Tariffs
I have nothing intelligent to say about President Trump’s specific tariff’s actions, nor about the ideal general tariff and free trade regime. I meant to weigh in anyway but somewhat to my own surprise decided not to.
But I have changed my mind on the wisdom in principle of running free trade when trade partner countries are highly protectionist.
When I was a kid, I saw Milton Friedman point out that trade imbalances were China giving us stuff while we gave them green pieces of paper. Which I was all in favor of.
Now I have realized that unfortunately the Chinese don’t just hoard those pieces of paper in their little Sino-vaults of Scrooge McDuck style greenbacks.
They use them to buy assets and influence in the U.S.
Suddenly that seems like a much worse deal. Instead of trading trash for goods, we are trading capital for consumption.
There once was a father who gave his kids “Dad-Time” coupons in return for chores. Then a neighboring family started submitting lower bids. Naturally, he awarded the deal to the lowest bidder. Soon, he was spending all his free time with the neighbors and none with his own children. He reflected it was because his kids were obviously lazy and greedy; he hoped they got over it somehow.
Sute
April 27, 2025
Let’s try this: under what pretense can we be said to have a limited government which supports free enterprise and liberty as opposed to central planning if a president can come in and immediately initiate massive taxes affecting virtually every activity in the country either directly or indirectly?
This isn’t just a tax on the tea, it’s a tax on everything or the materials, tools, supplies etc used to make everything.
Principled limited government is doomed. Congratulations at owning the libs.
Sute
April 27, 2025
And Milton was correct. Give them the paper and we take the stuff.
They NEED the paper. Every commodity in the world is bought and sold with dollars. Every bank needs to buy our paper in order to facilitate trade. Except…. We just initiated a trade war. So they don’t need a lot of our paper because there is less trade and we get higher prices or less goods and less growth as a result.
Pick any economy in the last 50 years. Which would you rather be. Not an imaginary one that doesn’t exist. Which nation is best positioned over the last 50 years in terms of growth, technology, environment, etc?
Do you want to be the one selling shoes for 10 bucks or the one selling shoes for 100? Who benefits more? Are we really begrudging China or Vietnam for providing us with low cost inputs we add hundreds of billions in value to and employ millions in the value chain to design, market, sell, and service?
E.C.
April 27, 2025
I . . . honestly am not educated enough in economics to make a comment either way. But Sute, when soldiers need boots (and electronics, and uniforms, among other things) to fight a war, and you can only buy them from your enemy, then your country has sacrificed not only paper or stuff, but the knowledge and skills to create necessary goods as well as frivolous ones.
We can’t make any of our own stuff anymore, and that is, in fact, a dangerous position to be in. Being money rich and skills poor is no kind of advantage, and I think that is what the current administration is trying to fix, albeit in a backwards fashion. We probably ought to have tempted the shoemakers to come to the US *before* we started a trade war . . .
G.
April 28, 2025
The United States has relied heavily on tariffs since the very first Congress.
I don’t accept the argument that this form of taxation has opposed to any other is incompatible with the existence of a free people.
Zen
April 28, 2025
We can’t even build our military hardware without parts from other countries. Our manufacturing is in desperate shape. We did so well after WWII because we had built our manufacturing up. Now, all China would have to do is seize Taiwan and we are in a bad way.
Truthfully, I don’t see this as solving the problem. It could be a great solution, but we are falling apart. People talk about who has more problems, Us or China. That is the wrong question. Who is solving their problems faster? China, by a long way. We still have a narrow advantage in AI, so enjoy it while it lasts. Trump is the little Dutch boy with his finger in the dike. It isn’t solving anything, but it may keep things afloat a little longer.
It has been prophesied that there will be no manufacturing, because of internal mobbing. I would recommend we have tools and knowledge how to use them, in addition to food storage and gardening.
Sute
April 29, 2025
Key wording there – act of Congress. Not a president manufacturing a crisis in…checks notes, everything with everyone everywhere, to justify emergency powers in raising import taxes.
Congress has the power to tax. Not the president. For a reason.
Zen
April 29, 2025
Technically true, Sute. But Congress outsourced that to the Executive a long time ago. Perhaps they should not have, but they did it.
I wonder if it is wise to act as if the Constitution hasn’t been shredded, when every other entity is acting with maximal agency.
I may agree with you that it is a bad idea. I am just not convinced it is worse than the status quo.
Now is just the time for us to be prepared. Whether this goes well or poorly, either way things are going to get bad soonish. No disrespect, but to a degree, politics is rearranging deck chairs on the Titanic.