Note that the White House has both (1) officially denied this, (2) provided the formula they assert was used as support for that denial; but the formula is exactly what they are denying but with two additional globally-constant elasticity factors in the divisor, however, those elasticity factors are 4 and 0.25, so...
It would have been hilarious back in 2001. It's... scarily prescient in 2025. Can satire be just too good?
[0]: https://theonion.com/bush-our-long-national-nightmare-of-pea...
Soon to be "Numerals of America"
E.g. one explanation given for these trade policies is that trump sees a war with china down the line and is worried that china has tons of factories that could be converted to make ammunition while usa does not.
If so, there is at least some logic to the base idea, but the implementation is crazy, probably not going to work that effectively, and going to piss off all amrrica's allies which would be bad if WW3 is really on the horizon.
So is destroying diplomatic relations with all their allies and trying to force ceding of power in central Europe to a former enemy who is allied to China?
Go on with ya.
He's a prick saving himself from prison whilst being willingly used to establish an oligarchic fascist state from the former USA.
The second order effects of what he's doing are pretty obviously terrible for usa, but quite frankly i dont think trump is smart enough to see that.
[To be clear i think trump is stupid, but i don't think his actions are entirely random. There is a chain of reasoning here, it just misses the forest for the trees]
Russia's invasion of Ukraine is more immediate concern there. Even if Europe still could count on the USA's NATO commitments 100% the war was a big wake-up call in terms of readiness.
E.g. one explanation given for these trade policies is that trump sees a war with china down the line and is worried that china has tons of factories that could be converted to make ammunition while usa does not.
2. Alienating allies won't help the US produce ammunition
It's almost like something has changed the past few decades that is far from inevitable.
Anyways, I hope you're looking foward to prices for everything going up.
No politician in Europe, NZ, AUD or Canada would risk massive hate from their own population to even suggest anything like that. Right leaning were pushed to align with russia so thats a double no-go.
Now again it’s not a defense of the administration or to flex some sort of agenda but it’s hard to argue, the EU has underinvested in its military for decades.
The proximate cause for these tariffs is not some future event. This is post fact rationalization.
The proximate cause is still the ongoing “information” war which determines the perceived reality that is litigated in elections.
Earlier politicians played theater, acting as if the red meat being fed to voters was real on TV, but dealing with reality as need be when it came to decision making.
This was a betrayal of voters, who saw their election efforts result in legislators who didnt do what they said.
Trump does what he says. He believes WWE is real, and acts as if it is. His base believes it is real, and now reality is crashing with the fiction.
The fiction will prevail, because his party has also been working to build the power to enact their will.
Everyone sees logic here, the same way that everyone saw the emperors clothes. The alternative is illogical.
This is the reason potential reasons “we dont know” have to be postulated (war / China can make more ammunition)
Trump has always liked tariffs [alas, I can't find the source for this pre-presidency, its been blown out by current events]. He thinks trade is a zero sum game, and thinks that someone else set up the petro-dollar system.
Trump has consistently and reiliably always cowered away from war. Using other means to stop it (see russia, NK, China, Iran). Yes I hear the "we're going to invade x, y and z" but they never acutally came to anything (is that because of his advisors?)
Trump doesn't think about future capacity, only future pride. Does this change "make american stronger, and other weaker" is pretty much the only calculus that he's doing.
Trump's thinking is roughly as following:
"Why do we have taxes when we can use tariffs to raise cash and bring power back?"
"Why don't they buy from us?"(china/rest of asia)
"why are we spending money on them, when we don't get any money back? They are weak."(NATO)
"Why are we punishing russia, they are offering deals" (Putin offering cash deals)
There is no 4d chess. Its just a man who's pretty far gone, shitting out edicts to idiots willing to implement them.
Here you go, Feb 2011: https://money.cnn.com/2011/02/10/news/economy/donald_trump_c...
"The comment repeated past statements from "The Apprentice" star, who has said he wants to put a 25% tariff on all Chinese imports, to level trade imbalances in the global economy."
Doesn't help that Google's custom time range search is complete garbage. Searched for "trump tariffs" from 1/1/1980 to 1/1/2010 and almost every link is about the current tariffs but with timestamps between 1980 and 2010.
e.g. "20 Nov 1987 — President Donald Trump issued a slew of tariffs on Chinese goods", "30 Jun 1981 — Ontario Premier Doug Ford announced Monday a 25% increase on electricity exports to some American states as a result of President Donald Trump's tariffs", "31 Dec 1999 — IMF says too early for precise analysis on Trump tariff impact", "1 Feb 2001 — Trump's Global Tariff War Begins"
Did find a couple of links that were chronologically correct - a 1999 Guardian story about Trump wanting to tax the rich(!) and a 1987 NYT story about Reagan putting tariffs on Japan.
(duckduckgo was even worse)
https://www.thetimes.com/us/news-today/article/why-trump-tar...
