But when tariffs are applied broadly we all pay more in taxes. And it's worse than a more familiar increase in sales or income tax because it can absolutely wreck supply chains.
"Do something or we'll trade with somebody else" is not a credible threat if they know you've already pissed off everybody else.
The US has an insane amount of leverage. Leaders in Canada, Europe, etc talk a big game but then ultimately talk to an economist and realize they have to come to the table. That's why these leaders keep announcing things and then walking them back.
The US imports a lot of goods because we can't or don't want to make them here. Meanwhile, the bulk of US GDP is services done by knowledge workers...
I am certainly not an economist but it seems like it would be a hell of a lot harder for the United States to build a bunch of factories and learn how to run them compared to the effort other countries would have to go through to import knowledge workers to build their own local services.
And 24% of GDP is a whole fucking quarter of the whole economic production of the largest economy in the world, it's not a "mild recession"...
I agree that it would be less severe for the US than for other countries. It's essentially saying, economically, "Do what I want or I'll kill you." It's a mafia-style negotiation. I despise it when others do it, and I despise that the US is doing it.
Now what has kept Europe stable was the US having a bigger economy, good intentions (as in the intention was to increase ALL trade, not just US' immediate advantage), an unbeatable army and a nuclear armed threat to fight. Perhaps ironically, this approach made the US the most powerful country in the world, when countries that directly pursued their own interests faded, or outright failed (most famously USSR).
This appears to be ending. And every country has politicians just salivating to do what Trump is (or appears to be) doing: getting themselves what they want at any cost to their own country's citizens. Sooner or later they'll come to power and ...
So how do you negotiate as a country, really? If the country you're negotiating isn't a psychotic aggressor at the moment ... the time will come when they are. Doesn't this make war the inevitable outcome?
Quite sad times. I liked the 2000s and 2010s with rather free trade a lot.
Of course they work. China has used them to go from people living in huts to the high tech manufacturing center of the world.
If the object is to bring in local manufacturing jobs, it's hard to claim that tarrifs can not be successful.
However, you can naturally expect vocal opposition from companies that want to avoid higher labor costs.
In the case of India, it's worked out very well as a proof of concept after Apple decided to reduce their reliance on China.
> Apple Aims to Make a Quarter of the World’s iPhones in India
https://www.wsj.com/tech/apple-aims-to-make-a-quarter-of-the...
It only helped locally produced shoddy products to win a larger market share, quality is underwhelming since they don't have to compete with more better products at the same price.