Tariffs again
Here’s another post on tariffs, because they’re a big deal right now.
As I’ve said several times, I haven’t decided what I think about them and am willing to adopt a “wait and see” attitude. But in the meantime, they make me very uneasy.
Because it’s a topic of great interest, here’s a link to an article criticizing the tariffs. An excerpt:
President Trump imposed hundreds of billions of dollars in tariffs on the countries of the world, that vary enormously from nation to nation. He calls them “reciprocal” tariffs, but they aren’t reciprocal at all. Trump increased tariffs even on friendly countries that had lower tariffs than we do, which is the very opposite of reciprocity. He imposed 10% tariffs even on countries that we have a trade surplus with, like Australia — which has fewer trade barriers than America does, and has some of the lowest tariffs on Earth.
In all this reading about tariffs and thinking about tariffs I became curious to know what another outside-the-box thinker, Javier Milei of Argentina, thinks of Trump’s tariffs. Here’s what I found:
Speaking at an event at Trump’s Mar-a-Lago residence and resort in Florida, Milei delivered a brief speech as he received an award for his defence of free markets and conservative values.
Declaring he is ready to work side-by-side with the United States and Trump, Milei praised the US president and ruled out retaliatory measures.
“Argentina is going to move forward to readjust the regulations so that we meet the requirements of the reciprocal tariffs proposal developed” by Trump, Milei said, according to remarks briefed by his office. …
“As you can see, we make policies with actions, not mere words, and on that, we agree with President Trump: it is time to act, and we are committed to taking the necessary measures,” he added.
Milei said that he had given instructions to ensure Argentina complies with Washington’s remaining requirements and vowed to “resolve the asymmetries with the United States in a short period of time.”
Milei is an iconoclastic thinker who has done a lot of things in Argentina that had people very worried about the outcome, but the results have been generally good for that country, considering how things stood before he took office. I’m not saying that Milei and Trump are identical – they most definitely are not – but there are certain resonances.
More on Milei at Mar-a-Lago:
“Make Argentina Great Again!” Milei bellowed from the ballroom stage at at Mar-a-Lago late Thursday.
It would have been the fourth face-to-face meeting between the leaders since Mr. Trump’s election victory last November as President Milei, who has imposed a sweeping austerity program to fix Argentina’s long troubled economy, offers himself as one of Mr. Trump’s strongest allies in the global culture war against the “woke” left.
Also, here’s a link to quotes from Bill Ackman on the tariffs. Interesting.
So you can use this thread for more discussion of Trump’s tariffs.
Indeed, Miles does not have orange hair…and Trump doesn’t have sideburns.
Probably been said elsewhere; Trump is negotiating, using a big stick. What remains after the deals are sealed could be nearly unrecognizable.
I’m fine with it as a negotiating tactic… just like I’m fine with DOGE going all out right now to expose as much as possible before the “deep state” has a chance to dig in their heels and before the next wave of elections. And I think that tariffs don’t necessarily have to crash the economy, there are a lot of other factors at play. But I also agree with those that say that we should not just have blanket tariffs across the board and that they should not just be calculated based on trade deficits alone.
I also think that if it takes the election of Trump to get Congress to reclaim more of its responsibilities to actually make the laws, it’s worth it. Is it wrong for the executive branch to exert control over its own agencies, and is it wrong for Trump to impose tariffs when that’s generally been the president’s decision… well no, but I also support the legislative branch reasserting itself.
A fundamental issue facing us: In a world with global and highly-efficient transportation and communications…and billions of people who are accustomed to low wages…is it possible for a country such as the United States to maintain its accustomed high standards of living for the large majority of its people?…and, if so, what are the key policy elements required to do this?
Tariffs are by no means the only answer to this question, but I think that tariffs…or some form of domestic production tax incentive will need to be in the mix.
Discussed at my 2021 post Labor Day Thoughts:
https://chicagoboyz.net/archives/66613.html
A reply to people who mock the idea that the US should make products such as toasters, asserting that we instead should focus on ‘advanced’ products like drones…
“Re: People who don’t get that a toaster factory and a drone factory are basically the same thing.
You are dumb. You know nothing about manufacturing, thus proving the point that America would probably be a stronger/more efficient country if a broader manufacturing base was present here.
A factory is a collection of processes that manipulate raw material through a series of steps using capital equipment. Modern factories are highly flexible. A drone and a toaster share a huge amount of commonality – injection molding, stamping, machining, PCB assembly, wire forming, precision assembly, packaging, QC, etc etc.