At most we might see a proxy war over Taiwan (i.e. the US supporting and arming Taiwan, with sanctions against the PRC). The risk would then be a widespread disruption of global trade, at which point the US would not want to be dependent on the Chinese economy or factories in any way.
I do think a lot of the details are bad. But Trump is not exactly a details guy. And while I think they could have been better (by a lot, fairly easily), I do think they are an accurate, if crude, representation of the policy vision Trump has been consistently articulating for decades (he's been talking about tariffs and trade deficits like this since the 90s).
I think it is true that most people don't understand the economic principles of tariffs, including most economists. But I do think the plan he's implemented largely comports with what he's consistently said he would do.
THIS is sanewashing.
People dont have to be insane to do this, they just have to listen to their trusted news sources.
How someone would vote for someone they know is lying is beyond my comprehension, but here we are.
Trump is neither stupid nor insane and he will have access to many very smart people, too. Based on that the reasonable assumption is that they are trying to achieve a well-defined objective and have set a plan in motion to do so.
The "game" is thus to figure it out. @ggm's comment above is one possibility.
1. It is authoritarian. Democratically elected leader's duty is to present the policies he plans to implement so that voters can decide if they want them implemented.
2. It is based on the "4D chess" myth - that the leader is way smarter than the rest and is capable of outsmarting other countries. The history shows that it is never true. The leaders are normal people. And the institutions are as good as the founding principles that are honored by them.
(2) You just claimed trump has access to smart advisors and some hidden masterplan but you ignore all counter indication. He ousts critical journalists, nominates incompetent staff, invasion-mongers, tweets and plays golf alot.
If i can see any common factor in his insanity, its the need to have an enemy to pose as the strong man against, which indicates that trump does not have a constructive vision for the US.
That's 100% not true. A candidate leader might tell you what they're going to do, and then you elect the leader, and then they do them, but they don't propose plans once in power to see if the electorate like them.
As much as I'm not a Trump fan, I really don't like that people use a separate yardstick to measure him vs people they like.
Public consultations and transparency are two crucial and lately very under appreciated parts of democracy.
If a leader cheats the voters it is no longer democracy.
Maybe there's a website that keeps track somewhere.
The simplest solution is the right one. You are projecting intelligence, because you are used to.
This is AFTER the US government has roundly fired thousands of their experts and workforce, AND has just told everyone of its intelligence and army rank and file that there are no repercussions for a massive dereliction of duty.
AND IT IS ONLY APRIL.
It does not imply that what they are doing is a good idea or will work (whatever the objective is), just that there is more rational thought in what they are doing than what people might assume because the public does not have the information and seeing through what is going on requires insights that most people don't have, either.
Again, check @ggm comment above. I am not saying that this is what is going on but it is a possibility, and an average member of the public would never think of that scenario and thus wouldn't see the order in the apparent chaos.
Not insane, incompetent.
The problem with primarily hiring sycophants from his favorite cable news channel is that he's not getting the best, even from the GOP. This also makes him even more susceptible to people with their own agendas like Musk since no one is willing to pushback.
The UK for a good few years had a government which had both these attributes. They were only interested in policies which would appeal to their base, but eventually even those soured on them because the policies were implemented so badly.
but for some reason a whole heap of people decided to stay home this time and this is the result, hope they still feel happy with their decision
It don't want to sound too persnickety, but there is always at least one losing side in an election. It doesn't have to mean they dropped the ball, it could just mean people preferred the other option. Hindsight bias is wonderful, but you have no idea what would have happened if they'd run with a different agenda, they may have had a worse result.
The 2024 election had historically-low support from normally stalwart Democrat demographics such as Latinos, the youth vote, and black males. That, IMO, supports the conclusion that the Democrats did something wrong this time. Also, not only did those groups abstain but Trump also picked up quite a few votes from them (especially working-age black males), suggesting that they are swing voters who probably could have been swayed to stay on the Dem plantation if exposed to more convincing messaging, or a more compelling Democrat candidate.
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
https://www.reuters.com/markets/us/markets-wrestle-with-trum...
>In a November paper, economist Stephen Miran, whom Trump has picked to chair his Council of Economic Advisors, raised the possibility that Trump could use the threat of tariffs and the lure of U.S. security support to persuade foreign governments to swap their Treasury holdings for lower-cost century bonds.
Via
https://news.ycombinator.com/item?id=43350553 https://news.ycombinator.com/item?id=43561808
Just so pple get the credit (even if they appear to be not so sane)
I'm stunned.
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
"To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25."
Yes, let's assume the world is constant and changes are made in isolation.
These people are either malicious or incompetent. That's been the case for every single day of the decade-ish that Trump has been foisted upon us.
https://bsky.app/profile/amyhoy.bsky.social/post/3lluo7jmsss...
Réunion is at 37%, which isn't a problem because any company in Reunion could just use an address on mainland France, but there's more: Guadeloupe, Martinique and French Guiana are tariffed at 10%.
