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I can't anymore, folks. Republicans passed the largest tax cuts for billionaires, increased the deficit by trillions, and kicked millions of people of medicaid. Meanwhile, Trump is out there creating the most regressive tax system via tariffs we've ever seen which affect the poorest the most.
Yet Democrats are the useful idiots. Incredible.
Tariffs incentivize domestic production. See the case of chicken tax and pickup trucks. While we do pay for tariffs now, later down the road we should not as more things would be made domestically. If you don’t do tariffs, there is no way to force producers to onshore.
Who's making small cargo vans domestically? Nobody. So they're all 25% more expensive, so you might as well buy a big cargo van when a small one would do.
Honestly, governments buy enough light trucks, that 'buy american' requirements would likely keep at least one company making them here.
So, it’s not that the tax doesn’t work, the issue is all the things around it that made it less effective.
Finding loopholes and driving trucks through them is what's considered American. It's not a relaxation.
At the end of the day, the chicken tax reduces our options in the vehicle market as it was designed to do, and it's one thing if we want to exclude WV vans and trucks when we have plenty of nice options at home, but now that we don't have nice options at home, it would be nice to be able to import them without a punative tariff.
Stable, long term tariffs. We’re seeing historic falls in manufacturing employment for a reason.
Well, you have to start somewhere.
> We’re seeing historic falls in manufacturing employment for a reason.
In your opinion, what is this reason?
There has been no start. You don’t build a factory because the President announced a tariff that he is also negotiating a trade deal around.
> what is this reason?
I’m remodelling my deck. I had orders into a steel mill in Utah. Tariffs mean their steel inputs are pricer than competitors in Vietnam. So I switched the order. And I paid with a cheque—if I paid cash I could skip taxes altogether. That wasn’t a thing six months ago.
Meanwhile, software and services aren’t tariffed. Just goods. Guess whose cost of capital has sunk.
You absolutely do once the math of tariffs makes your manufacturing abroad not competitive with onshored one. Will it apply for all categories of products? Probably not. However, it will definitely apply for many.
I am not sure I understood your reply about the reasons.
If someone bet on e.g. our Japan tariffs three months ago, they lost money. (Nobody did. The types that take Trump at his word on tariffs aren’t making economically significant decisions.)
Regardless, tariffs as an instrument have their merit with Trump or without Trump. Strategically, US has to bring manufacturing (and as much of a supply chains) back, there is no way around it.
If nobody bets on the tariffs staying then manufacturing doesn’t come back. The restoring of manufacturing is the bet.
> US has to bring manufacturing (and as much of a supply chains) back
Sure. These tariffs don’t do that.
How do you know? Are you from the future?
…we are currently in the future of the previous tariffs.
Also, come on, you’re yourself arguing these tariffs aren’t worth betting on. What do you think investing in a factory is?
Which ones?
> Also, come on, you’re yourself arguing these tariffs aren’t worth betting on. What do you think investing in a factory is?
I can’t bet on negotiation tactic, only on the outcomes and formal agreements. As soon as those would be finalized we would know. Now we do not know how the trade policy would look like. I would assume that investment banker knows the difference.
Liberation Day.
> can’t bet on negotiation tactic, only on the outcomes and formal agreements
How about money actually invested [1][2].
From four months ago?
"From four months ago? That's way too short a time for any tariff impacts to show up."
vs
"From four months ago? That's ancient history, it doesn't matter."
If it's the first, the link the other person provided shows a dip in manufacturing facility investment over the last 2 quarters. Maybe there will come a future point of stability where investors can feel confident, maybe not. Trump seems willing to use tariffs as a weapon for any disagreement with other countries, not just trade imbalances. There's little guarantee any trade agreement will be honored by the administration.
If it's the second, well, that's the problem. The tariff landscape has been in constant flux over the last several months [0,1,2]. You don't build a factory overnight. You want to understand what your supply chains and costs look like and have some confidence in what they'll look like by the time the factory is ready to start producing. There remains little guarantee that the landscape won't continue to change, and Trump's weaponizing of tariffs is part of that.
[0] https://e3.365dm.com/25/04/1600x900/skynews-trump-tariffs_68...
[1] https://news.ucr.edu/sites/default/files/styles/scale_825/pu...
[2] https://www.crugroup.com/globalassets/campaigns/commodity-ma...
That is when that was.
Also the ones from six months ago.
Strategically, it needed to keep manufacturing. It is too late now. Its labor and capital is already fully deployed towards innovation. Innovation that is now realizing that it is being stifled without a local manufacturing base, granted, but at this point pulling labor and capital away from innovation in order to build a manufacturing base again will only stifle it further as the rest of the world, which is quickly closing the innovation gap, keeps moving forward.
The US cannot afford to see that happen. So, in order to save face, what the tariffs will end up doing is open the doors for foreign capital and labor to flood into the US instead. While that will put factories in eye's view, it does not "bring back manufacturing" or resolve the strategic need. It merely lets what was strategically trying to be defended against inside the house, which is an even worse position.