You learn to run the wire forming process for the heater on a toaster? You learn 90% of what you need to know to wind the stator for a drone. You learn how the CNC mill works to clean up the die castings for the toaster? You know 95% of what you need to know to mill the drone core from bar stock. The injection molding machine that makes the slide lever for the toaster? Swap out the mold in it and now it makes the blades for the drone. The list goes on and on.
Old factories were mechanical and hard tooled to make *one* thing. This is still true of agriculture, this is still true for a lot of soft goods (a T-shirt factory can’t really make jeans)… But for a huge number of advanced, modern assemblies? It is not a crazy shift to go from toasters to drones as far as capital equipment is concerned, and he folks running it have a 1:1 skill set.”
https://x.com/gak_pdx/status/1908596074388086876
There’s not a fixed supply of labor in a fixed set of occupations, as long as there are unsatisfied human needs there will be work to do. If foreign imports were really putting people out of work and impoverishing the country in the long run, then they would have to stop, because who would be paying for the imports and with what money?
Consider the following family names:
Cooper: barrel-maker
Weaver: maker of cloth
Wainwright: wagon-maker
Miller: grinder of wheat into flour
Napier: maker of table linen
Faulkner: trainer of falcons
Fletcher: maker of arrows
These occupations were once so important people took their names from them. Could you round up a thousand in the people in the US following them?
You know what I’ve never seen anyone express concern about? Or even seen measured? A US state’s trade deficit with other states.
Companies and jobs move from one state to the other, different taxes or minimum wage or what have you. Things made cheaply in one state put people in another state out of business. Shouldn’t we put a stop to all that?
Why DOESN’T the US Constitution allow tariffs and customs borders between states? Why DID the Founders set us up as one enormous free trade zone? Even though some people had to compete with actual slave labor? They must have been idiots, I guess.
Think how much better off union-dominated or high minimum wage states would be if they could tariff production in right-to-work states and low minimum wage states, if protective tariff logic is correct.
Or just any state where the cost of housing or energy or just market value of wages is lower, that’s unfair too, right?
1) He calls them “reciprocal” tariffs, but they aren’t reciprocal at all.
If you just compare our tariff to their tariff, I’m sure this is true. But as Lutnick effectively said, The big things are obstructive importation regulations that act similarly to huge tariffs. If the Trump admin. people are targeting that, then the tariffs won’t look reciprocal at all. Of course, how do you calculate such compensatory tariffs, and are they fair in a quasi reciprocal sense? Is the Trump admin. even trying to be fair about it?
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2) David Foster asks: Can the US brings lots of manufacturing jobs back into the US while maintaining high “living wage” or “living wage+” standards for relatively unskilled labor?
I think some decades ago, people in the US understood that unskilled or lower skilled labor with low wages wasn’t so bad, if such jobs were stepping stones up an occupational ladder. Young people starting out perhaps. Now the Overton Window has taken us to the instant living wage, after high school.
I don’t think there is a nice and easy solution to this problem.
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3) This is probably related to 2), but… What is the inflationary impact of all of these reciprocal tariff actions??
Yesterday, the Federal Reserve came out with a statement that said that they believe that the inflation impact will be worse than most analysts think it will be.
If the Fed believes that, and if it is somewhat true, then the Fed funds rate, i.e. interest rates, will remain higher longer.
All that… sent the markets down another big notch, I believe.
I admit I’m out of my depth on the tariff questions.
But I’m glad I’m not loudly and publicly betting against Trump.
Tommy Jay…it’s not only a matter of relatively unskilled labor; there are a whole range of jobs in manufacturing, ranging from the assembly worker to the toolmaker ,the CNC programmer, the industrial engineer who designs the manufacturing process, the sales engineer who quotes on customer requests, etc.
I just saw somebody at LinkedIn asserting that we should focus on service jobs because they pay better than manufacturing…I’ve seen similar assertions often. But ‘service jobs’ is so broad as to be almost meaningless. It includes the fast-food worker and the Uber Eats driver as well as the high-level management consultant. And a lot of the low-end service jobs are catch-as-catch can temporary and unreliable employment.
And the idea that service jobs and ‘knowledge work’ are immune to offshoring is not correct. See my post Telemigration for thoughts on this.
https://chicagoboyz.net/archives/59860.html
Ten year treasury is below 3.9% – a six month low. Seems more important to our country (re:debt service) and citizens, mortgage rates, credit cards and loans.
I’m bullish on Trump’s strategy here.
The stock market drop is likely driven by hedge fund algorithm trading, etc. If I recall correctly I read somewhere that the majority of stocks are owned by something like 7% of the US population or something to that effect. I think it – DJI – meant something back in the day when market fundamentals applied; those days are long gone.
Re: People who don’t get that a toaster factory and a drone factory are basically the same thing.
