Discussing Tariffs

bee

Both parties have embraced the use of tariffs so voters should better understand how tariffs will shape the economy going forward.

Tariffs are, first and foremost, a tax, and Trump’s proposals would indeed raise meaningful revenue that could be used to shrink the federal budget deficit, which totaled $1.8 trillion in fiscal year 2024 ended Sept. 30. Under the most common interpretation of Trump’s proposal — a 10% tariff on all goods imports and a 60% tariff on Chinese goods imports — the US raises $2.6 trillion over 10 years if other countries do not retaliate. Dial the non-China tariffs up to 20% and revenues rise by $4.4 trillion.

the-true-cost-of-tariffs

Tarwheel

Tariffs are also likely to cause more inflation. Does anyone doubt that cheaper imports helps keep a lid on prices of goods produced here? The same with tighter immigration policies and deporting immigrants, which would raise labor costs.

rforno

Targeted tarriffs for specific reasons/situations are normal international economic policy.

Blanket tarriffs on everything is isolationist policy and will throw the US (if not world) economy into huge disarray, I feel.

Using 'tarriffs' as a sledgehammer when a scalpel is needed is a bigly recipe for bigly disaster, to include ramping up inflation. This is all made worse when the person making the threat *still* doesn't understand that the impact of tarrifs will be felt by the very people/industries he claims to be protecting by said tarrifs ... and that tarriff money doesn't just magically accrue in the US Treasury for use in other spending w/o consequences. But hey, it sounds impressive as a talking point and makes the guy feel 'powerful' on the world stage* which is all that matters to him.

* key word. Stages are where actors, even bad ones, perform.

AndyJ

But ... there are some buts after the passage quoted from the article that are worth reading too.

catch22

Short story time. My sister/b.i.l. needed to replace a 'tired' refrigerator in late 2018. They made their choice and the dealer told them that we have that in stock; but you should buy it now, as the price will increase 10% in the new year; due to the recent tariff increase on steel imports.
Yes, what we all know; that a tariff is a price increase for thousands of items that are required to finish a product in the U.S.
I had a great tariff product list from that period that is no longer available on my pc; but one should be able to find a current list of the 1,000's of items that go into U.S. built products. It is a most interesting list.
I can't recall the number of items that are imported, that are needed to assemble a 'garden tractor'; as an example.
Gotta move along with chores today.

davidrmoran

fine piece

FD1000

Tarwheel said:

Tariffs are also likely to cause more inflation. Does anyone doubt that cheaper imports helps keep a lid on prices of goods produced here? The same with tighter immigration policies and deporting immigrants, which would raise labor costs.

I remember that many "experts" said that Trump tariffs will raise the inflation...and they were wrong.

Old_Joe

They were? Says who?

catch22

Geez @FD1000 I just provided a real example.

Mona

Trump’s Tariffs Were Much More Damaging Than Thought

https://www.forbes.com/sites/stuartanderson/2021/05/20/trumps-tariffs-were-much-more-damaging-than-thought/

Mark

From Heather Cox Richardson on the topic of tariffs

October 15, 2024

Tarwheel

FD1000 said:

I remember that many "experts" said that Trump tariffs will raise the inflation...and they were wrong.

You don’t think the Trump tariffs contributed to the high inflation the past few years? If not, you’re dreaming

racqueteer

If you can buy the same item locally for the same price, it would obviously make no difference. As noted above, many items are either constructed from, or constructed by non-local sources. In the absence of a truly competitive alternative, the cost of that tariff is passed along to the consumer. That leads inevitably to higher costs for that item. The consumer gains nothing from that tariff.

It's not unlike the "tax the business" idea: We tax an industry/business. The industry/business cuts jobs, amount of product, or simply passes the extra costs along. The consumer pays more for the same thing. Who ultimately paid the tax?

Now, there may be other factors at play: Protecting local industries/workers' salaries at the expense of consumers' costs, for example; so it isn't typically a one-dimensional issue (most things aren't).

The object here is to force industry 'home', protect existing industry, etc. Those are worthwhile goals, but it's naive to assume you won't be paying more as a result.

msf

In the wake of [tariffs introduced by the Trump administration during 2018, i.e.] this increase in trade protection, the United States experienced substantial increases in the prices of intermediates and final goods, dramatic changes to its supply-chain network, reductions in availability of imported varieties, and the complete pass-through of the tariffs into domestic prices of imported goods. Therefore, the full incidence of the tariffs has fallen on domestic consumers and importers so far, and our estimates imply a reduction in aggregate US real income of $1.4 billion per month by the end of 2018.

Amiti, Mary, Stephen J. Redding, and David E. Weinstein. 2019. "The Impact of the 2018 Tariffs on Prices and Welfare." Journal of Economic Perspectives, 33 (4): 187–210.
https://www.aeaweb.org/articles?id=10.1257/jep.33.4.187 (free download)

From Mercantilism entry in the Concise Encyclopedia of Economics (on the website of the Library of Economics and Liberty:

In trade policy the government assisted local industry by imposing tariffs, quotas, and prohibitions on imports of goods that competed with local manufacturers. Governments also prohibited the export of tools and capital equipment and the emigration of skilled labor that would allow foreign countries, and even the colonies of the home country, to compete in the production of manufactured goods. At the same time, diplomats encouraged foreign manufacturers to move to the diplomats’ own countries.

