Trumponomics - Or How I Learned to Stop Worrying & Love Tariffs

[msduncan]

Trying to cut through retoric here, so I'm asking the hivemind:

Trump frequently claims that other countries such as China and Canada levy, and have been for years levying tariffs targeting US goods. Is this true? Or partially true?

[stessier]

Hopefully you agree the AP can be trusted. Timeline of Chinese tariffs since his first term.

https://apnews.com/article/china-us-tar ... ef0186b2bb

[Holman]

When Trump claims that other countries are levying a tariff on US goods, he is almost always referring to a VAT (Value-Added Tax), which is what most developed countries levy on goods (both domestic and imported) rather than a US-style sales tax. The main difference between a VAT and a sales tax is that VAT is collected at the national level while a sales tax is more local.

A tariff is targeted to a particular country, a VAT is not. When Trump claims a VAT is like a tariff, he is ignoring this important aspect of it.

[waitingtoconnect]

Australia is a simple example.

Due to a free trade agreement Australia tariffs basically nothing coming into Australia from the United States. We tariff some of their goods already.

It also lets Us companies mine and drill tens of billions in minerals and gas a year basically tax free at the federal level.

In terms of trade we massively benefit.

It has a goods and services tax at the federal level of 10%. This applies to all goods and services regardless of origin.

Trump administration officials claim Australia has imposed a 10% tariff on our goods and services.

Further they claim Australia’s public health system is unfair because it limits what the end consumer pays for medicines. Eg if a drug costs $1000 wholesale the government covers most of it. That limits a drug companies ability to charge what it likes.

This obviously has deeply upset the Australian public although Australian politicans have a history of bending over backwards for American interests even over their own people .

[Rumpy]

Trying to cut through retoric here, so I'm asking the hivemind:

Trump frequently claims that other countries such as China and Canada levy, and have been for years levying tariffs targeting US goods. Is this true? Or partially true?

No, he's misunderstanding how tariffs work. Max will be able to explain better, but it boils down to a simple fact: We're a big Country with a smaller population, therefore producing fewer goods. The U.S ends up producing a lot of goods that we in turn purchase. But due to the amount of U.S product coming into Canada, we have to be able to protect our own. You would do the same if you were in the same situation. It's simple economies of scale at work.

Back in 2018, Trump didn't like NAFTA, and so negotiations (actual negotiations instead of throwing around insults) began between our 3 Countries the U.S, Mexico and Canada, to draw up something that Trump would later deem to be the greatest trade deal, which is what became the USMCA Agreement. He was very proud to have negotiated a new trade deal.

Fast-Forward to this year, and while things haven't changed since the trade deal was signed, Trump accuses of us cheating (we haven't) and accuses whoever signed the trade agreement of being a fool. He signed it himself.

This graphic explains the whole situation very well, with the Dairy Tariffs.

[Zaxxon]

[Rumpy]

All Hail the Tarriff King!!

No wait, don't raise prices, or else!

What did Trump think would happen? This is exactly what was warned would happen months ago.with car parts crisscrossing the border multiple times over the course of vehicle manufacturing. Not allowing them to raise prices puts them in an impossible situation.

[msduncan]

When Trump claims that other countries are levying a tariff on US goods, he is almost always referring to a VAT (Value-Added Tax), which is what most developed countries levy on goods (both domestic and imported) rather than a US-style sales tax. The main difference between a VAT and a sales tax is that VAT is collected at the national level while a sales tax is more local.

A tariff is targeted to a particular country, a VAT is not. When Trump claims a VAT is like a tariff, he is ignoring this important aspect of it.

Gotcha and that makes perfect sense. VATs, I suspect, are also why several times when I've sold something to someone in Europe they almost always ask me to undervalue the item on the value declaration information.

[LordMortis]

Did I mention how wonderful it was the Michigan and Ohio voted for this shit. Those union increases over the next five years? Hello, layoffs... Did he also threaten supply chains? Because volatile input costs are almost always configure in to pricing. OEMs hope to use this to capture price savings when they go down and to prop up multiple suppliers when there is too much danger slimming down competition too far.

[El Guapo]

There's also going to a supplemental price increase to cover all the attorneys, lobbyists, and PR people that U.S. auto makers will hire to wordsmith explanations about how their price increases are not in response to tariffs.

