I have very little understanding of geopolitics or economics, so these tariffs don't make sense to me, and they don't seem to make sense to most people.
What’s the best steelman argument for them?
I’ve read a bit of Peter Navarro and others who support this line of thinking, but I’m trying to understand: is there a coherent endgame here that benefits the country long-term, or is this just short-term political theater dressed up as strategy?
What would the best possible version of this policy look like if it were smart?
The things that dominate middle class budgets: food, housing, medicine, education, are surprisingly local, and have become increasingly unaffordable in recent decades even as economic numbers have gone up.
The question that really matters to most people is, "What will these tariffs do to the prices of these things that actually matter?" And that it actually rather hard to predict.
The economists who claim that tariffs will harm normal Americans were also the economists who claimed that sanctions would destroy the Russian economy. They had the opposite effect, for reasons that still remain somewhat unclear. It may be that global trade makes certain classes of society very very wealthy, while not necessarily being such a positive for the middle class.
It is also notable that Chinese competitiveness has only increased as they have engaged in decades of state economic planning and market barriers. The economists who have told us since Reagan that this is inefficient and stupid might be ... wrong.
> The things that dominate middle class budgets: food, housing, medicine, education, are surprisingly local
> The economists who claim that tariffs will harm normal Americans were also the economists who claimed that sanctions would destroy the Russian economy. They had the opposite effect, for reasons that still remain somewhat unclear.
> It is also notable that Chinese competitiveness has only increased as they have engaged in decades of state economic planning and market barriers. The economists who have told us since Reagan that this is inefficient and stupid might be ... wrong.
You are quite wrong there with all of those three points.
#1. a lot of food items come from Mexico, South America, Asia also. Housing material from Canada and China. A lot of meds come from Asia especially India. Majority of Stationary is manufactured in China as well.
#2. Russia is struggling with economy. But remember it has a lot of help from China, Iran, N Korea, and India. That offset a lot of sanctions. Europe is still buying gas from them.
#3. I’ve to remind you this - China exports in trillions.
> were also the economists who claimed that sanctions would destroy the Russian economy.
This is _very much_ up for debate. It's been a couple of years since Russia went completely dark on publishing key numbers on their economy. [This was three years ago.](https://www.youtube.com/watch?v=ZRgS6gpiMX0). They had a large war chest ready before they went to war (part of which has been frozen in the west), and there are a lot of signs that they are on their last stretch before things go really bad for them.
Predicting _when_ things go bad is very difficult, so I do not hold that against said economists. The most telling sign is that the first thing the Russians ask for is for sanctions relief before any peace negotiations.
>The economists who claim that tariffs will harm normal Americans were also the economists who claimed that sanctions would destroy the Russian economy. They had the opposite effect, for reasons that still remain somewhat unclear.
They didn’t have the opposite effect. They were ineffective in general, because Russia has large trade partners not aligned with the West and it has been preparing for it, optimizing the government apparatus for 20 years (financial bloc for 30 years). There are plenty of A-players (head of central bank, minister of finance etc), working industrial policy and digitalized processes, and they can make decisions very fast both politically and bureaucratically.
Prices will very likely go up for products that are not 100% local.
Some resources for end products are currently mostly imported.
The new tarifs also affect resources and unfinished products.
New trade routes and spinning up local production will take time (likely longer five years) so the consumer will pay a price.
Question is how high it will be.
To purely imported goods (a lot of tech for example): cost will go up substantially.
To Russia:
They are currently in a war economy.
You will likely not really see a collapse coming until it is to late.
Banks have been forced to give far to cheap loans to the arms industry complex which are unlikely to ever pay them back.
This partially masks the true cost of the war.
> The economists who claim that tariffs will harm normal Americans were also the economists who claimed that sanctions would destroy the Russian economy. They had the opposite effect, for reasons that still remain somewhat unclear.
It is somewhat unclear to me that sanctions had the opposite effect to destroying Russian economy.
Does that mean it is doing great? I don't think so.
> The things that dominate middle class budgets: food [...] have become increasingly unaffordable in recent decades
I tried finding some number to corroborate your claims.
The proportion of food in the American budget has decreased from ~17% to ~13% between the 60's and now. In fact, it has decreased a lot for "at home food" and increased slightly for "dining out food"[1]. Food seems cheaper than ever - on average.
The current price of a calorie sufficient diet is now roughly $0.44/day in the US [2] that sounds very
low.
Between the 60's and today; the average daily supply of calories per person has increased from ~3000 kcal to ~3800 kcal [3]. People eat more than ever - on average.
I really wanna believe you, but aren't you just looking at the past with rose tainted glasses. And if you are young; aren't you making up a past that doesn't even exist ?
> They had the opposite effect, for reasons that still remain somewhat unclear.
It's clear that Russia redirected most of its exports. Just look at how much oil India is now buying from Russia — before the war, it was around 5%, and now it's over 40%. They rerouted a large part of their trade, created shadow fleets, and many EU exports still end up in Russia, but through proxy countries like Kazakhstan. (You can see this in the trade statistics between the EU and former Soviet bloc countries before and after the war.)
But the situation here is entirely different. The US has placed tariffs on much of Asia, the EU, and several other regions. There's nowhere for the US to reroute trade in a way that allows it to import the same goods at the same or lower prices.
Those things that are highly local have been dominating middle class budgets because foreign stuff like clothes has gotten so cheap. That's a good thing -- if you spend less money on some things you have more money for others. If you make the foreign stuff expensive, the local stuff will less dominate budgets as they destroy those budgets.
With all respect, that's not a steelman argument in favor of tarrifs. It's a stack of whatabountism fallacies. "Tariffs are Good" does not follow from "People who say Tariffs are Bad were wrong about other things". Everyone is wrong about lots of stuff. The world is hard to predict.
You don't shoot a hole in the bottom of your life raft because the person pleading with you not to was wrong about how many people it could hold.
> also the economists who claimed that sanctions would destroy the Russian economy. They had the opposite effect, for reasons that still remain somewhat unclear.
On what timeframe did they say that?
There’s a good argument they ARE working to that end, just not as fast as policymakers would like. See the RU economic weakness in September.
One can make a decent argument that the sanctions were insufficient as Russia is effectively a petrostate (now with industry on a war footing) and the sanctions largely avoided RU oil/gas. Also China took up the slack by buying whatever Russia was willing to sell, and in Russian currency which extended their runway.
Lastly, Russia predicted the sanctions as a response to their Feb 2022 invasion because similar things happened before, so they planned ahead and made themselves resilient to The US dollar financial system locking them out (the same way they made their internet resilient to foreign sovereigns potentially cutting them off.
Saying that sanctions helped the Russian economy is an absolutely wild claim to make, and not one I have seen made from a single credible source.
Double digit inflation despite a central bank baseline rate of over 20% is absolutely terrible. GDP numbers are only staying up because their government is spending a massive amount on the millitary and running huge deficits. The situation is very bad and getting worse. Millions of prime age workers have been pulled from productive work to supply the army and serve as assault troops. Hundreds of thousands have been killed or disabled.
The soviet stockpile drawdowns appear to have peaked which will put even more strain on the system. Nobody knows when the system will collapse but it will get there sooner or later without some major changes.
> The economists who claim that tariffs will harm normal Americans were also the economists who claimed that sanctions would destroy the Russian economy.
Nobody can predict the future, least of all economists. Having said that I think economists were not wrong on the headwinds that Russian economy would face. They just failed to account for extraordinary measures that dictatorship could take.
And even with said measures there had been a steady deterioration of the economic situation... The real question is what is the state of their mineral (cough gold cough) production rates and reserves. They might just be able to buy their way out of the current situationship.
Food is not entirely local. CA gets majority of fruits from Mexico, Peru, Chile etc. Olive, Sunflower, and other oils are imported. Many spices are imported. Lumber tariffs will impact housing and repairs. Any thing with semi-conductors will be expensive: routers, modems, tablets, phones.
Middle class expenses may arise around 5-10% at the very least.
> The things that dominate middle class budgets: food, housing, medicine, education, are surprisingly local, and have become increasingly unaffordable in recent decades even as economic numbers have gone up.
Really you have to split goods into two categories, stuff that has no geographic ties(alot of these goods manufacture has been outsourced to asian countries and low wage countries) and stuff that is tied to a location, think Mexican tequila or Swiss watches.
The first category is more tied to the middle class and I could alot of the manufacturing coming back to the US due to cost. The second category cannot be made in the US and buyers will bear the brunt of the cost runups.
The stuff in the first category that is going to be hit hard with tariffs is by and large big ticket items like cars and electronics, and conversely the really cheap plastic junk that is ubiquitous at dollar stores. I think the days of 50 inch flat screens for a few hundred dollars are gone. In addition cars sold in the US(US made brands and not foreign companies) have alot of their supply chain in either mexico and canada but the middle class is not buying alot of newer cars - average age of a car is reaching the longest ever due to cars jumping in cost the past few years.
I see this really hurting high income americans alot more, new cars especially European luxury are going to be quite expensive, alot of expensive wines and liquor will jump in price, jewelry and luxury handbags will also be alot more expensive.
> They had the opposite effect, for reasons that still remain somewhat unclear.
The US deindustrialized since the 70s. Russia has had 100 years to practice being an independent, self-reliant, sanctioned country. The reasons are obvious.
well for the Russia sanctions, initially it did have an impact but then both people and corporations found workarounds...
for example, blocking swift does not make money transactions impossible, makes it difficult for the layman in the first a few times.
nowadays, everyone uses crypto/usdt for the transactions and realizing it is actually cheaper and faster than the swift.
for the europe, they still buy the gas even at a higher price. grounding berlin to moscow flights only benefits turkish airlines and qatar airlines as now they profit from being monopolies (connections through istanbul and dubai)
the reality is that people adapt. i am not a trump supporter, i do not agree with the tariffs but that's what trump is trying to do; force people to adapt local goods
The Ruble was on it's way to complete devaluation before Trump propped up the Russian economy by signaling he's willing to give them everything in exchange for nothing.
But it's also true that the west never really fully committed to the sanctions, the fact that you still had Russian oligrarchs traveling around Europe with relative ease was a pretty strong tell.
It wouldn't be this steep if he wasn't trying as hard as he can to follow through on his promises of "his own brand" of prosperity, the only way he has ever known how, unfortunately that's when massive losses have always proven the most likely outcome.
Anyone else with a proper business background would have been able to negotiate international trade agreements more favorably, including overall increases in tariffs, and if there was going to be unavoidable downward pressure it would certainly be much less than this at this point.
Plus someone with actual useful deal-making experience would have been able to maintain stability on the way to a noticeable if not shocking upturn by now, there was a lot of low-hanging fruit left over after Biden.
Why not do something with that, rather than take it out on the American people? Just because all of them didn't vote for Trump, he can't bring himself to care about the country as a whole, or average citizens hardly at all. Much less legal residents.
If the only way to "sink the liberals" makes almost everyone else go down with the ship, so be it.
>It is also notable that Chinese competitiveness has only increased as they have engaged in decades of state economic planning and market barriers.
Meanwhile in California, the high-speed rail project is not going so well. There's some serious problems in the U.S bureaucracy, especially blue states. A recent extension of a rail line in San Francisco came in at $1 billion per mile. There are huge amounts of people dependent on the government running inefficiently, vastly overpaying and taking as long as possible to complete work. As we've seen with DOGE, as soon as someone starts to dig into all that, the whole establishment dependent on that inefficiency screams bloody murder. They seem to be adept at developing flywheels where the more money they spend, the worse the problems get, and that justifies spending more money. The $300 million a year homeless budget in San Francisco is a great example of that tendency. Somehow, that needs to get fixed if we want to compete at a world standard level.
This is a great question. For me, the steelman argument is the following: Without trade barriers, the local production economy is disadvantaged. Local companies have to comply with things like environmental and labor law regulations, making it more expensive to produce things. Other countries may not have these regulations. Therefore, by institution these rules without tariffs, the net effect is a reduction of environmental and social standards, as manufacturers move to locations where they do not exist.
