Will Trump Win the Tarriffs War?
To put it in very few words, I doubt it. Just an opinion, but I think it's an educated guess.
Now to explain.
First of all, the way he acts right now, it's Trump versus the entire world, give or take. The United States may be powerful, but it's not that powerful. Far from it. Then, Trump said it himself that China is the adversary of the United States nowadays. Seems to me that the US needs allies to stay ahead of China, if they'll be able to.
Tell me what allies does the US have now? Name one... that isn't pissed at Trump! Please don't tell me Russia... Putin (and Xi) probably laugh their asses off of the entire situation.
Sure, no ties with old allies have been 100% damaged (maybe with Canada, at least while Trump is at the White House?), but a lot of damage has been done. And trust is hard to rebuild. That goes both ways, by the way.
Not the greatest AI-generated image, but it shows the general idea, Trump settling tariffs left and right on other countries.
Probably his main publicly stated reason for applying tariffs is to force producers to move (back) to the United States. Maybe some will, given the circumstances. But how many or how big?
Let's step back for a bit and analyze the situation.
The reason why producers preferred other countries to build their production was either because of cheaper/better labor, direct access to cheaper resources, or fewer laws and regulations or cheaper ways to comply. Or for distribution reasons, made more sense to have production closer to a big market and reduce logistic expenditures.
Trump brags with new jobs created by producers that would come back or build new facilities. What he doesn't say is that the only way they would remain competitive is if they would become fully or almost fully automated, so almost no jobs. Otherwise, American salaries are way higher than in other parts of the world where production was relocated. Why would car manufacturers build cars in Mexico instead of the US, right? After all, it's just across the river... Well, looks like that river meant cheaper cars, including for the Americans that buy them.
But even this way, they have to fight with laws, regulations, permits, etc. The more advanced the country, the more over-regulated, seems to be almost a correlation, but maybe not always true.
Then, each producer has to make a decision. Do I disrupt my entire business for something that will end in 4 years, maybe even around 1.5 years? Or do I wait it out... and perhaps have a drop in sales during that time? Some may not be in the position to wait it out if they are on edge. But if they are on edge, can they afford to relocate to the US either? I assume enough will wait unless expressly they want to support Trump or are offered special conditions.
There is also the matter of how long it takes to move operations from one place to another, from building, buying or renting a place to equipping it, getting permits, hiring new people, training them, starting and building up production, possibly phasing out production in the old place and closing it, firing people if they serve the same market, etc. Will it be worth it? What kind of calculations will producers make? What kind of calculations will other countries make in response to Trump's aimless fire (attacking anyone, with a few preferred targets).
By the way, a dangerous game he plays in Greenland. Maybe that's why he and Putin are "buddies".
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In capitalism, no one wins on tariffs. Everyone is a loser. Tariffs are made to cover up inefficiencies, and as a result, they are blocking the access to quality, affordable products. The money collected from tariffs - if any - will be wasted on crazy ideas from incompetent politicians.
The shareholders are evaluating the qualification and results of a CEO whom they entrust to run their company. Voters do not have this ability on their representatives. Is all a circus show.
I agree. No one wins with tariffs. I also have my doubts they will bring a lot of extra money to those imposing them. That is because the economy as a whole will slow down as a effect of them entering the scene.
Yeah, 4 years can be a long time.
It is interesting reading this from your perspective, @gadrian. You are one of the accounts whose content I still read. You seem thoughtful in what you have to say, as a general rule.
One aspect of these tariffs I do not see mentioned is a key word. Reciprocal. That word is being reported as the center of what President Trump says will be coming on April 2nd. The point?
Tariffs are already in place. I would suggest either an argument be made that is simply not true. Or an argument should be made as to why it is okay for other countries to have various tariffs against trade with the U.S., but not the other way around.
@roleerob, don't let yourself be fooled by whatever President Trump says.
The VAT in Europe is very different from Tariffs. VAT is a value-added tax that applies equally to all competitors - although the value might be different for clusters of products (e.g., bread vs cars). VAT is paid at each commercial step as a tax on the value that is added to the product by that specific company. In the end, similar products have similar taxes added to the price, independent of the manufacturer, tax that is paid by private consumers. This is how EU is sponsoring the social welfare policy. I can't believe POTUS is not informed on this. Still, he calls Tariffs a reciprocal thing to EU's VAT.
Okay, @steemmillionaire, yes I have heard of the VAT. Are you saying there are no tariffs imposed on the U.S. from any European country whatsoever?
In my bringing this up, I had in mind more of what we read about countries like India and southeastern Asia. Whether they would make similar arguments to yours, I do not know.
I am open to discussing it, at least.
