Many are now in Vietnam, etc. The move was happening even before the tariffs were proposed. We keep getting notices about tariffs from our suppliers, but it seems very, very few product lines are affected and the ones that are are easy to find substitutes for.
I wish they'd bring more back here, but getting things out of China to places that are better regulated (ie, less slave labor) is a start.
That's good news imo
Any government interventions (ie. tariffs) are fraught with overhead, waste, fraud and abuse. However if someone can buy your widget for X but I can only sell mine for X+tariff, I will sell less over time and as a consequence be less wealthy. I honestly would like to hear from Gato or others smarter than I how else to get other countries to reduce or eliminate tariffs and other import restrictions without the tit for tat game of trade wars.
One thing everyone needs to keep in mind... NOBODY likes the Chicoms. And nobody really trusts them. All of history is against it.
No swatting required, but don't forget Trump's team has added in VATs that we pay on /all/ goods and services as if these were tariffs targeting US goods, and that they calculated the tariffs based on the difference in trade, not actual customs' quotas.
What you (and we) should worry about is the EU's response. The current leadership are globalist creatures afflicted by TDS in the fourth stage, and might well do stupid crap out of spite, rather than trying to finagle a win/win-solution.
As an aside, have you noticed how the climate change-threat seemingly has gone away? Suddenly, lowered production and consumption and fewer super-cargo ships burning diesel, and less air freight isn't a good thing anymore. It's almost as if the people pushing the climate hoax and the 11% who owns 90% of the US stock market are the same people.
Personally, I think lowered taxes on domestic production would be a better way to go, especially if combined with some rule about content of food/consumables: the more real and local, the lower the tax, trending to zero if it's within a given distance. Seems logical to me, trade-wise and environment-wise: buy milk from the farmer up the road equals good for the community and the environment, when compared to buying papaya from the other side of the planet?
To paraphrase the intro to the excellent Timothy Hutton show, "Tariffs provide... Leverage".
Israel is signing zero tariffs right now as I write this, and the European Union, Japan, the UK, and Italy have all announced they're next in line. So this entire post is already not even a thing.
Bonus word score: China's stock market crashed extremely hard today. Xi's got big trouble. You love to see it.
Bingo. Way too much ink is being spilled. Not Gato, of course, his piece is more informative than opinion.
You'd think tariffs would be a crime against humanity.
Its funny how all the people who couldn't pay back their student loans are now tariff and equities experts!
It'll be a "gnat" 1-2 months from now imo.
Right, at the most fundamental level it's about the devastation that outsourcing wrought on the entire Midwest for the benefit of coastal elites who love economic theory as long as it means the money flows towards themselves.
Slavery, is indeed profitable for the slaver.
Once you realize that globalism isn't an ideology, rather a "business plan" used as a financial weapon, things start to snap into place.
Exactly. Since slavery is illegal in the US, slavery profits are now extracted from Chinese workers and illegal aliens at the expense of free US workers who have to compete with them. Globalism is just a way to continue slavery under the guise of "efficiency".
The fundamental question is whether US national interests mean the interests of coastal elites, or the interests of all US citizens.
This is all similar to ancient Roman history. Livy documented patrician opposition to land reform and that sounded a lot like current US patrician opposition to tariffs.
Is it possible to have a middle class without an industrial base?
Trump is also pushing deregulation, lower energy costs via domestic energy production and attempting a stronger dollar policy—are these things enough to offset any price increases from the tariffs?
Are tariffs mostly paid by foreigners or by consumers? If demand curves are downward sloping, don’t they in theory get paid via smaller profit margins of foreign companies? (I suppose that depends on the product.)
Is it not true that our domestic producers are hurt by foreign countries’ trade policies?
It is really something for the media and all of these other countries to cry foul for US imposition of tariffs when they’ve put up trade barriers to our goods for decades. We never had free trade to begin with and that’s Trumps point. I believe he’d remove tariffs for any country that would do the same.
We're going to find out. And I'm willing to give him the benefit of the doubt in the near term.
Even assuming something needs to be done, I think its fair to expect some actual thought went into the details. I literally did more complex analysis in grade school than what went into these tariff formulas.
The expert class has no doubt let us down, but if that is your issue you should expect smarter, and better decision making. We divided the trade deficit by imports to get our tariff rates isn’t that. Its the same circus with a different clown.
Again I'm not arguing for tariffs. I'd rather incentivize using the knobs and levers of pareto optimalality.
No knuckle-swatting from me. If we want to import 100% of our underwear from VietNam, fine. But I'm not fine with importing motor vehicles, boats & ships, armaments, etc.
