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Well sure, many of the "experts" are ideologically motivated liars, but Trump and many of his people are also ideologically motivated liars. And I think that the tariffs are nonsensical not just from some complex ideological "expert" perspective... to me, they also seem nonsensical just from a common-sense perspective. I understand hating the "experts" and wanting to just push buttons, but that doesn't mean that we should abandon all sense of what buttons might be good or bad to push. I understand being frustrated with mainstream economists' consensus, but that doesn't necessarily mean that Trump's alternatives will be any better.
Why exactly are they non sensical? The first order effect is that tarriffs make it more profitable to produce things in America vs offshore, so there will be more jobs and industry created here. It’s only the secondary and tertiary effects where it starts to get ugly
This is the simple explanation:
Tariffs are a tax on goods entering the country.
Taxing things gives you less of them.
Thus we will have less goods entering the country, and the ones coming in will be at higher prices.
Fewer and more expensive goods and services means we are all poorer.
Yes, and that American/domestic producers will compete to gobble up these new margins on the newly more expensive goods.
It seems to me that is the secondary effect and prices rising is the primary effect.
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You can get a car by making a car in Detroit, or by drilling for oil in North Dakota and trading the oil for a Japanese car. Tariffs is to favour the former process over the latter - to first order the increase in cars made in Detroit is exactly offset by the reduction in oil drilled in North Dakota (foreigners who can no longer sell cars to the US can't get the dollars to buy the oil, so they don't).
It is true that an autarchic America would do more manufacturing and less of other things (and would be poorer as a result, because Americans suck at manufacturing and excel at things like software engineering and oil drilling), so if by "produce things" you mean specifically manufacturing then tariffs will lead to America "producing" more "things". But Trump definitely doesn't want to kneecap American natural resource exports, and probably doesn't want to kneecap American tech exports.
There is also a second order effect, which is that chaotically imposed tariffs generate moron risk premium, which reduces foreigners' (and Americans') desire to invest in America, so foreigners with dollars are more likely to spend them on American goods and services than invest them. If this isn't neutralised by monetary or fiscal policy, it increases demand for American goods and services, which would lead to increased production in the short term in a Great Depression, or inflation under normal economic conditions. In either case, in the long term the decrease in investment will lead to a decrease in production. For these tariffs at this time, the fall in USD indicates that financial markets think the second order effect will be bigger than the first order effect.
You’re missing the point here imo. This is economics 101 level analysis. America isn’t drilling for oil and then trading oil for Japanese cars. That’s what a persistent and high trade deficit means.
America is creating dollars ex-nihilo and then trading these dollars for real overseas goods. This is how having the reserve currency is a huge blessing, since we can trade unbacked paper money for real cars, computers, microwaves, etc!
But this blessing turns into a curse. This benefits individuals and orgs which can create dollars out of nothing, who are people with assets who can create money through debt. The government debt being at $37T is an exact symptom of this too, all these paper bonds have been exported overseas and we’ve received real items in return. The issue is that poorer people don’t benefit much from this “print money for overseas goods system” and it increases wealth inequality over time. Also, it hollows out your manufacturing base, for an increasingly financialized economy (dominated by the coastal regions in the US)
Tarriffs attempt to undo this curse, as being the reserve currency is starting to cause major issues at home (wealth inequality, ballooning government debt, no manufacturing is a national security issue). There’s going to be major pain. But it’s better now, than later, when the USG goes ~bankrupt and needs to default on the entire financial system. That’s gonna be some pain…
This is the bullshit allegation though.
Working class Americans have higher material quality of life than their peers in every other rich country, barring a handful of microstates like Luxembourg, or small countries blessed by geography, resources and good government like Norway and Switzerland.
The problems America has - with crime, drugs, homelessness - are political choices. American plumbers aren’t being financially screwed over.
Correct me if I’m wrong, but American living standards for all but the very bottom are higher than Switzerland Norway UAE etc despite higher nominal GDP.
In terms of disposable income / consumption, certainly. I would consider Switzerland and Norway more civilized, in that I think someone in the 50th percentile of the income distribution does have higher QOL there.
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Of course, since we can export “nothing” (ie: fiat money) for something (like real imports). So our material wealth is greater than most other counties (who don’t have this power up).
Things are not all rosy though. Chronic disease is higher here than any western nation, life expectancy is down, and severely lags behind our peers, deaths of despair are up… material wealth is not the only type of wealth. And at what cost?
None of that will be solved by tariffs.
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Yeah, because we're literally fat on all the riches.
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This would require that the US economy is at all set up to have manufacturing be a major sector, which it isn't, and that companies believe the current tariff regime is a permanent fixture of the economy rather than the crusade of one president. As it stands, these tariffs will be the first to go on January 21, 2029. And you can't spur investment by taxing, especially in an economy where the blue collar workforce does other things and manufacturing culture is gone, any more than you can turn the ocean into land by taxing Tuvalu.
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