[h0l0cube]

The tarrifs are for the US to build it's own domestic capabilities, but this will ultimately shift the rest of the world's trade away from the US and toward each other. It's a trade-off – no pun intended – between local jobs/national security and downgrading their own economy/geo-political standing/currency. Anyone who's been making financial bets on business as usual for globalization is going to see a bit of a speed bump over the next few years, but in the long term it's the US taking an L to undo decades of undermining their own peoples' prospects from offshoring their entire manufacturing capability. Their trump card - still no pun intended - is their military capability, which the world will have to wean themselves off first.

[whatshisface]

Tariffs don't create local jobs, they shut down exporting industries (other countries buy our exports with the dollars we pay them for our imports) and some of those people may over time transition to non-export industries.

Here's an analysis indicating how many jobs would be destroyed in total over several scenarios: https://taxfoundation.org/research/all/federal/trump-tariffs...

[h0l0cube]

They will, out of sheer necessity. Local industries will be incentivized to restart. And of course, there are already carve-outs for the automotive sector that needs steel, overseas components, etc. I expect more carve-outs will be made, esp. for the military.

I don't think the tariffs are being managed intelligently, but they will have the intended effect of moving manufacturing back to the US, even if, in the short term, it's going to inflate prices, and yes, put a lot of businesses in peril.

[seanmcdirmid]

> even if, in the short term, it's going to inflate prices, and yes, put a lot of businesses in peril.

This is optimistic. They could totally inflate prices in the long term, and not just create inflation, but reduce the standard of living Americans are used to. That in itself is fine as Americans probably consume too much, but living in the USA will become more like living in Europe where many goods are much more expensive.

Worst case is that American Juche turns out to be just like North Korean Juche.

[h0l0cube]

> They could totally inflate prices in the long term, and not just create inflation

This will all happen. But as I said, this is a trade-off. Devalue the currency, incentivize local production, increase exports, revive the working class – that's the long term goal.

> but reduce the standard of living Americans are used to.

Whose standard of living though? It's well and good if you're in a comfy desk job with health care and a pension. The discontent that led to Trump's rise is real, and it's routinely overlooked when considering how to counter him. Of the everyday people, those who have stable jobs and purpose aren't voting for Trump. (Of the wealthy, it's probably a lot more cynical who voted for Trump)

I'm not in favor of the policy, the manner in which it's being applied, or the people that are doing it, but reversing off-shoring is a consequence of using protectionist policies – be it tariffs, or subsidies.

High-skill work, and pencil-pushing desk jobs don't cover 100% of the population, and has lead to a lot of unproductive busy-work in the cities. The offshoring of blue-collar work bred the discontent that led to Trump. Trump fancies himself the new William McKinley and is using the cudgel of tariffs to re-onshore manufacturing. This is a process he started in his first administration, that was retained by Biden, and now he's doubling down and doing exactly what he promised he would – and somehow his voters are surprised?

Worse still, those service economy jobs keeping the coastal cities alive (both low skill and high skill) are on the verge of being replaced by AI – whether that's one year or 20, I don't know—though I'm wagering the latter. Physical labor is going to become more valuable as robotics is still way behind in technological development. I don't have a crystal ball, but I'd wager that–at least counterfactually—the US will have more jobs by enacting protectionist policy.

> Worst case is that American Juche turns out to be just like North Korean Juche.

Do you really in your heart of hearts think this is going to happen? I'm pretty sure the subjugation of the American people by the government would be feasible, let alone easy.

[Workaccount2]

>Whose standard of living though? It's well and good if you're in a comfy desk job with health care and a pension.

The fundamental problem is that people want low-value jobs (manufacturing clothes irons, screw drivers, ceramic mugs) with a contemporary American middle class living wages. It just doesn't math though. If you make mugs by hand all day you simply cannot create enough value in a day to keep up with the person who automates production lines all day.

Worse yet, they want those wages while also still being able to go to walmart and buy...clothes irons, screw drivers, and ceramic mugs for <$20 (maybe $50 for the iron).

We already just saw how this went over during the pandemic. Many people got $20/hr jobs for the first time in their life. A wage they have always dreamed of while slogging in $10-$12/hr jobs. Then it happened...but it felt the same as when they were making $12/hr. This is because the intrisic value they create didn't change. Value creation is what determines the structure of an economy, not wages or dollars or any other currency, those are just proxies.

The intrinsic value of making this stuff in the US just isn't there to make it viable to compete with the large number of high intrinsic value job workers in the US.

[borgdefenser]

The current standard of living is also being propped up by a completely unsustainable debt burden and the fading dividends of the unipolar moment.

Personally, I am completely in favor of all these policies. We are basically going to go through a period of austerity.

It is really what makes this system so incredible. Such a dynamic system to go from sending people checks in the mail to a few short years later, austerity. People get much too involved though with the personalities as opposed to what the system is doing as a whole.