If Nam or someone else were to cut off our supply of new underwear, I'm sure we could get by while every American woman who knows how to sew produces new products in the basement (and after seeing the $$ flow in, wonders why she didn't do it sooner). But ships, tanks, cars, engines, drugs, etc. MUST be domestically produced. Other nations aren't reliable enough, and starting up a new producer is too costly and time-consuming.
"you win the game by losing slowest"?
That is not the world I want for future generations, and we need not have it: that is the whole point of competitive market systems.
The hollowed-out manufacturing sector is another red herring. Manufacturing's share in both value added/GDP and employment declines as an economy gets richer beyond a certain point, which the US and other advanced economies have long surpassed. Adjusting for that trend, the US has an above-normal-size manufacturing sector.
And finally, the benefits of a heavily protected and heavily tariffed manufacturing sector are obvious in India, where for example you can still buy a 1930s design Royal Enfield motorcycle. More modern options? Not really. Why would anyone want to go down that route?
Im not worried about it. You seem to be taking that sentence out of context.
It will take care of itself. I don't claim to know if Trump thinks tariffs are the answer long-term...because they're not...but i do know this, he's not going to continue doing anything that cost him politically. I doubt he's playing 12D chess...but i believe he has his reasons...and they're not just tariffs for tariff sake.
I'd also like to give him the benefit of the doubt. If you go back over the last 9 years he's been right most of the time, even when it appeared he may be wrong.
You and me are not going to disagree, I'm a "Hayek" principles type of guy.
Any strict analysis on principles is doomed because Human Action. The market is addicted to Keynes and is by nature political, thus prone to emotion, greed and corruption. I don't think anyone can say Trump is truly playing 5D chess but his actions are probably tilting the rigged board in favor of domestic cronyism rather than globalists at least.
Disagree, knocking over Russia’s checkerboard hasn’t ended too well for anyone else.
Thats a strawman argument. But even if it were not your assertion proves my point.
I don’t know any more about Trump’s real plans than anyone else does. But it seems to me that Trump wants to stymie trade with China. Call it the Russia model. Before the Proxy War, Russia’s economy was over-reliant on foreign investment. Biden’s sanctions made foreign investment impossible, and the unexpected result was a renaissance in Russia’s economy, as Russian billionaires —cut off from their London townhouses and Swiss banks— were forced to invest at home.
Cut off from the West, Russia didn’t wither. It de-globalized and re-nationalized - and it worked. In just two years, Russia rocketed from mid-level doldrums to the top of the world’s wealthiest countries list. Once an ailing, foreign-dependent economy, Russia is now independent, politically stable, economically self-sufficient, and - despite all expert prediction - stronger than ever.
Tariffs are indeed a bargaining tool. This is the purpose. We need to zoom out and take a breath.
This was the last chance to save the dollar. And the gambit may very well work.
Normally, I am totes the most on board with this cat’s jam, but here I must choose a different spread for my bread.
“the issue is that you're never going to reach parity on tax receipts”
Who said that was or should be the goal?
Trump said it and has been saying it.
Or the gambit could be disastrous. If Trump pushes too hard he could force the world to dump the U.S. dollar as world reserve currency. And that would kill the U.S.'s supreme dollar advantage.
The gambit was in direct response to the world (BRICS, specifically) dumping the US dollar as the national reserve currency and rallying behind China yuan. Sure, it may fail, but it certainly can't cause a problem that already existed and was inevitable.
I guess I should say, not "cause it" but push something that is already in motion.
The U.S. will be up shit creek without a paddle if no one wants to buy their debt.
Trump, and Bessent, have repeatedly said that this is the new way. This isn’t up for negotiation.
That’s a fair point but the threat that they’re in place for the long haul has to be credible if it is indeed a bargaining position.
So keep doing what we are doing?
Nah. Let’s force those to the table. We will have free trade with some, like Vietnam, Taiwan, Canada and others, and the loser will be China.
I see no issue with that. China has been undermining the US, taking IP from our creators, backing Russia, and dumping products into our markets crushing our industries for years.
The goal isn’t full-scale protectionism, it’s to make deals with countries who will treat us fairly. They exist, and there are enough of them to support our consumers in the lifestyle to which they are accustomed.
so, let's pursue negative sum policies to make american great again?
how about we focus on positive sum activity like cutting regulation, shrinking government, and driving real growth? china will fail all on it's own. have you seen their debt levels?
why punish the US consumer to accomplish what will happen anyway?
Well we could always raise income taxes and cut entitlements as you suggest. While I agree with the theory, I am but 48. Boomers rule this nation, and we are not cutting SS or MCR. Full stop. Not happening.
What other solution do we have?
