Forgive me if this has already been covered but do those on here understand the potential impacts of the tariffs? I have a very shallow understanding and I was wondering if anyone could link to a simple-ish explanation?
Forgive me if this has already been covered but do those on here understand the potential impacts of the tariffs? I have a very shallow understanding and I was wondering if anyone could link to a simple-ish explanation?
As regards the public statements made by the President about how tariffs work (which are all complete nonsense), the following paragraph is relevant:
President Trump’s proposals have also sparked a public debate about who bears the ultimate burden, or the incidence, of tariffs. This question is neither new nor broadly open in the forum of public finance and trade economics, however. A consistent theoretical and empirical finding in economics is that domestic consumers and domestic firms bear the burden of a tariff, not the foreign country.
He has also managed to get a significant chunk of his worshipers to believe that VAT in Europe is a tariff and not a sales tax, which is also total gibber.
He has also managed to get a significant chunk of his worshipers to believe that VAT in Europe is a tariff and not a sales tax, which is also total gibber.
Thanks - NZ has a "Goods and Services Tax and I've been wondering what Trump's attitude to that would be.
He has also managed to get a significant chunk of his worshipers to believe that VAT in Europe is a tariff and not a sales tax, which is also total gibber.
Thanks - NZ has a "Goods and Services Tax and I've been wondering what Trump's attitude to that would be.
I think there was some handwaving about our Canadian GST* being a tariff at some point but Trump has opted for different gibberish instead.
I’m not 100% sure and unfortunately Google isn’t helping but I think the Canadian GST (introduced early 1990s) was inspired by the NZ tax.
(*In many provinces including Ontario the GST and provincial sales tax are now combined into a single harmonized tax aka the HST)
The UK government seems to have decided to absorb the tariff on steel Trump has put on us. I personally think that is a bad course of action. If we show no protest what is to stop him using more tariffs on us.
Because Trump has imposed more tariffs on Canada they are imposing more on the US. Suddenly Trump is less in love with tariffs. Did he really think there would be no comeback. He has been forced to say there will be pain for the US. Sounds familiar to those of us in the UK. Brexit went pretty much the same way.
Because Trump has imposed more tariffs on Canada they are imposing more on the US. Suddenly Trump is less in love with tariffs. Did he really think there would be no comeback. He has been forced to say there will be pain for the US.
Tariffs hurt the consumers in the importing country more than they benefit the manufacturers in that country. That's why when in the Great Depression all countries put up tariffs they made the Depression worse.
The UK putting up tariffs as a countermeasure might impress Trump because he isn't thinking straight, but it won't make life more painful for the US in the short to medium term than Trump's tariffs are already making it and it would make the consequences more painful in the UK.
Absoutely. You do not have to "absorb" a tariff exactly. It just makes it more difficult to sell in that country. If you can sell the steel elsewhere the effect is small. Also UK steel production is quite low and so the overall effect on the UK economy should be small, not worth making a big fuss about. For Canada, which exports large volumes to the US, it is a different matter.
Absoutely. You do not have to "absorb" a tariff exactly. It just makes it more difficult to sell in that country. If you can sell the steel elsewhere the effect is small. Also UK steel production is quite low and so the overall effect on the UK economy should be small, not worth making a big fuss about. For Canada, which exports large volumes to the US, it is a different matter.
I understand this, but to me a bully is a bully and needs standing up to. Just because he is hitting other countries harder doesn’t mean we should let it slide. Our Commonwealth cousins are being hit. We should stand by them financially or what is the use of the Commonwealth?
Because Trump has imposed more tariffs on Canada they are imposing more on the US. Suddenly Trump is less in love with tariffs. Did he really think there would be no comeback. He has been forced to say there will be pain for the US.
Tariffs hurt the consumers in the importing country more than they benefit the manufacturers in that country.
