Here it is, our big unifying moment.

No, blind retaliatory tariffs would be stupid. When someone is punching themselves in the face, the correct thing to do is not to also punch yourself in the face.

Tariffs have 3 effects:

The buyer pays more.
Because the buyer pays more, the seller makes fewer sales.
The government collects tariff tax revenue.

Whichever way the tariff goes, export or import, it will negatively affect that nation's people. An import tariff, like this, would negatively affect local consumers. An export tariff (eg Canada tariffing electricity exports to the US) would negatively affect local businesses through lost sales (the genius with Canada is the US can't stop buying electricity, so sales local sales would stay the same).

The only way a tariff makes sense for a country is if the tariff tax revenue is reinvested into the local economy. For example, if you tariff imports, you should use that revenue to incentivise local businesses to grow to replace that import.

Trump is not doing that. He's just collecting tax money from American people. He's almost certainly going to spaff that away on some scam, probably crypto, and basically bankrupt the American taxpayer and fuck up everyone's livelihoods.

EU countries should not copy Trump and blanket tax their citizens for American imports. If the EU were to implement tariffs (and I argue this isn't necessary or worthwhile), they should only be done with a plan to reinvest, such that there is a net benefit. Blunt tariffs with no plan will almost certainly have a net negative effect.

China is like Trump, in that neither of them care much about the negative effects on their people. That's why China went hard with retaliatory tariffs. The EU does not need to emulate that behaviour.

7 comments

Time to act like China and not bend to him.
- China's strategy worked great, just counter any announced tarrif with an equal reciprocal tarrif and he'll back off eventually. I wonder if we have more or less to loose than China had.
  
  Even if we lose more, we can't back down from a bully. We need to stand strong and roll with the punches
  
  No, blind retaliatory tariffs would be stupid. When someone is punching themselves in the face, the correct thing to do is not to also punch yourself in the face.
  Tariffs have 3 effects:
  The buyer pays more.
  Because the buyer pays more, the seller makes fewer sales.
  The government collects tariff tax revenue.
  Whichever way the tariff goes, export or import, it will negatively affect that nation's people. An import tariff, like this, would negatively affect local consumers. An export tariff (eg Canada tariffing electricity exports to the US) would negatively affect local businesses through lost sales (the genius with Canada is the US can't stop buying electricity, so sales local sales would stay the same).
  The only way a tariff makes sense for a country is if the tariff tax revenue is reinvested into the local economy. For example, if you tariff imports, you should use that revenue to incentivise local businesses to grow to replace that import.
  Trump is not doing that. He's just collecting tax money from American people. He's almost certainly going to spaff that away on some scam, probably crypto, and basically bankrupt the American taxpayer and fuck up everyone's livelihoods.
  EU countries should not copy Trump and blanket tax their citizens for American imports. If the EU were to implement tariffs (and I argue this isn't necessary or worthwhile), they should only be done with a plan to reinvest, such that there is a net benefit. Blunt tariffs with no plan will almost certainly have a net negative effect.
  China is like Trump, in that neither of them care much about the negative effects on their people. That's why China went hard with retaliatory tariffs. The EU does not need to emulate that behaviour.
He'll back down. He's always backing down.
Must be some sort of adrenaline rush or something, threating big players. Then it wears off and everyone tries to explain he's being an idiot and eventually he backs down.
Edit: Don't forget the tariffs are paid for by us US consumers.
Trump and his friends are making billions off manipulating the stock market by this mechanism.
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