A strong version of the policy would thus involve directly tying tariffs to environmental and labor laws of the producing country, thus equalizing the field with the local companies. Not only would this allow for fair international competition, it would also economically incentivise the global development of good standards.
I've never understood why countries like the EU pass strict environment and labor laws and then DONT place some kind of tariff or tax on countries without those restrictions. Not only to offset making your own market less able to compete on cost, but to provide a financial incentive for the other countries to up their game on environmental and worker quality-of-life issues (if that is the overall aim).
There are already ways to enforce those -- for example, Democrats and US labor unions used the USMCA negotiations to enact a "facility specific rapid response mechanism" that lets the US essentially strong-arm Mexico and Mexican companies into improving collective bargaining rights within the context of the trade deal; section 307 products (created by forced labor) have been illegal since 1930 (and enforced more strictly over the past decade, given concerns about Chinese slave labor); carbon import taxes addressing environmental regulations have been proposed in Congress, but haven't been implemented yet. The government also has existing authorities under anti-dumping and countervailing duty (ADD/CVD) legislation, so long as those duties comply with American obligations under international treaties (Trump's tariffs exist outside the ADD/CVD framework, and place the US in noncompliance relative to our WTO obligations).
Trump's tariffs don't really serve any specific policy goals other than "trade is bad and everyone should buy more from us than we buy from them," which is self-evidently absurd; why are we punishing Madagascar because we buy their vanilla and they're too poor to have extensive need of our services-based economy? Beggar-thy-neighbor trade policies inevitably beggar us as well, as we're likely to find out quite soon.
There's no coherence here, the people coming up with this policy are either ignorant or incompetent to the point of malice (Navarro, AKA "Ron Vara," being the benchmark). Tariffs, when used judiciously, can help support "infant industries" where domestic investment in emerging technologies means that supply constraints are less of a concern and where there are long-run expectations of lower domestic prices through efficiencies. In some cases, targeted punitive sanctions (against dumping policies, or to enforce labor and environmental standards) make sense, but the economic evidence on efficacy is mixed.
There is somewhat of an argument that countries such as China overuse American consumption as a crutch for development, rather than stimulating domestic consumption (Xi has, to give very mild credit, proposed policies to increase domestic demand); tariffs would certainly force countries and trade blocs to focus on non-American consumption, though this is a bit like losing weight by removing the patient's esophagus.
What we're seeing here is just ridiculous, from an economic perspective. Low-cost low-margin manufacturing is not coming back to the US, absent an economic crisis that pushes down to a upper-middle-income-level state (stay tuned!), while putting tariffs on agricultural products simply ensures that consumers will pay more without a corresponding increase in domestic competition (how many pineapples does the US grow?). The "calculation" of the tariffs, such as it is, is simply a tax on comparative advantage, which is mercantilist nonsense we left behind centuries ago. There's no steelman for this; even if there were, the increase in raw material costs would make the steelman unaffordable for us both.
IMO, tariffs are bad for the economy, but could be great for workers and the middle class. Regardless, implementing them this was is absolutely nuts.
China got our manufacturing because they didn't care about pollution. Now, they've developed cleaner industrial methods and built out fantastic infrastructure (e.g. massive industrial complexes right next to shipping ports). Meanwhile, we did nothing and we're a good ten to twenty years behind assuming perfect infrastructure development starting today with tariffs that are immediately in effect.
Combine that with the fact that infrastructure development in the US costs many multiples more than other developed nations, and you have a recipe for complete failure.
Not to mention China has been going hard into green energy. Both manufacturing it and using it themselves. It's the cheapest form of energy, and as you noted: much less pollution, which has a huge economic impact.
Meanwhile, what are we doing? Apparently green energy is evil, and we're going to go all-in on domestic energy production from something that's expensive, very polluting, and finite.
US manufacturing output is at an all-time high. It doesn't feel that way because there aren't as many jobs involved. I understand you're not actually arguing this, just speculating, but, "we need to boost manufacturing capability" isn't a convincing argument.
If this were indeed the case, I’m not sure tariffs are the right direction to do it.
Principally, that a company would need more guarantees on their capital investment that extend beyond a single president’s term. Since tariffs can be revoked at any moment, companies will want more assurances that the long path of capital investment will be worthwhile, or else they might find themselves disadvantaged before even getting off the ground.
They would find themselves lobbying the government to hold back the free market for them within a few years time.
I did see a talk where someone was making the case that if the U.S. depends heavily on China for steel, and Taiwan for chips, then if China invades Taiwan the U.S. would very quickly be unable to wage a war with both supplies cut off. So the goal is to build some capacity for such products domestically.
They also tied that to Trump's desire to get out of Europe and deescalate the Middle East, being that if the U.S. was already stretched across Ukraine and say Iran, it would be way to stretched to also wage anything in the far east.
I'm no expert by a long way, but I can see some logic in the argument.
In what crazy worldview would these be seen as good for America? Here's one.
Hypothetically, if you perceived that the root cause of some foreign policy problems you felt were important to solve was the gap in civil liberties between your country and powerful overseas countries, you could conclude that peace could be achieved by handicapping your own country so that it regresses to match the lower standards of the foreign nations that appear to have a problem with your country and its ideologies.
.
No guarantees that this is the actual belief of the people in power, it would just satisfy your requirement.
If the best possible version of this policy were smart, it would be coupled with boosting science and education, and improving conditions for the working class, including health care. It would also include governing in good faith.
Argument for tariffs: Make foreign made goods expensive to encourage local production. And it has worked. Usually tariffs are more focused though. For example, the US has had tariffs on trucks for a long time; as a result, most foreign automakers have US plants to build trucks/SUVs.
The main problem with the tariffs is this: the US has benefited mightily from globalism. What actually happened is that the US, being at the cutting edge of technology, outsourced mostly low paying jobs, while developing more innovative/productive industries and sold goods all across the world.
Apple's a prime example. All the difficult (read physical) and low-paying aspects of production are outsourced to Taiwan and China, meanwhile Apple employs tens of thousands of high paid engineers in the US. Ditto for all the big tech companies.
Now, globalism has negatively affected a certain segment of the population and it was definitely a mistake to ignore that (rust belt great example). But bringing manufacturing back won't fix that now that the cat's out of the bag. Engaging in a trade war will destroy a ton of high paying jobs (every multinational is going to take a sizeable revenue cut) just to bring back a small amount of low paying jobs, if any are brought back... Firms will likely build highly automated US factories.
The best possible version of this policy would be focused tariffs on specific goods you want manufactured in the US... Semiconductors, autos, steel, boats, that sort of thing.
Many countries have blanket global tariffs to make their own industries more competitive
We ignored them
Now we are doing it and yes it upsets the world order
There is no precedent where this has been beneficial for the US, but we can try again. The last time it was tried was 1930, and our fortunes vastly changed since then
The incentive is for entrepreneurially minded people to try to provide services in the US and fix the supply chain here. This theoretically means more people employed and more people able to afford the prices of things produced here. Keeps velocity of money in the economy high.
We will learn how resilient a coalition of other countries are, as they try to only trade with each other
A smarter version of this policy would be country by country and industry by industry negotiations. But, given that some countries are dropping their own blanket tariffs, and others like Vietnam already coming to the negotiating table, time will tell.
There are people (notably, Ha-Joon Chang) that have claimed that those protectionist policies have made South Korea more competitive, but I think you'd find a lot of economists disagree with that, and that South Korea become competitive in spite of those restrictions.
Keep in mind North Korea has had even stricter trade restrictions, and they don't have any functioning modern industry at all. Trade restrictions reduce export market size, insulate companies from competitive pressures, and those problems only serve to reduce capability, not increase it. Maybe there is some sort of happy medium of protectionist policies, but I've never seen any sort of framework for understanding how you could derive where that happy medium lies.
If trade restrictions only ever made countries more competitive, we wouldn't use them as a punishment.
> Many countries have blanket global tariffs to make their own industries more competitive
Which countries are these? In general, if you look at the list of countries with >5% effective tariff rate, it’s all developing world. Vietnam, FWIW, has an effective tariff rate of a little over 1%, in a similar range to the EU and to the US pre-Trump II.
Some countries _do_ have high blanket tariff rates, but you’re generally talking about very poor countries with limited secondary industry; these are, as a general rule, not big exporters to the US. None of the US’s biggest trading partners have high tariffs.
I think it's about reducing the impact of outside market forces on the US, and increasing its sovereignty in the long term, and potentially laying the groundwork for a white ethnostate that doesn't rely on immigration. The globalised world is going to be crippled by climate change, mass climate immigration, demographic instability and food security.
This avoids the demographic and, depending on your perspective cultural challenges that are coming for many countries in the future, and lets America march to its own beat. America is setting up to be a fortress and a world unto itself in an unstable world. While a lot of countries will be going through these issues in the future America is doing its hard yards now.
Still years of economic misfortune ahead in the meantime.
The best possible rationalization with extremely favorable glasses is that Trump is forcing a return to US manufacturing. The best version of this would incorporate things like a scheduled increase over time to give companies time to migrate, amounts based off of things like differences in living conditions, along with minor things like congressional approval so it's actually legal at all.
However the vastly more likely reason is he's a complete fucking moron that treats all interactions as binary "winning" or "losing". A mindset that helped him bankrupt numberous companies, and now likely a country. So trade deficits are "losing" and he's retaliating with tariffs. This logic befitting a toddler completely fits everything he's demonstrated over the years.
Let's say you want to bring back semiconductor manufacturing. It seems counterproductive to start with immediate blanket tariffs that include the machines necessary to fabricate semiconductors, where no domestic alternatives exist. Yet that's exactly what's happening. Previous policies would have used long lists of exemptions, carefully crafted tariff schedules, and other policies to try and minimize collateral damage. These tariffs do not.
Like many things carried about by this administration, the charitable interpretation of the intent is harmed by the manner of implementation. Countless policies have been implemented in a rushed, haphazard, confusing, nonsensical, surprising, and inconsistent manner which makes it tough to believe they are actually well-thought-out strategic moves.
Ref. manufacturing, any serious-scale company is not going to commit to a decade-long (or more) plan to building factories in the US with this sort of uncertainty; I'm sure a few will pay lip-service to the current POTUS but what CEO is going to commit to the long-term in a country in turmoil?
And even when this is past, those same CEO's - and their successors - will think long and hard about committing to any long-term investment in the US.
I think the real reason is more insidious. The purpose is to raise more tax revenue from the middle and lower classes so they can fund a massive tax cut for the billionaire class.
the most likely reason is the simplest one - he is deliberately manipulating market so that his family’s companies can benefit. He did this very transparently with crypto. Now with a larger stakes.
Corruption plain and simple. Now “lobbyists” will rush in offering him favors so that he removes some restrictions
Well, one theory is that Trump wants individual companies to come to him and beg for exemptions to the tariffs. This would consolidate his power: Nobody would dare to do anything that would oppose him, for fear of having their "tariff exemption" revoked.
Another theory is that Trump has some complicated plan to reduce the US's debt; again, it involves using tariffs as a "stick" to push our allies into doing what we want. Summarized here:
Trump take bribes with companies and countries for exemptions to tariffs. Trump informs insiders of upcoming market manipulations so they can exploit the falls and rises. Inflation rises in the us as companies have fewer competitors and another justification for price increases. Income inequality increases just like the last guy that said lets make america great again.
I didn’t see any other responses mention this, but a Reddit tinfoil hat argument that’s going around, which sounds more plausible than the other theories like wealth consolidation and systemic destruction of middle class, is the national debt that needs to be rolled over in the near future. Higher interest rates make it more expensive to roll over the debt and intentionally tanking the economy to increase unemployment and force the fed to lower the interest rates could make it cheaper for the government to roll over the debt in a manageable fashion.
The "intentionally tank the economy to roll over national debt at lower rates" theory completely misses how government bonds actually work. A bond is essentially a promise: you lend the government money for a specific period, and they pay you back with interest at the end. When that bond matures, it's simply paid off. There's no refinancing happening.