Depending on how large your internal market is, and whether your manufacturers can create substitutes of the appropriate type, the hope would be that in the medium to long term the jobs would be onshored (again). Although the latest steel foundries operate with level lows of staff, and the US doesn't retain the expertise to rebuild these and it would anyway require spinning up numerous other industries.
we make the 'interesting'/complex steel that isn't used as much as the bog standard cheap stuff. So you could argue that we really don't need to take a hit to the steel production that we do still do, especially in a time of apparent national/European rearmament... Unless of course the latter is going to offset the US hit to demand, but I can't see it being that quick to replace it.
If you are making a product for export that is unique, or at least not produced in the country you are exporting to, then as long as there's demand for that tariffs don't harm you - they just raise prices in the import country. If increased prices reduce demand then you're OK if there's an alternative customer for your product.
So, if the "interesting" steel (as @betjemaniac put it) isn't being produced in the US and is still needed in the US all the tariffs do is increase costs for the US customers, the UK can still make and export the same amount of this "interesting" steel.
I do take @Hugal 's point that we might feel it just to impose tariffs, that the US administration deserves it, as a punishment. But that is arguably falling into the same misunderstanding as Trump, the idea that tariffs hurt them. Imposing our own tariffs hurts us more than it hurts the US. It is not really a punishment. They are already punishing themselves. Better let them get on with it.
An importer faced with paying a tariff might then deduct that amount from what they pay the supplier if they haven't yet settled. It would be wrong of them to do this but I suspect they would have Mr Trump's blessing.
An importer faced with paying a tariff might then deduct that amount from what they pay the supplier if they haven't yet settled. It would be wrong of them to do this but I suspect they would have Mr Trump's blessing.
Well, if they did that then - at the very least - that supplier would not supply them in future.
@chrisstiles A foreign supplier would have to sue in an American court. This is not easy or cheap from abroad.
@TurquoiseTastic The USA customer would lose a supplier but the supplier would also lose a customer. Which would hurt more? Any goods already produced for that customer but not delivered would have to be scrapped if they were at all bespoke and any goods already on the water would suffer the same underpayment.
As I indicated this might only happen if the goods were supplied on long enough credit terms that payment is made after the point of import and if the USA customer was so-minded. I have no data on how likely this is.
@chrisstiles A foreign supplier would have to sue in an American court.
That's very rarely the first or even second step, an international contract will contain clauses specifying the body used for arbitration and that is unlikely to be the national courts.
@chrisstiles A foreign supplier would have to sue in an American court.
That's very rarely the first or even second step, an international contract will contain clauses specifying the body used for arbitration and that is unlikely to be the national courts.
Services contracts with the US frequently specify the courts and legal system of their home state as being binding. Not sure if goods contracts tend to be different.
If you have not seen this video of Ronald Reagan on tariffs, here it is.
His argument that tariffs squelch nebulously defined "innovative management and technological changes" is standard neoliberal "free market" rhetoric.
Which is a really interesting thing about Trump's trade policies, ie. they're the straight opposite of what neoliberalism, especially as represented in the Republican Party, has been preaching since at least the 1980s. What Trump is pushing is more like what Democrats like Dick Gephardt were saying in the same era.
Turns out a French member of the European Parliament wants America to return the Statue of Liberty to France because we no longer represent the values for which France gave it to America anymore. Story here
Turns out a French member of the European Parliament wants America to return the Statue of Liberty to France because we no longer represent the values for which France gave it to America anymore. Story here
They have a point. If Trump can ask for the Panama Canal back why not.
Interesting how Trump has infected so many threads in both Purgatory and Hell. When I wanted to find this thread, I had to go through seven pages before I could find it.
The latest impact Trump is/will be having on other countries looks like he is dictating how international companies handle Diversity, Equity and Inclusion programs within their business operations. His people are now telling the international companies if you want to continue doing business with the US government you have to follow his DEI dictates. Problem is, many of those companies have to follow the laws of the country where they are incorporated.
