While I respect the thought and research that went into your article, this analysis rings more true to me:
“Trump’s hour long press event in the White House Rose Garden April 2, 2025 was described by himself as “Liberation Day.” The tariff taxes will liberate Trump from the constraints of the rule of law and will gradually liberate the American people, as well as our friends abroad, from our money.
The tariff taxes that Trump imposes have nothing to do with coherent economic policy. The tariffs tax creates a personal treasury of bargaining chips that he will dispense one by one to keep the MAGA rank-and-file loyal and to impress world autocrats with the extent of his power.
Trump is a mob boss. He will receive selected loyal Republicans who have power and influence. He will hear their pleas, ruminate about what he might be able to do for them, and explain through veiled threats what they can do to in return for his benevolence. This is known in the trade as a protection racket. The only “constituents” who figure into any of this reside at the top of the economic food chain.
No. That is small-minded TDS, not rational policy analysis. It totally ignores the existential crisis we face with $35 trillion in debt and massive trade imbalances. But name calling rather than intelligent thought is the tool of choice on the pearl-clutching left these days. Too bad.
Did you just start a reply by name calling and then deride the person as unintelligent for name calling?
Having a positive take on policies like a 10% global tariffs, as the (post) author does, is not mutually exclusive from believing the person implementing that policy is unfit to successfully execute on them. There is an underlying economic theory to the steps being taken, but it is fair to point out that the psychology of the one steering the ship has been shown to be one of a retributive, vindictive, and narcissistic nature. The pen for signing their lauded policies may have been handed to a monkeys paw.
I’d like to ask everyone here a question. Does anyone look at this from the demand side? Do you think that it’s the 1% that has driven the massive sales growth at WalMart, Target, Costco over the past 30 years? Sales of everyday food, staples, clothing etc- a lot of which is not made in the US. Products which are sold on average at 3% profit margins or lower? Perhaps the 99% should stop demanding the cheapest products, made wherever they have to be to get onto shelves, from companies who employ more and more folks every year.
Friends, you do not know what is best for the American people. I do not know. What we have is demand. We can observe that every hour of every day.
And do you really think that this socialist project really works without price and margin controls on companies? At 3% net margins, do you really think these stores won’t be passing on higher costs for American goods to American consumers? Have fun with your wage-price spiral- unless you MAGA folks go full on socialist and try to control prices. That will be great for America! Let’s Go!
And I have no TDS to be clear. I was rooting for Trump to produce a measured, thoughtful approach to trade, re-shoring, fiscal deficit reduction and private vs public sector growth. I’m all in on that. You don’t reverse 40 years of policy in 3 months. Trump has 4 years. Breaking the system only forces us to start from a much lower base- not just for the 1% but the 100%. And poor messaging as Oren states only exacerbates the problem.
I looked at the markup for Nike and Apple. It's huge. Sneakers that retail for over a hundred dollars cost under twenty to make. While the markup on food is small, on imported non perishables it's pretty big.
We can't expect people to make a choice to buy American. Any sensible person buys the best quality at the lowest price. For many things there is no domestic choice.
Lots of upper income people shop at Walmart, Target, and Costco.
“ During the first half of 2024, households making less than $50,000 annually accounted for 41% of Walmart’s average monthly active users, compared to 36% for hard discount, 30% for supermarkets and 28% for target.
However, Walmart’s most affluent segment, households with $200,000 or more in annual income, expanded to 8%, growing almost five times faster than the 4% year-over-year growth for its overall average monthly active user base. ”
“ When it comes to income, 47% of Target shoppers are in the middle-income range ($40,000 to $125,000 annually, and 32% fall into the high-income bracket ($125,000 annually). Twenty-one percent of shoppers fall into the low-income (under $40,000 annually) bracket. Other Target insights from Numerator are below.”
“ So who, exactly, are the people flocking to Costco’s warehouses? According to recent data, 66% of Costco customers are Gen X (born 1965-1981) or Baby Boomers (born 1946-1964), and 61% are white.
About half (46%) of shoppers are middle income (household income: between $40,000 and $125,000), while 36% are high income (household income: over $125,000).”
This is your response? This is why we are in so much trouble.
My point is that lower, middle class Americans - this takes you easily into $125-200k income range- rely on low priced, high quality goods that will be much more difficult to find in a high tariff world. And wages will take much longer to equalize to prices- leaving these Americans in far worse shape for far longer than any of you imagine.
