I don't follow your logic. Say a Madagascar. All they have to do is create parity with U.S. tariffs. Done. What is the big deal? As you say, we don't export what they do, so no harm to them.
The intent here is reduction / removal of tariffs across the board. A blanket approach. Some will "make sense" more than others, but that is irrelevant.
Countries are being targeted based on our trade deficit with them, not their actual tariffs on American goods. This is meant to create incentives to address “other trade barriers,” such as currency manipulation or regulation, which may well work where those do exist (I’m not an expert so I can’t say what that will look like) The problem is that when you measure trade barriers via balance of trade alone, you will also include a country’s poverty as a trade barrier, even if they have no tariffs. However, applying a tariff on poor countries who cannot afford to import American goods, and are very reliant on exports for revenue, will backfire. They will become poorer and less able to import. The trade deficit will look lower because trade is depressed, but it doesn’t solve the actual underlying problem and just increases poverty in that country while Americans see much higher prices. This is a great example of how over-optimizing on a single performance metric (trade balance) can paradoxically incentive actions that undermine the original goal (improving the economic opportunities for Americans, protecting manufacturing jobs, increasing prosperity and security, etc).
Addressing the global trade deficit overall is likely worthwhile, and tariffs are one tool that could work positively in some cases. However, they are not a universal solution. A more individualized and precise strategy with other tools in play would go much further in achieving our actual underlying objectives of better national security, protecting high value manufacturing jobs, and fair trade.
You say it's a new economic era ruled by trade wars. I disagree. The US is the one initiating the trade wars, not all of the other countries. They are continuing to trade at their normal rates with each other. So it's more like a new economic era where the US exits global trade and other countries enter the vacuum they left.
I'm so glad I found your substack!Wonderfully explained
I don't follow your logic. Say a Madagascar. All they have to do is create parity with U.S. tariffs. Done. What is the big deal? As you say, we don't export what they do, so no harm to them.
The intent here is reduction / removal of tariffs across the board. A blanket approach. Some will "make sense" more than others, but that is irrelevant.
Countries are being targeted based on our trade deficit with them, not their actual tariffs on American goods. This is meant to create incentives to address “other trade barriers,” such as currency manipulation or regulation, which may well work where those do exist (I’m not an expert so I can’t say what that will look like) The problem is that when you measure trade barriers via balance of trade alone, you will also include a country’s poverty as a trade barrier, even if they have no tariffs. However, applying a tariff on poor countries who cannot afford to import American goods, and are very reliant on exports for revenue, will backfire. They will become poorer and less able to import. The trade deficit will look lower because trade is depressed, but it doesn’t solve the actual underlying problem and just increases poverty in that country while Americans see much higher prices. This is a great example of how over-optimizing on a single performance metric (trade balance) can paradoxically incentive actions that undermine the original goal (improving the economic opportunities for Americans, protecting manufacturing jobs, increasing prosperity and security, etc).
Addressing the global trade deficit overall is likely worthwhile, and tariffs are one tool that could work positively in some cases. However, they are not a universal solution. A more individualized and precise strategy with other tools in play would go much further in achieving our actual underlying objectives of better national security, protecting high value manufacturing jobs, and fair trade.
You say it's a new economic era ruled by trade wars. I disagree. The US is the one initiating the trade wars, not all of the other countries. They are continuing to trade at their normal rates with each other. So it's more like a new economic era where the US exits global trade and other countries enter the vacuum they left.
The observations are still being scientifically reverified. Gautam Sen