–David Foster
A trend which will continue with a vengeance as AI kicks in.
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Moore’s law is the observation that the number of transistors in an integrated circuit (IC) doubles about every two years.
https://en.wikipedia.org/wiki/Moore's_law
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Sam Altman, OpenAI CEO, argues informally we are going to see Moore’s Law kick in for the prices of everything, which means these prices will decrease towards the limit of the cost of the services and raw materials required.
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This [AI] revolution will create phenomenal wealth. The price of many kinds of labor (which drives the costs of goods and services) will fall toward zero once sufficiently powerful AI “joins the workforce.”…
AI will lower the cost of goods and services, because labor is the driving cost at many levels of the supply chain. If robots can build a house on land you already own from natural resources mined and refined onsite, using solar power, the cost of building that house is close to the cost to rent the robots. And if those robots are made by other robots, the cost to rent them will be much less than it was when humans made them.
–Sam Altman, “Moore’s Law for Everything” (March 16, 2021)
https://moores.samaltman.com/
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A serious problem with AI is how to distribute the wealth it creates for the benefit of all. Most of Altman’s article addresses that concern.
Niketas Choniates points out that the US Constitution does not allow tariffs and customs borders between states effectively establishing one enormous free trade zone.
That is exactly what Trump is trying to accomplish on an international scale with the economic leverage that increased US tariffs create.
TommyJay points out that the big things are obstructive importation regulations (and currency manipulations) that create trade barriers that act similarly to huge tariffs.
The proof that this the case is that few if any critics of Trump’s ‘reciprocal’ tariffs offer any rebuttal to the Trump administration’s claim that countries like Vietnam have an ‘effective’ tariff rate on imported US products of 90%. Anomalies like Australia are a concern and such cases should be quickly addressed. But not at the expense of lessening pressure on the countries who refuse to truly participate in the creation of a ‘level playing field’.
As others have noted, the 10 year Treasury, which was around 4.7% when 2025 began, is now just under 4.0%, indicating that Treasuries are in demand and being bought.
I don’t understand High Economics, but it seems to me that the most educated economists are going nuts right now, taking Trump’s proposed scheme as poison to the health of the world economy. Others, along partisan lines, are taking pains to emphasize the illogic and the flaws in great detail, and make dire warnings about their impact.
To me, it’s once again the old saw from Salena Zito about taking what Trump says seriously, but not literally. Already the countries are queuing up to discuss trade matters. Already, interest rates are coming down. It all has a familiar feel to it. That makes me want to wait and see, because it’s a ‘so far, so good’ answer.
Also, sometimes you get what you pay for. When I started this house I chose a certain brand of electrical box for outside locations. They were made in America. Several years later I got some more. They were made in Mexico and the quality was noticeably poorer. The last batch a few years after that were made in China. They were unusable and I threw them away.
Thanks for the clarification David Foster.
To your point: I know that highly unionized workforces have large contracts where the salary of workers much higher up the food chain, have minimum salary floors that are leveraged to the lowest salary in that workforce. So raise the minimum wage, and everybody (or a great many) see a salary increase.
I’m sure there is something vaguely similar that happens in the absence of a union contract too. Although the differences, with & without a contract, would be an interesting study.
The last news items I heard were that Vietnam, and perhaps others, were strongly considering dropping tariffs, if the US did so too. And that countries like France, and most importantly, China, were pissed off and would retaliate.
I believe there are some US companies employing Vietnam workers for cheap labor, and that Vietnam is about 1/10th the size of China’s population.
This is a simplistic notion and maybe wishful thinking, but if we can exploit Vietnam’s labor force, in a healthy and constructive way (!?), do we need to deal with China’s labor force if they choose to be obstinate? That is, China loses in that calculation. The flip side is, we would like to sell lots of goods into China’s massive customer base. Retaliatory tariffs tend to block that, & the US loses there.
Yesterday I watched the 35 year old tape of Oprah and Trump. Those who’ve seen it will note that he’s been very consistent in wanting tariffs for a very long time. While he may not be an economic genius, he did graduate from the Wharton School of Economics which would indicate at least a familiarity with the subject.
In some ways the man is like a magician who keeps his audience distracted with one or several things so that he can achieve an unexpected result. That is what I think is going on with the tariffs. They are a means to an end, or several and many ends. They may produce income like a tax. They may help balance our trade deficit, especially with friendly countries. They may help protect certain vital industries like steel for national defense purposes. They most certainly will help stop the flow of illegal drugs like fentanyl, heroin, cocaine, and meth coming in from Mexico as that country will be forced by economic necessity to knuckle under. They may also eventually bring about the return of industries like pharmaceuticals and microchips without which we are very vulnerable. All of this is the surface rationale, logical and moral.