France is already objecting to this heavy handedness. Story here.
Interesting how Trump has infected so many threads in both Purgatory and Hell. When I wanted to find this thread, I had to go through seven pages before I could find it.
The latest impact Trump is/will be having on other countries looks like he is dictating how international companies handle Diversity, Equity and Inclusion programs within their business operations. His people are now telling the international companies if you want to continue doing business with the US government you have to follow his DEI dictates. Problem is, many of those companies have to follow the laws of the country where they are incorporated.
France is already objecting to this heavy handedness. Story here.
It might technically not be a violation of national sovereignty, because the only punishment is being denied contracts by the US government, who are well within their rights to grant or deny contracts.
That said, I have no idea how they're expecting to monitor this. My guess is you just sign the paper saying "We don't do DEI at our office", and unless some disgruntled employee sends the US embassy a memo ratting you out for sponsoring the disability-themed film festival at the local art theatre, you're pretty much home free.
Some really depressing polling from The Economist:
The percentage of Republican voters regarding Canada as "unfriendly" or "an enemy" has risen from 7% in 2020 to 25% today. Among Democrats it has risen from 4% to 7%.
The percentage of Republican voters regarding the EU as "unfriendly" or "an enemy" has risen from 18% in Jan 2024 to 28% now. Among Democrats it has remained steady at around 3%-4%.
The percentage of Republican voters regarding Russia as "unfriendly" or "an enemy" has fallen from 86% in early 2024 to 72% now. Among Democrats it has also fallen from 86% to 81%.
The percentage of Republican voters regarding Ukraine as "unfriendly" or "an enemy" has risen from 20% in November 2024 to 29% now. Among Democrats it has remained steady at about 5%-6%.
The % of voters with a favourable opinion of the US has fallen (since August 2024) in Britain (-20%), Denmark (-30%), France (-20%), Germany (-30%) , Italy (-15%) and Spain (-10%). However among far-right voters opinion of the US has remained roughly steady (Britain +5%, France -5%, Spain -2%, Italy +5%) or risen (Germany +20%). But in Denmark far-right favourable opinion of the US has collapsed (from 60% to 15%).
UK gets 10% tariffs. EU 20%. The UK government is said to be relieved but not happy. I think they will wait a while before imposing retaliatory tariffs. I think they will try and swallow the 10%. Lowering the tax on Trumps tech bros seems not to have worked. Our disabled people are suffering for nothing then.
UK gets 10% tariffs. EU 20%. The UK government is said to be relieved but not happy. I think they will wait a while before imposing retaliatory tariffs. I think they will try and swallow the 10%. Lowering the tax on Trumps tech bros seems not to have worked.
It definitely hasn't worked. The current floor for the tariffs is 10% -- the reason the UK 'qualifies' is that it's one of the countries with which the US is currently in trade *surplus* (the UK imports more from the US than it exports).
UK gets 10% tariffs. EU 20%. The UK government is said to be relieved but not happy. I think they will wait a while before imposing retaliatory tariffs. I think they will try and swallow the 10%. Lowering the tax on Trumps tech bros seems not to have worked.
It definitely hasn't worked. The current floor for the tariffs is 10% -- the reason the UK 'qualifies' is that it's one of the countries with which the US is currently in trade *surplus* (the UK imports more from the US than it exports).
That, it seems, rather depends on whose statistics you trust - US Bureau of Economic Analysis ($3.4 billion surplus in exports of goods from US), or UK Office for National Statistics (£2.5 billion deficit in exports of goods from US - and £68.8 billion deficit in exports of services from US). On those figures the UK imports less (in goods and in services) from the US than it exports.
It's a mercantilist view isn't it. Exports = good, imports = bad. Not uncommon amongst armchair economists but expert opinion is that it doesn't work. I guess we'll see.
Insofar as anyone has tried to reverse engineer their calculation it looks like they took a fairly crude figure for trade deficit and divided it by total exports for a given country.