What people call "rolling over" debt just means the government is issuing brand new bonds to raise money to pay off the ones that are maturing. These are completely separate transactions, often with entirely different investors. The government continuously sells new bonds and pays off maturing ones as part of normal operations.
Creating a recession to somehow game this system would be spectacularly counterproductive. Tax revenue would collapse while unemployment benefits and other social spending would skyrocket, creating even larger deficits. Any minor interest savings would be dwarfed by the economic damage. Not to mention the Fed sets rates based on economic conditions, not to help government borrowing. This isn't some clever financial strategy—It's just bad economics built on a fundamental misunderstanding of how sovereign debt markets function.
The problem with this plan is that the tariffs are likely to cause inflation. (Because now prices have to include the tariffs.) In a period of inflation, people are unwilling to buy bonds of any kind, including Treasury bonds, unless they have a high interest rate. This will increase the cost of rolling over the debt, and will create even worse problems for our government.
1. Bring jobs back on-shore. Lots of US companies shut down factories over the last several decades and shipped jobs to Mexico and other countries. The UAW supports the tariffs.
2. Bring manufacturing back on-shore. If we have to fight a war, we need a strong manufacturing base (see #1). If it's a war with China, or with a country where China decides not to sell to us, we wouldn't have the manufacturing base to supply the war effort.
3. These are mostly reciprocal tariffs. The countries that were are putting tariffs on already have tariffs on our goods.
4. Additional treasury income.
5. Combat unfair practices like dumping.
The tariffs are not reciprocal tariffs (i.e., based on tariffs in those countries). They're set by dividing the trade deficit with that country against the total volume (and then halved). This premise can't be included in the steel man version of the argument.
Why should corporations respond to all of this by taking a lot of risk and invest in capital? The tariffs aren't based on any sort of sound strategy, just one poorly educated person's black and white, simplistic worldview full of insecurity.
They change practically by the hour; first they're on, then they're off, then they're on, then they change, thne they're bigger than anyone expected.
That doesn't make companies say "well, let's expand!" It makes them hunker down. Kill off the least profitable products, cut overhead, etc.
There's time needed to build the necessary manufacturing, train a workforce, etc.
There's prices skyrocketing when suddenly American manufacturers have less competition.
There's also the plunge in sales of goods we sell to other countries.
This is the sort of thing you change over a generation. Not in a day, year, or even four years.
You can't just snap your fingers and say "you'll buy all your CNC machines from AMERICAN companies!" - even if we had enough manufacturing capacity, where are you going to get the workers from, particularly as literacy and education levels have been falling, and the whole education system is getting torn up?
...and where are you going to get all the semiconductors from?
The US famously had to buy titanium for the SR-71 from Russia through shell companies because the US lacked the mining capacity, the refining capacity, and know-how.
The policy indicates trade, traditional partnerships, and traditional financial metrics are less important for the administration. It is largely symbolic rather than analytically worked out - the direction is more important than the details.
This is consistent with the economy being radically altered by robotics and AI. Comparative advantage in labor costs is becoming irrelevant, so a large part of the justification for trade disappears.
Wealth is being further concentrated into those with existing assets, as the negotiating position of labor becomes weaker. It is less important to maintain partnerships when you can do everything yourself.
Recession becomes less important than pushing hard for leadership in AI. Deepseek’s model release had a huge impact on the values of leading US firms. With AI traditional measures of the economy become significantly less relevant.
I can't steelman the case for high tariffs, but small tariffs make sense to me.
There's a trade off between economic diversity and comparative advantage, and a balance is better than being at either extreme.
A 5% cost advantage might be sufficient for a company to offshore production of medical supplies, but is that minor cost saving worthwhile versus the risk of a shortage in war or pandemic?
Automation is reducing labor cost advantages, and converging unit manufacturing costs globally, so more and more industries are falling into this "slight comparative advantage to offshoring" case.
I think deindustrialization is detrimental to the US. We couldn't even make masks fast enough during the covid. The YouTube video that compares the factory of GM and that of BYD's is just embarrassing. It really shows how far we've fallen. The cost of building anything, including canon shells, is through the roof because we simply don't have the supply chains. And do we really believe that we can keep innovating if we don't actually make things? It's really a pipe dream that our engineers can keep drawing boxes in their cushy offices and believe that Chinese companies won't catch up. On the other hand, it's so sad that successful people like Balaj believe that the US can never reverse the course of deindustrialization. Their reasons are the usual: the US workers are too incompetent compared to the Chinese workers. Our automation is too behind compared to China's. We have lost the know-how of building our supply chain. We may get back manufacturing, but we will lose our seigniorage of a global currency - the US dollar.
What I don't understand is that China was dirt poor 30 years ago and was not a manufacturing powerhouse even 15 years ago. It was the Taiwanese, the Japanese, and the westerners who invested heavily in China and brought them technologies and expertise and bootstrapped the massive manufacturing industries in China. The quality and professionalism of US workers used to be the envy of Chinese people. Since when rebuilding the manufacturing business has become mission impossible? Can we really keep printing money when we make so little stuff? I get that we have great service jobs, but who wants our services if we don't make anything worth servicing? Back in 1917, Allyn Young believed that London would always be the finance center of the world, but we all know what happened later.
I'm not sure if Tarrif will work in the end, but at least it can attract additional investment given that the US is the largest consumer market in the world. Combined that with deregulation (assuming it will be be successful) , at least the US has a shot to bring back the key manufacturing business. And don't we believe actions lead to information? What have we done in the past 15 years to stop our deindustrialization? At least this time our government is trying. For that, I'd like to give them benefit of doubt.
Just to play devil's advocate on de-industrialization here -- The Industrial Revolution and its consequences have been a disaster for the human race. They have greatly increased the life-expectancy of those of us who live in “advanced” countries, but they have destabilized society, have made life unfulfilling, have subjected human beings to indignities, have led to widespread psychological suffering (in the Third World to physical suffering as well) and have inflicted severe damage on the natural world. The continued development of technology will worsen the situation. It will certainly subject human beings to greater indignities and inflict greater damage on the natural world, it will probably lead to greater social disruption and psychological suffering, and it may lead to increased physical suffering even in “advanced” countries.
It should be obvious that this market correction is the desired outcome for this administration and its defenders.
If there weren't so many people whose livelihood or investment portfolios benefited from free trade or government spending the economic indicators wouldn't react as badly. Punishing or disincentivizing economic activity they don't like is more important than increasing GDP or asset values.
It may seem like a weak argument because of the circular logic but that shouldn't surprise any of us.
There are steelman arguments for tariffs, as can be seen by their regular use by every country in the world.
There are no steelman arguments for THESE tariffs, which are based on the premise of blindly assuming that all trade deficits across the board are bad, even for things the US is physically incapable of producing like various rare earths or diamonds, and then even more blindly setting tariffs based on the raw numbers of those trade deficits.
The problem with every third-party rationalisation is that they’re all just wild guesses.
The administration hasn’t explained their logic and haven’t made clear plans — that’s the real problem.
The difference between science and “traditional” beliefs is that the former is not just about convincing others through force, but explaining things to others such that they’ll convince themselves.
It’s also the difference between good political leadership and a ruthless dictator.
Whether he is right or wrong, when Lighthizer was on 60 Minutes, he said they have tried everything to level the playing field, and nothing worked. So this time, there is nothing to lose.
Reports are that Trump ignored all his advisors and did what he wanted so your point isn't relevant. I haven't heard a single analyst find sense in how tariff levels were set per country - someone did notice that it appeared a very simple formula had been applied, one that has no basis in economic theory.
Go open 10 year chats for the GDP, S&P 500, etc.
There was no problem with "level playing fields."
All of this is just one man who for forty years has been obsessed with how "we" are supposedly being "taken advantage of."
The economy overall was doing fine - intense economic stratification is a problem, but overall the country's economy was productive.
Man steps in, inheriting a growing economy doing just fine...and after months of uncertainty and upheaval, in two days erases a year's worth of economic growth.
The best explanation I’ve seen is the so called MarALago Accord[1].
I think the core thesis is that the US dollar and the US military being so core to all trade in the world had mad the US disadvantaged in terms of trade competitiveness. The accord is a set of goals/approaches to reduce that, theeeby making the US dollar more appealing for exports, other currencies less appealing.
People's models for the world have been massively disrupted. What we knew "before" is sort of thrown out the window now. These tariffs, if they are sustained, will create massive shifts that we cannot fully comprehend. It's like a massive physics system that's just received a shock.
I find it odd how many people continue to try and give this man the benefit of the doubt. Is it just hope? Hope that there is some grander plan and not just Trump doing stupid things that will in fact make everything worse because he's stuck in an 80s view of the world?
Intentionally cratering the economy raises unemployment, which applies downward pressure on wages, and allows entities that are cash-rich and privy to the timings of the intentional market shocks to buy up large swathes of the country for pennies on the dollar, which makes the merger of corporate and government power smoother and more easily total.
J. Paul Getty happened to be in the right place at the right time for the 1929 market crash to result in an explosion in his net worth, what’s happening here is akin to ultra wealthy individuals recreating Black Thursday with the only difference being that it has been very publicly engineered and telegraphed in advance.
That is the steelman, if you think that those things are good things.
The downturn would come either way, we are slamming headfirst into global warming consequences, other piled up risks and closing easy access resource ceeilings.
This way though the downfall is at least controlled, comparable to landing a wounded plane instead of breaking up midair. Big Olga never believed its own bull of "infinite growth" and parallel drove plans forward to keep civilization going in pockets once the "8billion can life like kings" bubble bursts. Bill Gates microreactors come to mind.
The rest of us go to hell, aka wars, martial law and civil war, preferably without damaging the pockets and without going nuclear. THANK YOU!
Sorry , to all those that fell for fusion, mars and star trek fantasies.
Phew! Good thing we're also rolling back EPA and other regulatory controls that encourage/enforce sustainable practices. Otherwise it might have been (only an ill conceived) part of a coherent strategy.
The steelman here is: it is better for a country to have a diverse manufacturing base and a net positive balance of trade. The only way to get manufacturing happening here is to make it more profitable to manufacture here than elsewhere. The only way to do that is to make sure everyone else’s cheap stuff is much more expensive, thereby creating a possible profit margin for local manufacturing. This medicine will be hard at first. But it will create a resilient economy where foreign wealth comes in (buying our goods) and national wealth stays home (purchasing locally made goods).
You didn’t ask for counter arguments but I’m sure we will see a wide range below this comment.
A broader picture here is to say neoliberal globalization is bad in that it removes local autonomy by creating a need for peaceful trading partners. Who is it bad for, and what sort of world would be good for those people is an exercise left to the reader.
EDIT: I like the vigorous comments and zero net score on this comment. don't blame the messenger guys, this is a fair statement of the steelman. It does not represent my own views.
If this was the real reason then wouldn't we see countries matching import tariffs with export tariffs? Sharing revenues on a percentage of the flow of goods into the US 50/50 would at least be a more sustainable geopolitically. It would be a collaborative resolution in some sense.
Instead, we are seeing countries match with import tariffs in the other direction, and a deterioration of global trust.
I don't think most countries actually want to balance bilateral trade. You can get a hint of this by the fact that the calculation that the US is using right now to determine the tariff rate puts a floor of 10% tariff. If they were truly committed to balancing bilateral trade then you would have expected them to actually have added export tariffs to any countries where the US had a trade surplus. Instead they gave a 10% import tariff still. I'm not sure I've seen any explanation for this 10%.
The trouble is that no company is going to want to invest in new/expanded US manufacturing facilities that only make sense under the just announced tariff regime, unless they have confidence that this is the new normal, and won't be rescinded any time soon. Would you want to bet that current tariffs will be largely the same next week, or next year, or in 4 years time?
> it is better for a country to have a diverse manufacturing base
A country can exist and be wealthy without diverse manufacturing base.
> a net positive balance of trade
A country can have stable and growing economy with negative balance of trade, as long as certain conditions are met. In short, this country may offer something else to compensate trade deficit, i.e. there can be a price tag on military and political power.