Before you answer, drive through NC, Southern Va, and SC and observe the devastation from all of the factories, some of which closed less than 20 years ago.
no, we can't. hausers law pertains and raising income taxes does not result in more revenue unless you're going to actually start taxing the american middle class.
https://en.wikipedia.org/wiki/Hauser%27s_law
upping the top tax brackets has no effect on tax recipts in the US. it just slows growth as people shelter more. 75% of americans pay no net federal tax. our system is incredibly top heavy, by far the most progressive in the OECD.
https://www.aei.org/carpe-diem/u-s-has-most-progressive-tax-system-for-oecd-24/
re NC etc:
you cannot use net negative activity to drive recovery. it's just not possible.
if you want resurgence, cut regulation, esp the EPA. that did more to harm US industry then any foreign issues.
tariffs do not cause recovery, they destroy it further. you might get one factory back, but if the cost to other amreicans if $700k per job, where's the path to prosperity?
We could eliminate the EPA entirely, and all regulations (while we are dreaming, why not?) and there will be no “resurgence” so long as it’s more profitable to move jobs to China or some other foreign country.
Sorry but I just flatly disagree with that point, even though I would love to see a lower regulatory burden.
I don’t know how you can say tariffs cost 700K per American job yet say eliminating the EPA will cause a resurgence.
(I work in tax equity, and did so when everyone had the vapors over the solar panel tariffs, which ultimately had no discernible impact, so I am cynical here.)
Cut defense spending 50% or more...close the foreign bases...no one is going to attack the US.
It appears to me (but I'm not nearly as astute as you) that along with the tariffs, they are also working on all those other items you list?
I read somewhere (I read a lot and honestly can't remember where), that many of our manufacturing companies have kept much of the tools, machines, molds etc that they need and can actually ramp back up easily! I'm sure some update would be needed but the one year expensing would help that.
From my "uneducater" consumer position, it appears to me that tariffs are just a portion of a larger plan. I see many things happening and I for one am all for it.
I have a whole different outlook on the solar panels... we used to design/install residential solar systems for our custom home clients. IMO, based on degradation, lost of productive land (farm and forests) possibly forever... UTILITY solar and wind should be disrupted and DISCOURAGED EVERYWHERE. It's a scam dependant on government/taxpayer incentives. Without the incentives, it will die.
We are on the same page - even though I work with a lot of solar clients in the tax equity world (we go where there is work to do!)
There is a lot of American ingenuity here. We can take back what we lost over the last twenty years. Even now I see examples, like when a new wipes plant moved in to Rockingham County a few years ago, and literally everyone wanted to work there.
I used to audit many of these plants. The men are there. The facilities are there, and strategically located. It could happen really fast.
We still have some, like Nucor, who are hanging on to this day. We just need a President on our side to fight back against China’s abuses.
i hear you re utility solar & wind - the wind scam even more so.
Ugh, "how about we focus on..." is a distraction rather than an argument. We can indeed and are currently focusing on various things at the same time, including those you've listed.
I think the current administration is already all in on these actions. So at the least this list is a counter to your main post.
What people don't want to hear is that we have to make the American worker MORE productive (even though we are #1) through innovation, efficiencies, etc.
Only way to do that is to lead the field in the "law of increasing returns". Sorry. Just the way it is.
Nonetheless, it's how we became the wealthiest nation with highest standard of living in history.
The only way tariffs could help in that transformation is if it was a temporary part of a larger strategem to give a boost to onshoring and retooling in order to jump start and accelerate innovation.
All the money we send to Europe (including our own military expenditures in defense of them, and the tariffs we pay on our goods we sell there, and the opportunity cost of not selling our goods that have prohibitive tariffs) are subsidizing their socialist policies, open borders letting in haters of western civilization, and months-long vacations and holidays away from productive work. Time to make europeans great again by removing much of those subsidies.
Yes. Well said, friend
Because without jobs that pay a living wage, the US consumer will not be able to afford any products, regardless of how cheap they are. We have destroyed the lower and middle class's ability to find a job that can support a family. This is the root of our crime and drug problems as well. Those things also incur a cost to society. Providing good paying jobs for average people makes society better. Why are fertility rates in the toilet? Because people have no hope of being able to afford a house or support a family. We have to get these (or equivalent) jobs back to the US or the whole thing will fold.
This!!
Do you think tariffs are a dollar-for-dollar pass-through to US consumers?
There's much evidence to be found, even in Trump I, that there's a dynamic as yet unmentioned in this thread: Currency exchange rates. And when tariffs are introduced by the net importing nation that also holds the strongest global currency there's movement that favors the net importer, strong currency holding nation.
Purchasing power of foreign goods goes up. More French champagne for the same dollar. The cost of imports goes Down. Tariff increase becomes a net wash for the US consumer. The Frenchies, Fascist German and UK Nazi's, Chinese Marxists get the short stick. A tariff/trade war they escalate is them taking that stick and shoving it in their moving bicycle wheel.
The US wins this. Other nations can choose to reset their tariffs and make concessions or crash their own already teetering economies. Maybe that gets their citizens to overthrow their totalitarian governments?