It depends where you live. $150k in NYC is not the same as in Little Rock. It’s just annoying that nobody responds to my larger point. Decent quality food and staples- all but the very rich are sensitive- anyone I know even at $200-300k is careful about what they spend and have a budget. Problem is prices of these goods will go up dramatically long before wages catch up. OR, wages will never catch up because if high-priced tariffed goods can’t be passed on to consumers, then retailers with 3% profit margins are going to scale back and that leads to lower production- making the tariffs counter productive.
Uh, Kurt, Don set the record for debt accumulation in his first term:) Wait a few weeks and you'll see his latest installment with the next tax/budget bill. Don cares not a whit about debt, he's the self proclaimed "king of debt", who went bankrupt six times, only to be bailed out by becoming a game show personality. Prior to Dons inauguration our economy was the envy of the world. Yes, we had challenges, but maga, for all the whining, never tells us where they would rather live. Hungary is nice I hear...
But it seems that Japan during the Reagan years was in a very different place economically than places like Cambodia or Vietnam today. Is it likely that the manufacturers in those countries could start building US factories, even if they wanted to? And since we have just thrown their economies off a cliff, isn’t it more likely that we push them geopolitically into the arms of China? Global trade was not just about economics but also alliance. Even believing that rebalancing trade deficits is to some extent necessary, this just seems like the most self defeating way to do so possible. Not to mention the human costs…
Following up, in 1980, US GDP per capita was just over $12.5k. Japan’s was just under $10k. Not equal, but similar. We were negotiating with an up and coming peer. In 2023, US GDP per capita was almost $83k where Vietnam’s was just over $4k and Cambodia’s was just under $2.5k. We are punching down with these poorly designed, crippling tariffs on a lot of the world that isn’t trying to take advantage of us, but is trying to rise out of poverty while providing us the goods desired to support our way of life at prices that we want to pay. As a counterpoint, in 1980, South Korea’s GDP per capita was well under $2k and has grown to over $33k in 2023, while repeatedly proving themselves to be one of our most valuable allies.
I would think most factories in Vietnam and Cambodia if not Chinese owned outright have only one customer. A Vietnamese factory for instance that only makes Nikes and was built with Chinese investors. I know that in Laos that is the case, mostly Chinese but some Korean too.
Trump is forcing good, smart people like Oren into a pretzel, as they try to come up with the coherent narratives to explain what otherwise looks to most like wild, aggressive impulses playing out on a large stage.
Oren says they need to articulate their ideas better. But there is no evidence that Trump has any difficulty articulating his ideas, or that his plan resembles anything that Oren imagines. There is simply no way, for example, that you can conform Trumps shredding of the university system and NIH and science research funding, to any forward thinking industrial policy for America. You don't hack away at the basic structures of research and science in this country--universally regarded as the strongest research engine in the world--and imagine that you're still going to have an economy built on innovation. You can dislike academics all you want, but you can't build a future for America without them, and Oren should know better. And you can't attract people from all over the world when you're also destroying the fundamental rights of free speech, and anyone who comes to study here now has to worry that they might have said something in a tweet sometime that was critical of Trump of Israel.
No, what the rest of us are seeing and terrified by is that it's clear that Trump really doesn't have a 'plan'. There is no apparent plan to build anything. There is only a 'plan' to destroy lots of things because the world has been 'bad' to the US.
By the way, I don't disagree with Oren's analysis of America's problems or how we got here, but he's coming very close to losing all his credibility as he tries to impose meaning and rationality on a reality that is obviously non-conforming.
Used to think you were an interesting thinker who provided a useful challenge to the mainstream orthodoxy but i can’t take your viewpoint seriously anymore. How are you so desperate to see a version of your ideas enacted that you’re willing to shill for an approach that is so poorly thought out and implemented? Hard to believe you’re celebrating something so destructive and unnecessary that is going to make Americans poorer
A rational case can be made in support of tariffs. I don't find the case persuasive, but I'm no economist. What annoys me about your essay (and more so for the economics essays of many other writers) is the misplaced tone of certainty.
it is moronic nonsense to attempt to justify trumps crazy tariff tantrum by comparison to reagan's negotiated, narrowly targeted "voluntary export limits" & the small share of domestic "transplant" production it generated.