[Rumpy]

That should be interesting to say the least.

[Kraken]

I haven't read any news since this morning so ignore this if events have left me behind. Tomorrow is the day that trump is supposed to take the economy out and shoot it. By now it's had its last meal; in a few hours it will be taken into the courtyard, stood up against a wall, blindfolded, given a cigarette...and trump will shout "PSYCHE!", take it back to its cell, and threaten to do it all again next month.

IDK what will ultimately happen tomorrow but you can bet on chaos followed by much analysis of winners and losers. You and I, the American consumers, will be the biggest losers.

[Max Peck]

Trump's economic and diplomatic acumen has worked wonders in bringing the disparate nations of Asia together in unity.

South Korea, China, Japan agree to promote regional trade as Trump tariffs loom

South Korea, China and Japan held their first economic dialogue in five years on Sunday, seeking to facilitate regional trade as the three Asian export powers brace from U.S. President Donald Trump's tariffs.

The countries' three trade ministers agreed to "closely cooperate for a comprehensive and high-level" talks on a South Korea-Japan-China free trade agreement deal to promote "regional and global trade", according to a statement released after the meeting.

"It is necessary to strengthen the implementation of RCEP, in which all three countries have participated, and to create a framework for expanding trade cooperation among the three countries through Korea-China-Japan FTA negotiations," said South Korean Trade Minister Ahn Duk-geun, referring to the Regional Comprehensive Economic Partnership.

The ministers met ahead of Trump's announcement on Wednesday of more tariffs in what he calls "liberation day", as he upends Washington's trading partnerships.

Seoul, Beijing and Tokyo are major U.S. major trading partners, although they have been at loggerheads among themselves over issues including territorial disputes and Japan's release of wastewater from the wrecked Fukushima nuclear power plant.

[LawBeefaroni]

I haven't read any news since this morning so ignore this if events have left me behind. Tomorrow is the day that trump is supposed to take the economy out and shoot it. By now it's had its last meal; in a few hours it will be taken into the courtyard, stood up against a wall, blindfolded, given a cigarette...and trump will shout "PSYCHE!", take it back to its cell, and threaten to do it all again next month.

IDK what will ultimately happen tomorrow but you can bet on chaos followed by much analysis of winners and losers. You and I, the American consumers, will be the biggest losers.

He's hosting an annoincement/tariff party in the Rose Garden today after market close. Give all the insiders time to trade before the announcement.

[Max Peck]

Weird, I've been hearing that tourism is as strong as ever and nobody would be giving up their once-in-a-lifetime trip to Disney.

Anger against Trump is forecast to cost the US international visitors

Anger over the Trump administration’s tariffs and rhetoric will likely cause international travel to the U.S. to fall even further than expected this year, an influential travel forecasting company said Tuesday.

Tourism Economics said it expects the number of people arriving in the U.S. from abroad to decline by 9.4% this year. That’s almost twice the 5% drop the company forecast at the end of February.

At the beginning of the year, Tourism Economics predicted a booming year for international travel to the U.S., with visits up 9% from 2024.

But Tourism Economics President Adam Sacks said high-profile lockups of European tourists at the U.S. border in recent weeks have chilled international travelers. Potential visitors have also been angered by tariffs, Trump’s stance toward Canada and Greenland, and his heated White House exchange with Ukraine President Volodymyr Zelenskyy.

“With each policy development, each rhetorical missive, we’re just seeing unforced error after unforced error in the administration,” Sacks said. “It has a direct impact on international travel to the U.S.”

The decline will have consequences for airlines, hotels, national parks and other sites frequented by tourists.

[LordMortis]

He's hosting an annoincement/tariff party in the Rose Garden today after market close. Give all the insiders time to trade before the announcement.

That's what they do. Every time.

[msduncan]

Sens. Mitch McConnell (yuck), Rand Paul of Kentucky, Susan Collins of Maine, and Lisa Murkowski are holdouts planning to vote with the minority to terminate the state of emergency regarding Canada, thus scuttling tariffs aimed at that country. Trump publicly accused them of having Trump Derangement Syndrome.