Well said. Oh those currency manipulators!
“cutting regulation, shrinking government, and driving real growth”
That’s also happening.
Do you have any idea how large China's manufacturing sector is? Good luck replacing more than one-third of all global industrial output. I see plenty of "issues" with that.
I know how big our industries here used to be, and it was only 20-30 years ago industries like furniture, textiles and auto parts started moving away from the US. We could bring it back. We have the facilities and the manpower.
But the point is not to re-shore everything, it’s to make trade fair. China has not been fair with us. We have other trading partners for these things, if China can’t be a fair trading partner.
How much are you willing to pay for furniture, textiles, and auto-parts? Do you know that the same structural shifts happened in the EU and are now happening in China, which has long ago stopped being the low-wage producer of choice? Of course, we can bring all these back--in the same way we could develop a pine-apple plantation industry in Alaska--but the costs would be enormous, both in price, but also in higher-value production forgone (the workers and capital must come from somewhere). And you may well be accepting much higher prices, but I doubt that that is the case for the US consumer in general.
And fairness? Why not accept that others are harming themselves (via tariffs, non-tariff barriers, industrial policy subsidies) and we can do the things the others still cant do and pay top dollar for (e.g., finance, high-end jet engines, etc)?
Chinese auto parts are known to have a 50+% failure rate brand new out of the box in some categories. Many of the best mechanics on YouTube have the magical secret of ordering real OEM parts from Japan or Germany and those work when repeatedly putting in $10 Chinese specials didn't.
Producers will charge what the market will bear. Just like they do right now.
This is why the corporate interests are crying, because corporations are going to bear the brunt of this. Incidentally, the stock market is also saying this.
If only we could all work in high-end knowledge jobs. I do, but it’s not realistic.
The question is what will the market bear? I guess that fully bringing back US textiles/furniture manufacturing will raise prices by a whole lot (these are labor intensive industries, and even the minimum wage in North and South Caroline is 15 times higher than the average wages in the Bangladesh textile industry, and I doubt that there are many new takers for a hard minimum wage job in states that already have very low employment).
The market (that is the consumer) won't bear these multiple higher prices, and firms will not produce, and the consumer is left with the lower supply they can produce at still much higher prices than if we had not tariffed.
I don't know what corporate "interests" are. Those who are crying are those whose retirement nest egg seems to be cracking and others who can't afford higher prices.
Issues=opportunities
true. and many opportunities end up becoing "learning opportunities", i.e., failures
I used to agree with you, but I don't any longer. First, government spending always equals taxes - you can pay for government with debt, inflation, sales taxes, tariffs, income taxes, but you're still paying for government. Nobody can prove that tariffs are uniquely awful as all taxes have similar deadweight loses. Second, taxing trade limits the government's ability to tax because trade has to compete with alternatives. It's a lot harder to avoid income taxes than tariffs, so I think government is smaller when it's depending on tariffs, and history seems to back that up. Third, free trade hasn't persuaded others to drop their tariffs, so it's worth trying something else. After all, tit for tat is very successful in theory and practice, so if higher tariffs lead to lower tariffs, I'm for them.
government spending does not always = taxes. it has not equaled taxes in the US for decades, it runs trillions above them.
when in the last 30 years has "lower tax income" shrink the US government? never. it tends to grow in such periods by running up more debt. i'm all for lopping 90% off the size of the US government, but how in any politically plausible way can you do that? it's nearly all entitlements and debt service. we could cut discretionary spending to 0 and still be running a deficit.
THIS
social security has to go...as well as Medicare/Medicaid.
now I'm really going to get my knuckles rapped by the crowed....lol
Social Security can make it, but the medical scam industry has to be torn down and rebuilt in order for us to survive.
probably better not to rebuild rockefeller medicine.
I agree, as long as it's a gradual phase-out where current recipients get theirs. I've planned my entire working life as if SS didn't exist, and that's true of most GenXers I know, but lots of older folks (including my mom) didn't.
Agree. Thats the only sensible way to do it.
And that's what older folks need to realize:
We're fine with that. It would be unfair to them otherwise...they don't have as much time.
But that doesn't mean we don't get to bitch about it!...;)
That seems fair...
Let’s not forget the cost of war, both monetary and human costs.
The pentagon has been turned loose by a Congress so lax.
Your Grandma needs to do some damage to those knuckles, Ryan.