Mission accomplished! In just over two months Don has obliterated the post war economic order, the post war security order, and the "new" right. I gotta say, I enjoy watching Don's cultists, with a straight face, claim this is all going according to plan:). And Oren laments a "lack of communication", as if Don actually has a plan to communicate about. Uh, Oren, have you noticed the ever changing messages from the administration? There is no economic plan... Kathie above has it right. This has nothing to do with economic policy. It's merely another tool in an autocrats toolbox. Since this experiment with tariffs looks likely to end like the last, maybe it's time for a new, new right? Oh, remember, Don still has his finger on the button. Good luck America.
While I think Oren makes good points as usual I find that much of the interpretation is looking through rose colored glasses. The fact that he has to interpret what he thinks the administration is up to speaks volumnes about how incompetently the execution is proceeding. I also note that in a recent Matt Stoller post he points out for any of this to actually produce the desired results, it must be coupled with a coherent industrial policy, which is completely lacking. Let's be honest, it will take years of effort to rebuild the industrial base and I am not sure the electorat has that kind of patience. A more nuanced and paced implementation would be more effective and less painful than the current sledge hammer approach
I also worry about allies such as Canada just bascially saying screw it we're done. The approach of bulling and punching down is not a way to negotiate a deal. Stating clearly what one wants and listening to a partner's desires so one can find common ground is the way to do it. Canada's new PM delivered a speech this week stating that they are walking away and seeking new trading partners and alliances. I don't know if this is political posturing or he means it but the fact that he has called for snap elections to validate the approach seems that we should take it seriously. At the end of the day it may be America against the world, which largely is by our own actions in much the way America created the current situtation.
I was working in a UAW parts plant in the 80’s. You should ask some UAW members how great the move of the Japanese to the South was. They came because we did not require unionization. This lead to jobs moving from the Rust Belt where pay was half of what it was up North. This continued for decades and is still going on. To resurrect our cities and towns will require at lot more than tariffs.
Communication is difficult because it gets filtered through the corporate media which is hostile. I depend on independent media like this to figure out what is going on but I am part of a small minority.
What about products that we just can't produce here like coffee? We can't bring coffee production to the U.S. and those countries that rely on coffee exports will never be able to close that trade deficit right? Are we just screwed on stuff like that? What about all the U.S. companies that rely currently on Chinese parts that aren't yet made in the U.S.? Are they just screwed until we build up a bunch of factories in 5-10 years?
Not trolling here. I genuinely don't understand. I want to know how this works.
Oren wants fair trade. No one is saying the US needs to manufacture everything. I guess you’re arguing we import a huge volume of certain products from some countries that they could never match it with stuff they import from us but those countries now have a great incentive to consider purchasing agricultural products or whatever from us.
But we can also adjust and adapt as we go along. What’s clear is what we have now is not working.
“The main products that Honduras exported to United States were Insulated Wire ($1.02B), Knit Sweaters ($921M), and Knit T-shirts ($824M).”
“The main products that United States exported to Honduras were Refined Petroleum ($2.23B), Non-Retail Pure Cotton Yarn ($490M), and Non-Retail Synthetic Staple Fibers Yarn ($358M).”
No. He is not saying it has to be an equal amount of the same product. We buy their coffee and they buy whatever product or combination of products we have to offer that amount to a similar dollar value (not absolute value of course as country sizes differ).
Re Trump, agree and I am worried he will ruin Vance’s chance in 2028. Vance is the future and can explain all of this almost as well as Oren. But he’s stifled under Trump.
A 10% permanent tariff would be at the point of entry, where coffee costs three or four dollars a pound. By the time it's sold at starbucks it would be pennies per latte. Far less than maybe an increase in wages due to renewed domestic manufacturing.
Minor point - we do produce coffee commercially in the US in Hawaii (Kona) and in Puerto Rico. Plus some minor production in California.
Tea is also grown in the US, in several states commercially and non commercially in a LOT of others, as it grows well in a greenhouse or as a house plant.
I too really like the policies laid out by Oren and The American Compass. But I do not trust Donald Trump to faithfully implement those policies. Trump's only goal seems to be self-gratification. We need look no further than the first paragraph in the American Camry article:
'Tesla’s annual “Impact Report,” released in May, surveyed thousands of its “key stakeholders.” Most were in China. Tesla’s largest plant and export hub is in Shanghai. It has just opened a research-and-development center there as well. Founded in America, dependent on American innovation, nurtured by American subsidies, the world’s most valuable car company might best be described as Chinese. When its executives promise “stakeholder engagement,” they mean kowtowing."'
Donald Trump chose the CEO of Tesla as the face of his administration.
