The steelman here is: it is better for a country to have a diverse manufacturing base and a net positive balance of trade. The only way to get manufacturing happening here is to make it more profitable to manufacture here than elsewhere. The only way to do that is to make sure everyone else’s cheap stuff is much more expensive, thereby creating a possible profit margin for local manufacturing. This medicine will be hard at first. But it will create a resilient economy where foreign wealth comes in (buying our goods) and national wealth stays home (purchasing locally made goods).
You didn’t ask for counter arguments but I’m sure we will see a wide range below this comment.
A broader picture here is to say neoliberal globalization is bad in that it removes local autonomy by creating a need for peaceful trading partners. Who is it bad for, and what sort of world would be good for those people is an exercise left to the reader.
EDIT: I like the vigorous comments and zero net score on this comment. don't blame the messenger guys, this is a fair statement of the steelman. It does not represent my own views.
If this was the real reason then wouldn't we see countries matching import tariffs with export tariffs? Sharing revenues on a percentage of the flow of goods into the US 50/50 would at least be a more sustainable geopolitically. It would be a collaborative resolution in some sense.
Instead, we are seeing countries match with import tariffs in the other direction, and a deterioration of global trust.
I don't think most countries actually want to balance bilateral trade. You can get a hint of this by the fact that the calculation that the US is using right now to determine the tariff rate puts a floor of 10% tariff. If they were truly committed to balancing bilateral trade then you would have expected them to actually have added export tariffs to any countries where the US had a trade surplus. Instead they gave a 10% import tariff still. I'm not sure I've seen any explanation for this 10%.
> Instead, we are seeing countries match with import tariffs in the other direction, and a deterioration of global trust.
Right, because e.g. if Canada has no tariff on car imports and the USA has tariffs, then the logical course of action for car manufacturers is to move all of their manufacturing for Canadian-sold cars to the US, because it's more flexible to have manufacturing in the place that incurs fewer tariffs overall. Canadian import tariffs take that incentive away.
Export tariffs make more sense for resources where the manufacturing base can't be moved.
The comment you replied to didn't say that this steelman wants an "even" balance of trade, it said the steelman wants a net positive balance of trade, more exports than imports. Export tariffs discourage something that the steelman wants. The basis for "trade deficit bad" is that we're collectively sending those countries more money than they're sending back.
> I'm not sure I've seen any explanation for this 10%.
So the orange idiot can make a "deal".
Not sure what you mean. Export tariffs are very rare because nearly everyone agrees that it's good for a country to export lots of stuff. The question is whether imports are also uniformly good for a country. Free trade advocates say yes (and I think they're right), "typical" protectionists say they become bad when they undercut local producers, balance-of-trade protectionists say they become bad when they exceed exports.
> everyone agrees that it's good for a country to export lots of stuff
Not if you want to avoid escalation of a trade war.
If you know that the US is pissed off because you're hoarding dollars because its the reserve currency and its causing the USD to rise too high, leading to their decline in manufacturing competitiveness, then you can solve their problem for them by adding an export tariff. It will make them more competitive. But that way, you get the revenues from the tariff rather than the US. Adding your own import tariffs makes the trade balance worse. Its like the person you're negotiating with is complaining about a knife and you decide to twist it rather than remove it. A 50/50 split of export and import tariffs would mean that both countries can take a cut, the USD can maintain reserve status, and US manufacturing can stay competitive despite a stronger dollar. The fact that noone is doing this means that either they haven't considered it or they aren't happy with this outcome(probably the latter, but you never know...)
> If you know that the US is pissed off because you're hoarding dollars because its the reserve currency and its causing the USD to rise too high
But you don’t know that! The explicit US position is that their tariffs are purely retaliatory, based on a formula they invented a few days ago which claims to compute an effective rate consisting of tariffs and non-tariff barriers. Export tariffs would make the formula as currently constructed go down, but the US would clearly see you’re juking the stats rather than actually removing trade barriers, and adjust the formula to account for it.
Perhaps you think the US is being strategically deceptive about its motivations? I do see a lot of people offer that as a “defense” of the US position, although I don’t clearly understand how this is meant to make things better. How should foreign trade negotiators know which HN commenters are telling them the real position and which ones have been taken in by the misdirection?
I think export tariffs are rare more for implementation reasons. For instance, resource royalties are relatively common, and you could theoretically structure resource royalties to apply to basically the same basket of goods, in the same amount as an export tariff.
The trouble is that no company is going to want to invest in new/expanded US manufacturing facilities that only make sense under the just announced tariff regime, unless they have confidence that this is the new normal, and won't be rescinded any time soon. Would you want to bet that current tariffs will be largely the same next week, or next year, or in 4 years time?
If none would, then why was it already starting?
https://www.investing.com/news/politics-news/investment-comm...
Totally agreed. Among the many complaints I have here, this is a big one. As long as Dems are saying "this sucks we hate it we will change it", we have a lot of uncertainty, and so it is definitely not time to build factories.
I'd contrast this with the Obama energy policy, which was a significant change in US policy toward energy independence, consistently and fairly quietly applied without generating a worldwide recession or trade war.
Some counterarguments:
> it is better for a country to have a diverse manufacturing base
A country can exist and be wealthy without diverse manufacturing base.
> a net positive balance of trade
A country can have stable and growing economy with negative balance of trade, as long as certain conditions are met. In short, this country may offer something else to compensate trade deficit, i.e. there can be a price tag on military and political power.
>A country can exist and be wealthy without diverse manufacturing base.
This theory has yet to be tested in a peer war.
> i.e. there can be a price tag on military and political power
And what about services the US provides? Google and Microsoft are some of the biggest companies and bring a ton of money to the US, but this doesn't seem to be included in the calculation because they don't sell physical goods.
> bring a ton of money to the US
Are they? Or do they keep their profits overseas?
That's the long-term theory, yeah.
It's interesting to see how the U.S. could make it happen though, given that there is already a shortage of labor and materials. It will be a long, long road.