Hacker News Reader

Comment by Aloha | Hacker News Reader

I'm pro tariff - but 25% tariffs are absurd, at most you need 10%-12% in narrowly targeted categories to ensure re-onshoring of production.

View on HN

They're clearly thinking much bigger, like returning to a model where tariffs are the primary mode of funding the government, and nuking whole sectors/devaluing the dollar to make US exports more competitive with a desperate potential workforce. Not a particularly compelling plan in my view but it has its own internal logic.

why would tariffs make US exports more competitive? It would make other countries under tariff to retaliate, which makes US exports less valuable.

Unless, of course, the US has some sort of monopoly on an export that others have no choice but to take. I dont think the US has such a resource.

The US does have such a monopoly, in tech. But because that's services rather than goods, it seems to be ignored.

I propose ASML raised prices for US customers by 30%, and maybe give China some freebies to thank them for the panda's.

Supposing they did, is there somewhere else their customers are going to buy from?

Well, you'd be glad to know that ASML is majority owned by institutional investors and a large fraction of that are US based.

Import substitution industrialization is a pretty well established method to foster industries and frankly works really well for developing states (or did until the entire international system started conspiring to turn you into a pariah state for trying it). You can't export something you're not making in the first place. But it is quite unusual for a fully developed, post-industrial economy to try and move back down the value chain and manufacture more stuff again so who knows what happens when we try that.

But a 25% tariff isnt going to do that, its just going to make things much more expensive - its another thing if you're trying to do cost adjustment tariffs - and just price in all the externalities (labor cost, regulatory regime, environmental rules, and human rights costs) that US manufacturing must bear - and make it a level playing field - thats not what this is.

> labor cost, regulatory regime, environmental rules, and human rights costs

These don't strike you as themes they're interested in? They're kneecapping or eliminating regulators and driving up unemployment. Their deportation drives, it's true, are a bit contradictory here, but those have other motivations.

Not particularly, no.

I do think they want to create more manufacturing jobs, which in general are a better quality than service ones however.

In what sense are they “better”?

Manufacturing generally provides higher margin than service jobs, so the generally provide better benefits.

> Manufacturing generally provides higher margin than service jobs

manufacturing jobs outsourced to low cost countries begs to differ.

Now of course, you'd argue that those are the bad ones, and the good ones are what you'd want to keep (like semiconductor manufacturing).

The opposite is true. The highest-margin stuff is services (like, to choose the obvious one, software). Frankly it seems pretty obvious to me why margins would tend to be lower for manufactured goods, especially commodity ones — you have more inputs besides labor, the primary one a service-oriented business has to worry about. There is a fairly sensible reason we don’t have those jobs.

I suppose you have in mind jobs like home health aides. But 1) we really do need a lot of them with an aging population 2) I’m not sure their lives would be improved by working in a textile mill instead.

The issue with trying to do this is tariffs are both extremely regressive and wont generate enough revenue to move the needle.

It'd be one thing if we were combining tariffs with a UBI - that can balance out most of the regressive effects of it, but we're not doing that.

I don't think they care about it being regressive. Perhaps they even consider that a benefit.

I’m curious - I wouldn’t describe myself as “pro tariff” at all, but I can see a good case for them in a couple circumstances; 1) in cases where production is important for national security - e.g. sufficient production of Calories and 2) in cases where off-shored production isn’t meeting standards around human rights, environmental protection, etc.

Do you see a case for tariffs otherwise?

Cost adjustment tariffs is my argument -

You use tariffs to equalize actual costs plus a little (environmental/climate rules, labor costs, regulatory environment, human rights, etc) between the US and a foreign country. It doesn't have to be a huge amount of increase either, 5-12% - and probably wouldn't apply to most developed countries, because it is based on that matrix of total cost of doing business.

As far as rationale here - I personally want to onshore as much production as I can - but you can't start with finished goods necessarily, you often have to start with the base supportive industries needed - but even I acknowledge that may not be practical for everything.

But, to do what I want to do is a decades long process and must be done strategically and carefully - blanket tariffs dont do that, and are just a blowtorch to the delicate interconnections of a modern economy. Like targeting agricultural goods is absurd, for example - and will just raise prices for no tangible good.

> I personally want to onshore as much production as I can

What's the rationale for this? Like if you're already close to full employment, this isn't even zero-sum, you're throwing away your comparative advantage and spending part of your economy on production rather than higher-value services.

I'm willing to spend part of my country's wealth to counteract, say, other countries' lack of environmental protections, but if you're spending that wealth on counteracting lower offshore labour costs... in effect, the net impact is that you're just reducing the value of your own labour to match the offshore labour. (ergo, tariffs are a real clunky way to support local labour that isn't competitive with offshore labour costs... you could achieve the same ends more efficiently via income taxes and UBI.)

I want a better quality of jobs, in my experience service oriented industry often have a thinner margin than hardware.

Like walmart is the largest private employer in the US, the working conditions, pay and benefits one gets from working at walmart isnt comparable to what we used to give what was the largest private employer 50 years ago (which was AT&T) - nor can the margins that walmart generates support those kinds of generous pay and benefits either.

This story is repeated a 100 times over thruout the US - while yes we have full employment, its in service jobs (retail, food service, hospitality) and not in manufacturing or other high paying jobs.

The second thing I'm trying to deal with, for lack of a more polite way (without lapsing too far into euphemism) to put it is "jobs for stupid people" (edit, in hindsight the best way to put this is "good jobs for everyone") - for a significant portion of the population, the best job they can hope for in terms of wages and benefits is working on a production line in a factory, while you and I (presumably) work in some sort of information job - thats just not an option for a significant portion of the population, and until we solve that we're going to keep having an issue with a K-shaped economy.

I get what you're saying, but I'm not getting any way that the economics here work. Expanding (rather than shrinking) the economy that way only works if you can export some of your production, which you won't be able to do if the production only exists because of tariffs. (Because other countries will enact counter-tarrifs.)

If you move Walmart employees to building widgets at a somewhat higher wage and that shrinks your economy, you'd have better overall results if you just raised taxes and gave the money to Walmart employees directly.

If every high wage country did the same thing - and specifically targeted low regulation places - it would. I'm certain that the US can build something that is competitive in Europe, and most of the Americas.

Also flatly, people cannot pay their rent, or eat GDP, its possible to have lower GDP growth and still be more prosperous country, most of the GDP loss will be to upper income earners.

> Also flatly, people cannot pay their rent, or eat GDP, its possible to have lower GDP growth and still be more prosperous country, most of the GDP loss will be to upper income earners.

Right, but then you’re working with a smaller pie than if you just skipped tariffs, taxed the upper income earners, and redistributed that.

And tariffs are particularly regressive - mostly resulting in higher costs for your low income earners, since tariffed goods are a relatively higher part of their expenses than they are for the wealthy.

Tariffs are an economically inefficient way to get a bigger pie slice for the median earner.

Sure - but they're a politically possible one.

I'm a big fan of UBI - love it, make all my librarian bits very happy! - but I also acknowledge the political reality of it.

I also do see the value in work, people derive significant mental health benefits from meaningful work too, that shouldn't be discounted.

Reply on news.ycombinator.com