Elon got his subsidies the old fashioned way:) Never has a foreigner suckled so successfully from the American teat. What is comical is that Don and maga despise electric vehicles…and now whine about Joepa’s EV subsidies. Cults are odd.
Insightful explanation of tariffs as they relate to global and bilateral economic relations. But what about the domestic effects, both politically and economically. For tariffs to work in the longer run (especially if imposed by executive fiat), they need domestic support. Reciprocal actions, which already have emerged, will adversely affect US exporting producers from autos to agricultural crops. The negative effects hit not only corporations (decreased sales leading to decreased revenues) but also workers (perhaps layoffs). And, of course, the tariffs themselves result in higher prices for consumers. All of this likely will lead to at least near term domestic dissatisfaction, which may translate into a political backlash. So if the point of the latest tariffs is to usher a long term transformation of the global economic order, these short term domestic economic and political issues need to be dealt with in order to provide time. The administration’s recent comments (eg., “I don’t care” about the pain; “only the weak will fail”) suggest either a lack of understanding or, worse, a lack of empathy for these domestic disruptions.
If the administration were honest they would have to say that if this works some people are going to be a lot better off but almost everybody else will be less well off. That is good for the country but no necessarily individuals. I am with you Bill, I am not sure we will have the stomach for it. I hope it works because when right wing populism fails it is easy for left wing populism to take root.
I’m definitely not an economist, and I don’t play one online, so I’ll leave that part of the discussion for those far more knowledgeable. However, I am a trained historian specializing in both China and the US. Here is what I think I’ve learned that might in some small way be relevant here:
1. Major economic/social/cultural transitions always cause significant pain for some group that gets displaced. In simple terms, there are winners and losers. Humans haven’t figured out a way around that. In this case, new industries that onshore as a result of tariffs likely will be far more automated and need significantly fewer workers than their existing US counterparts (if there are any).
2. In the US, the pain of these transitions often has contributed to violence. As examples, we can look at nineteenth century violence against each successive wave of immigrant workers who challenged the previous wave for industrial jobs. Of course, the most obvious case is the Reconstruction/Jim Crow south. Not likely to repeat itself here, but I might tenuously point to the already existing white nationalist sentiment.
3. Jim, to your point, China in particular has a much, much, much higher tolerance for pain than does the US. Moreover, the authoritarian regime has all the tools to deal with any resistance that might attempt to rise. Finally, the Chinese are far more focused on long term goals than is the US. This is not only a function of the centralized regime, but is deeply embedded in their cultural DNA. They don’t call themselves the Middle Kingdom for nothing. In the mid 80s, I asked a mid-level Chinese military officer just how serious they were about reclaiming Taiwan. He replied, “It might take years, it might take decades….but it will definitely happen.” I’m not sure the “immediate gratification” American public can match that determination.
That’s a very good point. Trump tries to rule like an autocrat. But the American people are not used to being rolled over and quietly endure the pain like the Chinese are. (Thankfully!)
Most of the hair on fire noises I've heard from fellow liberals seem to be due to loss in equities. Anyone online all day is not working. The hit to equities was broad and deep, and even the boring people who keep lots in bonds haven't seen a commensurate rise in the bond market.
In short the people who had quite a bit of money in IRAs and investments just saw their net worth drop a lot.
I too hate to lose money but at one time having had none I take a more holistic perspective. I'll never be poor again so who cares, it's just paper. I made out like a bandit when things were going up, not all of it went away. If we started making things here again eventually we might have a way for the working class to lead secure lives.
While I understand the power of tariffs in implementing well thought out and articulated policy, I can only think of the analogy of nuclear energy. On the surface nuclear energy can be an enormous power for good OR it can cause the world to self destruct. I believe Donald Trump has chosen to deploy tariffs…not for the greater good but in a manner intended to give one man supreme power. You may hope that more measured voices with more altruistic intentions are considered ….i don’t hold a lot of hope for that outcome. It is a shame, because I do agree with much of what I have heard you discuss about reconsidering our economic policy.
While I respect the thought and research that went into your article, this analysis rings more true to me:
“Trump’s hour long press event in the White House Rose Garden April 2, 2025 was described by himself as “Liberation Day.” The tariff taxes will liberate Trump from the constraints of the rule of law and will gradually liberate the American people, as well as our friends abroad, from our money.
The tariff taxes that Trump imposes have nothing to do with coherent economic policy. The tariffs tax creates a personal treasury of bargaining chips that he will dispense one by one to keep the MAGA rank-and-file loyal and to impress world autocrats with the extent of his power.