A number of people have reproduced this calculation by asking various LLMs to provide a possible function to calculate weighted tariffs. It's also possible that those LLMs have huffed the same source/paper the USTR is working from.
It's a mercantilist view isn't it. Exports = good, imports = bad.
Well not really, in the mercantilist view you are hoping people pay for your exports in something that's scarce (classically either gold or silver), it doesn't work so well when you are also running the global currency and acting as the defacto consumer of last resort.
The problem with reciprocating tariffs is that a) they fuel a trade war (which, as in any war, no one can win) and b) they impose additional taxes on your own consumers or, possibly worse, raise prices without earning additional taxes that can be used to offset the cost to consumers (not that it appears the US Gov plans to use revenue from tariffs to do that, through, for example, cutting taxes for the poorest or increasing aid for medical bills etc). I can see the temptation of reciprocal tariffs, but I hope most nations think carefully before acting.
It's a mercantilist view isn't it. Exports = good, imports = bad.
Well not really, in the mercantilist view you are hoping people pay for your exports in something that's scarce (classically either gold or silver), it doesn't work so well when you are also running the global currency and acting as the defacto consumer of last resort.
This. It’s like they’ve never heard of (never mind never read) Adam Smith.
Comments
One too many stands there
"Standing in the need of prayer", I would venture.
https://www.bbc.co.uk/news/live/c8e7y7ykd01t
https://www.voanews.com/a/rubio-says-syria-must-hold-accountable-perpetrators-of-massacres-/8004267.html
https://budgetlab.yale.edu/research/fiscal-macroeconomic-and-price-estimates-tariffs-under-both-non-retaliation-and-retaliation has a fair summary of the space in which likely outcomes live.
As regards the public statements made by the President about how tariffs work (which are all complete nonsense), the following paragraph is relevant:
He has also managed to get a significant chunk of his worshipers to believe that VAT in Europe is a tariff and not a sales tax, which is also total gibber.
It could be energy surcharges by next week unless POTUS comes to his senses.
Thanks - NZ has a "Goods and Services Tax and I've been wondering what Trump's attitude to that would be.
I think there was some handwaving about our Canadian GST* being a tariff at some point but Trump has opted for different gibberish instead.
I’m not 100% sure and unfortunately Google isn’t helping but I think the Canadian GST (introduced early 1990s) was inspired by the NZ tax.
(*In many provinces including Ontario the GST and provincial sales tax are now combined into a single harmonized tax aka the HST)
Because Trump has imposed more tariffs on Canada they are imposing more on the US. Suddenly Trump is less in love with tariffs. Did he really think there would be no comeback. He has been forced to say there will be pain for the US. Sounds familiar to those of us in the UK. Brexit went pretty much the same way.
I don't know the figures but steel isn't just steel - it might be that we import certain types and export others.
The UK putting up tariffs as a countermeasure might impress Trump because he isn't thinking straight, but it won't make life more painful for the US in the short to medium term than Trump's tariffs are already making it and it would make the consequences more painful in the UK.
I understand this, but to me a bully is a bully and needs standing up to. Just because he is hitting other countries harder doesn’t mean we should let it slide. Our Commonwealth cousins are being hit. We should stand by them financially or what is the use of the Commonwealth?
Depending on how large your internal market is, and whether your manufacturers can create substitutes of the appropriate type, the hope would be that in the medium to long term the jobs would be onshored (again). Although the latest steel foundries operate with level lows of staff, and the US doesn't retain the expertise to rebuild these and it would anyway require spinning up numerous other industries.
About 10% (by value) of the UK's steel goes to the US.
So, if the "interesting" steel (as @betjemaniac put it) isn't being produced in the US and is still needed in the US all the tariffs do is increase costs for the US customers, the UK can still make and export the same amount of this "interesting" steel.
Well, if they did that then - at the very least - that supplier would not supply them in future.