[Smoove_B]

Let me know when he has them hauled off and disappeared somewhere. Maybe then people will understand.

[Max Peck]

More to the point, let us know when they actually vote against any of Trump's whims instead of voicing concerns.

[Max Peck]

Slate is rolling out a new column: Margin of Terror.

Welcome to Margin of Terror, a new column in which we’ll track the reception the second Donald Trump presidency is getting from the United States electorate. To do this, we’ll of course be referring to public opinion polls—hence the name of the column, a delightful pun that evokes both the phrase “margin of error” and the sense of bleak, nauseated panic that many Americans currently feel when they think about the present and future. Befitting a political environment in which every faction can build its own siloed version of reality, though, we’ll also go beyond the topline approval numbers to try to figure out how Trump is faring with various demographic and cultural subgroups whose support (or indifference) were crucial to his victory in 2024.

CEOs and Normal Humans Are Starting to Agree: On Trump and the Economy, They’ve Made a Huge Mistake

So: Tariffs! One of the least sexy topics in history and economics. Your correspondent ignored them to the extent possible during his high school and college years on the grounds that they did not seem like they had been relevant to public affairs since roughly 1935. Ha ha, joke’s on him, and not just because he’s going to be paying $26 for an avocado next week!

That’s because, on Wednesday, Donald Trump said he will announce his biggest round of tariffs yet. (Tariffs are taxes on goods being imported into a given country, paid by the entity importing them.*) According to the latest reporting, it’s possible that the new tariffs could cover every country that does business with the U.S., or that they could, uh, not do that. And yes, it is weird that we don’t know more details about whether that will be the case given that this is all supposed to be happening in approximately five seconds. (The tariffs that Trump has already imposed cover specific goods imported from Canada, Mexico, and China. He also says that the previously announced worldwide tariffs on cars and car parts will go into effect Thursday.)

What these policies portend, in the near term, is inflation, because companies will probably raise the price of their goods by the amount that they will have to pay in tariffs. Month-to-month inflation is not particularly high right now by historic standards, but voters still think prices are too high in general because of the big jump they took in 2022 and 2023. Which is to say: They will definitely notice, right away, if prices start getting even higher again.

What tariffs portend in the long term is trouble for the economy more broadly, because when things get more expensive, people buy fewer things. And even though these are tariffs on foreign goods, that is still going to be bad for U.S. companies. Let’s say that, on a weekly basis, a given outlet of the Big Box Inc. corporation currently sells 10 Korean-made flatscreen TVs for $1,000 each, making a $100 profit on each one. With the new tariffs, those TVs might cost $1,200, but none of that extra $200 goes to Big Box as profit; they pay it to bring the TVs in and then pass the cost on to customers. Which means that when only eight of those now-more-expensive TVs are sold in the week after the tariffs go into effect, Big Box Inc. simply makes $200 less.

[Smoove_B]

He really is a stable genius:

President Donald Trump left observers baffled this week when he suggested in a late-night Truth Social rant that his tariffs on Canadian goods would include taxes on illegal drugs.

In the Truth Social post, Trump said that one of his goals with the tariffs was to "penalize Canada for the sale, into our Country, of large amounts of Fentanyl, but Tariffing the value of this horrible and deadly drug in order to make it more costly to distribute and buy."

Given that fentanyl is an illegal drug, the government collects no taxes from its purchase or sale.

Why hasn't anyone else ever thought to put a tariff on illegal drugs?

[Blackhawk]

I... laughing... Trump... sodumb

[LordMortis]

He really is a stable genius:

President Donald Trump left observers baffled this week when he suggested in a late-night Truth Social rant that his tariffs on Canadian goods would include taxes on illegal drugs.

In the Truth Social post, Trump said that one of his goals with the tariffs was to "penalize Canada for the sale, into our Country, of large amounts of Fentanyl, but Tariffing the value of this horrible and deadly drug in order to make it more costly to distribute and buy."

Given that fentanyl is an illegal drug, the government collects no taxes from its purchase or sale.

Why hasn't anyone else ever thought to put a tariff on illegal drugs?