Lolol...still love ya, JuQu.
well if you were in the generation that was going to pay for it all, you might have a different opinion.
not your fault, but genX will pay for it all.
trust me it's painful to pay into it for 35 years and pretty much know it'll be bankrupt by the time I'm eligible for it.
so I'll have funded it my entire working life for two previous generations, and get nothing out of the money i could've put to work somewhere else with far better "returns"...even if i did receive the "entitlement" in the end.
that doesn't seem fair...and that's why I've made plans otherwise.
yeah, at no time in my working life (beginning in 1989 at 16) have I considered social security deductions anything but a non-returnable theft from my pay to thinly fund old people's retirements.
the idea that I'd ever see it back looked ludicrous, even in high school where I was barely informed at all about the money and political structures I was going to be subjected to as I became independent from the parental units.
I do understand, Ryan. Was just having a little fun with you. Keep smiling.
I do agree that reducing tax receipts has not constrained govt spending. However, running a deficit does not mean that tax payers were relieved of the obligation to fund the deficit spending. Deficit spending = taxes in a different form - debt (delayed taxes) or money printing (a tax on savers).
The only place to save real $$$ is slash defense budget 50% or more. This would have added benefit of reducing global advenurism. Close the foreign bases and bring our soldiers home to retire.
That's the conventional wisdom, and I'm all in on seeing the Pentagon get their DOGE audit good and hard, but there's a *lot* of federal spending outside of defense. Like the USAID color revolution money that installed Zelensky and uninstalled Jair Bolsonaro, and was attempting to throw Trump in prison. Now that that money's cut off, the EU's various attempts to keep that playbook in flight are nakedly obvious.
While that math is certainly accurate.....
1- There is room to reduce Medicaid/Medicare entitlement expenses, through efficiencies and fraud reduction.
2- The best we may be able to do on the debt is to slow its growth, and let GDP gradually come back, proportionately.... analogous to the way the payment on a 30 year fixed mortgage gets "smaller" over time, relative to increasing values and income.
Look at it this way: govt could send soldiers door to door to take your stuff; that wouldn't be a "tax" but it's a tax. Inflation steals, debt steals, taxes steal, stealing steals. It's all stealing.
I'm just generalizing Ricardo Equivalence Theorem to include INFLATION, but spending always = taxes because government has to get the $ somewhere & anywhere govt gets the $ is a kind of tax.
Nope, debt & inflation are also taxes, just more cleverly disguised taxes. By definition, government spending = taxes, whether you tax via inflation or debt or taxes. Just as supply must equal demand, spending must equal taxes.
Extremely well argued that tariffs do indeed impose a dead weight loss on citizenry. However, it seems to me that you do not make the case that tariffs are worse than income taxes, which also impose the same losses and are clearly subject to the same crony corporatist favoritism, only that they cannot realistically fully replace the revenue provided by income taxes. You properly point out that tariffs allow industry groups and politicians to impose policies that enrich themselves at the expense of the overall welfare of the consumer. Those exact words apply equally if not more so to income and other taxes. High tax Democrat cities and states provide the clearest extreme illustration of that - income taxes, sales taxes, property taxes among others, unilaterally and stranglingly imposed to extract ever increasing amounts to corruptly enrich governing politicians and their friends while further entrenching their stranglehold on control. There is no question that drastically cutting government spending beyond simply reducing the tremendous fraud, corruption and waste is the perhaps unattainable solution, but why shouldn’t tariffs be part of the revenue equation? Is there some reason it must be an all or nothing matter? Are tariffs worse than income and other taxes? If they have the potential to achieve some potential benefit by leveraging others into better behavior toward us, is that not worthwhile as a replacement for some amount of income taxes? At the margin, is there a case to be made that we are better off with a government funded by some combination of selected tariffs and income taxes rather than one funded by income taxes alone?
You forgot the newest of the “deadweight” taxes: the abominable “bag” taxes where the state/local governments demand that the merchants charge for bag/s and paying $0.15 for a bag that doesn’t last fifteen minutes….. :P
The list is long.
I don't think your points hold much water:
1. Not all taxes have similar deadweight losses. The wider the tax base (and thereby the ability to avoid taxes via macroeconomically unproductive adjustments), usually the smaller the welfare loss. So a VAT or simple flat tax have much lower deadweight losses than a tariff per unit of raided revenue.
2. As you mention yourself, there is a transversality condition in that government spending has to be paid, as a last resort via the inflation tax or default. And governments using the latter options usually have small tax bases. So a small tax base relying on tariffs is hardly re-assuring.
3. Others using tariffs does not mean we have to as well. That was the entire point of the cat's article... Also, the last time we tried tit-for-tat in the 1930's beggar-they-neighbor tariff and debasement cyscels, it didn't work so well.