It's interesting to see how the U.S. could make it happen though, given that there is already a shortage of labor and materials. It will be a long, long road.
> What would the best possible version of this policy look like if it were smart?
It depends extremely on what your actual goals are, but if we suppose the goal is to increase US manufacturing capacity and economic independence with minimal pain, you'd enact this on a time-table over a period of years, after building enough support across the political spectrum to make it look like this policy will be essentially, if perhaps with some occasional tweaks, be maintained across administrations for some time. You'd also probably not significantly tariff the whole world, at any point.
The biggest problem with this approach is investor confidence. It's hard to sign on the dotted line to spend billions building factories when it's difficult to say with any certainty that these tariffs will still be around by the end of the year, let alone in five years. This was doomed to be way more painful than necessary when he started flip-flopping on this over the last couple months, regardless of whether it's even fundamentally any sort of a good idea.
If the goal's to replace large portions of income tax, as has been suggested by some including by Trump, uh... the math just don't work even with a drastically smaller federal government, it's nonsense, there's no "best possible" version there.
Intentionally nuking stocks causes investors to retreat for safety in bonds specifically treasuries. Demand for treasuries drives the interest rates on them down. The US has to refinance $10 trillion of existing debt this year. By driving rates down it save the federal government hundreds of billions in interest payments.
He has actually reposted a video confirming this outlook.
Another angle is he is targeting China. China is in a precarious domestic economic sitaution as well. It weakens China by reducing its exports. In addition tariffs if high enough for long enough encourage local manufacturing. If we go to war with China over Taiwan, it will be very easy for China to convert existing commercial factories to produce military goods. Much harder for us as so much of our manufacturing infrastructure has lain fallow. Its not a good idea to go to war with the country that makes everything you rely on.
I'm not saying these are valid ideas or it will play out like that. I'm saying this is what admin is thinking.
Also if you feel like a read, this is a paper by Trumps leading economic advisor Stephen Miran
Thanks for this. To me, this makes more sense than some random "tariffs are bad" messaging on social media. Do you have a link to the video you mentioned above? I would like to learn more.
As an aside, for those who have 401(K) and IRA accounts in the US, the stock market plunge might be a great time to convert funds into ROTH accounts (lower taxes now, etc). At least there is a silver lining...
What do you think you mean by saying 'drives interest rates down'. It seems a leap to think the fed, the entity that establishes the interest rate, will react in the way you describe.
I believe people are arguing for tariffs now are mostly not arguing that tariffs are good but that the world needs to level the playing field and that the US imposing tariffs now is a way to force that to happen. The US has lost quite a bit of industrial production to China and other nations over the years and argument is that this isn't simply low Chinese wages but a variety of trade barriers and trade subsidies. The rosy scenario is that Trump imposes these measures, other nations offer concessions and the barriers are mostly lifted with trade now being more in the US' favor.
The problem with this scenario is that every nation naturally has it's own idea of what is fair and that many things that are trade barriers are around politically sensitive issues (safety and purity standards, etc). So getting other nations to immediately drop stuff isn't that easy.
The analogy is war - after a short engagement, the trade-warring nation will "come home victorious". Like regular war, this scenario often doesn't come to pass.
I don't think steelmanning an argument works if the argument is made in bad faith. Steelmanning should be about trying to understand legitimate reasons for a positions, not bullshit arguments. About being fair and intellectually honest, and not about trying to act like a PR firm for the other person.
That said, if you want to make sense of the reasons behind the tariffs, I can offer a couple that would be reasons why Trump would implement tariffs.
1. While they are within his power, they are a cudgel he can use to hurt his enemies and show favoritism (and be open to bribes to get them lifted).
2. Trump has a weird obsession with tariffs, even after he lost a trade war with China in 2018 and had to bail out farmers with a bailout larger than the one to General Motors.
3. Also, as one of Trump's Wharton business school professors has stated numerous times, "Donald Trump was the dumbest goddam student I ever had."
Manufacturing is already here. US's manufacturing output is higher every year. Manufacturing jobs don't exist, and therefore cannot "come back". There is no scenario where Americans go to work in some kind of electronics or textiles sweatshop. If the result of these tariffs is "more US manufacturing" then all of that manufacturing will be automated and robotic.
The best (if not only) valid argument for tariffs is that they can be used to negotiate lower tariffs. Because tariffs only serve to reduce trade, which mathematically is suboptimal for economic output, and has been recognized as such by nearly every economist since David Ricardo.
Unfortunately, Donald Trump doesn't agree with that. Or his handlers don't. Not that the distinction matters anymore. The diplomatic and trade relations that we are destroying right now can't just be fixed by electing a new President. This is the US's Suez Crisis...we are no longer a world leader.
> which mathematically is suboptimal, and has been recognized as such by nearly every economist since David Ricardo.
That requires some initial assumptions that simply aren't true. Tariffs can and do serve a vital role to protect a country from one with lower standards of living (eg taken to an extreme, consider trade between county A where slavery is illegal and country B where it isn't)
> The best (if not only) valid argument for tariffs is that they can be used to negotiate lower tariffs.
> Unfortunately, Donald Trump doesn't agree with that.
I think most countries hit are in active negotiations to reduce or drop the tariffs. Israel has already said they're dropping their tariffs on the US and Argentina is in negotiations to do so.
The real question to ask is what comes next: What will Trump do with the tariff money?
That is what's going to determine if the policy is good or bad - if he uses it to boost manufacturing in the US, add jobs, even give people a rebate, it could do good things for the US.
You don't need to try and imagine why they're doing it, because Trump has said why for the last 30 years. He sees our trade deficit as as "the US being taken advantage of."
There is no economic argument for tariffs. There are mountains of theory and empirical historical evidence that they make countries poorer.
The motivation for these tariffs are not economic or financial.
They are being used by a narcissist as a tool to force others prostate themselves on front of him. Whether foreign leaders - who will have to "kiss the ring" pleading the case for their country to get relief - or domestic CEOs who will now have join a queue to plead with Trump for exemptions for their particular sector (like the auto business CEOs have).
We've already seen it with social media CEOs who queued up to offer him money and support, we're seeing it with law firms whose very existence he has threatened by EO forcing senior partners to not only bend to his will but to humiliate themselves in doing so and we seen university presidents do similar.
The tariff stuff is a continuation and escalation of that policy.
The cost is to America's reputation, international standing and economic well-being and will be borne for decades. The benefits are ephemeral - an ego massage for DJ Trump.
The coherent endgame is to ensure a fascist takeover of America by ensuring CEOs are at the mercy of POTUS. First the political party fell, then its representatives in Congress, then judiciary. The control of political institutions and education system has been assumed.
But free trade and commerce is antithetical to fascism. Unless the dictator can assume total control, his position is untenable. The goal is to form an equivalent of CCP Politburo and Putin in the form of POTUS + small number of hand-picked techbros. You can't achieve that goal unless you control commerce.
All of this is laid out in writings of Dark Enlightenment adherents and sanitized through Project 2025. Ironically, the people who complain the most about their freedoms being destroyed because their Facebook post saying COVID is a hoax was deleted not only will willingly submit to this, but also be its key enablers.
Here's a plausible steelman argument, drawing from insights from CEA Chair Stephen Miran and a paper he authored pre-administration titled "A user's guide to restructuring a global trading system"
It is a blueprint for "tariff based upheavel". It proposes using 'unilateral U.S. tariffs as leverage' to force other countries into a new accord, dubbed by some a potential "Mar-a-Lago Accord," analogous to Bretton Woods, that would include 'coordinated currency realignments'.
Miran argued that because the strong dollar has made U.S. exports uncompetitive and fueled chronic deficits, the U.S. might need to pressure other countries to strengthen their currencies (i.e. weaken the dollar) through a trade war if necessary. Alongside this potential grand strategy, it's also argue the tariffs directly address specific issues like unfair trade practices (the 'reciprocity' argument), dumping, reliance on adversarial supply chains (national security), and aim to incentivize domestic manufacturing investment.
Elements of Miran's thinking in the paper are evident in the Administration's approach. For instance, Trump aides publicly claim they are targeting countries with "artificially devalued" currencies for tougher tariffs and the President frames tariffs as "reciprocal", a hint that the endgame is to make others lower their trade barriers or adjust currency values to balance trade.
Direct quote:
"Treasury Secretary Scott Bessent has mentioned, the US could have a “traffic light” system that divides the world into three tiers: “green” countries with shared values, aligned economic and security goals, and a willingness to cooperate on exchange rates; “yellow” or neutral countries that want to keep high tariffs and remain outside the US defense system; and “red” countries, meaning adversaries or sanctioned nations that refuse to cooperate."
I think that adds potential useful context around where we might expect countries to align and what the intent is. Or perhaps as I've seen it put more inflammatorily, there are "vassals", "neutral" and "adversaries".
One last note would be that comparisons to the 1930s Smoot-Hawley tariffs are often made but the context is fundamentally different. In the 1930s, the US was a major creditor nation with large trade surpluses and dominant manufacturing. Today it's a large debtor nation seeking to revitalize its industrial base and reduce deficits within a far more globalized system. It's not quite fair to call it protectionism (as a sole objective) and the time period doesn't generalize to today's America.
With those datapoints....
The steelman perspective is that this is less short-term theater and more a high-stakes, potentially disruptive strategy aimed at fundamentally restructuring the global trading system. The intended endgame is to reassert U.S. economic advantage, enhance national security through resilient supply chains, and better align global economic rules with U.S. interests in a changed geopolitical landscape, using U.S. market access and currency centrality as key leverage.
To be clear, this doesn't imply that I agree. I’m not convinced it’ll succeed as intended, but that’s the best-case rationale. It might be a "Hail Mary" to prevent ceding global leadership to China.. or a way to "hit reset".
This doesn't directly answer the question, but global free trade has been a calamity for the middle- and working-class. It needs to be razed to the ground, and salt sowed in the fields, etc. This is one way of ending it.
Consider the case of Phil Knight of Nike. Here's what someone posted on Twitter (I don't know the account so obviously don't endorse everything, or anything else, it says):
"Knight's big "innovation" in shoe manufacturing was figuring out how to be one of the first people to flood the American market with cheaply made plastic footwear from Asia. Knight didn't make better, more durable shoes; he made cheaper ones by blowing up the native American industry.
Access to slave labor is, in the short run, a competitive advantage over skilled free labor.
In 1990, 10 years after the Nike IPO, there were 85,000 Americans employed making shoes. Today there are only 10,000 and 99% of our shoes are made overseas. The only exception is footwear for the military.
Phil Knight, however, is worth $35 billion and Nike has a market cap of $90 billion.
In other words, the good middle class wages once generated by homegrown American shoe manufacturing have been transformed by outsourcing into equities owned by a small class of investors and one insanely wealthy oligarch.
Global free trade is a way for the powerful to screw over the middle class by forcing them to compete with third world slave labor.
Yes, with high tariffs, Americans would have to pay slightly more for shoes. In return, however, they would be subsidizing good paying jobs and a decentralized industrial base in their own communities.
Global free trade, on the other hand, subsidizes massive increases in asset valuation. If you are one of the first "in on the ground floor" then you can make insane amounts of money by blowing up middle class wages by outsourcing those jobs overseas.
Libertarians and Wall Street types love to call this "capitalism" and the "free market" at work, but in reality, they are defrauding their countrymen out of the opportunity to build products themselves.
Americans are no longer able to make shoes at home. That option is not available to you. How can we call this a "free market" when it constrains our choices?
Outsourcing is 100% a government subsidy. It is a privilege, allowed by the state, to a select few citizens who figure out how to manipulate the international market to their advantage.
Phil Knight discovered the much cheaper Asian shoe market in the early 1960s because he had the money to travel abroad. His middle class neighbors making an honest living making shoes did not have that opportunity."
The middle and working class are the ones who would be paying signficantly more for shoes in this scheme. A minute fraction of them having jobs making shoes instead of the jobs they would have otherwise wouldn't balance things out.
