Ponca Dan when will tariffs ruin us?
- Thread starter HighStickHarry
- Start date
Tariffs are harmful to an economy. The greater the tariff the greater the harm. Fortunately for us so far Trump’s bark has been louder than his bite. Larry Kudlow has been a voice in his ear telling him the ramifications if he follows through on his threats. Not that that will stop him. The man is an idiot when it comes to understanding an economy. But at least to this point he has made threats and then backed off of them. For our sake I hope he continues doing that.
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I don’t want to go back and bump your sky falling predictions. When will we see these things be reported as the disaster you said they would be? They have been in effect for a while now.
The tariffs have had a very bad impact on segments of the economy, especially farmers. I'll try and find links for you.
https://www.vox.com/policy-and-politics/2018/11/27/18114566/trump-trade-war-china-farm-bankruptcy
https://www.usnews.com/news/economy...the-unintended-consequences-of-trumps-tariffs
Whiskey:
https://www.aei.org/publication/backfire-economics-2/
Steel:
https://www.cfr.org/blog/trumps-tariffs-are-killing-american-steel
I can get more if you want them.
https://www.usnews.com/news/economy...the-unintended-consequences-of-trumps-tariffs
Whiskey:
https://www.aei.org/publication/backfire-economics-2/
Steel:
https://www.cfr.org/blog/trumps-tariffs-are-killing-american-steel
I can get more if you want them.
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Ponca Dan was incorrect to think the Trump Tariffs would be significant enough to reduce the trade deficit.
You are mistaken in your accusation. Ponca Dan never thought the tariffs would reduce the trade deficit. That was Trump's belief from the beginning. He insisted that is one of the main reasons he wanted to impose tariffs in the first place. I have pointed out on several occasions that the tariffs have not reduced the trade deficit, but in fact they are reaching record levels in spite of them.Ponca Dan was incorrect to think the Trump Tariffs would be significant enough to reduce the trade deficit.
You thought that trade deficits would be a disaster without affecting the balance of trade?
No, I thought tariffs would be a disaster without affecting the balance of trade, unless it would increase the trade deficit, which it has done.
Really? I am skeptical. I think I know enough about Hayek and Mises to know that they wouldn't predict that tariffs would increase the trade deficit.
You misread what I wrote because I wrote it in a confusing way. I did not think the tariffs would necessarily increase the trade deficit, but I am not surprised to see they have not reduced it, nor does it surprise me to see they have increased.
Through what channel would they cause problems if they do not affect trade balance?
Raising prices on consumers in the country imposing the tariffs, as tariffs are nothing more than a tax on consumers. Reduce the amount of goods coming into a country, eliminating competition (or at the very least reducing it), giving government favored industries free reign to increase prices. Reduced inventory has an inflationary action, unless the currency in the economy is likewise lowered. Reactionary tariffs from affected countries lower exports, which can cause layoffs as industries can no longer sell as much product as before, and do not need as many workers as before.
I'm not following. How would this require a new definition of trade balance? It affects the trade balance (which is a meaningless term to begin with) but how is the definition altered?
I find it amazing that we think that a tarriff that adds a couple cents to the total cost of a product will destroy our economy while simultaneously electing candidates who propose (and in cases of major cities) pass taxes on any and all activities without any thought to consequence. We now have Soda taxes, congestion taxes, etc, and rarely do people say this will DESTROY the economy, yet an economically equivalent tarriff is going to cripple society as we know it.
Depending on the severity of the tariff it certainly could cripple an economy. The links I posted above show how Trump’s tariffs have damaged targeted industries. I suppose it depends on whose ox is gored. If you’re one of the victims of a tariff you might better understand that it’s not about raising the price of a soda can by a couple of cents.
Oh, and I agree with you that our various governments have gotten out of control with their taxing authority.
Trump's an economic idiot yet the economy is vigorous and unemployment is at a 50 year low.
Square that up for me.
This fear of a few tariffs to try and induce trading partners to play fair is also something I totally don't get.
Square that up for me.
This fear of a few tariffs to try and induce trading partners to play fair is also something I totally don't get.
Tariffs are just taxes inflicted via a different mechanism. I agree that tariffs if over-done could impact the economy, but no more than taxation if over done impacts the economy. They are birds of a feather, yet all these economists yammer about the impact of one (tariffs) while continuing to vote and financially support the other (taxes).
Farmers have been on the take for a while. I appreciate their sacrifice for the greater good in this matter.
Whiskey is a sin, get a real job.
Council on foreign relations. Nice source mr. Anarchy.
Whiskey is a sin, get a real job.
Council on foreign relations. Nice source mr. Anarchy.
I don’t know which economists you refer to.
The economists I have read do not fall into that category. They’re pretty much opposed to overwrought taxes as much as overbearing tariffs.
Dan, it isn't meaningless. Trade balance is exports minus imports. The negative impacts of tariffs you listed would show up as a decrease in imports and a change in trade balance.
It's similar to the fearmongering about a guacamole shortage hurting the US economy if Trump shuts down the border. Mexico's economy, the smaller economy much more dependent on trade with the US, has more to lose quicker with a border closing. Yet the media spin machine always defaults to the harm to the US consumer rather that the more substantial harm to the country which is the proximate cause for shutting down the border.
Trade Balance is a meaningless term. Or, more correctly, the notion of a Trade Deficit is meaningless. For one thing countries do not trade with each other. Individuals and companies from one country trade with individuals and companies of another country. The idea of a trade balance as insisted upon by government interventionists is just another example of unnecessary meddling by statists who are always looking for a way to interject themselves into the lives of the populace.