Trump is a mob boss. He will receive selected loyal Republicans who have power and influence. He will hear their pleas, ruminate about what he might be able to do for them, and explain through veiled threats what they can do to in return for his benevolence. This is known in the trade as a protection racket. The only “constituents” who figure into any of this reside at the top of the economic food chain.
The American People must organize and resist.”
-Diane Blank
No. That is small-minded TDS, not rational policy analysis. It totally ignores the existential crisis we face with $35 trillion in debt and massive trade imbalances. But name calling rather than intelligent thought is the tool of choice on the pearl-clutching left these days. Too bad.
Did you just start a reply by name calling and then deride the person as unintelligent for name calling?
Having a positive take on policies like a 10% global tariffs, as the (post) author does, is not mutually exclusive from believing the person implementing that policy is unfit to successfully execute on them. There is an underlying economic theory to the steps being taken, but it is fair to point out that the psychology of the one steering the ship has been shown to be one of a retributive, vindictive, and narcissistic nature. The pen for signing their lauded policies may have been handed to a monkeys paw.
I’d like to ask everyone here a question. Does anyone look at this from the demand side? Do you think that it’s the 1% that has driven the massive sales growth at WalMart, Target, Costco over the past 30 years? Sales of everyday food, staples, clothing etc- a lot of which is not made in the US. Products which are sold on average at 3% profit margins or lower? Perhaps the 99% should stop demanding the cheapest products, made wherever they have to be to get onto shelves, from companies who employ more and more folks every year.
Friends, you do not know what is best for the American people. I do not know. What we have is demand. We can observe that every hour of every day.
And do you really think that this socialist project really works without price and margin controls on companies? At 3% net margins, do you really think these stores won’t be passing on higher costs for American goods to American consumers? Have fun with your wage-price spiral- unless you MAGA folks go full on socialist and try to control prices. That will be great for America! Let’s Go!
And I have no TDS to be clear. I was rooting for Trump to produce a measured, thoughtful approach to trade, re-shoring, fiscal deficit reduction and private vs public sector growth. I’m all in on that. You don’t reverse 40 years of policy in 3 months. Trump has 4 years. Breaking the system only forces us to start from a much lower base- not just for the 1% but the 100%. And poor messaging as Oren states only exacerbates the problem.
I looked at the markup for Nike and Apple. It's huge. Sneakers that retail for over a hundred dollars cost under twenty to make. While the markup on food is small, on imported non perishables it's pretty big.
We can't expect people to make a choice to buy American. Any sensible person buys the best quality at the lowest price. For many things there is no domestic choice.
Lots of upper income people shop at Walmart, Target, and Costco.
“ During the first half of 2024, households making less than $50,000 annually accounted for 41% of Walmart’s average monthly active users, compared to 36% for hard discount, 30% for supermarkets and 28% for target.
However, Walmart’s most affluent segment, households with $200,000 or more in annual income, expanded to 8%, growing almost five times faster than the 4% year-over-year growth for its overall average monthly active user base. ”
“ When it comes to income, 47% of Target shoppers are in the middle-income range ($40,000 to $125,000 annually, and 32% fall into the high-income bracket ($125,000 annually). Twenty-one percent of shoppers fall into the low-income (under $40,000 annually) bracket. Other Target insights from Numerator are below.”
Chainstoreage.com
“ So who, exactly, are the people flocking to Costco’s warehouses? According to recent data, 66% of Costco customers are Gen X (born 1965-1981) or Baby Boomers (born 1946-1964), and 61% are white.
About half (46%) of shoppers are middle income (household income: between $40,000 and $125,000), while 36% are high income (household income: over $125,000).”
Investopedia.com
This is your response? This is why we are in so much trouble.
My point is that lower, middle class Americans - this takes you easily into $125-200k income range- rely on low priced, high quality goods that will be much more difficult to find in a high tariff world. And wages will take much longer to equalize to prices- leaving these Americans in far worse shape for far longer than any of you imagine.
I was responding to what appears to be a misconception.
125-200k is not lower middle class. It’s top 20% to top 10%, which us NOT lower middle.
Lower middle class Americans are generally sensitive to food, gas, and housing prices above all else.
It depends where you live. $150k in NYC is not the same as in Little Rock. It’s just annoying that nobody responds to my larger point. Decent quality food and staples- all but the very rich are sensitive- anyone I know even at $200-300k is careful about what they spend and have a budget. Problem is prices of these goods will go up dramatically long before wages catch up. OR, wages will never catch up because if high-priced tariffed goods can’t be passed on to consumers, then retailers with 3% profit margins are going to scale back and that leads to lower production- making the tariffs counter productive.