I also take issue with the trend of describing low paying jobs as "slave labor". Absolutely nobody in vietnam is heralding these tariffs, since they don't look forward to working even worse paying jobs as a result. Free trade benefits everyone except for abstruse dilettantes online.
I support putting tariffs on foreign nations (a) to the degree a nation 'undercuts' America by exploiting foreign workers, and (b) providing the tariffs be gradually introduced so as not to cause mayhem.
Those two stipulations would preserve America's reputation as a good global citizen, and would promote better conditions in the USA and the world.
The Trump tariffs meet neither of those stipulations.
I am in the minority here. These tariffs are fairly reasonable. Here's why:
(1) The state has a compelling interest in regulating market risk tolerance. When the FED sets the risk-free interest rate, it controls the price of risk, and thereby the risk of the entire market. It is often advisable to temper the risk-eager market for long-term stability.
(2) Likewise, when the POTUS enacts tariffs, it is similarly setting the market's risk tolerance--namely against the risks concomitant of economic dependency on foreign nations.
(3) This will inoculate the economy against external supply chain shocks (at the extreme: war) by reducing our liability. It's not just consumers who are price-sensitive; given goods within a class will not be affected equally, natural price advantages will emerge, shifting demand and consumption as all levels of economy begin to price-in these tariffs.
The "economic consensus" against these tariffs just isn't real? It's exceedingly likely that the US likely will be better off because of them :)
> This will inoculate the economy against external supply chain shocks
How so? There's hardly enough unemployment and there's also no incentive towards increasing the number of immigrant workers.
Either suppliers eat the cost of the tariffs as the US administration says, or they don't and then everything becomes more expensive, but either way you have the exact same supply chain.
- Tariffs are not a lever, they distort risk tolerance.
- Tariffs are crude, they are like a huge hammer hitting everyone, including allies
- Tariffs cause loss of confidence and loss of credit
To (2):
- Blanket tariffs target allies; they're isolating us and we're creating blocks polarized to us and weaning themselves off our economic output.
- Tariffs only reduce dependency if there is internal capacity, of which there is none. We'll best case shift our dependency via third-party countries
- We're concentrating our risk on fewer countries where tariffs are lower
To (3):
- We're reducing our efficiency and increasing prices, job losses are coming, productivity will stagnate. We're reducing our agility and our headroom
- Historically, autarky has lead to stagnation.
The economic consensus against these tariffs is real. It's exceedingly likely the US will destroy its economy, alienate itself and isolate itself because of them :)
About (3): This will inoculate the economy against external supply chain shocks, e.g. war.
The lead time required to set up realistic domestic production will mostly exceed this government's term. Setting up brand new supply chains doesn't happen overnight, does it?
I don't believe you or share your optimism, but I also don't want to get into an argument about it. I think it's too late to ponder if this is overall good or bad... We'll all find out either way soon enough.
If tariffs will strengthen the economy while everyone else predicts disaster, you've discovered market insight worth billions. The Dow didn't just drop 2,200 points because investors are confused, it dropped because people with serious money and expertise believe these tariffs will damage the economy. If you're right and they're wrong, there's an obvious move: bet against them and get rich.
p.s. Trump did this before in 2018-2019, giving us some hard data about the economic effects of tariffs on modern america that are guiding the economic consensus.
* National Security - we need to be able to make or trade for what we need in the case of war. Even non-tariff economists will give you this one but it can become a slippery slope. We need some capacity to make semiconductors, some steel/aluminum, pharmaceuticals, drones, etc.
* Tank the 10-year. If people pour into treasuries, the 10-year drops and we can refinance our debt a lot cheaper.
* Force a renegotiation of unfair trade agreements.
Weak arguments (IMO):
* bring back manufacturing jobs - even if we reshore some manufacturing, it'll be at the cost of many more other jobs and that manufacturing will be highly automated. No capital appetite exists to do this. No CEO wants to do this. We don't have the infrastructure or supply chains for this.
What is very difficult to defend is the implementation even if you agree with plan. No one outside the trump bubble can really defend the on-again-off-again, inconsistent communication, or board of imaginary numbers used for these. Some float "madman theory" as part of design on renegotiations but I don't think people will make deals with 'madmen' they can't trust and instead are much more likely to build coalitions against them.
> * bring back manufacturing jobs - even if we reshore some manufacturing, it'll be at the cost of many more other jobs and that manufacturing will be highly automated. No capital appetite exists to do this. No CEO wants to do this. We don't have the infrastructure or supply chains for this.
Isn't the market sell off exactly what oligarchs would want so they could sweep in and buy what's being sold off so their portfolios expand that much more. Ultimately, leaving less available for the 99%ers when the market rebounds leaving the oligarchs that much more in control.
This seems epistemically dubious. If Trump decided his first act as president was to cut corporate taxes instead, and stocks rallied, I bet the same people are going to complain about how "this is exactly what oligarchs want". Short of a communist revolution, what wouldn't oligarchs want?
Yeah, but the schadenfreude won't last, sadly. The coming recession is essentially inevitable at this point. Q2 earnings are going to be a disaster for everyone, expect economy-wide layoffs by autumn.
Shouldn’t we be looking at percentage changes? Naturally, there would be larger point changes as the total market cap of the entire market goes up over time
Exactly right. Otherwise we have to argue that 18 of the 20 worst days in economic history happened in the last 3 years, far surpassing the crashes of 1929 or 1987.
The article has both, but then we could also look at percentage change in a time span longer than a day or shorter. Those lists are arbitrary but Trump has added to this list two days in a row.
I'm hoping the lesson we learn is "do everything possible to maintain 3 separate but co-equal branches of government"
Tariffs are supposed to be imposed by congress, not the president. The president is using a loophole (declaring a national emergency) to give himself authority to bypass congress.
It shouldn't be possible for 1 branch of government to take such drastic measures unilaterally.
I'm willing to believe this administration is acting in good faith, but two things seem to contradict that, although maybe I'm wrong:
1. Why didn't they include services exported by the US in their 'tariff chart' ? The EU for example, imports a lot more US (tech amongst others) services than they export to the US. It seems disingenous
2. Why couldn't this tariff strategy be implemented in a more calculated, predictable, slow way to give everyone time to adjust, at home and abroad. What's to gain from doing it this way over the one I mentioned ?
The answer to both your questions is that they are not acting in good faith.
1) They didn't include services exported by the US un their "tariff chart" because that chart is just some post-hoc rationalization to their arbitrary, capricious actions.
2) They could implement a more calculated, predictable, slow way of doing this, but these people are not the kind to do that. They are shoot first, don't even ask questions later, just claim victory and keep shooting types.
> What's to gain from doing it this way over the one I mentioned ?
You're asking the wrong question. The right question is: "What do they have to lose by acting the way they are"?
They have nothing to lose. They aren't accountable to anyone. They aren't eligible to be reelected so they're not worried about another term. They have control over all branches of government. They have control of the DOJ and the FBI so they won't be investigated or prosecuted.
There's no downside or disincentive to act the way they are, and so that's why they're dong it.
Yeah... I would have thought that fear of Russia was way more ingrained into the American psyche. It's amazing how much they're basically bowing down to Putin
> Why couldn't this tariff strategy be implemented in a more calculated, predictable, slow way to give everyone time to adjust, at home and abroad. What's to gain from doing it this way over the one I mentioned ?
To me, the more concerning detail is that they don’t have any messaging about what their strategy is, except what appears to be guessing from various members of the administration — often which is mutually exclusive with other messaging.
The real risk of all that is people are going to sit on the cash they have, unwilling to make purchases when they can’t see the risk in their future.
My wife and I want to install new flooring, but that’s off the table for us right now, until we have a better idea where this is going.
^ those decisions are disastrous for the economy en masse
yep. I liquidated my TFSA ( tax free savings account in Canada ) 2 weeks ago. 90k. Invested in risk-free 90 days GICs instead. No way I would have watched it lose 10-20% of its value in 2 weeks
They just copied these tarrifs from a ChatGPT answer (https://www.newsweek.com/donald-trump-tariffs-chatgpt-205520...) because Trump has a demented focus on trade deficits above all else. The only 'good faith' allowance here is to assume complete incompetence.
Yeah, turns out running the largest economy on the planet is even more complicated than setting the clock on a VCR. Who would have thought. At least they tried.
He had a choice of hard landing vs soft landing. He chose hard landing — looking at history, large scale war follows failed economic war and alliances are arming up in anticipation. I hope Hegseth is ready.
Good news is most of his reserves come from Kentucky, so he won't have to worry about getting hit with tariffs. Oh, you're talking about ready for the military?
Can someone explain how tariffs aren’t both a tax and inflation, all rolled in to one? These are two of the most toxic words in politics and yet those most allergic to them are relatively quiet.
That’s so true, and I think it undermines reasonable conversations about his actions. Like talking to someone about why they’re rooting for the bad guy in a movie.
Readit News
What’s the best steelman argument for them?
I’ve read a bit of Peter Navarro and others who support this line of thinking, but I’m trying to understand: is there a coherent endgame here that benefits the country long-term, or is this just short-term political theater dressed up as strategy?
What would the best possible version of this policy look like if it were smart?
The question that really matters to most people is, "What will these tariffs do to the prices of these things that actually matter?" And that it actually rather hard to predict.
The economists who claim that tariffs will harm normal Americans were also the economists who claimed that sanctions would destroy the Russian economy. They had the opposite effect, for reasons that still remain somewhat unclear. It may be that global trade makes certain classes of society very very wealthy, while not necessarily being such a positive for the middle class.
It is also notable that Chinese competitiveness has only increased as they have engaged in decades of state economic planning and market barriers. The economists who have told us since Reagan that this is inefficient and stupid might be ... wrong.
> The economists who claim that tariffs will harm normal Americans were also the economists who claimed that sanctions would destroy the Russian economy. They had the opposite effect, for reasons that still remain somewhat unclear.
> It is also notable that Chinese competitiveness has only increased as they have engaged in decades of state economic planning and market barriers. The economists who have told us since Reagan that this is inefficient and stupid might be ... wrong.
You are quite wrong there with all of those three points.
#1. a lot of food items come from Mexico, South America, Asia also. Housing material from Canada and China. A lot of meds come from Asia especially India. Majority of Stationary is manufactured in China as well.
#2. Russia is struggling with economy. But remember it has a lot of help from China, Iran, N Korea, and India. That offset a lot of sanctions. Europe is still buying gas from them.
#3. I’ve to remind you this - China exports in trillions.
This is _very much_ up for debate. It's been a couple of years since Russia went completely dark on publishing key numbers on their economy. [This was three years ago.](https://www.youtube.com/watch?v=ZRgS6gpiMX0). They had a large war chest ready before they went to war (part of which has been frozen in the west), and there are a lot of signs that they are on their last stretch before things go really bad for them.
Predicting _when_ things go bad is very difficult, so I do not hold that against said economists. The most telling sign is that the first thing the Russians ask for is for sanctions relief before any peace negotiations.
They didn’t have the opposite effect. They were ineffective in general, because Russia has large trade partners not aligned with the West and it has been preparing for it, optimizing the government apparatus for 20 years (financial bloc for 30 years). There are plenty of A-players (head of central bank, minister of finance etc), working industrial policy and digitalized processes, and they can make decisions very fast both politically and bureaucratically.
New trade routes and spinning up local production will take time (likely longer five years) so the consumer will pay a price. Question is how high it will be.
To purely imported goods (a lot of tech for example): cost will go up substantially.
To Russia: They are currently in a war economy. You will likely not really see a collapse coming until it is to late. Banks have been forced to give far to cheap loans to the arms industry complex which are unlikely to ever pay them back. This partially masks the true cost of the war.
Let's so how this proceeds.
It is somewhat unclear to me that sanctions had the opposite effect to destroying Russian economy.
Does that mean it is doing great? I don't think so.
I tried finding some number to corroborate your claims.