This is a complex discussion but for me there's not enough here about economic realities ancillary to the main narrative. We're told that it's fine to run a trade deficit and given the example of a consumer and his grocery store. But Kroger isn't offshoring critical productive inputs and skimming the incremental margins from doing while it skips out on 1) offshore production frequently accompanied by slave or child labor, environmental impingements etc. America itself would never tolerate; 2) how the money traders themselves benefit from the financial engineering surrounding big trade deficits because money flows upward (WSJ: "But there is a more constructive way to look at a trade deficit. The $918.4 billion deficit reflects an equal $918.4 billion capital surplus. This demand for U.S. assets boosted the value of American stocks and bonds"); 3) how the average factory or company town worker frequently loses livelihoods and self respect via offshoring.
None of this is to say that tariffs are *the* answer. But something has to be done about the situation. This essay seems to counsel for more of the same, but the same is not working. Bessent put it well when he told Tucker that "the distribution of equities across households: the top 10% of Americans own 88% of equities, 88% of the stock market. The next 40% owns 12% of the stock market. The bottom 50 has debt."
Yes, you and Bastiat are right: tariffs are bad. But we have lost our manufacturing base and depend on China for spare parts, pharmaceuticals, and fentanyl while our major exports are Treasury notes. Standard Econ theory does not assume a current state of Debt > GDP, interest rates > growth, and a dying manufacturing base. Is our current path sustainable or are we teetering on the edge of a debt spiral apocalypse? The causes of our current sad state of affairs are mostly government spending, regulation, and rising minimum wage laws. While a clean solution would just roll those policies back, will politicians touch those third rails? Tariffs, while less than ideal and likely painful/inflationary in the short run, may be the only feasible least-worst policy option that has a chance of rebuilding our manufacturing base, increasing growth, and returning to a sustainable trajectory.
What about the fact that the fin/tech elite have been saying for some time that in the near future automation will be the way of life?
In light of that, what does the tariff war mean?
After all, between AI and innovations in technology some envision less and less need for humans in the area of service or product delivery to the public?
Probably you'll get lots of "abandoning Trump" comments for this one, and quite honestly, this whole thing is beyond my ability to understand all the nuance, but I will just make a couple comments:
"you’ll will have a large lifetime trade deficit with the grocery store. you will buy much from them. they will buy nothing from you"
sorry, but this seems a bit click-baity for you
"it provides a better cost of capital for US companies, lets them grow, makes them more competitive, enriches shareholders and underpins pension plans and endowments"
probably true, but I'm genuinely hoping my kids and future grand kids will be able to live lives that are more than just hollowed out amazon consumers
"if you cannot fluently explain the difference between <big sentence that you are not smart enough>..."
this is sort of a bad look from a person (cat?) that spent the last several years saying that the "experts" have held us captive
Mr. Gato,
I have studied economics and in fact one of the most interesting books I ever read was The Worldly Philosophers, so I understand the argument about dead weight losses etc. I do, however, believe that two factors that are almost never discussed are 1) how investors learn about where to invest, and 2) the multiplier effect of factory jobs.
If I save up $25 million and decide to build a factory in the US to make my new widget, I may enjoy a year or two of profit. Then a Chinese company copies my idea, builds a factory in China, which also prohibits my US made product from being sold there, and undercuts me. The I go bankrupt. The second time I save up $25 million I might be a little more careful, but could then still decide to build that factory in the US. Then the story repeats. But by the third time, I will have learned my lesson and will never invest in a US factory again.
I am also unsure if the knock- on effects of having manufacturing in the US are captured by the analyses showing a cost of, for example, $800k per US job created. The single factory job creates several others, in local retail, and also in supporting industries. My factory needs local vendors to maintain and upgrade my equipment. So if, perhaps, three other jobs are created per factory job, then the $800k per job becomes $200k.
I am no economist, but it seems to me that these two factors, among others, are not sufficient discussed.
this seems an overly rudimentary analysis. if you build a factory where it's that easy to undercut you and take your market, then why shouldn't you lose you money? you entered a commodity business as a high cost provider.
if you cannot compete here, you could not compete in china either.
learning not to engage in malinvestment is beneficial.
meanwhile, if we erect a tariff and keep you in business, you're just extracting subsidy (in the form of above market price) from the government who is granting you a form of monopoly/oligopoly. that's a net deadweight loss to society. the higher prices paid for goods exceed your extra profit.
there is nothing special about factory jobs in terms of "creating other jobs" and that is already factored into the analysis on cost. a job running a hotel would do the same.
in fact, moving from capital and resource intensive jobs to jobs that are less so tends to be a benefit. we did not offshore factory jobs because of tariffs, we did it because they were not great jobs and provided less value than other jobs.
this 1950's myth of "great factory jobs" was a very brief period in time post ww2 when the US had the only intact manufacturing base in the world, demand for our products was near infinite, the workforce small, and competition low.
that's never coming back, nor should it.
we lost 99% of farming jobs too. it made us much richer. US industrial production is near all time highs, we're just doing it with fewer people because productivity is better. this idea that "adding more people would be good" is a bit like saying a construction site should ban shovels and make people dig with their hands because the knock on effect on employment is good. but it's not. pay is a function of productivity and using up so many resources to dig increases the cost of labor in all other markets by using up limited supply of people.
lgm - We made refrigerators back in the 1950s that lasted 50 plus years rather than five, washing machines that lasted decades, wonderful wool blankets & cotton textiles, well-made clothing, reliable small appliances, sturdy tools and so on.
