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

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

#201

Post by tvb12 » Mon, Apr 07, 2025, 4:37 AM UTC

walterbell wrote: post #55

> The formula for the tariffs, originally credited to the Council of Economic Advisers and published by the Office of the United States Trade Representative, does not make economic sense. There is a 2024 paper (40 pages) by Stephen Miran, chair of the Council of Economic Advisers, https://news.ycombinator.com/item?id=43589350 The root of the economic imbalances lies in persistent dollar overvaluation that prevents th…

I'm still reading the paper, but Stephen Miran must regret writing this...

A sudden shock to tariff rates of the size proposed can result in financial market volatility. ... A second Trump Administration is likely therefore take steps to ensure large structural changes to the international tax code occur in ways that are minimally disruptive to markets and the economy

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

#202

Post by tvb12 » Mon, Apr 07, 2025, 6:47 AM UTC

tvb12 wrote: post #201

walterbell wrote: post #55

> The formula for the tariffs, originally credited to the Council of Economic Advisers and published by the Office of the United States Trade Representative, does not make economic sense. There is a 2024 paper (40 pages) by Stephen Miran, chair of the Council of Economic Advisers, https://news.ycombinator.com/item?id=43589350 The root of the economic imbalances lies in persistent dollar overvaluation that prevents th…

I'm still reading the paper, but Stephen Miran must regret writing this... A sudden shock to tariff rates of the size proposed can result in financial market volatility. ... A second Trump Administration is likely therefore take steps to ensure large structural changes to the international tax code occur in ways that are minimally disruptive to markets and the economy

I'm beginning to suspect that I've read more of this paper than anyone in the current administration has.

While President Trump has proposed a 10% tariff on the world as a whole, such a tariff is unlikely to be uniform across countries.

Oof.

Once tariffs begin increasing beyond 20% (on a broad, effective basis), they become welfare-reducing

Uh...

How can the U.S. get trading and security partners to agree to such a deal? First, there is the stick of tariffs. Second, there is the carrot of the defense umbrella and the risk of losing it.

Ukraine, Greenland, Canada... They've created so much doubt over the defense umbrella that they've really hurt their position here.

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

#203

Post by olelele » Mon, Apr 07, 2025, 11:06 AM UTC

tim333 wrote: post #192

greaber wrote: post #63

Doesn't this formula also punish circular trade patterns in a strange way, like if the US imports $X of good from country B and country B imports $X of goods from country C and country C imports $X of goods from the US, and there are no flows in the opposite direction, then the US would impose an infinite tariff on country B since US imports from B are zero?

Almost but the formula actually says trade with B is X, deficit is X, their effective tariff on the US is X/X =1 or 100%, the US tariff on them would be half or that or 50%. There's a list of real tariffs for various countries here https://x.com/ianbremmer/status/1908609257756336239 The circular situation seems not so common but countries like Camboidia don't import much from the US because the people there don't hav…

There are a long list of countries that haven’t had much luck with the US..

Laos, Cambodia, Vietnam, Korea, El Salvador, chile, Colombia, Iran and on and on.

Now it seems there is just one country benefiting from their relationship to the States…

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

#204

Post by timka » Mon, Apr 07, 2025, 10:20 PM UTC

Trying to make economic sense of a political action makes no sense. Trumps's goal is to disrupt global trade.

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

#205

Post by aigen000 » Mon, Apr 14, 2025, 7:02 PM UTC

nprateem wrote: post #124

hayst4ck wrote: post #70

Trump is only confusing if you think his policies are meant to benefit America. If you don't believe that, then his policies are terrifyingly not confusing. If you believe his policies are primarily meant to benefit American oligarchs or Russia, his policies are even less confusing. Withdrawing support for Ukraine and not putting tariffs on Russia, despite putting tariffs on uninhabited "Heard Island and McDonald Isl…

No. His policies are all aimed at fighting China. - He wants to choke them with tariffs (and now has leverage to get the rest of the world to join in). - They want Greenland to defend the North - He wants to onshore manufacturing as a strategic wartime capability Once you understand this, his policies make sense. And the whole business of putting tariffs on everywhere is so countries can't export from them to evade t…

If this was aimed at fighting China, Trump wouldn't be tariffing 99% of the rest of the world.

China has the upper hand because USA has turned against all its allies and countries will favor trade deals with the country which is not tariffing them. China will form stronger trade coalitions with the Japan/Korea/Europe and leave America to cannibalize itself.