The proportion of food in the American budget has decreased from ~17% to ~13% between the 60's and now. In fact, it has decreased a lot for "at home food" and increased slightly for "dining out food"[1]. Food seems cheaper than ever - on average. The current price of a calorie sufficient diet is now roughly $0.44/day in the US [2] that sounds very low. Between the 60's and today; the average daily supply of calories per person has increased from ~3000 kcal to ~3800 kcal [3]. People eat more than ever - on average.
[1] https://www.ers.usda.gov/data-products/chart-gallery/chart-d... [2] https://ourworldindata.org/grapher/cost-calorie-sufficient-d... [3] https://ourworldindata.org/grapher/daily-per-capita-caloric-...
I really wanna believe you, but aren't you just looking at the past with rose tainted glasses. And if you are young; aren't you making up a past that doesn't even exist ?
It's clear that Russia redirected most of its exports. Just look at how much oil India is now buying from Russia — before the war, it was around 5%, and now it's over 40%. They rerouted a large part of their trade, created shadow fleets, and many EU exports still end up in Russia, but through proxy countries like Kazakhstan. (You can see this in the trade statistics between the EU and former Soviet bloc countries before and after the war.)
But the situation here is entirely different. The US has placed tariffs on much of Asia, the EU, and several other regions. There's nowhere for the US to reroute trade in a way that allows it to import the same goods at the same or lower prices.
You don't shoot a hole in the bottom of your life raft because the person pleading with you not to was wrong about how many people it could hold.
On what timeframe did they say that?
There’s a good argument they ARE working to that end, just not as fast as policymakers would like. See the RU economic weakness in September.
One can make a decent argument that the sanctions were insufficient as Russia is effectively a petrostate (now with industry on a war footing) and the sanctions largely avoided RU oil/gas. Also China took up the slack by buying whatever Russia was willing to sell, and in Russian currency which extended their runway.
Lastly, Russia predicted the sanctions as a response to their Feb 2022 invasion because similar things happened before, so they planned ahead and made themselves resilient to The US dollar financial system locking them out (the same way they made their internet resilient to foreign sovereigns potentially cutting them off.
Double digit inflation despite a central bank baseline rate of over 20% is absolutely terrible. GDP numbers are only staying up because their government is spending a massive amount on the millitary and running huge deficits. The situation is very bad and getting worse. Millions of prime age workers have been pulled from productive work to supply the army and serve as assault troops. Hundreds of thousands have been killed or disabled.
The soviet stockpile drawdowns appear to have peaked which will put even more strain on the system. Nobody knows when the system will collapse but it will get there sooner or later without some major changes.
Nobody can predict the future, least of all economists. Having said that I think economists were not wrong on the headwinds that Russian economy would face. They just failed to account for extraordinary measures that dictatorship could take.
And even with said measures there had been a steady deterioration of the economic situation... The real question is what is the state of their mineral (cough gold cough) production rates and reserves. They might just be able to buy their way out of the current situationship.
Middle class expenses may arise around 5-10% at the very least.
> The things that dominate middle class budgets: food, housing, medicine, education, are surprisingly local, and have become increasingly unaffordable in recent decades even as economic numbers have gone up.
Really you have to split goods into two categories, stuff that has no geographic ties(alot of these goods manufacture has been outsourced to asian countries and low wage countries) and stuff that is tied to a location, think Mexican tequila or Swiss watches.
The first category is more tied to the middle class and I could alot of the manufacturing coming back to the US due to cost. The second category cannot be made in the US and buyers will bear the brunt of the cost runups.
The stuff in the first category that is going to be hit hard with tariffs is by and large big ticket items like cars and electronics, and conversely the really cheap plastic junk that is ubiquitous at dollar stores. I think the days of 50 inch flat screens for a few hundred dollars are gone. In addition cars sold in the US(US made brands and not foreign companies) have alot of their supply chain in either mexico and canada but the middle class is not buying alot of newer cars - average age of a car is reaching the longest ever due to cars jumping in cost the past few years.
I see this really hurting high income americans alot more, new cars especially European luxury are going to be quite expensive, alot of expensive wines and liquor will jump in price, jewelry and luxury handbags will also be alot more expensive.
The US deindustrialized since the 70s. Russia has had 100 years to practice being an independent, self-reliant, sanctioned country. The reasons are obvious.
for example, blocking swift does not make money transactions impossible, makes it difficult for the layman in the first a few times.
nowadays, everyone uses crypto/usdt for the transactions and realizing it is actually cheaper and faster than the swift.
for the europe, they still buy the gas even at a higher price. grounding berlin to moscow flights only benefits turkish airlines and qatar airlines as now they profit from being monopolies (connections through istanbul and dubai)
the reality is that people adapt. i am not a trump supporter, i do not agree with the tariffs but that's what trump is trying to do; force people to adapt local goods
How is China's own economy doing these days?
The Ruble was on it's way to complete devaluation before Trump propped up the Russian economy by signaling he's willing to give them everything in exchange for nothing.
But it's also true that the west never really fully committed to the sanctions, the fact that you still had Russian oligrarchs traveling around Europe with relative ease was a pretty strong tell.
Anyone else with a proper business background would have been able to negotiate international trade agreements more favorably, including overall increases in tariffs, and if there was going to be unavoidable downward pressure it would certainly be much less than this at this point.
Plus someone with actual useful deal-making experience would have been able to maintain stability on the way to a noticeable if not shocking upturn by now, there was a lot of low-hanging fruit left over after Biden.
Why not do something with that, rather than take it out on the American people? Just because all of them didn't vote for Trump, he can't bring himself to care about the country as a whole, or average citizens hardly at all. Much less legal residents.
If the only way to "sink the liberals" makes almost everyone else go down with the ship, so be it.
Meanwhile in California, the high-speed rail project is not going so well. There's some serious problems in the U.S bureaucracy, especially blue states. A recent extension of a rail line in San Francisco came in at $1 billion per mile. There are huge amounts of people dependent on the government running inefficiently, vastly overpaying and taking as long as possible to complete work. As we've seen with DOGE, as soon as someone starts to dig into all that, the whole establishment dependent on that inefficiency screams bloody murder. They seem to be adept at developing flywheels where the more money they spend, the worse the problems get, and that justifies spending more money. The $300 million a year homeless budget in San Francisco is a great example of that tendency. Somehow, that needs to get fixed if we want to compete at a world standard level.
This level of tariffs is to discourage international dependency and trade as a prelude to war. Look who does not have a tariff.
This is not good policy - leading economists have written about this [1] as “…perhaps the worst economic own goal I have seen in my lifetime.”
[1] https://www.thefp.com/p/tyler-cowen-liberation-day-was-even
A strong version of the policy would thus involve directly tying tariffs to environmental and labor laws of the producing country, thus equalizing the field with the local companies. Not only would this allow for fair international competition, it would also economically incentivise the global development of good standards.
Trump's tariffs don't really serve any specific policy goals other than "trade is bad and everyone should buy more from us than we buy from them," which is self-evidently absurd; why are we punishing Madagascar because we buy their vanilla and they're too poor to have extensive need of our services-based economy? Beggar-thy-neighbor trade policies inevitably beggar us as well, as we're likely to find out quite soon.
There is somewhat of an argument that countries such as China overuse American consumption as a crutch for development, rather than stimulating domestic consumption (Xi has, to give very mild credit, proposed policies to increase domestic demand); tariffs would certainly force countries and trade blocs to focus on non-American consumption, though this is a bit like losing weight by removing the patient's esophagus.
What we're seeing here is just ridiculous, from an economic perspective. Low-cost low-margin manufacturing is not coming back to the US, absent an economic crisis that pushes down to a upper-middle-income-level state (stay tuned!), while putting tariffs on agricultural products simply ensures that consumers will pay more without a corresponding increase in domestic competition (how many pineapples does the US grow?). The "calculation" of the tariffs, such as it is, is simply a tax on comparative advantage, which is mercantilist nonsense we left behind centuries ago. There's no steelman for this; even if there were, the increase in raw material costs would make the steelman unaffordable for us both.
https://www.npr.org/2025/04/02/1242229719/planet-money-the-c...
IMO, tariffs are bad for the economy, but could be great for workers and the middle class. Regardless, implementing them this was is absolutely nuts.
China got our manufacturing because they didn't care about pollution. Now, they've developed cleaner industrial methods and built out fantastic infrastructure (e.g. massive industrial complexes right next to shipping ports). Meanwhile, we did nothing and we're a good ten to twenty years behind assuming perfect infrastructure development starting today with tariffs that are immediately in effect.
Combine that with the fact that infrastructure development in the US costs many multiples more than other developed nations, and you have a recipe for complete failure.
Meanwhile, what are we doing? Apparently green energy is evil, and we're going to go all-in on domestic energy production from something that's expensive, very polluting, and finite.
- US needs manufacturing capability to maintain defense capability and boost long term growth.
- tariffs result in pushing some manufacturing (and associated skill set) back to the U.S.
https://fred.stlouisfed.org/series/GOMA
Principally, that a company would need more guarantees on their capital investment that extend beyond a single president’s term. Since tariffs can be revoked at any moment, companies will want more assurances that the long path of capital investment will be worthwhile, or else they might find themselves disadvantaged before even getting off the ground.
They would find themselves lobbying the government to hold back the free market for them within a few years time.
They also tied that to Trump's desire to get out of Europe and deescalate the Middle East, being that if the U.S. was already stretched across Ukraine and say Iran, it would be way to stretched to also wage anything in the far east.
I'm no expert by a long way, but I can see some logic in the argument.
Hypothetically, if you perceived that the root cause of some foreign policy problems you felt were important to solve was the gap in civil liberties between your country and powerful overseas countries, you could conclude that peace could be achieved by handicapping your own country so that it regresses to match the lower standards of the foreign nations that appear to have a problem with your country and its ideologies.
.
No guarantees that this is the actual belief of the people in power, it would just satisfy your requirement.
The main problem with the tariffs is this: the US has benefited mightily from globalism. What actually happened is that the US, being at the cutting edge of technology, outsourced mostly low paying jobs, while developing more innovative/productive industries and sold goods all across the world.
Apple's a prime example. All the difficult (read physical) and low-paying aspects of production are outsourced to Taiwan and China, meanwhile Apple employs tens of thousands of high paid engineers in the US. Ditto for all the big tech companies.
Now, globalism has negatively affected a certain segment of the population and it was definitely a mistake to ignore that (rust belt great example). But bringing manufacturing back won't fix that now that the cat's out of the bag. Engaging in a trade war will destroy a ton of high paying jobs (every multinational is going to take a sizeable revenue cut) just to bring back a small amount of low paying jobs, if any are brought back... Firms will likely build highly automated US factories.
The best possible version of this policy would be focused tariffs on specific goods you want manufactured in the US... Semiconductors, autos, steel, boats, that sort of thing.
We ignored them
Now we are doing it and yes it upsets the world order
There is no precedent where this has been beneficial for the US, but we can try again. The last time it was tried was 1930, and our fortunes vastly changed since then
The incentive is for entrepreneurially minded people to try to provide services in the US and fix the supply chain here. This theoretically means more people employed and more people able to afford the prices of things produced here. Keeps velocity of money in the economy high.
We will learn how resilient a coalition of other countries are, as they try to only trade with each other
A smarter version of this policy would be country by country and industry by industry negotiations. But, given that some countries are dropping their own blanket tariffs, and others like Vietnam already coming to the negotiating table, time will tell.
Keep in mind North Korea has had even stricter trade restrictions, and they don't have any functioning modern industry at all. Trade restrictions reduce export market size, insulate companies from competitive pressures, and those problems only serve to reduce capability, not increase it. Maybe there is some sort of happy medium of protectionist policies, but I've never seen any sort of framework for understanding how you could derive where that happy medium lies.
If trade restrictions only ever made countries more competitive, we wouldn't use them as a punishment.
Oh wow you got a developing country to agree to lower their tariffs on their fairly minor import capacity from the US.
Which countries are these? In general, if you look at the list of countries with >5% effective tariff rate, it’s all developing world. Vietnam, FWIW, has an effective tariff rate of a little over 1%, in a similar range to the EU and to the US pre-Trump II.
