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.
The plans are contradictory to say the least. The fact of a fierce domestic power struggle means that parts of the US power structure which have tried to force Trump out in the past now get downsized. NPR, USAID, Higher Ed, all in this category. It also means that Trump has to continue to take direction from various political sponsors whom he'll need down the line to prevent a repeat of the 2016 presidential term. We can count, therefore, on policies like top-end tax cuts, or corporate bailouts, or union busting, or turning a blind eye to vicious monopoly consolidation via "disaster capitalism" - all getting priority over investing in next generation of working class and middle class. This does not help matters.
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.
The Japanese banking industry made a run for top status in global finance circa the 80s also. Were beat down by harsh US action, which was possible because of the power disparity. The US-China relationship has much less disparity. And ofc one can't go around alienating allies if they're serious about attempting a repeat of the 80s US defense against Japan's rising economic power, but vs today's PRC.
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.
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
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.
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 electorate 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 bullying 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.
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.
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.
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.
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.
Never has there been more choice in media, corporate or otherwise. The challenge we have is not a lack of choice, it's a lack of willingness for most to consume media contrary to their existing biases. The right, including the far right, has plenty of outlets for their views, as does the left.
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.
I've been thinking about this article, and you know, this is really a magnificent tour de force! The argument is full of holes, but the ratio of the quality of the argumentation to the quality of the conclusions that had to be arrived at is just amazing. It's a masterpiece of sanewashing. One actually finds oneself nodding in agreement for a full minute before the spell breaks and the absurdities storm back into one's consciousness.
Absurdities like:
1. The Reagan VER episode was structured to be very diplomatic, and give Japan an advantage. Their forms enjoyed market power from restricting supply. That was some compensation for the interference and lost sales. In total contrast, these tariffs are imposed in an extremely undiplomatic way.
2. Transshipment and transfer pricing. With different tariffs on each country, there's a prima facie opportunity for arbitrage. The UK, for example, could and naturally will serve as a transshipment hub, as exporters exploit its low 10% tariff vs. much higher rates for most developed countries. Will there be complex rules of origin to prevent that? Unclear. But if there are, then firms have an incentive to manipulate transfer prices to make the imports look as cheap as possible. So to enforce rules of origin, without lots of gaming the system, you have to manipulate prices somehow. It's as if Donald Trump has decided to be the self-appointed central planner of all global trade. And no one is inclined to be cooperative.
3. And to what end? The objective seems to be that we have bilateral balanced trade with every country. Why would we want this? Suppose country A exports coffee to us, and doesn't want our exports, but loves buying cars from country B, which in turn doesn't buy coffee but loves going to Disneyland. Market says we should run a trade surplus with country B and a trade deficit with country A. Trade goes in a triangle, and everyone can be balanced. What's wrong with that? And yet somehow this scheme runs afoul of the objective. Country A has to figure out a way to buy something from us. This makes no sense and is just a formula for distortion.
4. The idea that a huge stock market plunge is a bad sign is mocked. Yet Oren gives no reason to think tariffs are friendlier to wages than to profits. No support at all is offered for the idea that a crash in the predicted future profits of publicly listed firms somehow reflects factors specific to them rather than general economic malaise.
I could go on. But this only underscores how impressive it is that Oren managed to make his position seem momentarily plausible. Every other economist is utterly contemptuous. And Oren's arguments don't stand up to scrutiny. But he manages to have an economist hat on and a Trump loyalist on at the same time. Very clever.
Mr. Cass makes a very compelling case in regard to a new direction to this center-right non-affiliated voter. He made valid points about an old style of doing things that doesn't really exist anymore and needs fresh eyes. His ideas on trade and military dependency were most enlightening.
However, in his comments to Mr. Stewart he made a rather snarky remark that (paraphrased) some 70-80 year olds out there were probably feeling a bit uncomfortable with Mr. Trump's current economic aerobics.
Actually, we 70-80 year olds recall and pine for the days when there was intelligent, logical, and articulate debate by a body of statesmen and stateswomen that would result in the best decisions for enhancing the lives of it's citizenry and the world we live in.
While Mr. Cass' ideology is feels logical and correctly detailed I would wager that having these points brought to fruition in a manner somewhat less vindictive and more diplomatic would have swayed more voters.
Also, as a passing thought, to stereotype 70-80 year olds as people who are adverse to change or open dialogue would be like stereotyping all policy wonks as intellectual pinheads.
Owen you totally lost your credibility with me. I thought you were a insightful economist but you are clearly drinking the mercantilist kool aide. The market is already giving us a verdict and it ain’t good 😌
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.