Does that make an easy loophole for any EU company wishing to export things to the US at a 10% tariff?
If these published rates actually going to be enforced this way, it seems like the whole EU has a very easy way to use the 10% rate.
They are not part of Schengen (but EU citizens don't need any visa, it's mostly intended to curb illegal immigration from South America via Guiana) and have the ability to use different VAT rates from mainland France, but that's all.
> The European Union (EU) has nine 'outermost regions' (ORs): Guadeloupe, French Guiana, Martinique, Mayotte, Réunion and Saint Martin (France), the Canary Islands (Spain) and the Azores and Madeira (Portugal). The ORs are an integral part of the EU and must apply its laws and obligations.
Not quite, at least not by default. The pre-Brexit Manx passport did confusingly include the text "European Union" on its cover, but holders of Manx nationality were only citizens of the EU if they had lived for at least 5 consecutive years in the UK or if they descended from a UK parent or grandparent.
Source: https://en.wikipedia.org/wiki/Isle_of_Man-variant_British_pa...
The state of British citizenship is a bit more complicated though I think. A bit like US citizenship which kinda depends on which US territory one lives, as far as I understand.
This is what I meant when I said these citizenships work in more complicated ways than the French one.
> Trump Tariffs Hit Antarctic Islands Inhabited by Zero Humans and Many Penguins
https://www.wired.com/story/trump-tariffs-antarctic-islands-...
I watched the man with my own eyes as he seriously floated the idea of injecting disinfectants to treat Covid-19. That was five years ago. His mental faculties have not improved since then.
His words to me felt they were those of a typical 5 year old, or an 80 year old with dementia, asking questions about subjects he doesn't understand but desperately trying to fit in.
But no, he did then ask about injecting a disinfectant.
Now it's quite possible Trump doesn't know the meaning of the word "disinfectant".
In the same press conference he also asked if "heat and light" will get rid of covid.
(Although of course he says this as "suggestions" and the "I'm just asking questions" tactic)
Many other countries, including EU members and China, already apply tariffs and non-tariff barriers far in excess of what the US is applying now.
So why no complaints about them? Why are those tariffs a good idea but the US ones are a case of "don't know what they're doing"?
To make it convenient for consumers, large foreign platforms would automatically handle VAT at point of sale, reducing friction and thereby pushing more import.
Some specific things had tariffs - e.g., nuclear reactors, and chinese electric cars - but it was by no means the norm, and I don't think citizens liked this. The Chinese car tariff in particular feels like German automotive lobbying, stifling competition. Tesla, pre-DOGE, also showed that we would have an unsatiable hunger for import of competitive cars, it's just that an F150 isn't a competitive car in EU.
Now, because if the trade war, we end up with blanket retaliatory tariffs and a strong push for buying local products, killing imports, that just wasn't there before. US and China was already in a trade war, so I guess that was the current state of affairs there.
That's how the common market remains competitive. We lower barriers for trade inside EU, while protecting our market from outside exports. Data is all available. Cars for example, US had tariff of 2.5%, EU 10%.
This is highly misleading:
Pickup trucks, which is a major share of the US car market, had an import tariff of 25% since 1964 (so it was pretty much the same average tariff level but with the EU doing less targetting).
While demand is much lower than in the US, it's still not zero.
But I'm talking about US import tariffs, not EU.
"Light trucks" have like 80% market share in the US; if you have 25% tariffs on those (for over 60 years now, too) then there is no room to complain about 10% car tariffs in the EU, full stop.
You could make a strong argument that Fords dominance in the segment was significantly helped by protectionism (without those tariffs Ford etc. would face much stiffer foreign competition).
This is not really that different from how the F-series works either, providing a frame where the rear can be built up dependent on needs.
It's just that the F-150 is a terrible fit. Our dropside vans are small with a very large footprint-to-bed ratio, is light and have low fuel consumption, is almost always custom, and has zero luxury or otherwise private appeal. There is no demand for e.g. engine performance, as the light vehicle class has load and towing limits that are easily met.
The F-150 is too bulky for casual city use and without a need to optimize have a low footprint-to-bed ratio, is heavy with and thirsty, is often just used "as is" with the stock bed, and is often used privately with a significant "muscle" appeal. In order to be driven with a regular license and not be affected by truck speed limits, tracking requirements and driving/rest time limits, it would still be registered as a light vehicle, making any additional load bearing/towing capacity unusuable.
There's nothing wrong with models being extremely optimized for specific markets and unfit for others. I imagine there aren't many EU-style dropside vans in the US, not to mention EU-style trucks. Japanese Kei cars are an even more extreme case of such market optimization.
It's too bad no-one bought these and they went away.
Amusingly the Postal Service in our area drives them now.
Something like this or an electric van would be amazing. However, does everyone always want to borrow it? I don’t think I own anything that wouldn’t fit in a vehicle like that.
