So, despite being labelled "tariffs", the actual basis for calculating the "reciprocal tariffs" has nothing to do with tariffs.
I rather doubt Walmart is going to increase the price of only Chinese made goods 25%. I think everything goes up 25% and they pocket the margin as long as they can get away with it.
It doesn't work because it's basically illegal to be poor in America, or rather to live like a poor person in a developing country. Because of theories about gentrification and such we just banned everything like SROs, company dorms, etc.
It worked for a little while in the 2000s because earlier flight from cities had left a lot of empty housing open to gentrify, but none of that is left.
There's a few classes of people left like supercommuters and people who live in RVs in the Amazon warehouse parking lot, but not going to run a big factory like that.
But memes about suicide nets aside, Chinese factory workers are there by their own choice, because it's better than their alternatives, and we've eliminated such choices by simply making it illegal to have the low cost of living it requires.
This was done to make the poor underclass go away (homeless people) but it also makes this type of working class (factory workers) go away. Luckily for us, we have a service economy with email jobs for them to work instead.
Well pack it up, that, the Evangeline legend and the Katrina episode of Boondocks round the tale out. Nothing else to see here.
(Actually, the slave labor camp is Mississippi these days [1])
[1] https://news.ycombinator.com/item?id=9354922;
https://web.archive.org/web/20201108140152/https://in.news.y...
The problems I described are mostly in blue states, although Texas has different problems that somehow result in basically the same issues. Like Houston doesn't have zoning, but still ends up with sprawl due to other restrictions.
1) raise tax revenue in a way that partially falls on foreign nationals
2) reduce trade deficits and foreign purchasing of treasuries.
3) Increase relative power if other economies are damaged more than the US. There are situations where zero and negative sum strategies are optimal, like war, where it is better to have a larger % of a smaller overall pie.
4) stimulate demand for us labor
None of the GOP budgets reduce the deficit. Trump’s blew them out even further.
My understanding is that yes, the national debt is still increasing, although the administration is counting on tariff funds to supplement revenue. Would you agree?
Not the debt, the deficit. The debt is the card balance. The deficit are new swipes. Nothing in the current policy package is about deficit (let alone debt) reduction.
(Valid on trade deficits. I guess we can run trade surpluses if we give up dollar hegemony. That, of course, means no more deficits.)
Let me see if I am following. The tariffs are ostensibly about spurring domestic industry so that American companies can flourish and we don’t have to pay tariffs on imports of foreign goods in the long term. Is that right? If so, then long term, aren’t we hoping that the “tariff funds” are small? But they are simultaneously supposed to supplement revenue to pay down debt too?
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
The TLDR is Miran sold to Trump US can Plaza Accord everyone, devalue USD to reindustrialize US, draw down US debt/commitments, keep exorbitant privelege... all by slapping tariffs (Trump's fav hammer) to scare countries into signing (converting) existing US commitments to "century bonds" in US favour while tying them to US orbit for foreseeable future. Is US strong enough to coerce others to sign on? IMO doesn't matter, this seems like plan specifically tailered to Trump preferences and ego, so as long as Trump thinks so Miran gets the job.
E: there is logic to the plan, logic that appeals to Trump -> US strength and monetary manipulation skills can force others to fall in line. And TBH countries have fallen in line in the past.
Why Trump’s tariffs are better than you think — and much worse
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Tariffs are theoretically supposed to encourage domestic production, but rely on the false premise that all raw and intermediate materials can be sourced domestically at a cost below the import price. That has generally proven to not work unless tariffs are in the hundreds of percent. But at that level, import taxes tend to poison entire sectors due to supply lag instead of drive domestic economies.
Wikipedia's articles on Smoot–Hawley and the Tariff of Abominations both have sections on their effects.
In short, we'll see a brief rise in the domestic economy, then a sharp recession. One of the reasons SE Asia, BRICS, and the EU have been so active to disconnect themselves from the U.S. is they don't want to get caught up in the U.S. economic failure like they did in the 1930s.