It's pretty easy to tell that's not what he's saying. What's harder is to figure exactly what he is saying. That somehow tarriffs on (legal) Canadian products will make it more expensive bring in illegal drugs from Canada. This, of course, leaves out the fact that a very small amount of illegal drugs are coming in from Canada, especially as compared to the amount going in from the US.

[milo]

It's a misquote. It should read, "...by Tariffing the value of ..."

Trump also posted this:
"Senator Tim Kaine, who ran against me with Crooked Hillary in 2016, is trying to halt our critical Tariffs on deadly Fentanyl coming in from Canada. We are making progress to end this terrible Fentanyl Crisis, but Republicans in the Senate MUST vote to keep the National Emergency in place, so we can finish the job, and end the scourge."

[Max Peck]

I've read that he's been talking about tariffs on pharmaceuticals that are sourced from Canada, so maybe he just short-circuited on that and expanded the idea to all drugs in general.

[Rumpy]

Yeah, not to mention that I think you can only tax legal products, and that illegal products are the ones that avoid detection therefore entirely. Therefore you can't tax what you can't see. Even Al Capone knew this, even though he got caught with tax evasion.

Taxing illegal drugs is like... uhh charging the ghosts in your house rent.

[LordMortis]

It's a misquote. It should read, "...by Tariffing the value of ..."

Trump also posted this:
"Senator Tim Kaine, who ran against me with Crooked Hillary in 2016, is trying to halt our critical Tariffs on deadly Fentanyl coming in from Canada. We are making progress to end this terrible Fentanyl Crisis, but Republicans in the Senate MUST vote to keep the National Emergency in place, so we can finish the job, and end the scourge."

Now that's clear. And OMG, what a fucking morangeon.

[Smoove_B]

The day we've all waited for is finally here:

President Trump announced a baseline 10% tariff on U.S. imports, with steeper reciprocal levies on goods from Europe, Japan, China and more than 50 other nations.

...

The trade actions unveiled on Wednesday come on top of 25% tariffs on foreign-made vehicles and auto parts announced last week that will take effect at midnight.

Steel and aluminum imports face similar tariff rates, with taxes threatened on lumber and pharmaceuticals.
The 25% tariffs applied on Canadian and Mexican imports that don't comply with the USMCA trade agreement will go into effect until the nations impose tighter border controls, senior officials said.

When those tariffs are removed, the North American countries will be subject to the baseline tariffs.

If this was his plan to get everyone to stop thinking about the price of eggs, it just might work!

[stessier]

Wow - so much for my 2% raise this year.

[Smoove_B]

Raise? Wait until tomorrow and the markets are open. Nothing like timing this announcement today after they closed because you know it's going to be bad.

The SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500, lost about 2% in after hours trading. The Invesco QQQ ETF, which corresponds to the Nasdaq-100 Index, shed 3.3%. The SPDR Dow Jones Industrial Average ETF Trust (DIA) lost 1%.

Shares of companies that are big importers were hit in extended trading Wednesday evening. Nike lost 6%. General Motors tumbled 3%. Shares of hard hit stocks over the past month as tariff fears swirled continued falling in after hours trading. Nvidia and Tesla were each off about 3%.

Congrats America. You voted for this.

[Enough]

The day we've all waited for is finally here:

President Trump announced a baseline 10% tariff on U.S. imports, with steeper reciprocal levies on goods from Europe, Japan, China and more than 50 other nations.

...

The trade actions unveiled on Wednesday come on top of 25% tariffs on foreign-made vehicles and auto parts announced last week that will take effect at midnight.

Steel and aluminum imports face similar tariff rates, with taxes threatened on lumber and pharmaceuticals.
The 25% tariffs applied on Canadian and Mexican imports that don't comply with the USMCA trade agreement will go into effect until the nations impose tighter border controls, senior officials said.

When those tariffs are removed, the North American countries will be subject to the baseline tariffs.

If this was his plan to get everyone to stop thinking about the price of eggs, it just might work!

Looks like he now likes the worst trade agreement ever (that he authored):

CNN: 10% baseline tariffs on all goods from all countries
EXCEPT "those compliant with the USMCA free trade agreement"

So Canada may have dodged a very large bullet on many of its exports

https://bsky.app/profile/markusoff.bsky ... uaznece226

[LordMortis]

Congrats America. You voted for this.

