Rationale to Trump's Tariffs

[Gadianton]

I think he's saying the sorta-ultimate goal is to get the foreign treasuries to sell off dollars, which reduces the value of the dollar; note the time stamp if I missed that. The sorta-ultimate goal is to reduce the value of the dollar because as great as it is that the dollar is strong as the world's reserve currency, a strong dollar means imports are cheaper and exports expensive, and that means America will never insource or become a great exporter. America won't produce its own steel unless the dollar falls.

But it's a long and rickety plan to get to there and I only followed it in patches. It seemed to me it would only work if foreign responses were perfectly anticipated and from there life plays out like a textbook. Retaliatory tariffs never mentioned as a possibility, for instance. At least not that I can recall.

[I Have Questions]

I suppose the face value of imposing tariffs on American imports is that Americans will end up funding the tariffs if they continue purchasing imported goods - because the suppliers will simply pass on the tariff charging via price increases.

That might drive Americans to buy alternative American-made goods. But if American-made goods were of equal or better quality, they’d be buying them already.

The other potential outcome is that foreign goods no longer get exported to America. Resulting in less choice for the American consumer. Is that a desirable outcome?

[Kishkumen]

I think he's saying the sorta-ultimate goal is to get the foreign treasuries to sell off dollars, which reduces the value of the dollar; note the time stamp if I missed that. The sorta-ultimate goal is to reduce the value of the dollar because as great as it is that the dollar is strong as the world's reserve currency, a strong dollar means imports are cheaper and exports expensive, and that means America will never insource or become a great exporter. America won't produce its own steel unless the dollar falls.

But it's a long and rickety plan to get to there and I only followed it in patches. It seemed to me it would only work if foreign responses were perfectly anticipated and from there life plays out like a textbook. Retaliatory tariffs never mentioned as a possibility, for instance. At least not that I can recall.

Later he says that the value of the dollar would go up, making the more expensive goods more affordable. I don't think the point he was making was that this was a good plan. He was saying that it is a plan, and that it has some conceivable outcomes in line with the aims of its framers.

[Physics Guy]

Tariffs can work as a subsidy to home industry if home-made goods are competitive on quality with foreign-made goods, just not competitive on price. You artificially boost the price of the foreign-made goods to the point where the home-made ones are no longer more expensive for the same quality.

Weakening your currency has a similar effect to the tariff, in part: it makes the foreign goods more expensive in your currency, allowing your local industry to compete on price. A weaker currency is better than a protective tariff, however, in allowing your home industry to compete in foreign markets.

If you raise a tariff to drive up import prices, other countries will likely impose retaliatory tariffs of their own, to drive up your prices in their markets. So the tariffs may make your home industry more competitive in your country, but they will likely make your industry even more hopelessly uncompetitive in other countries than it was before. If your currency weakens, however, your goods become cheaper in their currency at the same time that their goods become more expensive in yours. So your industry gets a price advantage over foreign competitors not only in your country but also in theirs.

That much I think I can follow. I still don't get how you can use tariffs to weaken your own currency.

[Gadianton]

The weakening was step two, which went beyond tariffs into other stuff.

Continued strengthening the dollar happens in step 1, so right, the tariffs strengthen the dollar and give even more reason to hold as a reserve currency.

Honestly, I'm not sure it matters much because to me this is apologetics, get a bunch of grad students together and come up with something theoretically plausible that could work out if everything went to perfection otherwise who knows.

One consistent theme in all this is Trump sitting at the negotiation table playing poker with world leaders. Trump going to war with the cartel. Trump turning the nation into his private enterprise to make great for himself. He won on inflation. He's going to cause more inflation, and on purpose. But, as we suspect, did he really win on inflation per se, or inflation as the excuse? If people really are that triggered about inflation, then he won't do very well, if people really have lost it to the point where they want Trump as their Putin as a form of proxy wealth for themselves, then he'll grind the Ajaxes of the nation into the dirt and they'll ask for more.

[Kishkumen]

If people really are that triggered about inflation, then he won't do very well, if people really have lost it to the point where they want Trump as their Putin as a form of proxy wealth for themselves, then he'll grind the Ajaxes of the nation into the dirt and they'll ask for more.

Yeah, unfortunately, I think the worst case scenario is where this is. Nothing Trump does is beyond rationalization by his cult members. Every time I open Facebook, I see another obviously dumbass thing that Trump has done, and without fail there is some dumber goober there to say that Trump is winning the game of 5-D chess or that the rest of us lack the requisite common-sense view of the world and how it really works to "get it."

[Physics Guy]

Apparently Trump take egg.

[Marcus]

In trying to understand the egg thing, I found my sentence of the day:

Travelers need to be aware that raw egg imports from Mexico are prohibited. Since January area CBP officers have encountered more than 90 people attempting to import raw eggs from Mexico.

https://www.cbp.gov/newsroom/local-medi ... blades-raw

90 people. Move over, fentanyl. The crisis is eggs.

[canpakes]

In trying to understand the egg thing, I found my sentence of the day:

Travelers need to be aware that raw egg imports from Mexico are prohibited. Since January area CBP officers have encountered more than 90 people attempting to import raw eggs from Mexico.

https://www.cbp.gov/newsroom/local-medi ... blades-raw

90 people. Move over, fentanyl. The crisis is eggs.

Uh oh. Soon, we could be facing thousands of salmonella deaths from illegal Mexican eggs smuggled across the border.

The cartels will probably start stuffing cartons of eggs inside cases of fentanyl.

[Doctor Steuss]

The craziest thing to me, is that we already have real world results of Trump-style tariffs from last time he was President. We don't have to guess about results. We don't have to rely on economists making modeling predictions. We don't have to theorize about outcomes.

His last little mouth-breathing tariff tantrum raised the cost of U.S. intermediate goods 10-30%, reduced real income in the U.S. by $1.4 billion every month in deadweight losses, cost consumers an additional $3.2 billion in added taxes, caused a net loss of American jobs in the manufacturing sector, resulted in foregone American stock market capitalization of at least $5 trillion dollars (i.e. people's 401k accounts), reduced our exports, decreased the average real household income of Americans, created a trade vacuum that was filled by other countries which the US has never regained, soured relations with long-time allies, and necessitated billions of socialist bailouts of our agricultural industry.

The only positive, as far as the US as a whole goes, is his taxing American consumers without legislation or representation put a modest dent in his record deficit.