I’ve been reading up on the tariffs that were imposed during the Trump administration and I keep seeing mixed reviews about their effectiveness. On one hand, they seemed to protect certain domestic industries by making imported goods more expensive; on the other hand, there’s a lot of talk about higher prices for consumers and retaliatory measures from trading partners.
The thing is, these tariffs aren’t exactly popular among everyone. If we were to look back 1 year out, 2 years out, and even a few more years down the line, how will we actually know if this was a good move?
Surely there are some metrics or outcomes that can help us evaluate their success or failure. I guess it’s not as simple as checking stock market performance alone, although that’s probably part of it, right?
Is it primarily about looking at changes in trade balances with countries like China, or do we need to consider the broader economic impacts, such as job growth within certain industries? And how much weight should be given to the political ramifications, like strengthened relationships (or tensions) with trading partners?
I’d love to hear your thoughts on what metrics or indicators would help determine whether these tariffs were indeed a beneficial strategy. Thanks in advance for any insights!
Ok, another answer closer to the ground. 2 goals are often invoked. Reduce the trade deficit and increase domestic manufacturing.
- Trade deficit
… means that more goods (and services) come into the US from the rest of the world than the US delivers in return.
Reducing the trade deficit makes Americans poorer by design. There will be fewer goods available for Americans, either because they have to give up more to the rest of the world, or because they don’t come into the country in the first place.
The rest of the world is willing to loan money to people, companies, and governments in the US. It is also eager to invest in the country, because it really was a good place in which to do business. Look at the current big thing: AI. You can’t really do that in the EU, and investing in China has its own risks. Trump may actually reduce the deficit by making the US more of a South American style banana republic.
- Manufacturing in the US.
One manufactures stuff outside the US and transports it there because it is more efficient. Americans can be more profitably employed in different areas. Moving more manufacturing to the US should be expected to leave the average American poorer. It should not be expected, in isolation, to reduce the trade deficit as it creates new investment opportunities that potentially attract foreign money, increasing the deficit.
However, while Americans would be left financially poorer, there may be benefits not captured by conventional econometrics. Maybe manufacturing is more emotionally satisfying in a way that is not captured by only looking at the wages. Who knows?
Unfortunately, getting to that state will be brutal. Millions of people will have to find and learn new jobs. That is what happened when manufacturing was off-shored. Reversing that will have the same cost. Some economists have come to believe that the psychological cost of such structural changes has been vastly underestimated, and that is why trade agreements are so unpopular. The benefits from free trade may not outweigh the psychological pain and disruption of communities. Reversing free trade will have similar effects, that are likewise virtually impossible to measure.
I think the most objective benefit would arise if a war happened that disrupted trade. For example, if Trump invaded Canada and Greenland, this would probably lead to the US being embargoed. Then it would appear good to have already built manufacturing capacity in the US while it was still easy. You need physical goods to fight wars, after all.
That’s kind of subjective.
There are two broad views on whether something ‘was a good plan.’ Generally, everyone agrees that accomplishing the intended goal is the first requirement, but people tend to divide then on whether there is a secondary requirement. Many hold that the second necessary requirement is that the action doesn’t violate prior tenants.
e.g. if the goal is to get children out of a burning building, actually getting them out is generally a minimum requirement for ‘a good plan’, however, if the plan is to get them out by punting them out the window, it would be argued by many that the plan was bad because it violates a prior tenant to not hurt the children.
For the tariffs, it is almost a given that it will create a better business environment for companies that want to compete in sectors where tariffs act as a protectionist measure. However, it is also generally a given that the tariffs will cause financial pain for the average American, whose standard of living depends on cheap foreign labor. For many people, the damage done to the American public is like the punting. It violates established values, and thus becomes a bad idea.
This also all assumes the stated goal is the real goal. The claim is the tariffs are intended to help American businesses, but the general interpretation is that’s a lie. Many people believe the tariffs are simply a threat to get obedience from other governments. From this view, the tariffs are a failure, because essentially no power has been gained over the rest of the world, and many places that were cooperating freely before now have antipathy toward the US.
If you’re looking for convincing arguments; read through the responses from this panel of experts: https://www.kentclarkcenter.org/surveys/tariffs/ (from 2024) and more recently: https://www.kentclarkcenter.org/surveys/tariffs-reciprocal-and-retaliatory-2/
Many of the responding professors provide detail on why they vote a certain way. For example to the 3rd part of the question from 2024: “The gains for the American economy from tripling the tariffs would measurably outweigh the losses.” you get replies like:
Protectionism via tariffs creates well-understood aggregate losses in efficiency. This is so even if China “unfairly” subsidizes its steel. Political motivations aside, actual distributional impacts are modest, ill targeted, and better handled with other more direct tax tools.
With links to further background information: https://economics.mit.edu/sites/default/files/publications/CW 04-15-22.pdf & http://www.econ.ucla.edu/pfajgelbaum/tradewar_1203.pdf with more detail to read.
Not sure if this will convince you or not; but it’s at least a cache of relevant information.
Not sure if this will convince you or not
I don’t think I worded my original post properly because I feel convinced already. I was just looking for a way to measure up the effects of this idea. If we are a country dependent on importing goods and we make them more expensive, it stands to reason that we either stop getting those goods (doesn’t seem easy…) OR we just deal with the price, and that doesn’t seem easy either.