Uh, Kurt, Don set the record for debt accumulation in his first term:) Wait a few weeks and you'll see his latest installment with the next tax/budget bill. Don cares not a whit about debt, he's the self proclaimed "king of debt", who went bankrupt six times, only to be bailed out by becoming a game show personality. Prior to Dons inauguration our economy was the envy of the world. Yes, we had challenges, but maga, for all the whining, never tells us where they would rather live. Hungary is nice I hear...
Blow off
But it seems that Japan during the Reagan years was in a very different place economically than places like Cambodia or Vietnam today. Is it likely that the manufacturers in those countries could start building US factories, even if they wanted to? And since we have just thrown their economies off a cliff, isn’t it more likely that we push them geopolitically into the arms of China? Global trade was not just about economics but also alliance. Even believing that rebalancing trade deficits is to some extent necessary, this just seems like the most self defeating way to do so possible. Not to mention the human costs…
Following up, in 1980, US GDP per capita was just over $12.5k. Japan’s was just under $10k. Not equal, but similar. We were negotiating with an up and coming peer. In 2023, US GDP per capita was almost $83k where Vietnam’s was just over $4k and Cambodia’s was just under $2.5k. We are punching down with these poorly designed, crippling tariffs on a lot of the world that isn’t trying to take advantage of us, but is trying to rise out of poverty while providing us the goods desired to support our way of life at prices that we want to pay. As a counterpoint, in 1980, South Korea’s GDP per capita was well under $2k and has grown to over $33k in 2023, while repeatedly proving themselves to be one of our most valuable allies.
I would think most factories in Vietnam and Cambodia if not Chinese owned outright have only one customer. A Vietnamese factory for instance that only makes Nikes and was built with Chinese investors. I know that in Laos that is the case, mostly Chinese but some Korean too.
Trump is forcing good, smart people like Oren into a pretzel, as they try to come up with the coherent narratives to explain what otherwise looks to most like wild, aggressive impulses playing out on a large stage.
Oren says they need to articulate their ideas better. But there is no evidence that Trump has any difficulty articulating his ideas, or that his plan resembles anything that Oren imagines. There is simply no way, for example, that you can conform Trumps shredding of the university system and NIH and science research funding, to any forward thinking industrial policy for America. You don't hack away at the basic structures of research and science in this country--universally regarded as the strongest research engine in the world--and imagine that you're still going to have an economy built on innovation. You can dislike academics all you want, but you can't build a future for America without them, and Oren should know better. And you can't attract people from all over the world when you're also destroying the fundamental rights of free speech, and anyone who comes to study here now has to worry that they might have said something in a tweet sometime that was critical of Trump of Israel.
No, what the rest of us are seeing and terrified by is that it's clear that Trump really doesn't have a 'plan'. There is no apparent plan to build anything. There is only a 'plan' to destroy lots of things because the world has been 'bad' to the US.
By the way, I don't disagree with Oren's analysis of America's problems or how we got here, but he's coming very close to losing all his credibility as he tries to impose meaning and rationality on a reality that is obviously non-conforming.
Used to think you were an interesting thinker who provided a useful challenge to the mainstream orthodoxy but i can’t take your viewpoint seriously anymore. How are you so desperate to see a version of your ideas enacted that you’re willing to shill for an approach that is so poorly thought out and implemented? Hard to believe you’re celebrating something so destructive and unnecessary that is going to make Americans poorer
A rational case can be made in support of tariffs. I don't find the case persuasive, but I'm no economist. What annoys me about your essay (and more so for the economics essays of many other writers) is the misplaced tone of certainty.
Interesting! I find that ( certainty) irritating from any corner
it is moronic nonsense to attempt to justify trumps crazy tariff tantrum by comparison to reagan's negotiated, narrowly targeted "voluntary export limits" & the small share of domestic "transplant" production it generated.
Mission accomplished! In just over two months Don has obliterated the post war economic order, the post war security order, and the "new" right. I gotta say, I enjoy watching Don's cultists, with a straight face, claim this is all going according to plan:). And Oren laments a "lack of communication", as if Don actually has a plan to communicate about. Uh, Oren, have you noticed the ever changing messages from the administration? There is no economic plan... Kathie above has it right. This has nothing to do with economic policy. It's merely another tool in an autocrats toolbox. Since this experiment with tariffs looks likely to end like the last, maybe it's time for a new, new right? Oh, remember, Don still has his finger on the button. Good luck America.
