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Comment by griffzhowl | Hacker News Reader

The problem is it's economically illiterate. Trade deficits aren't bad in themselves - they can be a sign that you're getting a good deal. Consider the case where a country with low wages exports raw materials to the US, and doesn't buy back as much from the US. This is the situation for lots of poorer countries who are exporting cheap raw materials to the US, and the US gains from these situations. Trump's policy simply makes all these raw materials more expensive.

Another way of reducing trade deficits would be to make Americans so poor that they can't afford to buy things from overseas. Eliminating trade deficits in itself isn't a rational economic goal.

Having said that, American manufacurers on average will likely benefit (though maybe not if their raw materials are too much more expensive), but this benefit will only come at the cost of American consumers, who are denied cheaper options from overseas by the tariffs

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You’re calling Trump “economically illiterate,” but what you’re saying will happen is exactly the motivation of Trump’s policy. He just thinks it’s a good thing rather than a bad thing.

Trump’s bet is that the upsides will be borne disproportionately by his base, while the downsides will be borne disproportionately by Democrats’ laptop-class base. It’s not irrational to think that will be the result.

Trump also thinks imports subtract from GDP.

I was just talking last night about how ironically the things Trump is doing fall not to far from what Bernie bros have dreamed of. Heavy tariffs and no income tax is pretty much the conservative version of liberal hand outs.

What do they expect to happen if the heavy tariffs either move the manufacturing of those products to the US or make the imports expensive enough that consumers switch to domestic manufacturers?

That tanks the revenue from the tariffs, which would make them an ineffective replacement for income tax.

How will adding a tax to every single consumer good benefit his base?

Because the taxes will encourage shifting production to the U.S.

How much do production workers get paid in China? How will our production goods be affordable at American labor rates? This strategy just makes everything more expensive - nothing cheaper.

Exactly and even if it does work to reshore factories (which will take years and we'll just ignore the question of where all the workers for these factories will come from, and that the goods needed for making those factories are also being tariffed) they'll only be competitive in a protected market so they're only really producing for the US market which will be stunted because costs would have inflated through the roof!

Not to mention these are blanket tariffs, not protecting specific American industries. So anything that's not feasibly produced here will be more expensive anyway.

Yes everybody, we are taxing all of your groceries - but all of those American coffee and banana farms (!) will be protected.

Sorry, who is saying that this will make things cheaper? I haven’t seen Trump or Vance argue this.

I mean, a large point of their campaign was that price increases were a major national concern, right? Can we agree that they repeatedly made that point? I recall many lawn signs to that effect.

So given that, I would have assumed that this administration would focus on making things more affordable. Instead, I'm seeing people try to explain to me that, actually, raising the prices across the board is a good thing!

To put it plainly, it seems like the administration raising prices is, in fact, not a good thing for Americans. And I don't see how American labor can produce things that are more affordable than what we can buy now. So it seems like a net negative, because ultimately they are choosing to make everything more expensive for consumers.

J.p. morgan is predicting 1.5% higher price index due to these tariffs. Even if that continues all four years, it’ll be much less than Biden.

Lots of time to make up for causing the largest market drop since COVID as well. Hopefully you're right and everything will be fine.

What kind of financing has Trump made available so that the average American company (companies of what 5-20 people) can setup multi-hundreds of millions of dollars mining operations, smelters, manufacturing plants? Because it's gonna be a stretch for the average 5-300 person factory around me to vertically integrate into a billion dollars of supply chain infra business.

Trump did decent in the rust belt. Many of them have lost their good paying manufacturing jobs. If, and this is a big if, we can bring back manufacturing in the US they can get their jobs back.

What is the time scale we are talking about when we talk about this change?

GM announced they are going to hire some temporary workers and expand overtime for existing workers before the end of this month.

I'm sure there are more companies, but that is all I've seen so far.

If I'm company leadership, I'm not doing anything but trying to limit damage while this guy's in office. His tariffs can turn on a dime- his petulance is business poison.

What plan has Trump put in place to built the infrastructure needed for this? What funding available to businesses? Oh none you say.

I don't think it's his base that will benefit. More the owners of factories, mines, oil wells, etc.

> You’re calling Trump “economically illiterate,”

I mean he's gone bankrupt 6 times including managing to bankrupt a casino a business where on average people give you money to get less money in return... He also confuses simple economic terms like equating trade deficits with tariffs.

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