Auto industry and other factory jobs helped to create a solid and prosperous blue-collar middle class where people took pride in a job well-done. This all lasted much longer than a "very brief period" and it lifted many people out of what would have been poverty. It also did not require people to be saddled for life with unpayable student debt.
On the subject of factory jobs being no better or worse than service jobs, it is my understanding that the multiplier effect of different jobs is quite different. I certainly hope that the analysis we have both seen do reflect this, but I have not seen evidence of it.
And I agree that US manufacturing output is at or near an all time high independent of the number of workers in the US who are employed by manufacturers. It is, as you point out, similar to farming where employment continues to decrease despite the output of farms continuing to increase.
"the higher prices paid for goods exceed your extra profit.
there is nothing special about factory jobs in terms of "creating other jobs" and that is already factored into the analysis on cost. a job running a hotel would do the same."
Are the skills required to build and maintain a complex supply chain to run a factory the same skills required to run a hotel? If they're not, is the value of the skills to build a complex supply chain to a society higher or lower than the value of the skills to run a hotel? Your implicit assumption is that the value of production knowledge is 0.
It was OK to overlook this in an age when Stockbroker Ricardo could hand-wave about industry so he could do more financializing. Your analysis of the value of knowledge is a little like Warren Buffett not investing in tech companies because of the excess of goodwill over tangible book value.
One thought here is whether cheap goods have caused consumers, particularly in the U.S., to overconsume. This reduces both savings and investment, particularly in the middle class. And cheap goods are often cheaply made, which means they wear out quickly (partly via planned obsolescence) and consumers end up spending more over the long term than they would buying a quality product up front.
I suspect some of that is a cultural issue that needs to be solved, but there is an argument to be made that we need to encourage consumers to buy less and to save / invest more. And shifting cheap foreign goods to quality domestic goods can perhaps drive more sensible purchasing at all levels, and also reduce the gigantic amount of waste.
Another thought is that different countries don't operate with the same regulatory frameworks. Putting aside their usefulness for a moment, if companies in the U.S. have to deal with things like minimum wage laws, expensive healthcare, environmental regulations, etc., whereas a country like China doesn't (or at least not to the same degree), do we just have a situation where, even without tariffs, we are imposing a loss on businesses and consumers because of our own regulations?
Finally, perhaps in a global political order, there is some value to shifting trade from certain countries to others. Others with more knowledge in this area may have a better view, but one could certainly make the case that shifting trade from countries like China to friendlier countries like Mexico and Canada can be beneficial, particularly if that increased trade comes with certain guarantees from Mexico and China to substantially increase border security and play ball on deportations, etc.
I agree on your first point- it will be interesting to see how consumption habits change. I think a key part of the argument that gato is making seems to be that more expensive goods are a punishment, therefore the greatest good for the consumer is the cheapest good. While I see the point from an economic perspective, I am not sure I agree from a moral perspective.
As you point out, is it the greatest good for the consumer to be able to buy lots of poorly made items? Potentially dangerous items (magnets and other dangerous components in toys come to mind)? Furthermore, is it still the greatest good for the consumer if the items they can purchase cheaply are made by slave labor? I don't subscribe to the "own nothing and be happy" WEF worldview, but I do think there is a middle ground between the huge amounts of wasteful consumption we see in the US and the more dire forecasts on future purchasing power being bandied about. I don't believe that Trump has explicitly made this point, but if we can drive manufacturing and production back to the US at some level and clean up dirty supply chains, on balance I would say that is better even if goods are more expensive.
It's a deadweight, a net loss in prosperity. But we are a prosperous people. Really prosperous. And we can survive trillions of deadweight loss pursuing a crazy carbon free, net zero future and remain prosperous as long as the nightmare is never fullfilled.
There are 55 primary copper smelters in China. There are three in the US, and one isn't operating. The US ships most of its concentrated ore off-shore for smelting. We destroy our primary industries with insane environmental? Environmental what? Lawsuits. It is not even the insane rules, it is the damned lawyers and their neverending lawsuits of uncertainty.
If Trump will fulfill his promise of a, "Golden Age of Energy Dominance" we will survive the tariffs and the will create immense opportunities to reestablish the US's resources as one of the foundation stones of our prosperity. If we are trading the juggernaut of environmental deadweight for the mosquito-like annoyance of tariff deadweight. We will be okay. Huge net gain.
