Have there been any studies or economists predicting macro-level benefits to the US economy with the tariffs? I'm not aware of any (much the opposite), but I'm interested if they exist.
I too am interested in learning more about the other side of the debate.
"He who knows only his own side of the case knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side, if he does not so much as know what they are, he has no ground for preferring either opinion" --John Stuart Mill
I think an interesting angle to this discussion is the fact that before the "temporary" income taxes (in 1913), tariffs were the primary source of tax revenue in the United States. There are lots of modern economists in favor of consumption taxes over income taxes. And in a climate where people are up in arms about billionaires skirting income taxes, you'd think it might be a popular idea to tax all the money they spend.
Consumption taxes are wildly regressive. US tax policy since 1913 (and arguably even before) is (perhaps suprisingly) very progressive (*). Not a good fit.
(*) progressive in the sense of following the principle that the impact of taxes should be roughly the same for all, not in the general political sense.
There's at least one plan [1] that specifically addresses this problem called FairTax:
> The proposal also specifies a monthly payment made to all households based on household size. Called a "prebate," the monthly payment offsets the regressive nature of a sales tax up to the poverty level.
Of course nobody agrees [2] on how effective this would actually be:
> Sales taxes are normally considered regressive though the FairTax provides a rebate that supporters argue would create a progressive effective rate on consumption. However, the Fairtax would also eliminate the EITC and CTC, dramatically reducing this benefit.[58] Additionally the FairTax would be applied to goods that are currently not subject to sales tax. These include all food, all prescription drugs and other health care products and services (such as doctor’s visits and laboratory tests), purchases of new homes, and utility bills. These goods make up a substantial share of low income families expenses
FairTax only addresses regressivity up to the poverty level. Its proponents specifically cite the way it would affect investment and savings, which are the domain of the wealth(y|ier). People earning median household income would face a much greater tax impact than people earning 10x that level, which is precisely what the progressivity of income tax with marginal rates is intended to avoid.
"No more billionaires. None. After you reach $999 million, every red cent goes to schools and healthcare. You get a trophy that says, “I won capitalism,” and we name a dog park after you." — Mikel Jollett
Good links, though I would not call that a "mostly neutral, inquisitive tone". Varoufakis knows that the outcome of Trump's imagined/proposed tariffs cannot be known at this point, and so he explores a couple of the possible results.
I don't know about any credible economist currently making positive predictions (marginal revolution might be a good place to keep your finger on the pulse), but I did see a paper a few years ago that showed protectionist tariffs in britain several hundred years ago had a strong correlation to current day prevalance/strength of current industries. Which is to say, that industries with higher tariffs had a stronger pressence today.
All things being equal, I might expect that strategic tariffs on important sectors to be vital in maintaining them. But, given how global the economy is, and how many more non-obvious substitutions there are today, I'm not sure these protections provide as much value going forward as they did 200 years ago. Worse, is blanket tariffs are not likely to do anything in the short term but drive up local prices to match foreign import goods costs, and is likely going to be a major wealth redistribution event towards physical capital holders.
The idea is to encourage "at home" investment because the consumer-facing cost of production inside the tariff border will be less, and thus the products will sell better and thus ... capitalism.
This is such a childish, simplistic, naive view of both capitalism and material production in 2025 that it barely deserves a mention.
AFAICT a lot of studies and economists predict macro-level benefits to the US economy for tariffs, but they also predict that the costs will outweigh the benefits.
For example, this analysis of the term 1 tariffs show 1,000 jobs gained and up to 75,000 jobs lost.
>“The message is that tariffs are tax cuts, tariffs are jobs, tariffs are national security,” Navarro told Fox News Sunday. “Tariffs are great for America. They will make America great again.” https://inews.co.uk/news/world/peter-navarro-behind-trump-ta...
I too have found the discourse around tariffs lacking. This is a common and blatant logical fallacy I see:
- Tariffs are bad. They hurt the country enacting overall it in the long run.
- It's correct to respond to the US tariffs with tariffs in response.