The plans are contradictory to say the least. The fact of a fierce domestic power struggle means that parts of the US power structure which have tried to force Trump out in the past now get downsized. NPR, USAID, Higher Ed, all in this category. It also means that Trump has to continue to take direction from various political sponsors whom he'll need down the line to prevent a repeat of the 2016 presidential term. We can count, therefore, on policies like top-end tax cuts, or corporate bailouts, or union busting, or turning a blind eye to vicious monopoly consolidation via "disaster capitalism" - all getting priority over investing in next generation of working class and middle class. This does not help matters.
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.
The Japanese banking industry made a run for top status in global finance circa the 80s also. Were beat down by harsh US action, which was possible because of the power disparity. The US-China relationship has much less disparity. And ofc one can't go around alienating allies if they're serious about attempting a repeat of the 80s US defense against Japan's rising economic power, but vs today's PRC.
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.
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
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.
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 electorate 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 bullying 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.
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.
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
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.
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.
Never has there been more choice in media, corporate or otherwise. The challenge we have is not a lack of choice, it's a lack of willingness for most to consume media contrary to their existing biases. The right, including the far right, has plenty of outlets for their views, as does the left.
The issue here is tariffs. The establishment media on the right (WSJ, NR) is as hostile as the establishment media on the left.
Agree, but that's because of a rare instance of consensus. Oren's tariffs are getting their chance, we'll see how it goes.
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.
I've been thinking about this article, and you know, this is really a magnificent tour de force! The argument is full of holes, but the ratio of the quality of the argumentation to the quality of the conclusions that had to be arrived at is just amazing. It's a masterpiece of sanewashing. One actually finds oneself nodding in agreement for a full minute before the spell breaks and the absurdities storm back into one's consciousness.
Absurdities like:
1. The Reagan VER episode was structured to be very diplomatic, and give Japan an advantage. Their forms enjoyed market power from restricting supply. That was some compensation for the interference and lost sales. In total contrast, these tariffs are imposed in an extremely undiplomatic way.
2. Transshipment and transfer pricing. With different tariffs on each country, there's a prima facie opportunity for arbitrage. The UK, for example, could and naturally will serve as a transshipment hub, as exporters exploit its low 10% tariff vs. much higher rates for most developed countries. Will there be complex rules of origin to prevent that? Unclear. But if there are, then firms have an incentive to manipulate transfer prices to make the imports look as cheap as possible. So to enforce rules of origin, without lots of gaming the system, you have to manipulate prices somehow. It's as if Donald Trump has decided to be the self-appointed central planner of all global trade. And no one is inclined to be cooperative.
3. And to what end? The objective seems to be that we have bilateral balanced trade with every country. Why would we want this? Suppose country A exports coffee to us, and doesn't want our exports, but loves buying cars from country B, which in turn doesn't buy coffee but loves going to Disneyland. Market says we should run a trade surplus with country B and a trade deficit with country A. Trade goes in a triangle, and everyone can be balanced. What's wrong with that? And yet somehow this scheme runs afoul of the objective. Country A has to figure out a way to buy something from us. This makes no sense and is just a formula for distortion.
4. The idea that a huge stock market plunge is a bad sign is mocked. Yet Oren gives no reason to think tariffs are friendlier to wages than to profits. No support at all is offered for the idea that a crash in the predicted future profits of publicly listed firms somehow reflects factors specific to them rather than general economic malaise.
I could go on. But this only underscores how impressive it is that Oren managed to make his position seem momentarily plausible. Every other economist is utterly contemptuous. And Oren's arguments don't stand up to scrutiny. But he manages to have an economist hat on and a Trump loyalist on at the same time. Very clever.
Mr. Cass makes a very compelling case in regard to a new direction to this center-right non-affiliated voter. He made valid points about an old style of doing things that doesn't really exist anymore and needs fresh eyes. His ideas on trade and military dependency were most enlightening.
However, in his comments to Mr. Stewart he made a rather snarky remark that (paraphrased) some 70-80 year olds out there were probably feeling a bit uncomfortable with Mr. Trump's current economic aerobics.
Actually, we 70-80 year olds recall and pine for the days when there was intelligent, logical, and articulate debate by a body of statesmen and stateswomen that would result in the best decisions for enhancing the lives of it's citizenry and the world we live in.
While Mr. Cass' ideology is feels logical and correctly detailed I would wager that having these points brought to fruition in a manner somewhat less vindictive and more diplomatic would have swayed more voters.
Also, as a passing thought, to stereotype 70-80 year olds as people who are adverse to change or open dialogue would be like stereotyping all policy wonks as intellectual pinheads.
“If this is correct, the Trump administration needs to do a few things…”
Stated differently, Trump met *none* of the expectations you laid out in Monday’s essay, but you’re still praising him. Abject hackery.
Owen you totally lost your credibility with me. I thought you were a insightful economist but you are clearly drinking the mercantilist kool aide. The market is already giving us a verdict and it ain’t good 😌