The generationally comfortable, I am sure, are getting less comfortable, while the private equity elite world citizenry are laughing at them along with the rest of us and making sure they remember their place. They'll be able to sit along side the anti Harris Muslims with the rest of us now. But hey, no mixed race socialist woman is trying to force them to live civilly along side other people, amiright?

[Enough]

The day we've all waited for is finally here:

President Trump announced a baseline 10% tariff on U.S. imports, with steeper reciprocal levies on goods from Europe, Japan, China and more than 50 other nations.

...

The trade actions unveiled on Wednesday come on top of 25% tariffs on foreign-made vehicles and auto parts announced last week that will take effect at midnight.

Steel and aluminum imports face similar tariff rates, with taxes threatened on lumber and pharmaceuticals.
The 25% tariffs applied on Canadian and Mexican imports that don't comply with the USMCA trade agreement will go into effect until the nations impose tighter border controls, senior officials said.

When those tariffs are removed, the North American countries will be subject to the baseline tariffs.

If this was his plan to get everyone to stop thinking about the price of eggs, it just might work!

Looks like he now likes the worst trade agreement ever (that he authored):

CNN: 10% baseline tariffs on all goods from all countries
EXCEPT "those compliant with the USMCA free trade agreement"

So Canada may have dodged a very large bullet on many of its exports

https://bsky.app/profile/markusoff.bsky ... uaznece226

More clarifications:

We’ve just gotten clarification from the White House that the tariff numbers in the charts Trump held up include both reciprocal levies and the 10 percent baseline. So Europe will face a 10 percent reciprocal tariff and a 10 percent baseline. China will face a 24 percent reciprocal tariff, on top of the 10 percent baseline. This is all happening in real time so the numbers were not clear at the outset.

[Holman]

Did Trump really claim today that he talked to Lee Iacocca about his tariff plan?

I'm sure "Lee Iacocca" stands in Trump's mind as the epitome of a good businessman. Trump is a creature of the 1980s, after all.

However, Lee Iacocca has been dead for six years.

[LordMortis]

MSN says no

https://www.msn.com/en-in/news/world/di ... r-AA1Cb9JD

Rather he used is "people are saying" pseudo hyperbole to reference Iococa in self praise of his stable genius, like it would be meaningful to anyone under 70.

“I watched a gentleman today on television who used to work with Lee Iacocca, a very respected automobile person.” He described the man as “an older guy, real pro, really top guy with Lee Iacocca.”

[Alefroth]

Fentanyl isn't an illegal drug.

[Enough]

MSN says no

https://www.msn.com/en-in/news/world/di ... r-AA1Cb9JD

Rather he used is "people are saying" pseudo hyperbole to reference Iococa in self praise of his stable genius, like it would be meaningful to anyone under 70.

“I watched a gentleman today on television who used to work with Lee Iacocca, a very respected automobile person.” He described the man as “an older guy, real pro, really top guy with Lee Iacocca.”

Don't worry, plenty of stupid to still go around:

https://bsky.app/profile/reichlinmelnic ... ueo42tuc2u

[Holman]

MSN says no

Ah, OK. Thanks.

[Kraken]

Yeah, not to mention that I think you can only tax legal products, and that illegal products are the ones that avoid detection therefore entirely. Therefore you can't tax what you can't see. Even Al Capone knew this, even though he got caught with tax evasion.

Taxing illegal drugs is like... uhh charging the ghosts in your house rent.

Interesting tangent: many states already tax the sale of illegal drugs -- not because dealers are expected to buy tax stamps, but rather to add tax evasion to the charges that can be leveled against them.

Even if someone is not convicted of criminal charges for drug possession or tax evasion, they may still face civil (monetary) penalties that vary by state: these can require payments of up to double the original amount of tax owed, as well as interest on the tax owed. Revenue agencies can use all their standard tools to collect this tax, including issuing tax liens, seizing assets, or garnishing wages.

[Grifman]

The inflation numbers are going to be interesting, as will the unemployment numbers too. I guess we’ll see how much hurt to their pocketbooks MAGA world is willing to take to continue to follow their Dear Leader. I jst don’t see Trump’s popularity surviving this except among his most fanatical base. This is just the stupidest economic policy I could imagine.