While I think Oren makes good points as usual I find that much of the interpretation is looking through rose colored glasses. The fact that he has to interpret what he thinks the administration is up to speaks volumnes about how incompetently the execution is proceeding. I also note that in a recent Matt Stoller post he points out for any of this to actually produce the desired results, it must be coupled with a coherent industrial policy, which is completely lacking. Let's be honest, it will take years of effort to rebuild the industrial base and I am not sure the electorat has that kind of patience. A more nuanced and paced implementation would be more effective and less painful than the current sledge hammer approach
I also worry about allies such as Canada just bascially saying screw it we're done. The approach of bulling and punching down is not a way to negotiate a deal. Stating clearly what one wants and listening to a partner's desires so one can find common ground is the way to do it. Canada's new PM delivered a speech this week stating that they are walking away and seeking new trading partners and alliances. I don't know if this is political posturing or he means it but the fact that he has called for snap elections to validate the approach seems that we should take it seriously. At the end of the day it may be America against the world, which largely is by our own actions in much the way America created the current situtation.
I was working in a UAW parts plant in the 80’s. You should ask some UAW members how great the move of the Japanese to the South was. They came because we did not require unionization. This lead to jobs moving from the Rust Belt where pay was half of what it was up North. This continued for decades and is still going on. To resurrect our cities and towns will require at lot more than tariffs.
Communication is difficult because it gets filtered through the corporate media which is hostile. I depend on independent media like this to figure out what is going on but I am part of a small minority.
What about products that we just can't produce here like coffee? We can't bring coffee production to the U.S. and those countries that rely on coffee exports will never be able to close that trade deficit right? Are we just screwed on stuff like that? What about all the U.S. companies that rely currently on Chinese parts that aren't yet made in the U.S.? Are they just screwed until we build up a bunch of factories in 5-10 years?
Not trolling here. I genuinely don't understand. I want to know how this works.
Oren wants fair trade. No one is saying the US needs to manufacture everything. I guess you’re arguing we import a huge volume of certain products from some countries that they could never match it with stuff they import from us but those countries now have a great incentive to consider purchasing agricultural products or whatever from us.
But we can also adjust and adapt as we go along. What’s clear is what we have now is not working.
The US runs a trade surplus with Honduras.
“The main products that Honduras exported to United States were Insulated Wire ($1.02B), Knit Sweaters ($921M), and Knit T-shirts ($824M).”
“The main products that United States exported to Honduras were Refined Petroleum ($2.23B), Non-Retail Pure Cotton Yarn ($490M), and Non-Retail Synthetic Staple Fibers Yarn ($358M).”
Whoa thanks!
No. He is not saying it has to be an equal amount of the same product. We buy their coffee and they buy whatever product or combination of products we have to offer that amount to a similar dollar value (not absolute value of course as country sizes differ).
Re Trump, agree and I am worried he will ruin Vance’s chance in 2028. Vance is the future and can explain all of this almost as well as Oren. But he’s stifled under Trump.
A 10% permanent tariff would be at the point of entry, where coffee costs three or four dollars a pound. By the time it's sold at starbucks it would be pennies per latte. Far less than maybe an increase in wages due to renewed domestic manufacturing.
And 0% tariff for Hawaii, Puerto Rico, and California.
Minor point - we do produce coffee commercially in the US in Hawaii (Kona) and in Puerto Rico. Plus some minor production in California.
Tea is also grown in the US, in several states commercially and non commercially in a LOT of others, as it grows well in a greenhouse or as a house plant.
I too really like the policies laid out by Oren and The American Compass. But I do not trust Donald Trump to faithfully implement those policies. Trump's only goal seems to be self-gratification. We need look no further than the first paragraph in the American Camry article:
'Tesla’s annual “Impact Report,” released in May, surveyed thousands of its “key stakeholders.” Most were in China. Tesla’s largest plant and export hub is in Shanghai. It has just opened a research-and-development center there as well. Founded in America, dependent on American innovation, nurtured by American subsidies, the world’s most valuable car company might best be described as Chinese. When its executives promise “stakeholder engagement,” they mean kowtowing."'
Donald Trump chose the CEO of Tesla as the face of his administration.
Wall Street Journal estimates that the car company most impacted by tariffs will be Subaru, followed by GM, then Nissan, Kia, and Hyundai.
