Well written analysis. I was speaking with some folks over the week regarding this. This is why I like economics... historical data & probabilities. I believe that if people or the markets weren't experience any angst whatsoever would be even more problematic. We are witnessing a correction that I do believe needs to happen regarding US trade. Parity is what is being sought & the status quo frameworks, parties & powers since the latter half of WW1 & definitely 2 don't like it.
I think the goal is clear like you stated "equalization of tariffs", trade parity, growth in American Mfg.
How one gets there is the difference. I know many folks who have different voting habits, yet desire the same end result. In my opinion what we are seeing are some of the most high stakes economic moves happening in our life time. "Squirmy" is how I described the feeling to a friend recently.
A really great individual to read about would be President William McKinley, 197-1901. President Trump referenced him in his Liberation Day talks & has referenced McKinley & his administration several times. Extra reading that I think would provide beneficial context on how he is approaching and/or viewing the situation, regardless of personal opinion. Point being history is cyclical often times & repeats itself. Just different in the modalities of execution.
For most, the goal is not the problem, it’s how it is being done. While I mentioned that leveling the tariffs is the goal, the administration hasn’t been as clear about this. Their messaging is off and inconsistent. The goals seem contradictory. This is more a lesson on messaging and clear leadership and how the lack of those impacts markets.
Touche then. That I can absolutely empathize and/or agree with. This is also a fair point, messaging has been sporadic giving lack of clarity to their overall goal in addition to how its getting done.
Ahh okay thanks for that clarity then that helps me reframe the lens in which I approach or read the article. Yes, very fair. I was initially viewing from a strictly market impact lens.
Another thing people forget are the massive amounts of services we export as a country. From Auditors to translators we receive money for these not to exclude the funds received for our military presence in some nations.
Two things to consider, one the football talk and the other a thought on resources.
I like the QB analogy, but I think it could use some adjustments. I do not see it as benching anyone because this means the US is deferring to less productive individuals. If the US produces something more efficiently and it told the price is going up on transporting the good from the US to another country, the game has changed. Since this comes at the US in all areas as opposed to one particular industry, it is like the NFL is saying the team must play a backup at guard, defensive end, and fullback (some teams still use them, lol). The US does not want to use the backup, but in order to play, they have to.
From a productivity view, directing resources to satisfy individual wants is the reason we economize anything. The believe the assumption in comparative coursework is that the make up of country A vs B allows for the opportunity cost to be lower which directs full production of one good. In the US, however, we are just really good at fully producing many goods and are restricted to efficiently allocate resources, due to an imposed tariff.
Abdullah- Thank you for this excellent analysis. I have not yet seen any insights into the long-term consequences of Mr Trump's tariff policies.
For example, the US government relied primarily on tariffs tor its income in the 19th century, until after the passage of the 16th Amendment in 1913. Mr Trump cut income taxes in 2018, and has recently extended that cut. The US Federal budget has been in continuous deficit (except Clinton in 1998-2001) since Reagan's tax cuts in 1980 -- will revenue from these tariffs replace revenue from these recent tax cuts? Will it reduce or eliminate the deficit?
What if Trump wins? If he trades only with countries that accept higher US imports than they export to the US, and if undocumented aliens are deported and immigration is severely curtailed? Would this be beneficial to the US? By my understanding most US manufacturing of goods and services currently imported from other countries would be done by robots, due to expensive US wages, and programming would be done by AI. That doesn't lead to a lot of growth in employment. And that is relatively good, because the US fertility rate is 1.74 -- less than replacement. The big problem is that Mr Trump's policies, especially with respect to race, would seem to lead to less utilization of the existing US potential labor force. If all groups do not have equal access to excellent education and higher education, underserved groups will continue to be unable to supply labor, especially in a tighter labor market.
Thanks for the helpful data and insights. A couple points:
1) The US is the #2 manufacturing nation in the world. People tend to forget this when we emphasize our comparative advantage in services. We export an enormous amount of chemicals, machines, technology, etc. I think this is an important point since so many people think "we don't make anything here anymore."
2) The administration's goal is *not* clear, contrary to what you wrote in the piece. Are they trying the reduce the tariffs of trading partners, reduce the overall trade deficit, reduce all bi-lateral trade deficits, reshore manufacturing, or cut the budget deficit? None of these are the same thing, the strategies for achieving them are often at odds, but the administration has said each of them at one time or another as the reasons for their trade policy.
Thanks for pointing out 1. As far as 2, you are correct. The overall message is not clear. However, they have clearly indicated that "equalization of tariffs" is a goal, but they have many other goals contradicting goals too...hence the overall confusion.
Great one!
Can u attach the links to studies which show the impact of 2018-2019 tariffs, thanks.
