i believe trump says therell be inflation in the immediate future but whats the science on how tarrifs are for the greater good in the long run? explain it like im, say, a video game addicted 14 year old
Most economists urged against tariffs from the standpoint of them being a net negative. I’d tend to agree with skilled economists over the failed businessman turned weird politician that panders to the generally uneducated.
I believe Trump’s process here was to revert back to a pre-1913 era when income taxes didn’t exist and tariff taxes funded what income tax did. Not only is that absurd to assume that spending would equate to something like tax on all income, but the tariffs are set to begin on the 4th, yet as far as I know, there’s zero plan to prevent paying tax on my income, so it’s imbalanced in the short term and a “putting the cart before the horse” plan. This will likely result in higher prices with less disposable income, and it may negatively affect the job market as a whole.
Additionally, I think he claims that these tariffs will shift production back into the hands of Americans, but the reality there is that warehouses don’t get built overnight and they surely don’t get staffed overnight. Also, Americans aren’t really known for their proclivity towards cheap and fast labor, and with his conjunctive scorched earth policy on immigration, it may just end up with a bunch of empty warehouses and no employees to do the jobs—there’s a reason why Nike doesn’t stock Oregon with a bunch of warehouses and make all of their shoes in their own backyard.
Also, everything I just said only looks at the United States since that’s where these taxes will be paid. Likely, what these tariffs will additionally do is deconstruct a historical trade relationship that America has had with Canada—I haven’t looked into the trade agreements we’ve had with Mexico and China but I don’t think we were on great terms with China, maybe someone else knows better. I expect that Canadian purchasers will actively avoid American made products when they can, if for nothing else than principle, rightfully so. This means that as a country, we’ll probably sell fewer of the goods that we’re known to sell to Canada, further damming our economy. Trudeau has already urged Canadians to be strategic with their dollar and to avoid what’s clearly labeled as American-made, citing things like Florida orange juice and Kentucky bourbon, amongst others. It’ll also probably make the rest of the world view us as entitled little crybabies, again, rightfully so.
The obvious is that exports from Canada, Mexico, and China will now cost us more money, so I think both long and short term, you can expect to pay more for things like Modelo, lumber, steel, various fruits and vegetables, etc. There’s a chance that the companies themselves may shoulder this added cost in the beginning to prevent a loss of sales, but that only lasts for so long and I think as a whole, everyone has a pretty sour taste in their mouth about America and this choice, so I won’t be shocked if that sympathy doesn’t exist for American consumers or the company’s own sales.
In a study across 151 countries from the years 1963-2014, it was found “that tariff increases are associated with an economically and statistically sizeable and persistent decline in output growth. Thus, fears that the ongoing trade war may be costly for the world economy in terms of foregone output growth are justified.” (Here it is:
https://pmc.ncbi.nlm.nih.gov/articles/PMC7255316/#:~:text=The%20findings%20suggest%20that%20tariffs,following%20an%20increase%20in%20protectionism.)
Another possibility that’s based on nothing other than me assuming the worst with the ultra-wealthy is that when the economy does take a shit, those with wealth can buy things up for pennies on the dollar. Think real estate companies buying property during the 2008 housing crash.
Ideally, we don’t need to consider the effects we may or may not have after four years, based on the hope that we don’t replace Trump with someone who’s as big of a megalomaniac or as immune to taking everything into consideration before a decision like he is.
Topic: Changes under Trump 2.0 (Read 188630 times)