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Notes -
As someone who’s not particularly plugged into a tariff perspective either way, I will summarize what I took away from Trumps perspective on Rogan when talking about chips.
There are certain products we want more made of in America like chips and cars. Today we incentivize it with carrots and end up giving ridiculous subsidies to already rich companies, which further ruins organic domestic competition by picking winners and losers upfront. And it ends up not working to boot because it remains cheaper to produce overseas. So the companies do the minimum to get their subsidies or pull out halfway in leading to tremendous gov waste with little gain.
Since we’ve already agreed we want to market distort these products (I.e incentivize domestic production) tariffs apply a stick instead, making it more expensive to produce overseas to begin with. Thus the government doesn’t have to spend money, it in fact makes money during the transition, it doesn’t have to pick winners (all domestic producers can compete fairly), and it’s harder to cheat.
The other thing Trump mentioned was that this play can work because America is in a negotiating place of power, still very rich, but our advantage won’t last forever and a harsh tariff policy isn’t as effective if you can’t negotiate as well.
Without being able to judge the economic principles of all this, it sounds quite sensical to me, and to get a midwit like myself to disagree, I’ll need more from the other side than ‘experts disagree followed by theoretical jargon’.
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