That’s interesting because German car makers actually lobbied _against_ those tariffs fearing retaliatory tariffs.
https://www.reuters.com/business/autos-transportation/fatal-...
This isn't a fair comparison. Local produces also have VAT reduced by the value of goods they bought locally, so it is not such a burden for a local producer vs importer who doesn't benefit from such VAT reduction at all for his costs.
Huh? VAT is transparent to all involved companies regardless of import/export in such a way that the final transaction to a consumer cover the whole VAT of the value chain.
A quick VAT tutorial:
---
The local producer buys seeds, and pays a price that includes VAT. They then sell crop for a price that includes VAT. The difference is settled with the government: The local producer gets back all the VAT they paid, and instead give the government all the VAT they collected.
A reseller buys local produce at a price that includes VAT, and sells it at a price that includes VAT. They then get back all the VAT they paid (which is exactly what the government got from the local producer from this exact transaction!), and in turn give the government VAT they collect from the final consumer.
In the end, the amount of VAT retained by the government is exactly the price paid by the last recipient of the goods. No company in the chain ended up paying VAT out of their own pocket, and no other government earned VAT.
---
Now try with imported goods: The foreign producer buys seeds at a price that includes their local VAT. They then sell crops for export at a price with no VAT. The producer gets back all the VAT they paid, and give nothing to their government as they collected none during export.
The reseller buys the foreign produce at a price without VAT and instead report and pay VAT themselves to initiate the VAT chain. They sell it at a price that includes VAT. They get all the VAT they paid back, and in turn give the government the VAT they collect form the final consumer.
In the end, the amount of VAT retained by the government is exactly the price paid by the last recipient of the goods. No company in the chain ended up paying VAT out of their own pocket, and no other government earned VAT.
Granted, the importer's country is the one stuffing their pillows with the VAT, which does not benefit the foreign producer. That's the difference.
Take two producers - one US, one local - selling their identical products at $100. US costs are $80, all out of pocket, no VAT relief, US producer's profit is $20 after the importer adds 20% VAT ($20) to reach $120.
The local guy’s $80 includes 20% VAT on inputs ($13.33 reclaimable), dropping his real cost to $66.67. He sells for $100, collects $20 VAT (total $120), then pays the government $6.67 ($20 collected minus $13.33 reclaimed). His profit’s $26.67 - still 33% more than US's $20, thanks to VAT offsets.
You have to agree that this is a very tangible advantage for local companies, no?
Let's assume as you did that the actual input has the same real cost to manufacture (ignoring e.g. local labor cost differences, fuel cost differences, government incentives, etc.), and that your example therefore needs exactly 80 USD worth of real, untaxed input in both cases.
The US producer buys this for 80 USD out of pocket as there's no VAT to pay, adds 20 USD profit and sells it for 100 USD. An importer adds 20% VAT, making it 120 USD.
The local producer has to pay VAT so their price for the same thing is 96 USD out of pocket. They get 16 USD VAT back from the government next time they file VAT (irrespective of what they sell), i.e. the "relief" undoes the VAT entirely. They add 20 USD profit making the price 100 USD, add 20% VAT, and what do you know, same 120 USD price tag.
In both cases the final consumer price is 120 USD, and after VAT is cleared the input seller gets 80 USD, the producer itself gets 20 USD profit and the government at the point of consumer sale gets 20 USD VAT.
If the local guy exports the goods to the US the VAT is refunded, making both prices 100 USD. Input seller earns the same, profits remain 20 USD, but no VAT is earned.
This is also why all companies only discuss prices excluding VAT, as the VAT is purely symbolical if it's not a consumer sale.
Tarrifs are a tool. They have both positive and negative consequences. It seems like the manner they are being applied are just random and will get most of the negative consequences with very little of the positive.
They have zero positive consequences for anyone but manufacturers.
However, as a political tactic, the sharp implementation gives them breathing room to re-calibrate before the midterms. That comes at a real GDP cost, though.
The only reason to implement them is to protect local manufacturing, which is usually a bad thing in the long run (they just become less competitive)
Since we are diving into language semantics, these are _arbitrary_ tariffs that have been shat out via a "formula" which is being fed "how much stuff they sell us" as its input.
trump said "punish everyone who we spend more money with, barring our favourites" and they gave him a set of options. He chose the one he liked the best. No he didn't read any impact assessments, if they were made. He went by gut instinct.
Its just a punt. There is no greater game plan. its just a man making policy by vibe.
What makes them arbitrary? there is no really plan to test if they are going to work, or at what point they need to be adjusted. He will keep them until he sees something on twitter/truth social that makes him reconsider.
Even though his first pass crude approximation is stupid, it's really how other countries react, and how he reacts to them that will determine whether they behave like reciprocal tariffs or not.
There is a baked-in plan to test if they're going to work: they are formulaic, based on the trade deficit. Supposing that deficit falls, they will automaticlaly readjust downwards. I don't think the trade deficit (particularly restricted to goods, as they did it) is a good proxy for that, but it's also not completely untethered from reality.
