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PaperclipPerfector  22d ago (text post)   32375 thread views

Culture War Roundup for the week of April 7, 2025

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So the White House finally released some demands for lifting the tariffs and it just highlights the economic illiteracy behind their thinking even more. https://www.whitehouse.gov/briefings-statements/2025/04/cea-chairman-steve-miran-hudson-institute-event-remarks/

What the Trump admin seems to think is that other countries work like centralized command economies where he can demand a leader buy more from the US and have the country follow through, rather than individuals and businesses making their own personal purchasing decisions in aggregate.

Even if all trade barriers (including the nonsensical things he includes as trade barriers) are completely gone, there is no easy way for say, Australia to force their businesses to start buying more American made products. They're not a communist nation and unless we want our allies to turn that way, they can't reach down the hands of government and force private business to do so.

First, other countries can accept tariffs on their exports to the United States without retaliation, providing revenue to the U.S. Treasury to finance public goods provision. Critically, retaliation will exacerbate rather than improve the distribution of burdens and make it even more difficult for us to finance global public goods.

Second, they can stop unfair and harmful trading practices by opening their markets and buying more from America;

Third, they can boost defense spending and procurement from the U.S., buying more U.S.-made goods, and taking strain off our servicemembers and creating jobs here;

Fourth, they can invest in and install factories in America. They won’t face tariffs if they make their stuff in this country;

Fifth, they could simply write checks to Treasury that help us finance global public goods.

Ignoring the absolutely laughable "just give us free money" fifth demand and the "just don't fight back" first demand, the only thing that these countries can truly do without going into command economy mode is half of the 3rd demand, increasing defense spending.

It's like they expect the EU, UK, Australia, etc to essentially issue orders from the government forcing their wealthy investors and businessmen to spend their money and resources in the US. Now many of those richer nations might have wealthy investors who want to do so anyway, but what about the poorer nations like Lesotho or Vietnam with barely any capital? They can't suddenly flip around and start buying large amounts of US goods when they can barely even afford their poor lifestyles.

It also shows that good faith tariff negotiations are doomed from the start. They truly believe that trade deficits are being on the "losing end" of trade, and his view of them as centralized command economies slots into that neatly. In the same sense there's a weird attempt to tie in the US account deficits as some major loss, which also serves as evidence they view western economies less like open market economies and more as this weird form of centralized government command economy. Again these are individuals and businesses conducting the trade and any method you take to reduce this requires big government to interfere.

However, that view is at odds with reality. The United States has run current account deficits now for five decades, and these have widened precipitously in recent years, going from about 2% of GDP in the first Trump Administration to a high of nearly 4% of GDP in the Biden Administration2. And this has happened all while the dollar has appreciated, not depreciated!

They also just keep repeating this claim which we already know to be false.

It is important to note here that tariffs are not levied simply to collect revenues. For example, the President’s reciprocal tariffs are designed to address tariff and non-tariff barriers and other forms of cheating like currency manipulation, dumping, and subsidies to gain unfair advantage.

We already know that the reciprocal tariff formula has absolutely nothing to do with trade barriers and is simply the U.S. trade deficit with a country, divided by the value of the goods the U.S. imports from them. Not only that but as many point out, including conservative think tanks, it's not even done correctly.

Even if all trade barriers (including the nonsensical things he includes as trade barriers) are completely gone, there is no easy way for say, Australia to force their businesses to start buying more American made products.

Think outside the box. Zero is not the lowest number. Australia could put a negative 20% tariff on all American imports, directly paying American manufacturers to ship their products to Australia.

Is this flat-out extortion? Yes. But the mechanisms for enforcement are already in place. Just change the sign in the relevant Excel templates.

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