Well written analysis. I was speaking with some folks over the week regarding this. This is why I like economics... historical data & probabilities. I believe that if people or the markets weren't experience any angst whatsoever would be even more problematic. We are witnessing a correction that I do believe needs to happen regarding US trade. Parity is what is being sought & the status quo frameworks, parties & powers since the latter half of WW1 & definitely 2 don't like it.
I think the goal is clear like you stated "equalization of tariffs", trade parity, growth in American Mfg.
How one gets there is the difference. I know many folks who have different voting habits, yet desire the same end result. In my opinion what we are seeing are some of the most high stakes economic moves happening in our life time. "Squirmy" is how I described the feeling to a friend recently.
A really great individual to read about would be President William McKinley, 197-1901. President Trump referenced him in his Liberation Day talks & has referenced McKinley & his administration several times. Extra reading that I think would provide beneficial context on how he is approaching and/or viewing the situation, regardless of personal opinion. Point being history is cyclical often times & repeats itself. Just different in the modalities of execution.
For most, the goal is not the problem, it’s how it is being done. While I mentioned that leveling the tariffs is the goal, the administration hasn’t been as clear about this. Their messaging is off and inconsistent. The goals seem contradictory. This is more a lesson on messaging and clear leadership and how the lack of those impacts markets.
Touche then. That I can absolutely empathize and/or agree with. This is also a fair point, messaging has been sporadic giving lack of clarity to their overall goal in addition to how its getting done.
Ahh okay thanks for that clarity then that helps me reframe the lens in which I approach or read the article. Yes, very fair. I was initially viewing from a strictly market impact lens.
Great analysis, enjoyed it!
Great article.
Another thing people forget are the massive amounts of services we export as a country. From Auditors to translators we receive money for these not to exclude the funds received for our military presence in some nations.
Great point, Antowan.
Thanks for adding context to the QB analogy. I’ll make sure to work on it for the next talk.
As far as the US being good at producing a lot of things, that’s possible but even then it’s not good at producing everything.
Two things to consider, one the football talk and the other a thought on resources.
I like the QB analogy, but I think it could use some adjustments. I do not see it as benching anyone because this means the US is deferring to less productive individuals. If the US produces something more efficiently and it told the price is going up on transporting the good from the US to another country, the game has changed. Since this comes at the US in all areas as opposed to one particular industry, it is like the NFL is saying the team must play a backup at guard, defensive end, and fullback (some teams still use them, lol). The US does not want to use the backup, but in order to play, they have to.
From a productivity view, directing resources to satisfy individual wants is the reason we economize anything. The believe the assumption in comparative coursework is that the make up of country A vs B allows for the opportunity cost to be lower which directs full production of one good. In the US, however, we are just really good at fully producing many goods and are restricted to efficiently allocate resources, due to an imposed tariff.
Very good. Chris
Abdullah- Thank you for this excellent analysis. I have not yet seen any insights into the long-term consequences of Mr Trump's tariff policies.
For example, the US government relied primarily on tariffs tor its income in the 19th century, until after the passage of the 16th Amendment in 1913. Mr Trump cut income taxes in 2018, and has recently extended that cut. The US Federal budget has been in continuous deficit (except Clinton in 1998-2001) since Reagan's tax cuts in 1980 -- will revenue from these tariffs replace revenue from these recent tax cuts? Will it reduce or eliminate the deficit?
What if Trump wins? If he trades only with countries that accept higher US imports than they export to the US, and if undocumented aliens are deported and immigration is severely curtailed? Would this be beneficial to the US? By my understanding most US manufacturing of goods and services currently imported from other countries would be done by robots, due to expensive US wages, and programming would be done by AI. That doesn't lead to a lot of growth in employment. And that is relatively good, because the US fertility rate is 1.74 -- less than replacement. The big problem is that Mr Trump's policies, especially with respect to race, would seem to lead to less utilization of the existing US potential labor force. If all groups do not have equal access to excellent education and higher education, underserved groups will continue to be unable to supply labor, especially in a tighter labor market.
Phillip, these are all great questions we should ask before implementing tariffs.
Thanks for the helpful data and insights. A couple points:
1) The US is the #2 manufacturing nation in the world. People tend to forget this when we emphasize our comparative advantage in services. We export an enormous amount of chemicals, machines, technology, etc. I think this is an important point since so many people think "we don't make anything here anymore."
2) The administration's goal is *not* clear, contrary to what you wrote in the piece. Are they trying the reduce the tariffs of trading partners, reduce the overall trade deficit, reduce all bi-lateral trade deficits, reshore manufacturing, or cut the budget deficit? None of these are the same thing, the strategies for achieving them are often at odds, but the administration has said each of them at one time or another as the reasons for their trade policy.
Thanks for pointing out 1. As far as 2, you are correct. The overall message is not clear. However, they have clearly indicated that "equalization of tariffs" is a goal, but they have many other goals contradicting goals too...hence the overall confusion.