These aren't reciprocal tariffs, they are trying to eliminate the trade deficits between countries we trade with. We are basically trying to kill every other countries economy by making sure they aren't "winning". This is literally going to fuck over the entire world, US included, and it's not going to be pretty. The way they decided on these tariff percentages was by taking our trade deficit and diving it by the country exports we trade with. The 10% is for countries we don't have a trade deficit with. I can't express how completely fucked this is and the damage it's going to cause.
As is so often the case these days, it gets dumber. Trump released a list of countries along with what he alleges is the rate at which those countries tariff the United States. Many people pointed out that these numbers are not the actual tariff rates with those countries, so where the hell did they come from? Someone finally cracked it, the "tariff rate" is just the trade deficit the US has with that country, divided by the total exports from that country to the US. Doubling the oven temperature and cooking for half the time literally isn't this stupid an equation.
So, impose tariffs on pretty much anything imported. Note to self, tariff = tax paid by consumer unless they buy local manufactured products. Local manufacturers leap at the opportunity to increase their market share by now being able to increase their price by anything up to the original imported price plus new tariff. And of course none of the inputs to their manufacturing process are imported otherwise their inputs would now be subject to a tariff as well. Manufacturing ramps up in all the current idle factories, skilled workers who were once scratching their ass are now back in demand. Investment surges due to the predictable and stable economic and political environment. This all happens instantly. MAGA. Got it. Where does the Ginger nut and the Musk stick fit into this? Seems like a lot of trouble to go to so you can piss in your own boot.
This specifically is a Trump thing. He is under the impression that if you have a trade deficit with another country, that country is winning and he is losing. This "helps" balance that equation in his mind. Musk fits in because he is doing all of the dirty work behind the scenes so he can eventually dump him and claim that's not what he wanted and Elon went too far blah blah blah. The absolute evil behind most of this is Stephen Miller. That guy needs to find the wrong end of something that goes boom.
No problem. The US trades with most countries on earth and they in turn trade with us. In most cases, the US buys more goods from other countries than they buy from us. This is called the trade deficit. If the US imports 1 billion dollars of goods from Italy, but they only import 500 million dollars of US goods, our trading deficit would be 500 million. What Trump has done with his tariffs is take whatever that trade deficit is with every country, turn it into a percentage, and claim that country has a tariff on US goods at that amount. This is a completely made up thing, and it's nothing more than a way for Trump to destabilize the entire world economy. There is no logic or equation or reason behind this measure other than to force every nation to come to trump bowing and kissing the ring to try and get the tariff removed. If a country does not have a trade deficit to the US (Australia), he's imposed a flat 10% tariff to "make back money the US has spent supporting those nations". He also put a 25% tariff on all cars and car parts. To put these tariffs into numbers, let's say a car costs $10,000 and is imported from Japan (all Toyota, Honda, Nissan, Mazda etc). After these tariffs go into place, that car will be hit with a 25% tariff and then an additional 24% tariff because it is coming from Japan. That car is now going to cost $14,900. This is the absolute baseline for just bringing the car into the US to be sold, this is before any dealer mark ups or any additional pricing. A car company is not going to just eat that cost and sell you the car for $10,000, you are going to pay the higher price. The above example is for one item. Now do everything we import from that country. Every electronic device, every food item, everything now is 24% more expensive to import from Japan. Now do the above calculation for every country who had a tariff levied on them today and you can see how catastrophic that is going to be on the global economy.
Not sure if you've ever heard some of those "what if" scenarios where like China calls in all of the US debts at once or the US dollar losses is reserve currency status, but this is right up there in magnitude and could realistically start the great depression 2.0.
This is the part of any sort of economic discussion that seems like a no-brainer to me. Anytime you impose something on a company that affects their profit, you can’t expect the company to just shrug and say “guess we’ll make less money then, right?”
That's exactly what Trump has done, though. He's warned the auto makers to not raise their prices as a result of the tariffs... "or else".
Democrats said it wouldn't work like that when they wanted to make American corporations pay their share of taxes. Sounds to me like nobody in the federal level of American politics has any good ideas.
Oh. My. God. That is EXACTLY the way that ChatGTP suggests picking tariffs in order to fix a trade deficit. The fuckers asked ChatGTP how to fix the economy.
On Chat GPT, the following prompt will immediately get you the method they used: If I wanted to even the playing field with respect to the trade deficit with foreign nations using tariffs, how could I pick the tariff rates? Give me a specific calculation
Yes, that’s part of my point. Any government plan to get more money from companies/billionaires/whatever with a lot of money is always going to have a reaction of that company/billionaire/whatever adjusting things to not adversely affect the amount of incoming money.
Never in the history of anything has a corporation failed to channel any sort of loss whatsoever on to its consumers and/or its lowest-salaried employees.