Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?
This is your opportunity to ask questions. No question too simple or too silly.
Culture war topics are accepted, and proposals for a better intro post are appreciated.
Jump in the discussion.
No email address required.
Notes -
I will tackle the tariff half of the question. I assume that you paired it with a question about corporate taxes to indicate that you are looking for arguments against tariffs that are specific to tariffs, as opposed to generic anti-tax arguments. I will also assume you are asking about tariffs under Trump as opposed to tariffs in the abstact.
1. Comparative advantage. The essential idea is that each country produces things it is good at and exchanges them for things it isn’t good at. If you reduce trade by creating tariffs, that makes everyone poorer. I won’t dwell on this because there are many good explanations of comparative advantage on the web.
2. Logistics. Canada exports most of their oil to the United States. The United States produces more oil than it consumes, so importing oil from Canda allows the United States to export a lot more oil. With U.S. tariffs on imported oil, it makes sense for Canada to export oil to countries that need it to avoid the tariffs, but that is going to cost Canada a fair amount of money to build the necessary infrastructure. The United States also loses because consumers in the American midwest have to pay more for gasoline and companies involved in oil export lose work.
This could be classified as an example of comparative advantage (the U.S. has an advantage in exporting oil), but I list it separately because it is not an obvious example.
3. Uncertainty. Trump has repeatedly announced tariffs and then changed his position. This makes it very hard for businesses to invest. A business can’t very well invest in a factory to make something covered by tariffs unless the factory would be profitable without the tariff, because no one knows what the tariffs will be a year from now. Similarly, a business can’t invest in a factory that would be profitable without the new tariffs, but relies on imports as inputs so tariffs could make it unprofitable.
4. Loss of trust. The tariffs imposed by Trump are generally in violation of international agreements that the U.S. has signed. For example, the tariffs on Canada violate the USMCA agreement that Trump negotiated during his first term.
I imagine that some countries will still negotiate deals with the United States because they feel that they have no choice. (One such country would be Israel, which preemptively eliminated all tariffs on U.S. goods before April 2.) But the European Union is strong enough that I don’t see them making a free trade agreement with an untrustworthy partner.
This loss of trust is across the board, not just in trade. For example, the United States cannot find itself in a position where it has no choice but to default on its debt (if the Treasury has trouble rolling over its debt, the Federal Reserve can function as the buyer of last resort), but it could decide to default. That's probably the rates on long term treasury bonds have been so high recently.
5. Corruption. Trump can say to both foreign leaders and U.S. companies, “I’m willing to consider lowering the tariff you are concerned about. I’d like you to do me a favor, though.”
The thing I haven't seen anyone really address is that usually, the Comparative Advantage in question is lax safety and environmental laws. Sure, we have less land well-suited for Cocoa plants than South America. But the reason why it's cheaper to build a factory in China than the US is because China has no qualms with forced labor, unsafe conditions, and pollution. The government of China is able to force people to produce things that there is no demand for, including brand new ghost cities.
Are people just ok with this, morally and ethically? Is there any concern that this is a strategy that China has been employing to explicitly hollow out the American Industrial Capability which won WWII for the Allies?
The forced labor concern don’t apply to Europr, Japan, South Korea, Israel, or New Zealand, which have all had tariffs raised.
Yes, this is true. I would be for a kind of trade union that where the main requirement for entry is not exploiting their workers or environments (and maybe combined with a military pact.) Of course, the EU might have a different understanding of what that means than the US...
I'm not super informed on this but my impression is that I don't really like the American leftist habit of labeling working conditions they don't like as having "low labor standards" when the alternative is just those workers not being employed at all. I suspect most European countries have standards above this even if I wouldn't particularly like those jobs myself. It's easier for me to believe China doesn't have them given their track record on human rights in general and that they have labor that's much more accurately described as forced or coerced. So the US need not be the gold standard for what acceptable labor standards are. There is still no need for any tariffs at all on Europe and the other countries I mentioned (except maybe Israel but we can start by cutting off other sources of funding to them first).
I was referring to European countries making it almost impossible to fire an employee without a solid record of misbehavior and prior notice.
America decides, "We will only have free trade with countries that maintains worker accidents under a certain threshold and has solid enforcement against slave labor on exports."
Then Europe says, "We'll make our own free trade organization with countries that have a good enough social safety net and do not allow companies to fire their employees willy nilly." And the US gets kicked out of the global trade anyways.
Except that would never happen, because they would love to sell to us. It's mostly a thought experiment to try to assess where the line is that we wouldn't' allow countries to cross. China at one end, Canada at the other, where is the line drawn?
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link
More options
Context Copy link