I really dont think there is a plan. Trump says he wants tariffs, this is what he got. Why would he adjust them, unless there is an upside for him? is he going to remember to re-evaluate them? does the department that generates the stats even exist any more?
This may kill more manufacturing than it creates.
I feel like that's not true (really, zero positives? never? that would mean a whole lot of people is patently stupid), but I'd like to base my opinions on facts, not feelings.
https://m.youtube.com/watch?v=9C5Jig7XCw8&pp=0gcJCdgAo7VqN5t...
Analogy:
1. Roommate Trump who falsely claims you're in a common-law marriage: "You're running a trade-deficit with your grocery store, so every time you buy groceries from them I'm going to punish you by taking 25% of the cost. If you don't like it, you should work there part-time to reduce the deficit. You're about equal in paying friends for food versus them paying you for food, but they need you more than you need them, so to make you hustle I'm still taking 15% from any money that goes out. Finally, you have an extreme trade-surplus with your regular employer because they just send you checks, hurray!... That'll be 10%, because reasons."
2. Critics: "That idiot is insane. That's not how any of this works. Find a divorce lawyer ASAP."
3. You: "You guys aren't consistent thinkers! I mean, why aren't you complaining about how Mrs. Johnson adds a 100% cost onto Mr. Johnson's purchases of cigarettes, as a way to get him to quit? 100% is a much bigger number, so obviously Mrs. Johnson's the real villain here, and you don't seem to care!"
____________
If you're so certain Trump has a coherent and non-dumb strategy, please describe how it's supposed to work and why you expect the results to be good things.
Why not consider US prints dollars which are used for global trade? That means other countries are subsidizing US inflation and US economy.
Why not consider the massive investments other countries have made in the US economy when buying shares, bonds, securities?
What if they impose tarrifs on US financial and IT services? What if Amazon cloud and Netflix start costing 30% more?
What if they quit using dollars for trade?
What if they start selling US stock and securities? What if they start selling US dollars?
My understanding so far based on buried comments is: other countries have tariffs on individual products they're historically good at manufacturing and they want to retain it. e.g. Milk in the Nordics, Cars in Japan and EU, Bikes in India, etc.
keyword: "selective to retain"
US is applying it across the board blindly, not to retain something that's existing, but what appears to be a blind hope of starting everything from scratch.
Buried comments say "strategy" is lacking, because these tariffs also apply on the very raw materials needed to start from scratch. The policy does not intelligently select and separate items by their current or future use to the US industry.
There is a prediction that this blunt hammer will not yield to a more productive situation, in couple of years it would only have to be quietly rolled back and strategic thinking would have to be re-applied.
The counter-counter argument is, maybe a real strategy is being worked upon, and this blunt hammer is just a leverage tool. But so far there are no concrete signals of strategic thinking, so it's currently perceived as "let's keep turning one knob after another". The lack of accompanying software updates, calculations, projections, personnel planning, etc all contribute to the notion that there is no strategy.
And at this point, it devolves into emotion and personality, which is better to stay away from.
I hope it's not the department of government something...
For example Japan wants to protect its farmers so has tariffs on rice. But that is not a simple tariff on all rice imports. There are various rules and a tariff free allowance. The largest importer of tariff free rice to Japan is the US.
I think there's a few things wrong with Trump's go to of tariffs as weapons:
- America seems to want total freedom to trade on its terms, not as partners. E.g. expecting countries to import American goods that do no satisfy customer demand or local laws.
- Trump's unpredictability will mean that companies will be hesitant to make large investments if they think the policy will change on a whim. US policy is largely controlled by a single, unpredictable, vindictive and fragile ego. That's not a good environment to build a stable and healthy company.
- The hyperbole such as calling international trade raping & pillaging. This is voluntary trade we're talking about.
- The main issue is that it's not solving the real problems of the average American. Globalization has big issues, it's kept some countries in poverty and contributed to declining living standards especially in western manufacturing. However it is just one factor amongst many that are causing hardship for small town America. A reversing of globalisation does not solve massive wealth inequality, it does not intrinsically solve low wages or abandoned factory towns. At the same time that Trump installs tariffs he's making it easier for the wealthy to concentrate ownership of assets, increase inequality, reduce employment laws and erase social protections. 14 billionaires with elite projection are not working to benefit the average American, they're working to benefit their own average.
From what I read, the average tariff applied by the EU is under 1%. Other comments say Trump has just divided imports by exports to calculate his tariff rates.
But I think the concern is more key industries for the US like autos, tech (EU never ending fines are essentially tariffs), etc. where the disparity is more dramatic. But it’s still not a 20% difference.
Another concern is the devaluation of the Euro vs the dollar due to certain economic policies. Which again is a defacto tariff.
Anyways, my guess is this is a negotiating position since 20% seems excessive, but I could be wrong.
