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Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

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Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#71

Post by jmyeet »

paradox242 wrote: post #45
jmyeet wrote: post #21

There are two silver linings to all this: 1. The evisceration of American soft power will really diminish the direct and indirect harm the US intentionally and unintentionally causes. Just look at China, South Korea and Japan deciding to respond to tariffs together [1]. That is an absolutely astonishing event given fairly recent history. Future retellings of history will correct portray the US as the actual Evil Empi…

Given the amount of military and economic power wielded by the US compared to our nearest competitor, we are one of the most benign great powers in history, which is saying a lot about considering the harm that we have caused. Calling the US "the real evil empire" is puzzling when we have still have the regimes in Russia, China and North Korea still at large.

Benign? Native American genocide, the transatlantic slave trade, chattel slavery, segregation, Japanese interment, suplying drug cartels with weapons and money, the havoc that's caused in virtually every Central and South American country, the only nation to ever use nuclear weapons against a foe (twice, and against civilian population centers no less), Korea, Vietnam, the Middle East, all the CIA-backed coups and regime changes, becoming the world's arms dealer, economic imperialism and almost starting World War Three (the Cuban Missile Crisis should really be called the Turkey Missile Crisis).

We also end up consistently on the wrong side: apartheid South Africa, Pinochet's Chile, Saudi Arabia, Israel, the list goes on.

Russia? We enabled the looting of Russia after the collapse of the USSR that directly created Vladimir Putin.

North Korea? This continues a long trend of simply starving countries for the hell of it, just like Iraq [1], Venezuela and Cuba.

China? What's China done exactly? I'll tell you what: it singlehandedly lifted hundreds of millions of people out of extreme poverty in the 20th century. Remove China from the stats and poverty grew in the 20th century. China became an economic powerhouse while having a much fairer distribution of wealth than the US has had or currently has. And they continue to build infrastructure rather than minting a few more billionaires.

[1]: https://www.aljazeera.com/opinions/2022/3/25/lets-remember-m...

Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#72

Post by roenxi »

fblp wrote: post #48

I don't quite understand the error this article is pointing out and how it could lead to a four fold inaccuracy. Can someone try explain with an example?

They used a 0.25 constant in a formula and the article is arguing they should have used 0.945 instead (difference of ~4x). The constant the Trump administration used seems to have been the one for estimated effect of tariffs on retail prices (ie, consumer facing) and it was more appropriate to use the one for the effect on prices at the border.

I assume that is similar to me being a computer company importing chips, a 25% tariff on microprocessors will make the imported cost of microprocessors go up by ~24% (because some really expensive ones don't get bought) but it would increase the price of the computers I build by ~5% because most of the computer isn't a microprocessor.

It is an exciting time to learn about the country of Lesotho.

Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#73

Post by adamredwoods »

kristopolous wrote: post #27

I wonder if he and his friends opened a bunch of options the morning of and are now collecting their winnings... he does have a bunch of crypto pump and dumpers as advisors.

Reddit's r/QuiverQuantitative. follows trades and puts by members of congress. MJ Greene bought stock in Dollar General.

Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#74

Post by qwertox »

user1241320 wrote: post #54
dragonwriter wrote: post #24

Earlier quoted context omitted.

It is even worse than that as Martinique is a “territory governed by France” in much the same way that Hawai’i is a territory governed by the USA. Martinique is a region and department of France—and administrative subdivision of the same type as those in the French mainland, differing only in that the the top two levels of subdivision (region and department) are coextensive rather than nested in Martinique and the ot…

Potentially France could have all imports from US pass by Martinique and they’d save a lot of money

And offer a loophole to any European company.

Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#75

Post by colechristensen »

readthenotes1 wrote: post #18
colechristensen wrote: post #11

Earlier quoted context omitted.

I want the people who work to make the things I use to earn more than $150 per month. A sane tariff policy would be set up to penalize these very low wage exporters to give competitive advantage to exporters and local producers with higher wages but also to incentivize higher wages in a way that set rates make producers more profitable if they paid workers more (and likewise other human development and environmental…

Well, this gets closer. There used to be a garment industry in the USA...

There still is, just small. I quite like my American Giant tshirts for example.

Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#76

Post by GIFtheory »

colechristensen wrote: post #51
GIFtheory wrote: post #29

Earlier quoted context omitted.

I don’t see how tariffs magically create wealth for foreign exporters that translates into higher wages. Let’s say I can buy a $10 shirt from Lesotho with zero tariff. Now a 50% tariff gets imposed. I can either eat the tariff and pay $15, in which case Lesotho still gets their $10, or Lesotho can eat the tariff to keep their exports competitive, in which case Lesotho now makes $5. The part about giving a competitive…

for countries that pay a worker $10 a day, put a tariff on the goods produced by that worker to total $10 for countries that pay a worker $15 dollars a day put a tariff on the goods produced by that work to total $4 therefore someone importing goods produced by one worker in one day from the lower wage country would spend $20 for the goods from the lower wage country but only $19 for the goods for the higher wage cou…

That’s a nice idea, but I’m skeptical—where is the new wealth coming from that will allow Lesotho to pay its workers more? It’s not an issue of strong-arming some bad guys in Lesotho to pay their workers more using tariffs as a negotiation tool.

I feel that conflating tariffs with some sort of negotiation tool to bring about positive global change is disingenuous, because the real aim is clearly protectionism.

Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#77

Post by SpicyLemonZest »

ArtTimeInvestor wrote: post #61

Could it be that Trump's main goal is to stay in power? I mean not only for the next 3 years. But beyond. If we look at his actions from this angle, could they make sense?

No? The tariffs aren't popular with anyone, have already produced multiple defections from his own party in Congress, and severely undercut the rationale business and financial leaders had for supporting him in 2024. His co-consul Musk, who normally spares no effort to hype up Trump's decisions, has spent the past few days carefully avoiding even indirect acknowledgement of the tariffs. It's really hard to see how this policy could possibly lead to consolidating power.

Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#78

Post by lostlogin »

adamredwoods wrote: post #73
kristopolous wrote: post #27

I wonder if he and his friends opened a bunch of options the morning of and are now collecting their winnings... he does have a bunch of crypto pump and dumpers as advisors.

Reddit's r/QuiverQuantitative. follows trades and puts by members of congress. MJ Greene bought stock in Dollar General.

I’m not in the US, what could this mean?

Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#79

Post by pinkytoe »

DarknessFalls wrote: post #56

Trump said he is open to negotiation on these tariffs. The factor of four difference is likely intentional padding. This way, he can: 1.) Shock the market into dropping several hundred points on the S&P and Nasdaq indices, thereby making quite a bit of money on the way down and then back up again. and 2.) Lower tariffs in exchange for patronage from countries or specific businesses that want a port opened in this new…

this is a classic way that kings and other authoritarian leaders demand patronage.

Re: Trump's Tariff Formula Makes No Economic Sense. It's Also Based on an Error

#80

Post by foxglacier »

Can anyone explain the reversal of positions on free trade between left and right since the 2000s? Back then, the biggest bogeyman of leftists was globalization and they would protest against free trade agreements and wanted to boycott imports from poor countries because it was exploiting workers there and taking jobs from poor people in rich countries. At the same time rightists loved free trade because it was good for economic growth everywhere. Since Trump 1 when he cancelled some trade agreements, that somehow turned upside-down and leftists since then love free trade while rightists (or at least Trump) oppose it. Trump seems to be like part of a 2000's leftist dressed up as a rightist.

I wonder if the change in leftists is just a reaction to Trump who they didn't like because of his personality. Now everybody's making economic arguments which is nothing like what the older type of leftist would do.

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