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The McKinley Years

jasonsteinhauer.substack.com

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Re: The McKinley Years

#11

Post by terribleperson »

rqtwteye wrote: post #5
A_D_E_P_T wrote: post #4

> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…

I think it may work in the long term but it requires a lot of domestic investment to create that manufacturing capacity. This would require investor confidence that the tariffs will stay around for a long time. In the short term it will just be basically a sales tax. And I bet corporations will add a few more percent to the price increase caused by tariffs. Same as in the last years with high inflation.

Also, you can't do it across the economy all at once. If you really wanted to build up domestic manufacturing, you'd pick a few small sectors that are either almost in the wheelhouse of existing domestic producers or simple enough that that production capability can be realistically developed from scratch in a few years, and then you tariff just those sectors while providing the aforementioned investment. Once you've gotten the results you're looking for, you expand to other sectors.

You don't do it to the whole economy at once because the negative economic effects of the tariffs will impede the very development you're hoping for, and because there's just not enough free labor, expertise, and funding to simultaneously develop domestic production of everything.

Re: The McKinley Years

#12

Post by throw0101d »

A_D_E_P_T wrote: post #4

> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…

> Today, a tariff is quite literally the same thing as taxing Americans […]

Not just a tax, but a subsidy as well:

> Executives from U.S. steel companies were enthusiastic backers of the 2018 tariffs and have urged Trump to deploy them again in his second term. They have called for the elimination of tariff exemptions and duty-free import quotas, saying those carve-outs allow unfairly low-price steel to enter the U.S. and undermine the steel market.

[…]

> Higher prices for imported steel are often followed by domestic suppliers raising their own prices, which then get passed through supply chains, manufacturing executives said. For consumers already reeling from rising retail prices and inflation, pricier steel and aluminum could further lift costs for durable goods like appliances and automobiles, as well as consumer products with aluminum packaging, such as canned beverages.

> “The issue with tariffs is everybody raises their prices, even the domestics,” said Ralph Hardt, owner of Belleville International, a Pennsylvania-based manufacturer of valves and components used in the energy and defense industries. Steel and aluminum are Belleville’s largest expenses.

* https://www.wsj.com/economy/trade/trump-tariffs-mexico-canad...

Why not just go directly to the subsidy and skip taxing the public?

Re: The McKinley Years

#13

Post by rqtwteye »

tharmas wrote: post #10
rqtwteye wrote: post #5

Earlier quoted context omitted.

I think it may work in the long term but it requires a lot of domestic investment to create that manufacturing capacity. This would require investor confidence that the tariffs will stay around for a long time. In the short term it will just be basically a sales tax. And I bet corporations will add a few more percent to the price increase caused by tariffs. Same as in the last years with high inflation.

Don't forget a key component of Trump's tariff policy is to "replace" income tax with the tariff (tax). This effectively replaces income tax with sales tax. And you can guess which economic class benefits from this the most.

That's probably the real goal. I was a little skeptical about Project 2025 but it really looks like they are following it.

Re: The McKinley Years

#14

Post by ChrisArchitect »

Just searched Google Maps for Mt. Denali, Alaska only for it to return results for Mount McKinley immediately. Note I'm not really sure if that's anything to do with an executive order or that it was Alaskans wanting it called Denali while many elsewhere in the country incl at the Federal level called it McKinley.

Related:

Google Maps now shows the 'Gulf of America'

https://news.ycombinator.com/item?id=43007052

Re: The McKinley Years

#15

Post by LaundroMat »

I stumbled upon The Knick (2014) recently, a Steven Soderbergh directed two-season series about a hospital in 1900's New York.

It is truly visionary as it is the perfect picture of the Golden Age the current administration seems to long back to.

Re: The McKinley Years

#16

Post by drewcoo »

A_D_E_P_T wrote: post #4

> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…

> Today, a tariff is quite literally the same thing as taxing Americans

Assuming Americans cannot change their spending habits. I'd rather assume that most Americans are smart enough to make choices to their advantage, though.

Why do Americans not drive more EVs from BYD? Because the Biden administration put a 100% tariff on Chinese EVs. Nobody accused Biden of unduly taxing Americans, only of making BYD unaffordable.