But you can rebrand tariffs as “fines” all you want.
When they’re applied wildly disproportionately to certain firms in a certain industry from a certain 3rd party country…it’s a defacto tariff.
Let’s continue down the circular argument drain!
Tariffs and fines, for lack of better words, are both aligning incentives through financial penalties, but they are still different things.
The EU (governmental body) created laws to price in negative externalities and punish offenders until they correct their behavior. Fines will punish corps (private citizens) directly, with little collateral damage, until they stop being anti-competitive.
A fine forces a 1)small target to follow 2)a specific law and uses, like tariffs, financial penalties to achieve this. That law is a long term reflection of people's local culture and values, and it 4)can be appealed and judged. 3)A negative externality was priced in as a law and a fine.
-- Right now, you have the Trump admin (gov body) applying tariffs to other countries (gov body) because they want manufacturing (private citizens) back in US soil. There is clear widespread collateral damage.
A tariff shapes the economic behavior of a 1)big target and, like fines, also uses financial penalties to achieves this. The desired economic outcome is a 2)trading strategy of a temporary administration. There is collateral damage. 4)There is no court, judge or 3rd party to appeal to, you as a government can only try to negotiate with the other government. 3) Two governments that were having mutually beneficial and consensual trading are now no longer doing so, there was no negative externality here, and while Trump may claim so it does not make it true that other countries were taking advantage of America. See trade balances considering products and services, as one example of lies trying to make it look like US was getting short changed by the world, it was not.
If tariffs and fines still feel like the same thing, it's only because 1)corporations have become government-sized and have achieved government-like powers; and 4) that 3rd party of the judicial branch seems to be more and more taken over by just the government itself, who might actually be a gov-sized and gov-powered corporation.
Just 3 days ago it was almost $500 million to various car manufacturers, the biggest piece to Volkswagen. https://ec.europa.eu/commission/presscorner/detail/en/ip_25_...
In 2021 it was $900 million to Volkswagen and BMW https://ec.europa.eu/commission/presscorner/detail/sv/ip_21_...
In 2019 it was $370 million to automotive suppliers: https://ec.europa.eu/commission/presscorner/detail/sk/ip_19_...
In 2016 it was $3 billion to truck manufacturers: https://ec.europa.eu/commission/presscorner/detail/en/ip_16_...
That list keeps going. And these are just the EU actions. National governments have their own enforcement. Germany fines Volkswagen for another billion in 2018: https://www.theguardian.com/business/2018/jun/13/vw-fined-1b...
Treating fines on US companies as a tariff means we should also count Volkswagen $4.3 billion fine for Dieselgate as a hidden tariff. Do you agree with that?
But specifically when it comes to tech (which is overwhelmingly US companies), there is a massive imbalance. Tariffs are one mechanism by which that imbalance can be tilted.
"EU privacy regs are just laws you can choose to follow if you don't want to get fined!" Yes, and tariffs are laws you can choose to follow (by producing US market products in the US) if you don't want to get fined.
Again, US companies will also need to pay tariffs on imported goods, so it's not just targeted at EU companies. It's a tariff on geographic production.
I don't agree with much of this administrations policies, but to claim the EU hasn't created an imbalance in the way it extracts "fines" from US tech companies (and the incentives around that) doesn't reflect reality.
AGAIN, I don't agree that either the EU fines or US tariffs are a good idea. But the logic of using a tariff to correct this imbalance is sound.
Of course fines on tech companies disproportionately affect US companies. They’re the biggest tech companies!
If you broaden your view to look at other industries you’ll find things are much more balanced.
https://en.wikipedia.org/wiki/Digital_Services_Act#Large_onl...
Edit: it's definitely worse if you go deeper into the rabbit hole. Sister legislature, Digital Markets Act:
Booking.com insisted on the fact that it is one of the only European companies that is a global success and that as they are not the most dominant actor in this sector, they should not be disincentivized while competing with bigger companies.
So yeah, "please only punish non-EU companies" definitely sounds like a trade barrier.
Comply with EU legislation for activity within the EU and there are no fines so it’s hardly a tariff
But I’ve dealt closely with EU compliance on these matters, and the fines are absolutely levied selectively and in bad faith on areas that are impossible to comply with on the timelines provided or ever. They have absolutely turned into strategically punitive taxes on an industry that the EU has no answer to, so in effect, yes, they are tariffs.
With all due respect, when you are given years to comply, the problem is not that the timeline is impossible, but that your organization chooses to ignore the regulation.
If the same laws had been passed in the US, the company would have complied already.
"THE LAW IS THE LAW" is not an logical argument. Tariffs are also imposed via legislation (laws).
Just as EU companies have to abide by EU privacy regs, US firms also have to abide by US tariff regs.
Exactly, so we agree fines are not tariffs then?
> Just as EU companies have to abide by EU privacy regs, US firms also have to abide by US tariff regs.