The beast we have to kill is the environmentalist plaintiff's bar. Sensible rules that are static. No more existential energy crisises. A free market in energy. Mines galore.
The people who are against tariffs have had more than 30 years to do something to help the poor and working class. They have done nothing, they have achieved nothing. The poor and working class have been screwed over by the current system, so bravo for Trump for trying to change it and do something for the people who have gotten nothing.
All the rest of the debate on tariffs is bullshit, and reeks of economic elites trying to hang onto their privilege at the expense of the poor and working class. Enough. They have gorged themselves at the trough for far too long, and now it is time for others to benefit from the system.
Bravo, Donald! Keep the pressure on, and do not give an inch to the tariff whiners. They've had their time and now it is time for them to STFU and get out of the way.
I don't usually post, so this may not go well, but I will try anyway since I am in Puerto Rico with my boricua wife.
The purpose of these tariffs is two-fold: one, to bring high-paying jobs back to the US, and two, to fix our supply chains, which, as we witnessed during COVID, are vulnerable. Even our weapon systems use Chinese-sourced products.
This is a once-in-a-lifetime opportunity to rebuild our manufacturing base augmented with AI and robotic technology and control our supply chains.
Economic theory states that a 10% tariff has the following impacts: 4% is absorbed by the tariff-paying country. Another 4% is negated by relative currency appreciation. That leaves 2% for price increases. These numbers vary by the relative economic power of the two countries, with the advantage going to the trade deficit country.
We do not have to wonder. We can look at recent experience. During his first term, Trump imposed a tariff on China, and the prices for those goods rose by 0.7%. The UAW has looked at these numbers and supports what Trump is doing.
Before you can have “free” or “fair” anything you have to take out the “fake”.
The US and World economies have been built upon fakery and fraud in the form of money from nowhere.
That fraud has to be shaken, hard, to get it out of the system. That is what this reckoning is. A great sorting exposing reality from falsity.
The whole world is broke and broken because they’ve been playing fast and loose for decades with not only other peoples money, but from fake money printed on top it propping up their fake economies.
Everyone has skin in this game, and their own demons to confront, as Trump works to establish an actual economy based on reality.
The status-quo has been patently unsustainable and headed for a cliff.
The economic ship has to take a hard, fast and dramatic turn to avoid the edge of that cliff, or we all go over it.
And time is not on our side.
I’ll take this hopefully temporary beating over the alternative, which is CERTAIN RUIN.
Yes a sick patient
Victor Davis Hansen has a much better take on this one. There are a lot of moving pieces in the restructuring (or recovery) of our economy. Tariffs are just one of them. My big concern is China and the fact that we (and the rest of the world) are funding their "take over the world" war machine with the tariffs we pay.
Seconded. As others have noted, there is more to this issue than decent jobs / a low Consumer Price Index. The 90s promise of open trade with China was that liberal markets would lead to its social liberalization and the weakening of the CCP. That has not happened. So much for those prognostications.
So sure, the math is indisputable -- given the premise we live in an open-ended free market sandbox. But nation-states still exist, and they differ from grocery stores in inportant ways. As for Ricardian comparative advantage, eg trading English textiles for Portuguese wine, did that math still apply when Napoleonic forces invaded Portugal in 1807 and occupied it for two years?
good point. which reminds me, others have noted elewhere that tho substack seems uncensored, some if not many of the authors are controlled op. i do not know if this is true, but have seen evidence that backs it up.
"...concentrated interests gang up to inflict diffuse harm upon the many, taking $10 each from 300 million people such that they might make an extra $500 million themselves. the fact that this taking cost $3bn is not their concern. that gets swept under the rug. it’s someone else’s problem."
This is an accurate description of what has been done for decades in the US. The "swept under the rug" part is the $36T debt. The "someone else" is the middle class.
The worst part of the crime is that the "stolen" money has to be paid back by our kids and grandkids, or we go bankrupt. As stated, the usurping class doesn't care either way, as long as they are on top of the pile.
Economically, they didn't produce a damn thing or even provide capital for the most part. That's why the term "stolen" applies. It's good work if you can get it.
Until the Luigi's come.
Bottom line is none of us really knows DJT's thinking, or how this will all shake out. It sure looks like a lot of countries suddenly are lining up to negotiate trade deals and tariff reductions. Maybe that was the whole point. I am still skeptical that we're going to eliminate the income tax, but maybe it will blunt the impact of extending the tax cuts. Eliminating waste and fraud, reducing regulations, and regaining energy independence may put off the inevitable reckoning. but the underlying dirty secret is NO ONE has the stomach for seriously reducing spending. Until we do, I think this is all moving deck chairs on the Titanic.
I have been saying similar. There's no doubt Trump has planned this for a long time.
This is not his first rodeo. Take heart, and know God is in control.