At the most macro level, I think there is a tremendous amount of denial that the unipolar moment is over. The arguments against austerity here are just clinging to a time that has come and gone. It is like wishing I could stay in my 30s forever.

AI is also incredibly deflationary long term. The path we were on would have devalued the currency long term. If we get control of the debt and re-shore manufacturing, I can't imagine that not being good for the currency. I think the easiest way to get a non-distorted view is by flipping things around from the perspective of China.

All of this would seem bad from the Chinese perspective.

I feel like we are also doing a type of Yuan gambit to the world long term here.

Sick of the US? Well the Yuan is right there for you to take. We are betting on the gambit being refused.

If we could just turn the temperature down on the political personality bullshit there is so much interesting discussion to be had but it is almost impossible that it currently doesn't turn into a pointless food fight.

[seanmcdirmid]

> AI is also incredibly deflationary long term. The path we were on would have devalued the currency long term. If we get control of the debt and re-shore manufacturing, I can't imagine that not being good for the currency. I think the easiest way to get a non-distorted view is by flipping things around from the perspective of China.

> All of this would seem bad from the Chinese perspective.

China is leading with very aggressive investments in AI and automation, along with clean energy and clean energy vehicles. America is...just blustering mostly, some AI investments, but not much beyond that. China is set to reap more of the AI revolution than the US is, so it is very good from the Chinese perspective, especially given the increasing skill gap between Chinese and American talent. The MAGA effort is just making it worse by de-emphasizing education even more. Like Trump, Xi is an autocrat for sure, but unlike Trump he isn't stupid.

[whatshisface]

You're thinking about the bolt factory that will open, but what about the factories that close? Putting, as you say, businesses in peril, gets rid of jobs.

As for the carve-outs, there isn't a single US industry that doesn't rely on imports from lower down the supply chain.

[h0l0cube]

Protectionist policy, if applied consistently, will actually lead to more jobs (and higher wages) eventually, but also higher inflation and job losses in the short term, and a more insular economy. It's foolish to go so hard, and so fast – or this is just a negotiation tactic – so I think the Trump administration is going to compromise by necessity, but in time supply chains will adjust to the new reality, and tariffs can increase.

[mlyle]

> and higher wages) eventually

Higher real wages?

Do gains from trade not exist?

Comparative advantage: Country A has an easier time making X than Y, and country B has an easier time making Y than X, so country A should trade some of their Xs for Ys, and both countries end up richer.

I think there's some reasons to dial back interdependence a little, but I don't think it's a path likely to lead to greater wealth or real wages.

(And certainly no reason to make erratic changes at large scale, focusing on allies and neighbors first).

[h0l0cube]

I don't believe I have to point this out, but this is not a policy that I think is good, it's just one that will have the intended affect of onshoring manufacturing jobs. And I'm not talking about higher wages for quants, or MBAs, or HR, or software evangelists, or door-to-door salespeople, or cashiers at Dollar General, I'm talking about for people who are underemployed, unemployed, or doing some nonsense busywork because the manufacturing sector has been eroded away over the last 4 decades.

> And certainly no reason to make erratic changes at large scale, focusing on allies and neighbors first

Those people who benefited from globalization, and who didn't care about the working class, are exactly who brought us to this moment. And I have a huge shrug to those who are loath to accept that. If only it was attended to sooner by a more sensible administration.

[whatshisface]

That's an assumption, I'm trying to challenge it. Taxes usually take money out of the economy and lead to less activity. Why should a (very high) tax on transportation be different? These are not the sorts of things we can afford to just do without making sure they will work.

[h0l0cube]

> Taxes usually take money out of the economy

This is an oversimplification, they can change incentives, and sometimes increase investment.

> lead to less activity

I do agree money will be divested from the US as they become more and more expensive to deal with (leading to "less activity"), and like I said this will rechannel the economy between the rest of the world. The trade-off is that the US becomes a manufacturer and exporter again (leading to "replaced activity"), some manufacturing capability is duplicated (leading to "more activity" though redundant/less productive), and the currency devalues.

But I'll admit I'm well out of my depth here, and I'm being booed off the stage. All the same, I don't think I'm wrong here. Protectionism isn't new, and lots of countries do it, it's just novel that the world's largest economy and bastion of free trade is doing it to such an extreme.

[pessimizer]

It's a debate that has been had by many people far more informed than anyone who will see this thread, many times over decades or even a few centuries. Rather than challenging it on a very basic level (it's a tax, all taxes are bad, why should this tax be different), just look up the other debates and read them.

[pstuart]

The tariffs are seen as "free money" that will allow for cutting taxes on the wealthy. Note that the current messaging is "we spend too much money" and there's nothing about "we need to invest in _foo_"

[h0l0cube]

Advanced chip fabs, and battery manufacturers are the first counterexamples that come to mind. The government doesn't need to invest, they just need to watch the free market realign their manufacturing to maintain access to the US economy. Tariffs have been around since Trumps first term, and were retained by Biden, and they're already doing what they intended.