Yes, also by nature, only importers pay tariffs, so most tarrifs will be paid by US firms, just like most EU fines are paid by EU companies. I don't see a disagreement here.
> "THE LAW IS THE LAW" is not an logical argument
It's not mine. I'm saying that if you don't commit a crime or by negligence let a crime happen, you won't get fined. Some criminals are never caught, and we can talk about two-tiered justice system, but just, I don't know... Don't commit crime? The risk to be fined will be 0 then.
But when I decide to reduce all foods by at least 10%, lower my protein and carbs by 25%, pledge I'll remove at least 30% of metals from my diet and will be doing a 4 day fast twice a week in order to become an olympic level athlete by next year, people say I don't know what I'm doing!
How can people possibly be against nuanced thoughtful dieting yet be against my sudden do it all at once approach? It's totally inconsistent, what idiots everyone else is.
>So why no complaints about them?
Because that's not true.
This has been persistently claimed but I have yet to see evidence on this. In most cases it's including VAT which doesn't make sense since local manufacturers pay that as well.
Obviously VAT isn't a "trade barrier", if anything it's a "consumption barrier" and it's the same for every business that EU citizens give money to (i.e. if I bought a robot hand that cost $2000 to make from an EU company, I'd likewise be paying €400 VAT on top of that).
Source?
> ... The price elasticity of import demand, ε, was set at 4.
> ... The elasticity of import prices with respect to tariffs, φ, is 0.25. ...
None of the values are related to their names in any way
Trump personally may or may not understand it (I think he does) but his political superpower is his willingness to stand up in public and say complete bullshit knowing that it's bullshit, knowing that some people are fools who will uncritically believe the bullshit, and other people are cynics who who will nod along with the bullshit either to make money out of the rubes or because they think it serves a strategic purpose.
You can waste years wondering which side of Hanlon's razor someone is on, but it's important to remember that obsessing over such dilemmas can lead to paralysis. Just like there are a lot of street hustles and cons that depend on confusing/misleading the mark before tricking or mugging them out of their money, there are a lot of political gambits that depend on inducing analysis-paralysis in opponents. Manufacturing dilemmas is also a key element in military strategy.
My advice is to stop worrying about whether these people are such fools that you owe them some sort of empathy and an effort to save them from themselves, or you will end up like Charlie Brown having the football pulled way by Lucy yet again. It is OK to cut them off and treat them as bad actors, for the same reason you should often round off quantitative values instead of obsessing over precision.
Politicians are just pretending to be dumb? Why?
>There is no way these people don't understand the difference between expressing a trade deficit as a ratio and actual tariffs laid by other countries.
I don't think most people deny that these are capable individuals. The problem is - I think the people in Trump's inner circle now are sycophants first. They know what Trump is doing is destructive, but they are just choose to be yes men. Remember, this isn't Trump's first go-around, and the majority of people who stood up to Trump the first time (Pence, Barr, Perry, Price, Rex Tillerson) are gone.
Funny enough wikipedia has an article[1] about this that is so large that it has many sub articles. Ultimately, I can't trust that his appointments are exercising any sort of discernment because a large number of his 2016 appointees were fired for doing so.
In short, Fitzgerald could be a genius, but all signs point to him being a yes-man that would rather sink the ship than stand up to Trump.
[1] https://en.wikipedia.org/wiki/List_of_dismissals_and_resigna...
To hide their motives, if you think they are just dumb then you will not look for the real reason they do it.
Not sure that is what happens here, but that is a very common reason to play dumb.
I told you: because it creates a strategic dilemma that paralyzes the opposition. The same reason a hustler pretends to be dumb to lure the mark, the same reason trolls use shitposting to bait people.
His name is Howard Lutnick. He was CEO of a financial firm called Cantor Fitzgerald. https://en.wikipedia.org/wiki/Howard_Lutnick
It is not as if he is going to die of starvation because of tariffs. He has no skin in the game.
If this is the case, we could at least likely put to rest most concerns that Trump will be implementing much of Project 2025.
I'd be very surprised if he had too much to do with that plan directly. Assuming that's true, and if he's only surrounded by yes men, no one is there to convince him to do anything other than exactly what he himself wants to do.
But in this case: what is the game plan? What are they trying to achieve? Is it simply chaos, so that they can rule in perpetuity?
You probably want to be more careful with how you phrase that. The Republican party passed the Civil Rights Act and ended slavery, among other things.
Those may not be the type of Republicans you are thinking of today, but they still had that little (R) next to their names.
Way more Democrats in both houses of Congress voted for it than Republicans (to be fair the Democrats held the Senate 67-33). A Democratic president signed it. His Democratic predecessor asked for it. How do you figure "the Republicans did it"?
https://en.wikipedia.org/wiki/Civil_Rights_Act_of_1964#By_pa...