The least impacted? Tesla. Why? It imports no whole vehicles into the US, and its parts supply is less impacted by tariffs than any other car company.
Next to Tesla is Stellantis (hit 4-5x harder by tariffs than Tesla), followed by Ford.
It is striking that GM is hit roughly 2x harder by these tariffs than Ford.
Sounds like Chinese Teslas aren't for import to the US.
Elon got his subsidies the old fashioned way:) Never has a foreigner suckled so successfully from the American teat. What is comical is that Don and maga despise electric vehicles…and now whine about Joepa’s EV subsidies. Cults are odd.
Insightful explanation of tariffs as they relate to global and bilateral economic relations. But what about the domestic effects, both politically and economically. For tariffs to work in the longer run (especially if imposed by executive fiat), they need domestic support. Reciprocal actions, which already have emerged, will adversely affect US exporting producers from autos to agricultural crops. The negative effects hit not only corporations (decreased sales leading to decreased revenues) but also workers (perhaps layoffs). And, of course, the tariffs themselves result in higher prices for consumers. All of this likely will lead to at least near term domestic dissatisfaction, which may translate into a political backlash. So if the point of the latest tariffs is to usher a long term transformation of the global economic order, these short term domestic economic and political issues need to be dealt with in order to provide time. The administration’s recent comments (eg., “I don’t care” about the pain; “only the weak will fail”) suggest either a lack of understanding or, worse, a lack of empathy for these domestic disruptions.
If the administration were honest they would have to say that if this works some people are going to be a lot better off but almost everybody else will be less well off. That is good for the country but no necessarily individuals. I am with you Bill, I am not sure we will have the stomach for it. I hope it works because when right wing populism fails it is easy for left wing populism to take root.
I’m definitely not an economist, and I don’t play one online, so I’ll leave that part of the discussion for those far more knowledgeable. However, I am a trained historian specializing in both China and the US. Here is what I think I’ve learned that might in some small way be relevant here:
1. Major economic/social/cultural transitions always cause significant pain for some group that gets displaced. In simple terms, there are winners and losers. Humans haven’t figured out a way around that. In this case, new industries that onshore as a result of tariffs likely will be far more automated and need significantly fewer workers than their existing US counterparts (if there are any).
2. In the US, the pain of these transitions often has contributed to violence. As examples, we can look at nineteenth century violence against each successive wave of immigrant workers who challenged the previous wave for industrial jobs. Of course, the most obvious case is the Reconstruction/Jim Crow south. Not likely to repeat itself here, but I might tenuously point to the already existing white nationalist sentiment.
3. Jim, to your point, China in particular has a much, much, much higher tolerance for pain than does the US. Moreover, the authoritarian regime has all the tools to deal with any resistance that might attempt to rise. Finally, the Chinese are far more focused on long term goals than is the US. This is not only a function of the centralized regime, but is deeply embedded in their cultural DNA. They don’t call themselves the Middle Kingdom for nothing. In the mid 80s, I asked a mid-level Chinese military officer just how serious they were about reclaiming Taiwan. He replied, “It might take years, it might take decades….but it will definitely happen.” I’m not sure the “immediate gratification” American public can match that determination.
That’s a very good point. Trump tries to rule like an autocrat. But the American people are not used to being rolled over and quietly endure the pain like the Chinese are. (Thankfully!)
Liberal Maga here, well, almost.
Most of the hair on fire noises I've heard from fellow liberals seem to be due to loss in equities. Anyone online all day is not working. The hit to equities was broad and deep, and even the boring people who keep lots in bonds haven't seen a commensurate rise in the bond market.
In short the people who had quite a bit of money in IRAs and investments just saw their net worth drop a lot.
I too hate to lose money but at one time having had none I take a more holistic perspective. I'll never be poor again so who cares, it's just paper. I made out like a bandit when things were going up, not all of it went away. If we started making things here again eventually we might have a way for the working class to lead secure lives.
While I understand the power of tariffs in implementing well thought out and articulated policy, I can only think of the analogy of nuclear energy. On the surface nuclear energy can be an enormous power for good OR it can cause the world to self destruct. I believe Donald Trump has chosen to deploy tariffs…not for the greater good but in a manner intended to give one man supreme power. You may hope that more measured voices with more altruistic intentions are considered ….i don’t hold a lot of hope for that outcome. It is a shame, because I do agree with much of what I have heard you discuss about reconsidering our economic policy.
No one has mentioned the penguins yet?