The steel man argument is:
1. Bring jobs back on-shore. Lots of US companies shut down factories over the last several decades and shipped jobs to Mexico and other countries. The UAW supports the tariffs.
2. Bring manufacturing back on-shore. If we have to fight a war, we need a strong manufacturing base (see #1). If it's a war with China, or with a country where China decides not to sell to us, we wouldn't have the manufacturing base to supply the war effort.
3. These are mostly reciprocal tariffs. The countries that were are putting tariffs on already have tariffs on our goods.
4. Additional treasury income.
5. Combat unfair practices like dumping.
The tariffs are not reciprocal tariffs (i.e., based on tariffs in those countries). They're set by dividing the trade deficit with that country against the total volume (and then halved). This premise can't be included in the steel man version of the argument.
Are you arguing that those countries don't impose tariffs on our goods, or you don't like the method of calculation?
EU tariffs for goods from the USA vary but based on trade volume it's effectively 1.3%. Setting a 20% tariff for all EU imports is a huge novelty unknown in recent decades. There have been higher tariffs for certain products to protect domestic industry, some of them are more than 60 years in place through.
Well, regardless of whatever you think about truly reciprocal tariffs, the Trump Tariffs are not that. They released the formula they used to calculate the levels and it has nothing to do with other countries’ trade barriers. It’s like literally trade deficit with that country divided by imports. Which is utterly unhinged, with no basis in theory or reality. But again, even if you disagree, that is not the definition of a reciprocal tariff.
A reciprocal tariff is a tax or trade restriction that one country places on another in response to similar actions taken by that country. The idea behind reciprocal tariffs is to create balance in trade between nations. If one country raises tariffs on goods from another, the affected country might respond by imposing its own tariffs on imports from the first country. This response is meant to protect local businesses, preserve jobs, and fix trade imbalances.
https://economictimes.indiatimes.com/definition/reciprocal-t...
I think you are arguing that they aren't equal tariffs. I would agree with that. They do seem to be reciprocal though, because the countries imposed tariffs on our goods of some sort.
There may not be zero tariffs in other countries, but the amount calculated by the Trump Admin doesn't account for them. It doesn't even consider them. It's as simple as "trade deficit by total volume". Unless you assume that, absent tariffs, trade would always be perfectly balanced (it won't be), then the difference is structural realities (such as certain climates growing things that can't be grown in the US).
They aren't reciprocal tariffs because the other countries don't have anything like comparable tariffs in place already.
Why should corporations respond to all of this by taking a lot of risk and invest in capital? The tariffs aren't based on any sort of sound strategy, just one poorly educated person's black and white, simplistic worldview full of insecurity.
They change practically by the hour; first they're on, then they're off, then they're on, then they change, thne they're bigger than anyone expected.
That doesn't make companies say "well, let's expand!" It makes them hunker down. Kill off the least profitable products, cut overhead, etc.
There's time needed to build the necessary manufacturing, train a workforce, etc.
There's prices skyrocketing when suddenly American manufacturers have less competition.
There's also the plunge in sales of goods we sell to other countries.
This is the sort of thing you change over a generation. Not in a day, year, or even four years.
You can't just snap your fingers and say "you'll buy all your CNC machines from AMERICAN companies!" - even if we had enough manufacturing capacity, where are you going to get the workers from, particularly as literacy and education levels have been falling, and the whole education system is getting torn up?
...and where are you going to get all the semiconductors from?
The US famously had to buy titanium for the SR-71 from Russia through shell companies because the US lacked the mining capacity, the refining capacity, and know-how.
>Why should corporations respond to all of this by taking a lot of risk and invest in capital?
They would invest domestically to evade the tariffs. They invested heavily in Mexico since NAFTA to increase profits, the tariffs (hopefully) make it more profitable to manufacture domestically.
>The tariffs aren't based on any sort of sound strategy, just one poorly educated person's black and white, simplistic worldview full of insecurity.
I'm not going to reply to that since it is an emotional argument.
>They change practically by the hour; first they're on, then they're off, then they're on, then they change, thne they're bigger than anyone expected.
I agree it should have been much more predictable and steady. I suspect the fluctuation is due to the countries in question capitulated to what Trump wanted (higher security at the border, removed tariffs on US goods, allowing the CIA to hunt down cartels in Mexico, etc)
>That doesn't make companies say "well, let's expand!" It makes them hunker down. Kill off the least profitable products, cut overhead, etc.
Not expand, relocate. Relocate building new factories with US labor on US soil, run by US workers.
>There's time needed to build the necessary manufacturing, train a workforce, etc.
Agree.
>There's prices skyrocketing when suddenly American manufacturers have less competition.
Short term yes, but tariffs are deflationary long term in advanced economies.
https://onlinelibrary.wiley.com/doi/abs/10.1111/1467-9396.00...
>There's also the plunge in sales of goods we sell to other countries. This is the sort of thing you change over a generation. Not in a day, year, or even four years.
I agree it's very agressive. I don't recall any politicians trying to get manufacturing on shore in earnest in my lifetime (and I'm old), but I'm happy to see an attempt. Drive anywhere down main street in middle America, you'll see a lot of boarded up ghost towns that used to be propserous. Lobbyists spend a lot of money to keep their clients' costs down by using cheap offshore labor. Their clients are of course corporations.
>You can't just snap your fingers and say "you'll buy all your CNC machines from AMERICAN companies!" -
You can offer price incentives. If US CNC machines are $100K and Chinese are $110K with tariffs, they will buy US CNC machines.
>even if we had enough manufacturing capacity, where are you going to get the workers from, particularly as literacy and education levels have been falling, and the whole education system is getting torn up?
Many of these jobs don't require a college degree. On the job training used to be an effective way to do this. It's not going to be easy, but it's possible. There are plenty of people in middle America looking for work.
>...and where are you going to get all the semiconductors from? The US famously had to buy titanium for the SR-71 from Russia through shell companies because the US lacked the mining capacity, the refining capacity, and know-how.
Well if China invades Taiwan, which they have been promising to do and did with Hong Kong, we won't have any modern semiconductors. The US economy and military can't survive without modern semiconductors. TSMC (Taiwan) and Intel just made a deal where TSMC will run Intel's fabs in the US using their manufacturing expertise.
https://www.tomshardware.com/tech-industry/intel-and-tsmc-ag...
There are definitely long term upsides to this if the tariffs stay intact and there are long term upsides if other countries remove tariffs on us. It's certainly rewiring the global trade network, hopefully in our favor. We have one ace up our sleeve, we have the largest market in the world by 2x. That's a lot of negotiating power.