I just thought this is odd… like if I wanted to propose a tax on bicycles, we could talk how many bicycles there are in the USA, if this would make sense, etc. but that’s an actual discussion. Most of the people in this thread are just asserting it’s a bad idea and either don’t know the “why” themselves, or just don’t want to say.
19th century solution to a 20th century problem in a 21st economy.
It’s bad. But I’m sure some people are making a tonne of money of it. Just not you.
There is no absolute, objective way to judge if some policy is a good or bad. We can only determine if some policy achieves its goals. This is difficult as different justifications for the tariffs have been given.
We can also have philosophical arguments over whether the goals are good in some abstract sense. For example, some people on the right feel that the US not having access to X-mas knick-knacks and gifts is positive, as it will force people to engage with religion.
This guy does defense economics but he did a good piece on the tariffs: https://m.youtube.com/watch?v=nVZ1lcw2bVU
They’re not. If you think they are you’re a moron. There’s no gentle way to put it.
It’s a grift. They already did it once this month, it’s called insider trading.
I don’t think it’s a good idea. I just want to know if the badness of the idea can be quantified. Otherwise there’s the chance that in the future, someone decides to do it again.
It already happened in the past and had dramatic consequences for trade in the U.S., that being “The Great Depression.”
We already know what happens. It didn’t stop someone from deciding to do it again.
The US introduced tariffs in the thirties and it ultimately caused the attack on Pearl Harbour.
The reason why we know it’s a bad idea is history.
It had been done before, the result was known. Many people spoke up. It made no difference because his goal is to harm others and enrich himself.
Objectively What’s the stated goal (A classic example being green policies which are bad for the economy but good for society) and then compare the results in let’s say one year.
That said, economic have plenty of model whose accuracy go from not worse than rolling a dice to good enough to predict the consequences of policies before implementing them so they can do better
deleted by creator
A lot more people will be unable to acquire a lot of things. There will be a lot more crime.
The higher tariffs are paid by the importers, who make the customer pay for that. And considering that the minimum wage is now below the poverty line, a lot of electronics, even necessities like washing machines and fridges, will be unaffordable by some people.
And what is the result when a lot of people can’t afford basic necessities? Crime.
Give it a year.
On the bright side, ill bet the smuggling business will be booming over the next few years!
Your degree of credulity should be criminal.
Any economist or data scientist should be able to pretty easily compare the economic course to a forecast of what would have happened with minimal interference.
Will we listen? No, because experts don’t count for shit in the US anymore.
Will we listen? No, because experts don’t count for shit in the US anymore.
You know, in a world where most people don’t listen to experts and follow data, there’s a lot of money to be made in just doing your research. It seems like over time the people and places that learn to use data to guide their hand will outperform the ones of those that do not.
I guess we will see which one is a winning strategy.
The problem is that the winners don’t share. They exploit the others. That’s exactly what got us here in the first place.
We already know. We already know they’re bad.
We know because the negative effects are already happening, and literally every expert on the matter has said they are fucking stupid.
We already know. We already know they’re bad.
I don’t find that a convincing argument. If this is such an economy ending thing, certainly you could say “Well, just look at X!” and it would be really bad. There should be some chart showing good before and bad after. Where’s that chart?
Sir, this instance is called ‘No Stupid Questions’.
This is by and large - a stupid question.
I’ve learned a lot of people can tell me they are bad, but only a few can tell me why.
I hate the tariffs (and everything else about the orange man), I think they’re a terrible idea. But you’re absolutely right.
Especially right now, Lemmy is an extreme echo chamber. I agree with most of the things being echoed, which is why I’m here, but I also recognize it’s pretty bad.
Your questions was entirely reasonable, and well stated, and a lot of people are just being dismissive, insulting, or saying “just because”. And truth be told, the answer really is a complex one, and would require an actual professional to give a good response.
Yeah, I mean I don’t feel any better than Trump if someone asks me about tariffs and I just say “THEY ARE BAD, OBVIOUSLY”. I don’t feel like that’s any better than Trump’s approach where he just says “THEY ARE GOOD”.
I want to know the supposed theory behind them, if any. If there isn’t one, that’s a big red flag. The few people I know in real life that thinks they are a good idea all seem to share the belief factories will pop up “soon” and no one will care about China anymore. I don’t get it, building factories doesn’t seem that easy. The last time the US mobilized that quickly was WW2, and I don’t think we are that serious this time around.
I think it’s going to be bad but I want to put a measuring stick against it instead of just saying “THEY ARE DUMB”.
Everything the rapist trump does is to help himself. He does nothing for the good of the people. That’s one major way you know he’s fucked us.
He also consistently lied to everyone about who pays the tariff, making sure his brainless followers buy in, helping fuck us harder. Nothing that comes from his mouth is understandable or the truth.
The only person who has any excuse of thinking Tariffs are a good idea is Ferris Bueller because he missed the lecture.
there are people who are completely happy with the economy going to absolute shit as long as its by the hand of conservatives.
literally ran into red-hat magas living on disability from the VA whose children are all now unemployed and they couldnt be fucking happier.
these people will absolutely eat trumps feces if it means a democrat has to smell it. there is no reasoning. facts do not fucking matter.