That last part sounds familiar ...

[Trump] said such punishing tariffs would encourage companies to set up factories in the United States and would take in revenue for the country.

One idea, the former president said, would be to make the tariff “so high, so horrible, so obnoxious, that they’ll come right away.”

Mr. Trump said the tariff would have to be higher than 10 percent to do that: “They’re not going to do it for 10, but you make a 50 percent tariff, they’re going to come in.”

https://www.nytimes.com/2024/10/15/us/politics/trump-tariffs-economy-economy-club-chicago.html

Mercantilism died in the 18th to 19th century for good reason. It views trade as a zero sum game. In contrast, "Adam Smith viewed trade as a positive-sum game in which all trading partners can benefit if countries specialize in the production of goods in which they have absolute advantages. Ricardo extended absolute advantage theory to comparative advantage theory. " At least that's what I was taught in Econ 101.

https://www.worldscientific.com/doi/10.1142/9789812385222_0001

Old_Joe

Evidently FD1000 thinks that all of this is just "fake facts".

davidrmoran

>> punishing tariffs would encourage companies to set up factories in the United States

it is just so offensively stupid that he does not know how complex things are, and are made, how much skill and training (and robots) it takes, and how long it takes

today's primer:

https://www.nytimes.com/2024/10/17/opinion/trump-tariffs-economy.html

Mona

‘Off the charts’: How Trump tariffs would shock U.S., world economies

https://www.yahoo.com/finance/news/off-charts-trump-tariffs-shock-013111202.html

Crash

"...the cost of that tariff is passed along to the consumer..."

Truth.
But that's a business decision, to do so. It's not a thing sent down from on high by the Prince Of Darkness, to be obeyed without thinking, without exception.

FD1000

Old_Joe said:

Evidently FD1000 thinks that all of this is just "fake facts".

Sure, I got it.
Trump had low inflation + high increase of real wages + the borders were tight + Putin did not attack Ukraine + the Middle East was quiet and 4 Muslim countries sign peace agreement with Israel because Trump killed Sulimani, destroyed ISIS, and chocked Iran.

On the other hand Joe & Kamala had very high inflation + houses & Vehicles increased over the high inflation + Putin invaded Ukraine during Obama,Joe, and Kamala + illegal immigrants by the millions invaded our country + war in the middle East because weak Joe and Kamala.

Basically, anything good that Trump did is fake, but everything bad that Joe and Kamala did was because of Trump.
TDS all the way.

Old_Joe

• As if any US president has any control over Russia starting a war.

• As if Trump's good friend Putin's war had nothing to do with the world-wide increase in energy prices.

• As if any US president has any control over Hamas starting a war.

• As if any US president has any control over Hezbollah starting a war.

• As if Trump's destruction of the agreement with Iran to hold back nuclear weapons development has had no bad effects in the Middle East.

• As if any US president has any control over a world-wide pandemic.

• As if that world-wide pandemic had absolutely nothing to do with major increases in the cost of goods.

• As if a huge portion of the inflationary pressures in the last few years had nothing to do with the massive financial support that Biden provided to the American consumer to keep them afloat through all of this.

• As if the absence of the much-predicted "inevitable" depression has nothing to do with Biden's policies.

• As if all of the support now being given to increase production of critical equipment and electronics here in the US isn't real.

• As if the financial markets are not in an excellent state.

• And as if you haven't profited directly from all of that presidential work.

Crash

Ding. Ring the bell, @Old_Joe.

msf

One can be easily misled if one reads statistics without looking Beyond The Numbers.

It can lead one into suggesting in January 2020 that "For cash sub use SEMMX".
SEMMX had been quiescent for several years. It had had a std deviation over the previous five years of just 1.14.

But risks that rarely manifest can lurk below the surface. Sometimes they do show themselves. Once was right after this suggestion was made, between 2/24/2020 and 4/8/ 2020 (SEMMX down 25.18%). Another time was not long afterward, between 1/13/2022 and 12/5/2022 (SEMMX down 14.05%).

Likewise, while average (median) real income soared toward the end of the Trump administration, it helps to look beneath the surface. When huge swaths of low paid workers lose their jobs, then of course the average income (real and nominal) of workers soars.

[I]n March and April 2020 [j]ob losses in the private sector totaled 20.9 million (-16.2 percent) and were concentrated in relatively low-paying service-providing industries, such as leisure and hospitality (-8.2 million jobs, or -48.4 percent) and retail trade (-2.3 million jobs, or -14.6 percent). These job losses boosted the average hourly earnings of workers remaining on private sector payrolls by $1.46, or 5.1 percent...

https://www.bls.gov/opub/btn/volume-13/did-the-pandemic-affect-real-earnings.htm

The situation continued to be so bad that at the end of 2020 Trump was complaining that his own administration wasn't handing out enough cash (stimulus checks) directly to taxpayers.
https://www.texastribune.org/2020/12/22/trump-covid-relief-congress-stimulus/

It was left to Biden to send out the economic relief checks that Trump was unable to get through Congress. Biden signed that into law in early March 2021.
https://home.treasury.gov/policy-issues/coronavirus/assistance-for-american-families-and-workers/economic-impact-payments

The point here is that whenever one looks at numbers, whether for particular investments or economic trends, it behooves one to look at more than the number themselves.