Re: The McKinley Years

#17

Post by A_D_E_P_T »

drewcoo wrote: post #16
A_D_E_P_T wrote: post #4

> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…

> Today, a tariff is quite literally the same thing as taxing Americans Assuming Americans cannot change their spending habits. I'd rather assume that most Americans are smart enough to make choices to their advantage, though. Why do Americans not drive more EVs from BYD? Because the Biden administration put a 100% tariff on Chinese EVs. Nobody accused Biden of unduly taxing Americans, only of making BYD unaffordable…

The latest tariffs apply to steel and aluminum, which are the most basic of industrial inputs.

Have you seen how much aluminum the US produces?

> https://en.wikipedia.org/wiki/List_of_countries_by_aluminium...

It's roughly on par with Iceland and a little bit less than Saudi Arabia. There's no way to meet the demands of industry with domestic aluminum production. What's more, US production and processing of aluminum focuses on "high-end" aerospace grades that are not always suitable for things like household appliances & can be far more expensive than foreign alternatives.

Now let's do steel:

> https://en.wikipedia.org/wiki/List_of_countries_by_steel_pro...

Not so bad, but only 8% of China's production and 4.25% of global production. Again, no way to meet domestic demand with entirely domestic steel. Further, US steel is in the opposite position described above: Most US steel grades come from very old mills and are "low-end." A lot of tool steels, automotive steels, and specialty steels are simply not made in the US, and must be imported.

What's interesting is that the most high-end steels come from Japan and Germany. (Also, increasingly, China.) What happened, to simplify things a little bit, is that their steel mills were bombed into oblivion during WWII, so, after the war, they built new and much more modern mills. Whereas the US kept using its far older pre-war mills. Over time this developed into a durable advantage on the high-end.

As for BYD -- a 100% tariff is practically a de facto import ban. Try a 100% tariff on everything, or on steel and aluminum, and see what happens. It'll make periods of normal inflation seem like a Golden Age.

Re: The McKinley Years

#18

Post by A_D_E_P_T »

throw0101d wrote: post #12
A_D_E_P_T wrote: post #4

> "This worldview led McKinley, first, to tariffs. > "A tariff is, essentially, a tax on foreign goods that makes them more expensive relative to similar items made domestically. In theory, this helps boost and protect local industry. The tariff—paid for by the foreign entity—also generates revenue for the government." > Taxing foreigners was superior to taxing Americans, McKinley rationalized. A tax on foreign produ…

> Today, a tariff is quite literally the same thing as taxing Americans […] Not just a tax, but a subsidy as well: > Executives from U.S. steel companies were enthusiastic backers of the 2018 tariffs and have urged Trump to deploy them again in his second term. They have called for the elimination of tariff exemptions and duty-free import quotas, saying those carve-outs allow unfairly low-price steel to enter the U.S…

Ultimately, you get what you subsidize.

Tariffs are very weak subsidies; they're more of a penalty for domestic end-users. Going directly to the subsidy would get the government what it wants -- more steel, aluminum, or whatever -- and spare end-users the pain.

Direct investment in small and nascent business is also a powerful lever. At trade shows, I've personally spoken with more than a few Chinese factory owners, and many of them mentioned that they got their start with an $_M investment by the government, and that the government is a minority shareholder in their business. This is how you get lots of factories in sectors you want to see, and you can force them into competition to keep end-user prices low.

Just imagine the US doing this for drones, AI, mining and metals production, etc. It would be like mega-YC.

Re: The McKinley Years

#19

Post by llamaimperative »

rqtwteye wrote: post #13
tharmas wrote: post #10

Earlier quoted context omitted.

Don't forget a key component of Trump's tariff policy is to "replace" income tax with the tariff (tax). This effectively replaces income tax with sales tax. And you can guess which economic class benefits from this the most.

That's probably the real goal. I was a little skeptical about Project 2025 but it really looks like they are following it.

Why were you skeptical of it?

Re: The McKinley Years

#20

Post by saghm »

llamaimperative wrote: post #19
rqtwteye wrote: post #13

Earlier quoted context omitted.

That's probably the real goal. I was a little skeptical about Project 2025 but it really looks like they are following it.

Why were you skeptical of it?

People seem to be willing to go out of their way to rationalize around having to take threats beyond a certain magnitude seriously. I think something similar seems to be happening with all of the discussion around Greenland (and Canada, for that matter); the idea of us actually getting into a serious territorial dispute with Denmark or Canada would be such a divergence from what anyone is familiar with that it's easier to just discount it as not being a realistic concern.
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