@roleerob, I'm not an expert on the topic, but it seems that the EU Commission wrote an article explaining the trades between US & EU, deficits, tariffs, sales tax & VAT: https://ec.europa.eu/commission/presscorner/detail/en/qanda_25_541
The average tariffs, excluding VAT and sales tax, were around 1% before the Trump Administration, well balanced (in 2023, the US collected approximately €7 billion of tariffs on EU exports, and the EU collected approximately €3 billion on US exports).
Yes, on some products, there's an asymmetry, but that is because both parties agreed so (the US protected the truck industry with 25% tariffs; the EU protected the small vehicles industry with 10% tariffs).
And I believe the analyses provided by the EU Commission do not include expenses on military stuff, as that is anyway gov2gov discussed in most cases. EU is a net importer of the US defence industry.
President Trump never said all of this - at least I could not find it in his communication.
Thank you for your additional input on this, @steemmillionaire. I appreciate this:
I am not either. My original response contained a request for clarification, not declarative statements, on that basis. Further, I would say the vast majority of people could say the same thing, if they were being open and honest.
Whatever happens, I know I was not consulted. You probably could confirm the same on your side. Together we'll find out what the ultimate outcome of this particular aspect of Trump's agenda is.
Along the way, we can rest assured the effort to continuously manipulate, confuse, and delude people will not stop, resulting in as much division as possible.
Perhaps some day, the people being subjected to it will finally speak with an overwhelming, unified voice and say they have had enough.
That day will come sooner as more people take responsibility by using platforms such as Optimism Fractal DAO's, helping improve and create new models of "People Powered" Anonymous Decentralised Fractal Democracy for Community Governance.
That is an interesting perspective, @atma.love. While I do not specifically know to what you are referring here, I assume they are crypto related references. We'll find out soon enough whether blockchain technology truly plays a role in liberating us, from what I am touching on.
Thanks for continuing to read my posts!
There will always be some imbalance to correct. It often depends on who weighs on things and determine they are balanced or not. And it depends if correcting certain imbalances brings you (i.e. in this case, the US) and the partners more harm than good. Especially that the US needs partners even more than before to stay competitive against the bigger perceived threat.
Trump tells a lot of half-truths or plain lies to justify his actions. It's like a broken record. It's unfortunate, but when he starts talking and I have a choice, I mute the sound, because he started to bore me to death. I've seen people stopped contradicting him altogether, because it's counterproductive. He just gets more stubborn and probably never hears what the other person says on some subjects, or if he does, he gets mad about it.
Thank you for your response, @gadrian. It looks like my comment prompted some more engagement with your readers, on your post!
We agree on this. There were always be something to point a finger at, as it is sadly far too common to create some sort of "all or nothing" narrative around whoever the latest enemy is supposed to be. With what objective?
Dividing us by whatever works versus uniting us around common objectives.
Perhaps. How would you characterize the claims of so much of what the administration he replaced had to say? About pretty much any topic you would care to mention?
The sad reality is people are far less inclined to have open and honest dialog about any topic today than was the case in my younger years. It was most certainly not perfect then, but it is indisputably worse today.
The various political leaders we are all presented with as our "savior" do not help this, but since people are so easily swayed, I guess the argument is made that is what the people want.
I despise this mindset personally.
We can agree on this. Trump is a classic New Yorker and I have worked with some of them personally. I do not know what happens to people growing up in that concrete jungle, but they definitely have similar traits.
FWIW, I do not like the way he communicates, particularly when he makes it personal. Since, again, this is such a common characteristic of public discourse in our time, I have to grudgingly accept the constant give-and-take is part of it and ignore it myself.
I and many of the American people focus instead on what he does. In sharp contrast to the administration he handily defeated, who had done all in their considerable power to destroy him and anyone willing to be publicly associated with him.
Haha, it sure does!
Yep! It's always easier to control people when they are divided and to turn them against each other instead of against you.
I didn't follow what Biden was doing as much. I certainly thought he was unfit for the position toward the end. I certainly didn't like the woke movement and the non merit-based job structures. Trump may be partially right about immigration, but I can't trust Trump to say the truth either, and I'm too far to know what's really going on. I know he surely exaggerates on some aspects, because not all delinquents came to the US. He conveniently forgets about the ones that are a "net positive". After all, Elon Musk is an "imported good". So was Albert Einstein and many others. I'm sure a few came in the last 4 years. Maybe not as prominent yet, but time will tell. By the way, how many of the gold-diggers back in the day were upstanding citizens?
Trump maybe would have taken better economic decisions (for the US, not necessarily the world), but we see now at what costs...
Yes, now it's difficult to have a dialogue. The radicalization has reached very high levels.
I hate that we turned on this route, too. You rarely have two viable options to choose from.
Ah, that's another thing they did horribly. But that turned him into a victim and a sure winner. Probably they thought they would break him and he won't run for the 2nd term. Bad judgement call with Trump!