I buy a washing machine that is manufactured by a company in Korea. That is between me and them, not the USA and Korean governments. (Except those governments cannot help themselves, they simply must get involved.)
And there is an absolute balance in the transaction. The Korean manufacturer exchanged its machine, which it valued at $500.00, for $500.00, while I exchanged my $500.00, which I valued equal to the machine. A $500 machine for $500 is a trade balance. There is no deficit.
The protectionists that are advising Donald Trump are playing mind games with him and the rest of us. They actually have people believing we should be taxed (via tariffs) as a way to get back at foreigners that have the audacity to sell their products to us at prices we desire. It's idiocy, and, I'm sorry, but Donald Trump is an idiot for believing it.
As regards "the negative impact" that tariffs cause: that in no way alters the definition of a trade balance. Tariffs definitely have a negative impact in the sense that it interferes with the machinations of the marketplace. But the definition remains the same.
Now, I've got to work today, so I can't continue this conversation. So you get the last word. As always I enjoy dialogs like this.
There is probably no way to get you to remove the scales from your eyes, but I'll try one more time. If Trump essentially shuts down trade between the US and Mexico, our 3rd largest trading partner, there will be consequences far beyond the concern over guacamole. Not only will it cause shortages in products, but it will cause a significant rise in prices of those products available. It will have a severe impact on the supply chains that companies have spent decades in perfecting. Many economists say it will cause a recession in the US. I don't want to live through another recession, do you?
You seem to be content to believe Mexico will be hurt worse than the US, so that makes any negative impact in America to be OK. I will agree with you that Mexico will suffer worse than the US. But that does not alleviate the suffering we will feel, it will be very real. And that's the only point the economists you seem to despise are trying to make. It's like when Trump said trade wars are easy to win. What nonsense! We may win a trade war, but there is no such thing as a war without casualties. Maybe you don't care, you think you will not be one of the casualties, and I hope you are right. But there will be American casualties, that's a consequence that cannot be averted.
Now, I'm off to work!
This is a wild assertion, Dan. Your boys Hayek and Mises would never claim that the balance of trade has no macro effects on the economy.
Such transactions aggregated over entire nations do have significant effects on the macro-economy, Dan.
Believe it or not Dan, but there are major differences between good and services and IOUs.
I am with you on this part Dan. But it turns out that the tariffs put in place are too insignificant to make any difference. from CNBC "Tariffs collected in the latest fiscal year ended Sept. 30 rose by less than $7 billion from fiscal 2017" $7billion is a rounding error in a $20trillion economy.
Dan I think I was poor at communicating what I meant by "by definition" The traditional comparative advantage trade theory says that a free trade world is the best because it results in the most efficient production of goods and services. In order for tariffs to have the negative impacts you describe, they would have to be significant to change trade and production patterns. The negatives impacts your describe, by their very definition require a shift in trade and production. For example, you listed "Reduce the amount of goods coming into a country" that is the very definition of a shift in the trade balance. (reduction of imports reduces the trade deficit).
I agree we'll take a hit economically depending on how shutting the border happens---maybe only let trucks through and nobody else. My point is Mexico will yell "calf rope" very quickly and do the things necessary to stem the flow of illegals through their country which is the reason for considering shutting the border. The secondary point is the consequences of any action taken by Trump is always painted by the talking heads as how much harm Americans will suffer rather than the other side of the equation, how much harm will, in this case, Mexico suffer. Their's will be substantial and quickly realized thus leading to actions on their part to mitigate the proximate problem--illegal immigration.
But how will the lefties be able to eat their avocado toast without avocados? Let's try to focus on what's important here.
I know you refuse to watch videos, but I thought someone else who might be interested would find Don Boudreaux explaining trade deficits and trade balances to be enlightening. He certainly says it with much more lucidity than I.
Dan, I'm with you and Don that trade deficits aren't bad. My disagreement with you is just that tariffs are bad to the extent that they change trade levels from from what would occur in a free trade regime. If the tariffs are too small to change import and export levels then they aren't really that bad.
Lunch break is over, but I’ll reply very quickly.
Perhaps I have been unclear in my admonitions over tariffs, in which case I apologize. It is my contention that tariffs are detrimental to an economy EVERY time they are imposed. The degree of the detriment is equal to the size of the tariff. A small tariff has a small effect and a large tariff can be very bad. So it seems we have been in agreement the whole time!
DJT blew his tariff horn and made preposterous threats against practically the whole world, including our allies. Had he actually practiced his rhetoric he very well might have plunged the world into a recession, and possibly a depression. He watered down his threats when it came time to enact tariffs and the result has been very bad for some industries in America, but the overall effect has been mild.
I’m sure I infuriate the always-Trump sector of this board by saying he is an economic idiot. But his embrace of mercantilist economics in foreign trade is maddening. And potentially damaging to the progress he has made on the domestic front. Many always-Trumpsters are convinced he is playing 3D or 4D chess with our adversaries (trading partners are NOT adversaries, but Trump doesn’t seem to understand that) and he won’t really do any of those bad things he proposed, it’s just a tactic he learned in business. Maybe. But his business tactics created many enemies against him, and led to bankruptcy on his part several times. It’s not a tactic I am comfortable seeing him use when my - our - future hinges on it.
Back to work!
We agree with the small stipulation that if Country XYZ produces widgets for a 2$ less than anyone else and Country ABC imposes a $1 per widget from XYZ, then that tariff is no worse than a sales tax, but $3 tariff would much much worse.
A tax is a tax whether it be called a tariff or a sales tax. Adding $1 to the cost of each widget will have the same negative impact regardless of what the $1/widget increase is called. So basically yes I agree with you, but I’m not sure what importance should be attached to your stipulation.
