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US Administration announces 34% tariffs on China, 20% on EU

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Re: US Administration announces 34% tariffs on China, 20% on EU

#491

Post by DebtDeflation »

hayst4ck wrote: post #297

The golden prize for America's enemies is to remove the US dollar as a global reserve currency. Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we m…

> Since trade is conducted largely in USD, that means other governments must purchase USD to trade.

This is just one facet of a broader point. When people talk about a "trade deficit" what they are really talking about is what's known in Economics as a "Current Account deficit". When discussing international trade and Balance of Payments, there are two accounts - Current Account (goods and services flow) and Capital Account (asset and liability flow). By definition, the two must net to zero. That's not an equation, it's an identity. If you have a Current Account deficit then you have an equivalent Capital Account surplus. It works in both directions. For example, foreign direct investment into another country in the form of a loan leads to a flow of funds into the country (Capital Account surplus) and then those funds are used to buy things (import) from the first country or other countries, leading to a Current Account deficit.

Re: US Administration announces 34% tariffs on China, 20% on EU

#492

Post by data_marsupial »

hayst4ck wrote: post #297

The golden prize for America's enemies is to remove the US dollar as a global reserve currency. Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we m…

They don't need to hold USD long term to complete transactions. Transaction demand does not explain why the dollar is the global reserve currency.

Re: US Administration announces 34% tariffs on China, 20% on EU

#493

Post by mminer237 »

TrackerFF wrote: post #377
doener wrote: post #225

"This guy cracked the tariff formula: @orthonormalist It’s simply the nation’s trade deficit with us divided by the nation’s exports to us. Yes. Really. Vietnam: Exports 136.6, Imports 13.1 Deficit = 123.5 123.5/136.6 = 90%" https://x.com/Geiger_Capital/status/1907568233239949431

...and every country USA has a positive trade with, will get slapped with the 10% tariff. Every country on the table Trump posted, that have received the 10% tariff, the US have a positive trade with. No winners in this one.

Plenty of countries got excluded from this—Canada, Mexico, Belarus, Russia...

Re: US Administration announces 34% tariffs on China, 20% on EU

#494

Post by bko »

hayst4ck wrote: post #297

The golden prize for America's enemies is to remove the US dollar as a global reserve currency. Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we m…

I agree tariffs are harmful and counterproductive, even if they're applied by the other side. My only hope is that this is part of some grand bargain where other countries reduce theirs on US goods and things reach a more balanced equilibrium.

It is interesting to note that none of this panic applied when US trading partners imposed tariffs on US.

But if this is part of a larger shift in terms of funding the government, I would be somewhat open minded. For instance, if instead of taxing income, we had tariffs that play a role of basically a sales tax, I think that has some benefits. For one, I think tax policy should encourage productive work (income) as opposed to consumption (sales). So a shift from income to consumption taxes would be a positive development. You can make adjustments so that its progressive (i.e. tax credits to cover the first N dollars in consumption tax). The big problem is the geo-political effect less trade might have and the effect on the markets.

Re: US Administration announces 34% tariffs on China, 20% on EU

#495

Post by timmg »

stickfigure wrote: post #480

Here's something I want to understand: In 1930 the Smoot-Hawley Tariff Act was passed by congress - an act of legislation. Nearly 100 years later we have the president unilaterally picking any tariff numbers he wants. What happened?

As I understand: Congress gave the president the power to add tariffs in some "exceptional" cases. Trump claims this is an exceptional case.

We'll see if Congress or the courts do something about it.

Re: US Administration announces 34% tariffs on China, 20% on EU

#496

Post by mateus1 »

croes wrote: post #367
doener wrote: post #225

"This guy cracked the tariff formula: @orthonormalist It’s simply the nation’s trade deficit with us divided by the nation’s exports to us. Yes. Really. Vietnam: Exports 136.6, Imports 13.1 Deficit = 123.5 123.5/136.6 = 90%" https://x.com/Geiger_Capital/status/1907568233239949431

Some think AI helped with the formula https://universeodon.com/@cryptadamist/114271484597938775

The takeaway from the X-poster being "it's good that they're using LLMs" is hilarious. Why praise the method if the end result is so bad?

Re: US Administration announces 34% tariffs on China, 20% on EU

#497

Post by phorkyas82 »

Karupan wrote: post #39

Genuine questions: why are they calling it “reciprocal”? Is the US just matching the tariffs set by the other countries? Also, this announcement has wiped out any plans of buying tech products this year, plus a holiday to the US and Canada later in the year. Good thing too, as the entire globe is probably staring down the barrel of a recession.

It's like the blaming in a playground fight; who started first? For context: https://nitter.net/KushDesai47/status/1907618136444067901

Re: US Administration announces 34% tariffs on China, 20% on EU

#498

Post by ericmay »

hayst4ck wrote: post #297

The golden prize for America's enemies is to remove the US dollar as a global reserve currency. Since trade is conducted largely in USD, that means other governments must purchase USD to trade. This is the core of trade deficits. Foreign countries buy US dollars so they can trade with other people. That guarantees the deficit since they give us something in exchange for USD, which they do not then spend on goods we m…

> It is the definitive end to it, and the birth of Chinese hegemony.

I think you’re spot on about the risks of the tariffs (I’m not really sure where I stand on them today), but your arguments don’t produce this conclusion. China is far more protective of its markets, nobody has or will have any interest in trading in any Chinese currency, and tariffs from not just the US but other nations will continue to exacerbate existing problems at home for China.

Companies like Temu came into existence because global pullback on purchasing Chinese manufactured goods is resulting in job losses, and instead of having factories go under the Chinese government would prefer to sell products that very quickly fall apart or are built extremely cheaply or with very poor environmental practices to at least get some money.

Further, while these tariffs seem questionable and everyone is piling on Trump (which is deserved, with prejudice, in my mind), let’s not pretend that the EU, Japan, and others are saints here. They do enact trade barriers to protect their own domestic industries as well. On the tech side for example there’s simply no argument that the EU is fining US tech companies just because they happened to enact policies and rules that the US companies break all the time. Some portion of that is a shakedown or a form of a trade restriction.

Re: US Administration announces 34% tariffs on China, 20% on EU

#499

Post by coffeefirst »

VectorLock wrote: post #114

Someone figured out that the new tariffs are just our trade deficit with that country divided by the country's exports. I think more and more we see lots of evidence they don't know what they're doing.

Yes. These are College Freshman Essay economics, where you know just enough to declare it's time to go bold and are still stupid enough to believe it will work.

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.

Re: US Administration announces 34% tariffs on China, 20% on EU

#500

Post by UncleMeat »

casey2 wrote: post #156

The US particularly has an extremely large population of men (10s of millions) who don't work. Who knows if they'd be doing "low skill" manufacturing if somebody was around to hire them. But if you actually wanted this to work you would have started by subsidizing american raw materials.

There are around 200m working age americans. So 100m working age american men. You are claiming that 20% of working age american men (at least) are playing video games all day (I assume that being in school or raising children or whatever is acceptable activity)? Where are you getting these numbers?
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