Some countries _do_ have high blanket tariff rates, but you’re generally talking about very poor countries with limited secondary industry; these are, as a general rule, not big exporters to the US. None of the US’s biggest trading partners have high tariffs.
This avoids the demographic and, depending on your perspective cultural challenges that are coming for many countries in the future, and lets America march to its own beat. America is setting up to be a fortress and a world unto itself in an unstable world. While a lot of countries will be going through these issues in the future America is doing its hard yards now.
Still years of economic misfortune ahead in the meantime.
However the vastly more likely reason is he's a complete fucking moron that treats all interactions as binary "winning" or "losing". A mindset that helped him bankrupt numberous companies, and now likely a country. So trade deficits are "losing" and he's retaliating with tariffs. This logic befitting a toddler completely fits everything he's demonstrated over the years.
And even when this is past, those same CEO's - and their successors - will think long and hard about committing to any long-term investment in the US.
He also puts tariffs on countries which have a deficit with the US.
Corruption plain and simple. Now “lobbyists” will rush in offering him favors so that he removes some restrictions
Another theory is that Trump has some complicated plan to reduce the US's debt; again, it involves using tariffs as a "stick" to push our allies into doing what we want. Summarized here:
https://www.youtube.com/watch?v=090CqPrw_AE
What people call "rolling over" debt just means the government is issuing brand new bonds to raise money to pay off the ones that are maturing. These are completely separate transactions, often with entirely different investors. The government continuously sells new bonds and pays off maturing ones as part of normal operations.
Creating a recession to somehow game this system would be spectacularly counterproductive. Tax revenue would collapse while unemployment benefits and other social spending would skyrocket, creating even larger deficits. Any minor interest savings would be dwarfed by the economic damage. Not to mention the Fed sets rates based on economic conditions, not to help government borrowing. This isn't some clever financial strategy—It's just bad economics built on a fundamental misunderstanding of how sovereign debt markets function.
They change practically by the hour; first they're on, then they're off, then they're on, then they change, thne they're bigger than anyone expected.
That doesn't make companies say "well, let's expand!" It makes them hunker down. Kill off the least profitable products, cut overhead, etc.
There's time needed to build the necessary manufacturing, train a workforce, etc.
There's prices skyrocketing when suddenly American manufacturers have less competition.
There's also the plunge in sales of goods we sell to other countries.
This is the sort of thing you change over a generation. Not in a day, year, or even four years.
You can't just snap your fingers and say "you'll buy all your CNC machines from AMERICAN companies!" - even if we had enough manufacturing capacity, where are you going to get the workers from, particularly as literacy and education levels have been falling, and the whole education system is getting torn up?
...and where are you going to get all the semiconductors from?
The US famously had to buy titanium for the SR-71 from Russia through shell companies because the US lacked the mining capacity, the refining capacity, and know-how.
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The policy indicates trade, traditional partnerships, and traditional financial metrics are less important for the administration. It is largely symbolic rather than analytically worked out - the direction is more important than the details.
This is consistent with the economy being radically altered by robotics and AI. Comparative advantage in labor costs is becoming irrelevant, so a large part of the justification for trade disappears.
Wealth is being further concentrated into those with existing assets, as the negotiating position of labor becomes weaker. It is less important to maintain partnerships when you can do everything yourself.
Recession becomes less important than pushing hard for leadership in AI. Deepseek’s model release had a huge impact on the values of leading US firms. With AI traditional measures of the economy become significantly less relevant.
There's a trade off between economic diversity and comparative advantage, and a balance is better than being at either extreme.
A 5% cost advantage might be sufficient for a company to offshore production of medical supplies, but is that minor cost saving worthwhile versus the risk of a shortage in war or pandemic?
Automation is reducing labor cost advantages, and converging unit manufacturing costs globally, so more and more industries are falling into this "slight comparative advantage to offshoring" case.
What I don't understand is that China was dirt poor 30 years ago and was not a manufacturing powerhouse even 15 years ago. It was the Taiwanese, the Japanese, and the westerners who invested heavily in China and brought them technologies and expertise and bootstrapped the massive manufacturing industries in China. The quality and professionalism of US workers used to be the envy of Chinese people. Since when rebuilding the manufacturing business has become mission impossible? Can we really keep printing money when we make so little stuff? I get that we have great service jobs, but who wants our services if we don't make anything worth servicing? Back in 1917, Allyn Young believed that London would always be the finance center of the world, but we all know what happened later.
I'm not sure if Tarrif will work in the end, but at least it can attract additional investment given that the US is the largest consumer market in the world. Combined that with deregulation (assuming it will be be successful) , at least the US has a shot to bring back the key manufacturing business. And don't we believe actions lead to information? What have we done in the past 15 years to stop our deindustrialization? At least this time our government is trying. For that, I'd like to give them benefit of doubt.
If there weren't so many people whose livelihood or investment portfolios benefited from free trade or government spending the economic indicators wouldn't react as badly. Punishing or disincentivizing economic activity they don't like is more important than increasing GDP or asset values.
It may seem like a weak argument because of the circular logic but that shouldn't surprise any of us.
There are no steelman arguments for THESE tariffs, which are based on the premise of blindly assuming that all trade deficits across the board are bad, even for things the US is physically incapable of producing like various rare earths or diamonds, and then even more blindly setting tariffs based on the raw numbers of those trade deficits.
The administration hasn’t explained their logic and haven’t made clear plans — that’s the real problem.
The difference between science and “traditional” beliefs is that the former is not just about convincing others through force, but explaining things to others such that they’ll convince themselves.
It’s also the difference between good political leadership and a ruthless dictator.
One needs only words, the other needs violence.
https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-pr...
https://www.whitehouse.gov/presidential-actions/2025/04/regu...
It is a very good interview and discussion.
https://youtu.be/KwUG2bOHqFA?si=DKm2Y_I53Qdfuh-b
But to impose them on 60+ countries at once for arbitrary reasons makes absolutely no sense.
Go open 10 year chats for the GDP, S&P 500, etc.
There was no problem with "level playing fields."
All of this is just one man who for forty years has been obsessed with how "we" are supposedly being "taken advantage of."
The economy overall was doing fine - intense economic stratification is a problem, but overall the country's economy was productive.
Man steps in, inheriting a growing economy doing just fine...and after months of uncertainty and upheaval, in two days erases a year's worth of economic growth.
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[1] https://en.m.wikipedia.org/wiki/Foreign_policy_of_the_second...
J. Paul Getty happened to be in the right place at the right time for the 1929 market crash to result in an explosion in his net worth, what’s happening here is akin to ultra wealthy individuals recreating Black Thursday with the only difference being that it has been very publicly engineered and telegraphed in advance.
That is the steelman, if you think that those things are good things.
This way though the downfall is at least controlled, comparable to landing a wounded plane instead of breaking up midair. Big Olga never believed its own bull of "infinite growth" and parallel drove plans forward to keep civilization going in pockets once the "8billion can life like kings" bubble bursts. Bill Gates microreactors come to mind.
The rest of us go to hell, aka wars, martial law and civil war, preferably without damaging the pockets and without going nuclear. THANK YOU!
Sorry , to all those that fell for fusion, mars and star trek fantasies.
You didn’t ask for counter arguments but I’m sure we will see a wide range below this comment.
A broader picture here is to say neoliberal globalization is bad in that it removes local autonomy by creating a need for peaceful trading partners. Who is it bad for, and what sort of world would be good for those people is an exercise left to the reader.
EDIT: I like the vigorous comments and zero net score on this comment. don't blame the messenger guys, this is a fair statement of the steelman. It does not represent my own views.
Instead, we are seeing countries match with import tariffs in the other direction, and a deterioration of global trust.
I don't think most countries actually want to balance bilateral trade. You can get a hint of this by the fact that the calculation that the US is using right now to determine the tariff rate puts a floor of 10% tariff. If they were truly committed to balancing bilateral trade then you would have expected them to actually have added export tariffs to any countries where the US had a trade surplus. Instead they gave a 10% import tariff still. I'm not sure I've seen any explanation for this 10%.
> it is better for a country to have a diverse manufacturing base
A country can exist and be wealthy without diverse manufacturing base.
> a net positive balance of trade
A country can have stable and growing economy with negative balance of trade, as long as certain conditions are met. In short, this country may offer something else to compensate trade deficit, i.e. there can be a price tag on military and political power.
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It's interesting to see how the U.S. could make it happen though, given that there is already a shortage of labor and materials. It will be a long, long road.
It depends extremely on what your actual goals are, but if we suppose the goal is to increase US manufacturing capacity and economic independence with minimal pain, you'd enact this on a time-table over a period of years, after building enough support across the political spectrum to make it look like this policy will be essentially, if perhaps with some occasional tweaks, be maintained across administrations for some time. You'd also probably not significantly tariff the whole world, at any point.
The biggest problem with this approach is investor confidence. It's hard to sign on the dotted line to spend billions building factories when it's difficult to say with any certainty that these tariffs will still be around by the end of the year, let alone in five years. This was doomed to be way more painful than necessary when he started flip-flopping on this over the last couple months, regardless of whether it's even fundamentally any sort of a good idea.
If the goal's to replace large portions of income tax, as has been suggested by some including by Trump, uh... the math just don't work even with a drastically smaller federal government, it's nonsense, there's no "best possible" version there.
He has actually reposted a video confirming this outlook.
Another angle is he is targeting China. China is in a precarious domestic economic sitaution as well. It weakens China by reducing its exports. In addition tariffs if high enough for long enough encourage local manufacturing. If we go to war with China over Taiwan, it will be very easy for China to convert existing commercial factories to produce military goods. Much harder for us as so much of our manufacturing infrastructure has lain fallow. Its not a good idea to go to war with the country that makes everything you rely on.
I'm not saying these are valid ideas or it will play out like that. I'm saying this is what admin is thinking.
Also if you feel like a read, this is a paper by Trumps leading economic advisor Stephen Miran
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
As an aside, for those who have 401(K) and IRA accounts in the US, the stock market plunge might be a great time to convert funds into ROTH accounts (lower taxes now, etc). At least there is a silver lining...
https://drive.google.com/file/d/1Gk7TTyAYgyvvoP6szjV7J5wjjkC...
The problem with this scenario is that every nation naturally has it's own idea of what is fair and that many things that are trade barriers are around politically sensitive issues (safety and purity standards, etc). So getting other nations to immediately drop stuff isn't that easy.
The analogy is war - after a short engagement, the trade-warring nation will "come home victorious". Like regular war, this scenario often doesn't come to pass.
That said, if you want to make sense of the reasons behind the tariffs, I can offer a couple that would be reasons why Trump would implement tariffs.
1. While they are within his power, they are a cudgel he can use to hurt his enemies and show favoritism (and be open to bribes to get them lifted).
2. Trump has a weird obsession with tariffs, even after he lost a trade war with China in 2018 and had to bail out farmers with a bailout larger than the one to General Motors.
3. Also, as one of Trump's Wharton business school professors has stated numerous times, "Donald Trump was the dumbest goddam student I ever had."
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https://www.youtube.com/watch?v=1ts5wJ6OfzA
Unfortunately, Donald Trump doesn't agree with that. Or his handlers don't. Not that the distinction matters anymore. The diplomatic and trade relations that we are destroying right now can't just be fixed by electing a new President. This is the US's Suez Crisis...we are no longer a world leader.
That requires some initial assumptions that simply aren't true. Tariffs can and do serve a vital role to protect a country from one with lower standards of living (eg taken to an extreme, consider trade between county A where slavery is illegal and country B where it isn't)
> Unfortunately, Donald Trump doesn't agree with that.
I think most countries hit are in active negotiations to reduce or drop the tariffs. Israel has already said they're dropping their tariffs on the US and Argentina is in negotiations to do so.
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Hence he didn't put tariffs on Russia.
He’s maintaining crippling sanctions on Russia…
That is what's going to determine if the policy is good or bad - if he uses it to boost manufacturing in the US, add jobs, even give people a rebate, it could do good things for the US.