They would very quickly find themselves in court for breach of contract.
@TurquoiseTastic The USA customer would lose a supplier but the supplier would also lose a customer. Which would hurt more? Any goods already produced for that customer but not delivered would have to be scrapped if they were at all bespoke and any goods already on the water would suffer the same underpayment.
As I indicated this might only happen if the goods were supplied on long enough credit terms that payment is made after the point of import and if the USA customer was so-minded. I have no data on how likely this is.
That's very rarely the first or even second step, an international contract will contain clauses specifying the body used for arbitration and that is unlikely to be the national courts.
Services contracts with the US frequently specify the courts and legal system of their home state as being binding. Not sure if goods contracts tend to be different.
His argument that tariffs squelch nebulously defined "innovative management and technological changes" is standard neoliberal "free market" rhetoric.
Which is a really interesting thing about Trump's trade policies, ie. they're the straight opposite of what neoliberalism, especially as represented in the Republican Party, has been preaching since at least the 1980s. What Trump is pushing is more like what Democrats like Dick Gephardt were saying in the same era.
They have a point. If Trump can ask for the Panama Canal back why not.
The latest impact Trump is/will be having on other countries looks like he is dictating how international companies handle Diversity, Equity and Inclusion programs within their business operations. His people are now telling the international companies if you want to continue doing business with the US government you have to follow his DEI dictates. Problem is, many of those companies have to follow the laws of the country where they are incorporated.
France is already objecting to this heavy handedness. Story here.
It might technically not be a violation of national sovereignty, because the only punishment is being denied contracts by the US government, who are well within their rights to grant or deny contracts.
That said, I have no idea how they're expecting to monitor this. My guess is you just sign the paper saying "We don't do DEI at our office", and unless some disgruntled employee sends the US embassy a memo ratting you out for sponsoring the disability-themed film festival at the local art theatre, you're pretty much home free.
The percentage of Republican voters regarding Canada as "unfriendly" or "an enemy" has risen from 7% in 2020 to 25% today. Among Democrats it has risen from 4% to 7%.
The percentage of Republican voters regarding the EU as "unfriendly" or "an enemy" has risen from 18% in Jan 2024 to 28% now. Among Democrats it has remained steady at around 3%-4%.
The percentage of Republican voters regarding Russia as "unfriendly" or "an enemy" has fallen from 86% in early 2024 to 72% now. Among Democrats it has also fallen from 86% to 81%.
The percentage of Republican voters regarding Ukraine as "unfriendly" or "an enemy" has risen from 20% in November 2024 to 29% now. Among Democrats it has remained steady at about 5%-6%.
The % of voters with a favourable opinion of the US has fallen (since August 2024) in Britain (-20%), Denmark (-30%), France (-20%), Germany (-30%) , Italy (-15%) and Spain (-10%). However among far-right voters opinion of the US has remained roughly steady (Britain +5%, France -5%, Spain -2%, Italy +5%) or risen (Germany +20%). But in Denmark far-right favourable opinion of the US has collapsed (from 60% to 15%).
It definitely hasn't worked. The current floor for the tariffs is 10% -- the reason the UK 'qualifies' is that it's one of the countries with which the US is currently in trade *surplus* (the UK imports more from the US than it exports).
A number of people have reproduced this calculation by asking various LLMs to provide a possible function to calculate weighted tariffs. It's also possible that those LLMs have huffed the same source/paper the USTR is working from.
The USTR have provided a gussied up formula here:
https://ustr.gov/issue-areas/reciprocal-tariff-calculations
But two of the figures in the denominator multiply out to 1 (they essentially nullify each other).
Well not really, in the mercantilist view you are hoping people pay for your exports in something that's scarce (classically either gold or silver), it doesn't work so well when you are also running the global currency and acting as the defacto consumer of last resort.
This. It’s like they’ve never heard of (never mind never read) Adam Smith.
Backward to a brighter yesterday.