Additionally, people seem to not understand that a country that exports more to the US than it imports stands to lose more when the US/that country have the same level of tariffs.
At a large scale, if global trade breaks down the United States will be comparatively (not absolutely) better off because they can support themselves (consumption, food, raw materials).
None of this is an endorsement of tariffs. I think the US is in a pretty good spot and things could get a lot worse. Tariffs absolutely will make expensive things more expensive, and it will hurt. But the discussion I've seen online has reduced itself to some sort of weird orthodoxy that doesnt even make sense.
I think this is only the case if there aren't replacements available from other countries.
I feel like China is going to be the biggest winner of this tariff war.
Just as an example (from Canada), we had long had a 50% tariff on Chinese EVs which helped U.S. EV manufacturers stay competitive. Now I think we're going to relax that (which IIUC was only implemented to appease our relationship with the U.S. in the first place) and cheaper Chinese EVs should start appearing on the market.
Good for Canadians, good for China. Not as good for the U.S.
Sure, but I don't see much of a difference from importing from China vs. the U.S. in terms of real impact.
I don't really care so much for the "lingua franca status of English" (even though it's the only language I speak fluently). While yes, this is one of Canada's main languages (not that we don't have a lot of Cantonese/Mandarin speakers too), China itself would be a good example that one can succeed without speaking the language which has the "lingua franca status"
Perhaps it's worth noting that the number of fluent Mandarin/Cantonese speakers in Canada is probably not much lower (as a percentage - ~4% in 2016 and I can imagine it's only increased since then) than the number of fluent English speakers in China (5%)
edit: 4% is actually the number of Canadians who spoke Mandarin or Cantonese as a first language in 2016 (which again, is likely higher now). The number of fluent combined Chinese language speakers is almost certainly higher then, even if just a little bit.
Not sure why you're making this personal. I do of course realize the privilege in speaking English as a first language, being born in a developed nation, as a white cis-man, and so on.
To cling to the idea that English need continue to be the most important global economic language though, is a type of linguistic and economic supremacy I don't care to partake in.
But keeping with the US is not better both in the short and the long term, for lack of possible trust after what just happened over the course of three months.
China is quite reliant on food and energy imports (two critical preconditions for everything) and their consumption rates arent great which is not good for an export based economy.
They could be a beneficiary if global trade doesnt go nuclear. And it probably wont. If it does they are in big trouble.
Just about any undergraduate textbook will discuss tariffs and why they are nearly universal regarded as poor policy. See Samuelson for instance. The online discourse is poor because the vast majority of people, even those who are educated, have never cracked open a 1st year Econ textbook.
That is very relevant overall and I thank you for bringing it to my attention. But what I'm talking about are people who declare tariffs as an absolute bad and then go on to say enacting them is rational and good. In the beggar thy neighbor policy, the behavior is not considered an absolutely bad thing. This happens with tariffs as well, but people can be even more dogmatic about it.
Think of it like an invasion - shooting people is probably as close to an absolute bad thing as you can get, but if you're getting shot at its pretty much time to start shooting back
- Shooting someone is absolutely bad in all scenarios
- Its correct to shoot someone if they are trying to shoot you
I agree with the second point completely. The problem is if you say that, you should go back and revise the first point, because clearly its not absolutely bad.
In the case of tariffs, once you acknowledge that reciprocal tariffs are good, you run into a problem because the US generally has lower tariffs on other countries than other countries have on it.
The US is not proposing reciprocal tariffs, it is proposing broad tariffs premised on xenophobic fantasies placing blame for US fentanyl consumption and other US failures on foreign governments.
My understanding is that in principle you could use this to cause onshoring, but you want to target the tariffs narrowly and you need everybody to believe that they're long term.
Trump's plan doesn't do the former and no US President could achieve the second.
"He who knows only his own side of the case knows little of that. His reasons may be good, and no one may have been able to refute them. But if he is equally unable to refute the reasons on the opposite side, if he does not so much as know what they are, he has no ground for preferring either opinion" --John Stuart Mill