OTOH, if one chooses to disregard the whole environment, then we should take note that in addition to generating significant growth in real wages, the Trump administration was the only one since Hoover to end its term with fewer jobs than when it started. Both the wage growth and the employment statistics could benefit from context.

https://finance.yahoo.com/news/trump-leave-office-worst-jobs-030044152.html

gman57

delete

catch22

@Old_Joe and @msf

Thank you to both for your time and efforts with your writes.

A recent post(er) in this thread indicates this:

What is the meaning of fake reading syndrome?

What is fake reading syndrome? By its definition, fake reading is a condition that prevents readers from actually absorbing any information through reading.

Remain curious,
Catch

racqueteer

A fairly common logical fallacy when dealing with people. Their actions tend to have multiple inputs and influences, and no reliable conclusions can be drawn by comparing the resulting outcomes. Trying to guess what might have occurred if someone else was in charge, during entirely different circumstances, is an exercise in wishful thinking. We're fooling ourselves if we think that a single person, however powerful, can overcome events beyond their control.

The best we can do is to elect someone who we believe has our best interests at heart, and who listens to people who are more knowledgeable then him or herself.

davidrmoran

FD1000 said:

Old_Joe said:

.

Sure, I got it.
Trump had low inflation + high increase of real wages + the borders were tight + Putin did not attack Ukraine + the Middle East was quiet and 4 Muslim countries sign peace agreement with Israel because Trump killed Sulimani, destroyed ISIS, and chocked Iran.

On the other hand Joe & Kamala had very high inflation + houses & Vehicles increased over the high inflation + Putin invaded Ukraine during Obama,Joe, and Kamala + illegal immigrants by the millions invaded our country + war in the middle East because weak Joe and Kamala.

Basically, anything good that Trump did is fake, but everything bad that Joe and Kamala did was because of Trump.
TDS all the way.

Dumbfoundingly opposite

Wooow

Old_Joe

"The best we can do is to elect someone who we believe has our best interests at heart, and who listens to people who are more knowledgeable then him or herself."

How true. Well, we know for sure that eliminates one of the two contenders.

racqueteer

The various political philosophies are largely benevolent in theory, but people, in general, are inherently less so. It has often been recognized that a benevolent dictatorship is probably the best form for a government to take. The issue is always with finding a benevolent individual to become that dictator; or with withdrawing that power from subsequent people who are less benevolent once it has been relinquished!

Politics tends to attract people who desire power for themselves; regardless of party. It's probably no coincidence that it attracts rich people/families. Nor unusual for it to attract people with concerning tendencies. Regardless of one's political leanings, take a close look at the individual and the people she or he listens to. I'd like to believe that an objective observer would choose to follow a wise path, but we are, after all, dealing with people... 8^b

Mona

FD1000 said:

Old_Joe said:

Evidently FD1000 thinks that all of this is just "fake facts".

Sure, I got it.
Trump had low inflation + high increase of real wages + the borders were tight + Putin did not attack Ukraine + the Middle East was quiet and 4 Muslim countries sign peace agreement with Israel because Trump killed Sulimani, destroyed ISIS, and chocked Iran.

On the other hand Joe & Kamala had very high inflation + houses & Vehicles increased over the high inflation + Putin invaded Ukraine during Obama,Joe, and Kamala + illegal immigrants by the millions invaded our country + war in the middle East because weak Joe and Kamala.

Basically, anything good that Trump did is fake, but everything bad that Joe and Kamala did was because of Trump.
TDS all the way.

FD1000, I hope that you are enjoying your travels in Europe. Certainly you must have something better to do than post on MFO and BB. Did you forget your Luvox in Atlanta?

FD1000

Hey Mona, I enjoy our Europe and all other travels around the world which we have done for over 40 years.
What I don't enjoy is the simple fact that many people, especially bight ones with advanced degrees completely lost their mind.
When I discuss politics with my Dems friends they want to eliminate Trump or just kill him regardless of the law because in there mind it's OK. Any means should be used and why TDS.
On the other side what Dems have done is all OK and most of the media are cooperating too.
There is an easy test, any time antisemitism increases dramatically, especially among the educated people, this time the universities + several reps of one party and nothing major done + the media don't recognize it, it's a problem.
My last post on this thread.

mnzdedwards

Thank you all for the many years that go back to the Fundalarm days of investment advice and wisdom. I benefited from it and I appreciate all the thoughtful insights and the great work David and Charles and many others here have done.

Unfortunately, politics and ideology have become so pervasive in the comments that i can no longer visit what once was a great place to exchange ideas. I wish you all the very best in your investments and health.

Mike