Thank you for this additional input on a new day here, @gadrian. Lots of good input from you here. With most it, we are in agreement. In spite of living in different parts of the world.
That is encouraging to me.
I think I will leave this conversation here and we'll all find out together what the outcome is of this particular aspect of President Trump's agenda, as it is scheduled to be taken to another level on April 2nd.
Thanks for a meaningful conversation, as always!
Tariffs are a tax on you to support local businesses. Reciprocal or not.
This trade war is going to cost us all... for what?!
The real issue is the strained relationship that's being caused by this weird victim complex the current US regime has. The numbers he throws out are crazy and lack any sort of context.
Trump's policies and attitudes are so disliked here in Canada that he will cost the Conservative party, which has similar policies/rhetoric and would be the most sympathetic to him, the upcoming election after they have held double digit poll leads forever. People have called for the government to revoke Elon's citizenship and labeled him a traitor.
Our nations are the closest of friends with fantastic benefits that have legitimately affected everyone on both sides. Something I never see mentioned is that militarily defending the 49th parallel would cost trillions of dollars. Is this relationship something worth casually disrespecting or ending with insults, open corruption, blatant incompetence, lies, and bullying?
I think a lot of people here would be open to the 51st state idea if some of the cultural issues the US has, such as gun violence and authoritarianism, were resolved.
TLDR: I hope you have a good car with a long warranty
Thank you for your response, @alapok. I am sympathetic to parts of it, e.g. the continual reference Trump makes to Canada becoming our 51st state. What games are being played behind the scenes with this, I have no idea. Nor do I suspect, do the vast majority of people. He clearly had zero regard for Trudeau.
FWIW, I am not in favor of Canada becoming our 51st state.
For adding a little humor (maybe?) and a bit of color into this conversation with you, I used to manage a team of Canadians. On my first official business trip in that role, I was introduced to this huge guy out in Alberta whose first question was to ask where I was from. Having been told by my new direct reports how sensitive the topic of Canada NOT being America was.
I proceeded to answer honestly about living not that far south in the Pacific Northwest. Leading to this huge man standing up, reaching across the table, and dwarfing my hand in his with a handshake. Telling me (pretty close all these years later ...):
We all had a good laugh and a nice dinner afterwards.
I will never forget that experience.
https://www.reddit.com/r/usa/comments/1jmnr5q/will_trump_win_the_tarriffs_war/
The rewards earned on this comment will go directly to the people( @davideownzall ) sharing the post on Reddit as long as they are registered with @poshtoken. Sign up at https://hiveposh.com. Otherwise, rewards go to the author of the blog post.
Haha, this should have been posted in Canada's subreddit if anyone wanted lots of upvotes. 😁
I agree with @steemmillionaire that there are no winners on tariffs... Only people who would pay the price, and those are usually the ordinary folks, like you and me... tariffs and subventions usually expose the weakness of the country and not the strength...
Yep, true. I especially put the title in a win/loss paradigm, knowing we actually all lose.
As with any tax, tariff, minimum wage, etc the only person paying the price is the end user. The fact that the US government are seemingly turning politics into just big business thinking they can bully everyone into doing what they want is, in my opinion, quite worrying for the global economy.
It's a lot of dancing around. Things they've set up today and suspended tomorrow, and stuff like that. I'm sure some tariffs will stay in place, but most likely they started with something maximalist to scare everyone that they mean business, and will gradually de-escalate from here. Escalate to de-escalate, right? At least I hope that's on their minds.
Tariffs can work against a single state, possibly economically weaker than you, but tariffs against whole world... Nowadays can a country totally close? If everyone stop import to usa, can they survive to it?
The only way I think what they did makes sense is if they escalated to... de-escalate. It's a tactic in negotiations/military operations. Sounds like Russia's nuclear threat doctrine.
I'm no economist, but I think he's doing things wrong. The tariffs on countries that have been allies is another blow when he is also attacking them over Ukraine and actively threatening to take some over. His cosying up to Putin is disturbing. I suspect that he sees everything as a business transaction and he has often failed at that before. You need to maintain some sort of relation with other countries and cannot just out-compete them. I think some US businesses will see some losses as people decide to shop or travel elsewhere. The Tesla boycott is directly driven by his extremist attitude.
There is no way I would travel to the US now. I was there a few years back and had a great time, but with people being detained over minor issues now it doesn't seem safe and I do not want to support this regime in any was as I see it as bad for the world in general. I have plenty of American friends and I hope they can get through this.
Countries are not and should not be run as businesses. This pure capitalist way of seeing things will lead to a lot of suffering.
Very true. I don't think he understands cooperation, or if he does, he discards it. It's either mine or not mine. If it's not mine, it's a competitor.
I wonder how he ended up in crypto with a mentality like that... Although "decentralized" in crypto is in many cases a buzz word nowadays.
