| Long-term trade deficits are intrinsically bad. The tariffs directly address this by being exactly weighed by said deficit. See the OTR report [1]: > To conceptualize reciprocal tariffs, the tariff rates that would drive bilateral trade deficits to zero were computed. While models of international trade generally assume that trade will balance itself over time, the United States has run persistent current account deficits for five decades, indicating that the core premise of most trade models is incorrect. > The failure of trade deficits to balance has many causes, with tariff and non-tariff economic fundamentals as major contributors. Regulatory barriers to American products, environmental reviews, differences in consumption tax rates, compliance hurdles and costs, currency manipulation and undervaluation all serve to deter American goods and keep trade balances distorted. As a result, U.S. consumer demand has been siphoned out of the U.S. economy into the global economy, leading to the closure of more than 90,000 American factories since 1997, and a decline in our manufacturing workforce of more than 6.6 million jobs, more than a third from its peak. > While individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible, their combined effects can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero. If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair. [1]: https://ustr.gov/issue-areas/reciprocal-tariff-calculations > Tariffs are not a lever, they distort risk tolerance. The "distortion" / divergence from market trends is exactly the point. This is no different from the FED setting the risk-free interest rate, or a carbon tax being levied. The government is holding actors accountable for an externality (trade deficit). > Tariffs are crude, they are like a huge hammer hitting everyone, including allies The intrinsically bad part is the trade imbalance, not adversarial nation status; these tariffs are structured such that if adhered to, ceteris paribus, we will have zero trade imbalance. See the OTR report. These tariffs are anything but crude, rather calculated and surgical. Countries with little deficit will be changed little tariff; those with large deficit a proportional, calculated tariff. > Tariffs cause loss of confidence and loss of credit This has yet to be shown in the long term. > Blanket tariffs target allies; they're isolating us and we're creating blocks polarized to us and weaning themselves off our economic output. Again, these are not "blanket tariffs." They are strategic, surgical and calculated, based directly on the particular trade deficit--especially indicated for allies who have gone unchecked for far too long. It's unclear if adversarial BLOCs have much to do with tariffs, and the US's economic exports (especially key exports like oil and LNG) have only increased amidst recently increasing strategic import controls. > Tariffs only reduce dependency if there is internal capacity, of which there is none. You're putting the cart before the horse. We need demand before we see an increase in production. > We'll best case shift our dependency via third-party countries
> We're concentrating our risk on fewer countries where tariffs are lower Reciprocal tariffs are calculated and recalculated based on current trade deficit--this won't happen. Intrinsically, the "bucketing" of trade along geopolitical borders (we sum all exports and imports along national lines), actually incentives nation-heterogeneity, not nation-homogeneity, in imports, which is directly in line with national security interest. > We're reducing our efficiency and increasing prices, job losses are coming, productivity will stagnate. We're reducing our agility and our headroom Prices will increase, naturally. That's the entire point. See the OTR report. Jobs likely won't decrease, though, given the cost of labor will be relatively cheaper than the cost of goods, incentivizing hiring. Additionally, the FED is likely to lower interest rates, which will put further demand on the labor market. :>
We certainly have a lot more negotiating power and agility and headroom now that we can strategically peel away tariffs to absorb supply shocks, once the economy adjusts to the new status quo. > Historically, autarky has lead to stagnation. When has the US ever been in autarky? Ultimately, like the FED setting the risk-free interest rates, the POTUS is tempering the market's risk-taking behavior by internalizing the externality of trade deficit for economic agents. |
> The intrinsically bad part is the trade imbalance,
The basis of your comment appears to be recieved wisdom from an uncredited source, what many regard as an opinion of dubious standing.
eg:
from: https://theconversation.com/no-thats-not-what-a-trade-defici...and numerous other professional opinions from economics and trade.