Lutnick clearly has zero actual influence in this administration. He's a barking dog sent to do TV soundbites, and his explanations are often full-bore nonsensical or completely contradictory to his prior explanations. Foreign officials (such as Canada) have repeatedly come out of meetings with Lutnick almost...assuaged....as if Lutnick is saying "he isn't really going to do this...there's no way", because even Lutnick doesn't realize just how stubborn Trump is about his outrageously stupid ways. These guys keep trying to pretend this is all some masterful negotiating strategy by the Art of the Deal master.
And based upon 100% of Trump's history in government, it won't be long before Lutnick and Bessent are out of this admin, both will be "RINOs" attacked by the MAGA cult, and they'll both be telling the tale of how outrageously stupid Donald Trump is. Like closing on 100% of Trump's administration in the first term.
Just look at the lead up to these tariffs. The day before Trump was still "deciding". This is something that a team of expert economists should have worked on for months, probably to conclude that free and liberal trade is what made the US the richest large country on Earth, but instead it was something that everyone had to sit around and wait for Trump to pull something out of his ass.
Trump has openly and widely talked about tariffs replacing income tax for years. This administration is clearly one where no one ever can counter any harebrained idea from Trump -- and they're all incredibly stupid ideas from that incredibly stupid man -- so whatever nonsensical takes he has they have to all try to make talking points around and create some post facto rationalizations. It is the most dangerous administration in human history, and the American voter looked at this traitorous, constitution-shredding, law-breaking imbecile and said "more please!"
There is no 4D chess happening here[1]. There isn't even checkers happening. No masterful long term negotiating strategy. It's just a fumbling moron (rapist, charity-stealing imbecile) that is doing the most nonsensical way to deal with a deficit rather than, you know, raising taxes. And to be clear the US deficit is untenable and needs to be dealt with, and the head in the sand approach by successive governments is not reasonable, but combining DOGE's ham-fisted stupidity with Trump's economic destruction and the deficit is likely going to be much, much worse. The US is on the fast track to insolvency.
"But China....next war....China!"
Trump started this whole thing by attacking allies. By dissolving alliances and trying to economically harm its closest friends. Precisely the opposite of expectations if the US were seriously trying to counter China.
[1] Aside from corruption. Tariffs are the foundation of corruption because everyone has to come, hat in hand, begging for exemptions. There is going to be a line to the White House of manufacturers and importers, from Apple to military contractors, begging for special waivers. Which they'll get if they grease the right palms, as this is the most blatantly corrupt administration in US history.
If one does want to impose a large block of tariffs, it does seem reasonable that you would want to keep details quiet until the entire package is announced. You wouldn't want other countries responding early
And these apply immediately. This is an administrative impossibility. CBP is going to have a disastrous couple of weeks about this rag tag collection of barely defined nonsense.
This is 100% disaster, top to bottom.
The comment I replied to was claiming that Trump himself was still deciding what the tariffs would be until this week. My question was how we could be so certain of that.
As far as reciprocity goes, how is this plan not based at least in part on reciprocity? They claim other countries have taken advantage of the US and we're on the losing end of trade deficits. The tariffs they announced seem to be based entirely on trade deficits/surpluses with each country.
I have no idea if this would work or what the administration's real motives are, but the on the surface it sure seems like they proposed tariffs that target the problem they claim - trade imbalances.
And really that is a silly theory regardless. The US would achieve maximum effectiveness by doing a normal tariff legislative process and then soberly discussing with all parties. Instead it's constant on/off brinksmanship. Because Donald Trump is a profoundly stupid imbecile with a simpleton, child-like understanding of the world. There is going to be customs and business chaos as this is factored in.
>As far as reciprocity goes, how is this plan not based at least in part on reciprocity?
It has zero bearing on reciprocity. Reciprocity is matching the other party's tariffs.
If you're richer than the other party, or if they sell things that you want but you don't sell things that they want, that isn't reciprocity. It's like if I tariff my children when they buy from McDonalds -- I mean, McDonalds doesn't buy from me! - and claim it's reciprocity. That would be insanely stupid, right?
It's a massive tax hike on Americans -- a regressive tax that will hit the working and middle classes the hardest -- shrouded under some patriotic America thing. No way anyone falls for this...right?
You're probably thinking of that one dead badger.
That's how you devolve into a 3rd world country by the way. I've lived in 3rd world countries and seen this over and over again. That's why 3rd world country stock markets don't go up - because locals have a distrust in them. Locals know insider trading is rampant.
I went from a low risk investor to betting on US doing stupid stuff and stated making real money. Cognitive dissonance investment I think.
How doesn’t need to make as many of them anymore, so that’s a saving.
Far as I can tell, the ideal would have been to simply double incoming tariffs, but that would be infeasibly large. This was a way to generate a plausible smaller number that can be increased later on an individual basis depending on how the country responds.
It's not that there's no strategy, it's that it was designed by reckless amateurs who haven't done the reading, haven't consulted with anyone that understands all the trade-offs, and have an uncapped appetite for risk.
The TV version works out perfectly, since the writers control the ending.