The motivation for these tariffs are not economic or financial.
They are being used by a narcissist as a tool to force others prostate themselves on front of him. Whether foreign leaders - who will have to "kiss the ring" pleading the case for their country to get relief - or domestic CEOs who will now have join a queue to plead with Trump for exemptions for their particular sector (like the auto business CEOs have).
We've already seen it with social media CEOs who queued up to offer him money and support, we're seeing it with law firms whose very existence he has threatened by EO forcing senior partners to not only bend to his will but to humiliate themselves in doing so and we seen university presidents do similar.
The tariff stuff is a continuation and escalation of that policy.
The cost is to America's reputation, international standing and economic well-being and will be borne for decades. The benefits are ephemeral - an ego massage for DJ Trump.
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But free trade and commerce is antithetical to fascism. Unless the dictator can assume total control, his position is untenable. The goal is to form an equivalent of CCP Politburo and Putin in the form of POTUS + small number of hand-picked techbros. You can't achieve that goal unless you control commerce.
All of this is laid out in writings of Dark Enlightenment adherents and sanitized through Project 2025. Ironically, the people who complain the most about their freedoms being destroyed because their Facebook post saying COVID is a hoax was deleted not only will willingly submit to this, but also be its key enablers.
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
It is a blueprint for "tariff based upheavel". It proposes using 'unilateral U.S. tariffs as leverage' to force other countries into a new accord, dubbed by some a potential "Mar-a-Lago Accord," analogous to Bretton Woods, that would include 'coordinated currency realignments'.
Miran argued that because the strong dollar has made U.S. exports uncompetitive and fueled chronic deficits, the U.S. might need to pressure other countries to strengthen their currencies (i.e. weaken the dollar) through a trade war if necessary. Alongside this potential grand strategy, it's also argue the tariffs directly address specific issues like unfair trade practices (the 'reciprocity' argument), dumping, reliance on adversarial supply chains (national security), and aim to incentivize domestic manufacturing investment.
Elements of Miran's thinking in the paper are evident in the Administration's approach. For instance, Trump aides publicly claim they are targeting countries with "artificially devalued" currencies for tougher tariffs and the President frames tariffs as "reciprocal", a hint that the endgame is to make others lower their trade barriers or adjust currency values to balance trade.
This strategic thinking appears connected to the 'traffic light' system mentioned by Treasury Secretary Scott Bessent.. https://instituteofgeoeconomics.org/en/research/2025040302/
Direct quote: "Treasury Secretary Scott Bessent has mentioned, the US could have a “traffic light” system that divides the world into three tiers: “green” countries with shared values, aligned economic and security goals, and a willingness to cooperate on exchange rates; “yellow” or neutral countries that want to keep high tariffs and remain outside the US defense system; and “red” countries, meaning adversaries or sanctioned nations that refuse to cooperate."
I think that adds potential useful context around where we might expect countries to align and what the intent is. Or perhaps as I've seen it put more inflammatorily, there are "vassals", "neutral" and "adversaries".
One last note would be that comparisons to the 1930s Smoot-Hawley tariffs are often made but the context is fundamentally different. In the 1930s, the US was a major creditor nation with large trade surpluses and dominant manufacturing. Today it's a large debtor nation seeking to revitalize its industrial base and reduce deficits within a far more globalized system. It's not quite fair to call it protectionism (as a sole objective) and the time period doesn't generalize to today's America.
With those datapoints....
The steelman perspective is that this is less short-term theater and more a high-stakes, potentially disruptive strategy aimed at fundamentally restructuring the global trading system. The intended endgame is to reassert U.S. economic advantage, enhance national security through resilient supply chains, and better align global economic rules with U.S. interests in a changed geopolitical landscape, using U.S. market access and currency centrality as key leverage.
To be clear, this doesn't imply that I agree. I’m not convinced it’ll succeed as intended, but that’s the best-case rationale. It might be a "Hail Mary" to prevent ceding global leadership to China.. or a way to "hit reset".
Consider the case of Phil Knight of Nike. Here's what someone posted on Twitter (I don't know the account so obviously don't endorse everything, or anything else, it says):
"Knight's big "innovation" in shoe manufacturing was figuring out how to be one of the first people to flood the American market with cheaply made plastic footwear from Asia. Knight didn't make better, more durable shoes; he made cheaper ones by blowing up the native American industry.
Access to slave labor is, in the short run, a competitive advantage over skilled free labor.
In 1990, 10 years after the Nike IPO, there were 85,000 Americans employed making shoes. Today there are only 10,000 and 99% of our shoes are made overseas. The only exception is footwear for the military.
Phil Knight, however, is worth $35 billion and Nike has a market cap of $90 billion.
In other words, the good middle class wages once generated by homegrown American shoe manufacturing have been transformed by outsourcing into equities owned by a small class of investors and one insanely wealthy oligarch.
Global free trade is a way for the powerful to screw over the middle class by forcing them to compete with third world slave labor.
Yes, with high tariffs, Americans would have to pay slightly more for shoes. In return, however, they would be subsidizing good paying jobs and a decentralized industrial base in their own communities.
Global free trade, on the other hand, subsidizes massive increases in asset valuation. If you are one of the first "in on the ground floor" then you can make insane amounts of money by blowing up middle class wages by outsourcing those jobs overseas.
Libertarians and Wall Street types love to call this "capitalism" and the "free market" at work, but in reality, they are defrauding their countrymen out of the opportunity to build products themselves.
Americans are no longer able to make shoes at home. That option is not available to you. How can we call this a "free market" when it constrains our choices?
Outsourcing is 100% a government subsidy. It is a privilege, allowed by the state, to a select few citizens who figure out how to manipulate the international market to their advantage.
Phil Knight discovered the much cheaper Asian shoe market in the early 1960s because he had the money to travel abroad. His middle class neighbors making an honest living making shoes did not have that opportunity."
I also take issue with the trend of describing low paying jobs as "slave labor". Absolutely nobody in vietnam is heralding these tariffs, since they don't look forward to working even worse paying jobs as a result. Free trade benefits everyone except for abstruse dilettantes online.
Those two stipulations would preserve America's reputation as a good global citizen, and would promote better conditions in the USA and the world.
The Trump tariffs meet neither of those stipulations.
(1) The state has a compelling interest in regulating market risk tolerance. When the FED sets the risk-free interest rate, it controls the price of risk, and thereby the risk of the entire market. It is often advisable to temper the risk-eager market for long-term stability.
(2) Likewise, when the POTUS enacts tariffs, it is similarly setting the market's risk tolerance--namely against the risks concomitant of economic dependency on foreign nations.
(3) This will inoculate the economy against external supply chain shocks (at the extreme: war) by reducing our liability. It's not just consumers who are price-sensitive; given goods within a class will not be affected equally, natural price advantages will emerge, shifting demand and consumption as all levels of economy begin to price-in these tariffs.
The "economic consensus" against these tariffs just isn't real? It's exceedingly likely that the US likely will be better off because of them :)
How so? There's hardly enough unemployment and there's also no incentive towards increasing the number of immigrant workers.
Either suppliers eat the cost of the tariffs as the US administration says, or they don't and then everything becomes more expensive, but either way you have the exact same supply chain.
- Tariffs are not a lever, they distort risk tolerance.
- Tariffs are crude, they are like a huge hammer hitting everyone, including allies
- Tariffs cause loss of confidence and loss of credit
To (2):
- Blanket tariffs target allies; they're isolating us and we're creating blocks polarized to us and weaning themselves off our economic output.
- Tariffs only reduce dependency if there is internal capacity, of which there is none. We'll best case shift our dependency via third-party countries
- We're concentrating our risk on fewer countries where tariffs are lower
To (3):
- We're reducing our efficiency and increasing prices, job losses are coming, productivity will stagnate. We're reducing our agility and our headroom
- Historically, autarky has lead to stagnation.
The economic consensus against these tariffs is real. It's exceedingly likely the US will destroy its economy, alienate itself and isolate itself because of them :)
The lead time required to set up realistic domestic production will mostly exceed this government's term. Setting up brand new supply chains doesn't happen overnight, does it?
p.s. Trump did this before in 2018-2019, giving us some hard data about the economic effects of tariffs on modern america that are guiding the economic consensus.
* National Security - we need to be able to make or trade for what we need in the case of war. Even non-tariff economists will give you this one but it can become a slippery slope. We need some capacity to make semiconductors, some steel/aluminum, pharmaceuticals, drones, etc.
* Tank the 10-year. If people pour into treasuries, the 10-year drops and we can refinance our debt a lot cheaper.
* Force a renegotiation of unfair trade agreements.
Weak arguments (IMO):
* bring back manufacturing jobs - even if we reshore some manufacturing, it'll be at the cost of many more other jobs and that manufacturing will be highly automated. No capital appetite exists to do this. No CEO wants to do this. We don't have the infrastructure or supply chains for this.
What is very difficult to defend is the implementation even if you agree with plan. No one outside the trump bubble can really defend the on-again-off-again, inconsistent communication, or board of imaginary numbers used for these. Some float "madman theory" as part of design on renegotiations but I don't think people will make deals with 'madmen' they can't trust and instead are much more likely to build coalitions against them.
Except it already started: https://www.investing.com/news/politics-news/investment-comm...
IPOs already getting pulled, M&A market dead, market selloff, inflation persisting (soon to rise), probable max tax brackets to rise, etc.
Also if you are wealthy you have more money in the market than sitting in cash, so crashes hurt more than help you.
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but yeah, it is a red herring in an industry that’s obsessed with hyperbolic phrasing
I know % losses are far more relevant, but it's still baffling the support this guy gets.
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Tariffs are supposed to be imposed by congress, not the president. The president is using a loophole (declaring a national emergency) to give himself authority to bypass congress.
It shouldn't be possible for 1 branch of government to take such drastic measures unilaterally.
1. Why didn't they include services exported by the US in their 'tariff chart' ? The EU for example, imports a lot more US (tech amongst others) services than they export to the US. It seems disingenous
2. Why couldn't this tariff strategy be implemented in a more calculated, predictable, slow way to give everyone time to adjust, at home and abroad. What's to gain from doing it this way over the one I mentioned ?
Incompetent leader and a coterie of overconfident personalities with no depth or expertise. The fallout is predictable.
1) They didn't include services exported by the US un their "tariff chart" because that chart is just some post-hoc rationalization to their arbitrary, capricious actions.
2) They could implement a more calculated, predictable, slow way of doing this, but these people are not the kind to do that. They are shoot first, don't even ask questions later, just claim victory and keep shooting types.
> What's to gain from doing it this way over the one I mentioned ?
You're asking the wrong question. The right question is: "What do they have to lose by acting the way they are"?
They have nothing to lose. They aren't accountable to anyone. They aren't eligible to be reelected so they're not worried about another term. They have control over all branches of government. They have control of the DOJ and the FBI so they won't be investigated or prosecuted.
There's no downside or disincentive to act the way they are, and so that's why they're dong it.
There's a difference between nonpartisanship and ignorance.
To me, the more concerning detail is that they don’t have any messaging about what their strategy is, except what appears to be guessing from various members of the administration — often which is mutually exclusive with other messaging.
The real risk of all that is people are going to sit on the cash they have, unwilling to make purchases when they can’t see the risk in their future.
My wife and I want to install new flooring, but that’s off the table for us right now, until we have a better idea where this is going.
^ those decisions are disastrous for the economy en masse
“THIS IS A GREAT TIME TO GET RICH, RICHER THAN EVER BEFORE!!!” Trump said on Truth Social (2025-04-04)
https://thehill.com/homenews/administration/5231994-trump-tr...
They are also just terrible at communication, needlessly aggressive and bombastic
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To put that in Simpsons terms: "The Garage? Well oo la di da Mr. Frenchman."
https://youtu.be/JhbJnlIvfyc
That’s so true, and I think it undermines reasonable conversations about his actions. Like talking to someone about why they’re rooting for the bad guy in a movie.