But as I’ve stated on other threads, the real goal is a trade war in preparation for a real war with China. Every seemingly outlandish thing Trump bellows like taking over Greenland, annexing Canada, or renaming the Gulf of America, they all indicate a circling of the wagons. He didn’t send Hegseth to Japan or Vance to Greenland without a reason. Nor did he put a 54% tariff on Chinese goods while willing to cut a deal with Vietnam on just a wild flim. And…my gut feeling – this is why the stock market is crashing. It’s not the fear of recession, but of war.
physicsguy linked to a good tariff story on AT that shows Trump’s plan seems to be working as intended.
https://www.americanthinker.com/blog/2025/04/smart_nations_lining_up_for_tariff_deals_with_president_trump_and_you_wouldn_t_be_surprised_which_ones_they_are.html
Here are a couple more that seem to me to have useful information as opposed to just rah-rah cheerleading.
https://www.americanthinker.com/articles/2025/04/the_price_of_reciprocity_why_president_trump_s_tariffs_make_strategic_sense.html
Well, maybe a little cheerleading. Sort of.
https://www.americanthinker.com/blog/2025/04/tariffs_burn_it_all_down_rule_over_the_ashes.html
Not that I’m an expert in economics (I’m not), but what with the Democrats POLICY of sabotaging the US economy as part of their WEF/WTF** policy (see Trudeau and HIS sabotage of the Canadian economy)—NOT ONLY the economy but the social order as well, in fact MAXIMUM CRISIS CREATION, one wonders what options Trump and his administration have.
Especially since adding MAXIMUM inflationary pressures was one of “Biden”‘s special parting gifts to Trump, along with all the hidden, ongoing graft, corruption, slush and theft that were part and parcel of “his” administration.
Add to this, the need of the Democrats to ensure that the country goes under financially so as to be able to blame it all on TRUMP (cf. Egg Production, for just one relatively pathetic example); to ensure that the country goes through one crisis after the next—even if such crises are ONLY the result by the media constant echoing Democratic Party wet dreams. (And where have we seen this before?)
One wonders whether anti-Trump multi-millionaires are willing to dump stocks (and lose scads of money) if ONLY to derail Trump—IOW, are willing to help destroy the country in order to torpedo Trump and his administration.
(Democrats try to “DESTROY” the country? Gosh, where have we seen that film before??)
All told, Trump is fighting against a myriad of foes coming at him from all directions. (It’s not only the Democrats; it’s the EU—or most of it—with China and other bad actors providing enfilading fire.)
He needs to make bold moves to try to deflect their perfidy, sabotage and subversion, so as to keep them off balance as much as possible—to keep them bonkers, encourage them to bark hysterically and make them continue to act as insanely as possible.
He needs results but it will take time, which is a luxury that the forces arrayed against him are NEVER going to give him, even if such policies will ultmately prove helpful to the world economy.
They would rather things go up in smoke rather than Trump achieve success.
And if he does succeed, they will not only NOT report it but will find all kinds of ways—“six ways to Sunday”??—to call it “UTTER DESTRUCTIVE FAILURE”.
I’m not sure why we should help them to do this….
In fact, one should pay attention to more astute, constructive economic commentary by those who in fact cautiously assert that Trump’s ideas might just work…even as one notices that those countries adamantly opposed to tariffs might just have to—grudgingly, albeit—come around (as some have already begun to do).
All this keeping in mind that the Democrats—and their allies in the media and the academies—are COMMITTED to DESTRUCTION.
**Speaking of the WEF/WTF it appears as though it’s been DE-SCHWABBED. Is this possible…or is it a case of SCHWAB being “pushed out the door only to enable him to climb back in through the window”…?
“Founder Klaus Schwab to step down as World Economic Forum’s chair”—
https://www.reuters.com/business/world-economic-forum-founder-klaus-schwab-step-down-chair-trustees-ft-reports-2025-04-03/
Oh WAIT! In 2027…Those stinkers….
Related?
“Disentangle from Europe”—
https://www.americanthinker.com/articles/2025/04/disentangle_from_europe.html
H/T Blazingcatfur blog.
Possibly an attempt to provoke a “Make Europe Sane Again” movement?
(Or at least nudge them towards being more responsible… OTOH, how does one encourage an Authoritarian entity to be more responsible?)
The cemeteries are full of people who had ” the way”, Trump has ” the way” we must choose it or not. This choosing comes without understanding Trump’s ” way”
All of society is just remnants of someone’s or group of people’s ” way”. I shall throw my lot in with Trump ( that’s called faith) and live with the result.
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