No. of Recommendations: 22
Welp...guess we'll see if this works.I guess it would help if we knew what it was supposed to accomplish.
The Administration is all over the map on this.
Some talk up the amount of revenue these tariffs will bring in - but that only happens if the tariffs stay in place and we continue to import at high levels.
Others talk about the need for other countries to get on the phone and cut a deal - but what kind of deal can they cut? The tariffs aren't
really reciprocal or based on reality - Japan doesn't
really impose a 46% tariff rate on the U.S. either through actual duties or non-tariff barriers - so there's not actually anything they can change. Their real tariffs are only about 4% (one of the lowest rates in the world), so even if they zero them out it won't do anything.
Still others talk about returning manufacturing jobs to the U.S. But that's not going to "work" - it's just going to make us poorer. Most of the manufacturing jobs that left to places like Vietnam are the same sort of crappy jobs that we have trouble getting high-school graduates to take anyway. What's the endgame there?
Speaking of Nike and Vietnam, in his Chartbook today, Adam Tooze notes that 50% of Nike’s products are made in Vietnam, and that there are half a million people in the country working for the at least 155 factories that make Nike goods. Now we’re slapping massive tariffs on them, but the question is ... to what end? Do we think there are hundreds of thousands of people in the US eager to work in sneaker and t-shirt factories at the wages that sneaker and t-shirt factories pay? Are there people eager to work in sneaker factories even at ‘good’ wages? Do we think that the US has the level of robotic capability to replace these factories without having to hire a lot of workers? And if not, what is the administration trying to accomplish?https://archive.ph/KTygV#selection-1631.0-1635.674The only actual objective behind these tariffs is an attempt to reduce trade deficits to zero. Which is at least a thing that it's targeted to achieve (as opposed to the fig leaf justifications of reshoring manufacturing or generating revenue, which are contradictory goals). The problem is that it's a stupid thing:
Thomas Sampson, associate professor of economics at the London School of Economics, said the formula was “a figleaf for Trump’s misguided obsession with bilateral trade imbalances” and that there was “no economic rationale” for the tariffs.
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Oleksandr Shepotylo, an econometrician at Aston University, Birmingham, which recently modelled the effects of a global trade war, said the use of economic formulas merely gave the USTR document “a sense of being linked to economic theory”, but it was in fact divorced from the reality of trade economics.
“The formula . . . gives you a level of tariff that would reduce [the] bilateral trade deficit to zero. This is an insane objective. There is no economic reason to have balanced trade with all countries,” he said.
“So in this sense, this policy is very unorthodox and cannot be defended at all.”https://archive.ph/w523X#selection-4355.0-4367.81There's no way to "see if this works," because there's no legitimate economic objective to it. Had they actually done a deep dive into the fundamentals of each target country's economic and trade regimes to genuinely identify where there might be tariff imbalances and/or non-tariff barriers, as opposed to just differences in the fundamentals of different national economies that cause trade imbalances for reasons that have nothing to do with economic or trade policy, then the tariffs
could have been a took to address those tariffs/NTB's. But they didn't do that. They just came up with whopping big tariffs against countries with big trade imbalances. Those tariffs can't achieve anything but reduce trade imbalances, regardless of how badly they impoversh us.