Well no. Not really. Not for everything anyway. Some things like electronics - sure, but it's a matter of national security not economy - it doesn't have to make financial sense, it just has to exist so that the country can have that ability no matter what happens.
As a simple(and really oversimplified) example - let's say that tariffs force clothes manufacturers to bring tshirt making back to the States. The $5 T-Shirt now costs $30 due to tarrifs. So ok, someone makes a factory in US because now it makes sense, employs american workers, pays them good wage - ok, now they make t-shirts cost $20 because they are made domestically.
Cool - that's great, but now the rest of the world still buys $5 tshirts, while Americans buy $20 ones that can't even be exported anywhere because why would anyone buy them if they have cheaper alternatives. All you've done is you increased the cost of your products to the american consumers.
Some can argue - ok, that doesn't matter, what matters is that manufacturing is now back in the states and american people have employment. And sure, there is merit to that argument - but it reminds me of how my own country used to work under communist rule, people would go "comrade party leader, people have no jobs", "ok, we'll build a factory here so you can have jobs".
Can the factory make anything that is actually worth making? Doesn't matter, what matters is that people got jobs and "manufacturing is happening here" - for an economy based on capitalist principles, that sounds like a disaster for US.
But hey, what do I know. Just an external observer.
So, you and I are in agreement that for some things it makes sense, right? Both strategically, and economically.
Nearly every economist disagrees with blanket tariffs.
They think this for reasons. Historic ones. Logical ones. Modeled ones. Do some basic research. Talk to an AI. This is not advanced material.
I do not have enough information to definitely say whether it’s good or bad. Most of the things in life are neither because they have good side effects, and bad side effects to them. So, I think looking for a “good only” solution is a loosing strategy.
Usually when I don't have enough information on an issue, I take it upon myself to learn more about it before stating an opinion.
> Most of the things in life are neither because they have good side effects, and bad side effects to them.
You don't have to be a doctor to understand that the downside of cancer probably outweighs the upside of not having to save for retirement. Economic instability is the cancer in this metaphor, and the cause of it is Trump changing his mind on tariff rates every other day. Economists, like doctors, are trained on how to treat this illness, and all of them are saying "stop doing that". Trump can either listen to the experts or continue on his path, destroying the American economy in the process.
You say we need tariffs to bring manufacturing back. Then you turn around and say the tariffs aren't the point, it's the deal. You even said it was silly to bet on announced tariffs elsewhere.
If the tariffs are necessary to bring manufacturing back full stop, then you don't need to "make a deal". If it's just a tool to make a deal, then they're not necessary!
You just keep moving those goalposts.
If it was a long term strategy they would just set a fixed % and leave it at that, otherwise companies cannot make any plans.
Economists pretty much universally agree that tariffs are bad for both sides. It can make sense to use them to preserve strategic industries even if it’s less efficient economically. For example, tariffs on food could make sense to ensure an enemy can’t starve you with a blockade. But as a blanket policy it’s just bad.
You would have to prove that claim. There is more than one way to achieve a specific goal.
> Trumps tariffs are unpredictable and also make local producers pay more for raw material they need.
It’s one of the consequences. There are other ones. Is your only objective is to ensure that local manufacturers pay the least amount possible for their raw materials? This is very simplistic view of things.
To echo a comment made in a parallel thread, decisions made to invest in US manufacturing don't get made by people dumb enough to take Trump at his word.
And even if he wasn't tariffs are unlikely to persist at those levels under the next President, regardless of who that is, and that's the sort of timeline you pay back your investment in US manufacturing over...
So, yeah, predictability matter. Institution do not want to invest based on something that goes up and down randomly.
> Is your only objective is to ensure that local manufacturers pay the least amount possible for their raw materials? This is very simplistic view of things.
Well, yeah, them paying more is rather massive obstacle. You know what is simplistic view of things? Belief that Trump will make economy better, because you like his fraudster personality and would like to be like him.
There were no tax cuts for billionaires in the BBB.
(Not increasing the tax is not a "cut".)
It's just as disingenuous as scaling back a proposed budget increase and calling it a "cut".
The FTC wouldn't let businesses get away with such language, why should the government get a pass?
I’d wager most people would consider those scenario cuts. However, in your framework, the verbiage is different despite a shared outcome.
The taxes were cut 8 years ago. There aren't further "cuts". Billionare tax rates have been the same for the last 8 years, and will continue at the same rate at least into next year.
Are you not aware that these things are different? That there is a difference between an adjustment to a proposed budget and a budget that has been enshrined in law?
What's the magical time horizon that changes this? If I change the taxes due for 2026, is that a tax cut? How about 2027? Where's the line between a change in law that is or is not a tax cut with this philosophy?
If you want consistency, a change in law that adjusts the tax burden downward from what the burden would be without the change in law is a tax cut. Therefore, a change in the law that makes previously temporary reduced tax levels into permanent reduced tax levels is a tax cut.