I think Elon Musk contributed to this himself through his attitude and some questionable positionings in certain matters. But the association of the two in this context probably made Tesla a target. Ironically, while Musk is working on DOGE, Tesla sent a letter to the White House a while ago complaining that tariffs hurts their exports.
I've heard some things, but wasn't aware about the magnitude of the changes going on there coming from the standpoint of fighting immigration.
I know many thought this would be better. Coming after Biden, they were justified in their expectations. I also thought Biden's final years as a president were awful.
It's not only Americans that will suffer. We all are or will. Let's hope we all will pull through this.
Was Biden really worse than this? This is chaos and will not end well.
I don't think Biden was as... intense, quite the opposite. Except toward Trump and... crypto. Well, probably Trump wins race against crypto on who the previous administration hated more. 😄 Ah... and Putin, too.
But in his lack of intensity, at least perceived by us over here in the EU, that administration made a lot of mistakes. That doesn't justify Trump calling him names all the time, but he takes many things personal, which is pretty bad for a president.
I think the US needs competent government and does not seem to have it now. The censorship and persecution of various groups is scary. The whole security chat fiasco shows how bad they are. I don't think crypto is that high on priorities for many outside the sort of people who hang around here and Trump only cares about what money he can make from it. People behind the scenes may have deeper plans.
Interesting! I thought that's what they said they want to prevent ever going on... If this happens (and it probably does), it shows how easily do politicians change once they have the power. Once again!
Yeah, that would be almost hilarious, it is wasn't serious.
I agree.
A lot of people predicted things they would do, but some have been worse than that. There are efforts to back up data they are taking down. The parallels with history are notable.
Depends I guess on what you mean win and lose in a sense. A win maybe with changed trade patterns and trade partners. A loss when it comes to that he has lost all of Europe as allies. But then again doesnt seem like he and his team care a lot for Europe.
We in Europe have been through hard times before and risen to the challenge, I wonder if the americans really understand what might come because of their actions?
They DON'T have in the world other trading partners that can replace the EU or Europe, in their goal to stay ahead of China.
I think they thought the EU would be more divided and they could negotiate with countries instead of an economic block, at more favorable terms for the US. Seems their tactics had the opposite effect.
I'm sure there will be some negotiations at some point. They can't afford to break ties with the EU. Nor can we.
Think you might be right on that part. But I am not yet convinced the Trump and administration dont rather build other relationships than return to status quo with Europe. And I am not sure Europe ever want to return to prior stayus either
They will. Both. Trump is too proud to not be perceived as he won something before backing down.
According to Grok:
The EU (not Europe as a whole, so even without UK, Norway, Sweden, etc.) is US's first trading partner, accounting for 17-18% of the total goods trade of the US in 2023. That is excluding service trade, which is another major trade component.
The next trade partner for US is Mexico with 15-16%, and Canada with 14-15%. The next is China with 11-12%. Great choice of targeted tariffs from Trump, lol. Practically all US top trading partners.
The next country not on this list is Japan with a weight of 4-5%.
Who do you think could replace the EU?
In reverse, United States is the top trade partner with a weight of 16-17% of total trade (without services). Second is China with 13-14%, third is UK with 11%, and so on.
Who do you think could replace the US at the top?
Yeah I dont understand either if you look at those numbers.
I just wonder if he realized what a movement he created Europe with his actions?
Yeah, things aren't pretty. Probably not as bad as in Canada, but he persists, and will get things worse.
Yeah Canada is in a tough and akward position.
It's a dangerous game, but I don't like the trade war. I think it made sense when they were trying to fight drug inflows through Mexico or Canada, but the rest of the world doesn't make sense. Only time will tell, but I have a feeling that it won't work out in the end.
I have a feeling all or most of these tariffs are just a way to force deeper renegotiation of trade agreements. Some tariffs will stay, others will go away from all sides, but in most cases, after negotiations, in the end.
I think Trump's approach feels more like short term thing than a real strategy. Businesses aren't going to overhaul supply chains on a impulse, especially when policies flip every few years
For the world's sake, I hope there's more to it than a movie with quick-trigger gunmen.
I hope so too
I think waiting it out will be a popular choice. Trump has only been in office 3 or 4 months and it already feels like he's been there forever, so I still think 4 years is a long time, and there might be people who will not like to wait it out.
It's a long time indeed especially if everything is unpredictable. But he can't keep the same pace either (I already see things slowing down), as in the first month of his presidency, when I think he had every day planned out in advance.
We'll see what producers will do.
I think he had a lot of things planned out and that was why he got the ground running with those tarrifs stuffs and all that. However a lot is people are probably more disappointed than pleased
I think many of his supporters are still behind him. Not sure about the swing voters. But he has 4 years to do what he wants (more or less). His party however has mid-term elections in 2 years.