Trumps Tariffs. An idiots guide?

[CosyNavyLeader]

Can someone try and explain it to me in an easy to read, simplistic version?

Please no nasty comments. I have ADHD and I struggle to read large news articles. And there are so many of them. But I want to understand.

Thankyou in advance.

At the moment they believe what Trump says. That they were being ripped off and that Trump is going to change this.
It is only if/when it starts to impact people personally that they will change their minds.
And even then he might somehow manage to make them believe it is the Libs fault and it would have been so much worse even he hadn’t been in charge.

But like us they must be seeing the value of their pensions/portfolios tank in real time this last week. Ugh, yes I’m waiting too. I wonder if Trump has it in him to ride out any disapproval. The Maga lot have been so forgiving of him.

Based on the very loud people on social media, I bet it could be easily spun as “rich corrupt lefties lose millions- hooray” rather than tens/hundreds of thousands lost from normal Americans.

He is actually throwing Americans under the bus too - he is an idiot who is pushing through ideals that won't work.

The Trump supporters I’m seeing being vocal on tv or social media all seem to be saying they are expecting a few months of financial pain, after that the $billions will be flooding in due to the tariffs coming to fruition and it’ll all be worth it. Madness.

Absolute lunatics
Those economists working for Trump must prepare to retire after his term. How they produce numbers and essays to support the plan. Him being lunatic is obv clear from the start but a whole administration being brought on the propaganda? Are they all working under fear?

I recall Farage et al saying similar about Brexit. Just a few months of pain and then the growth will start flowing….

The billions only come flooding in if consumers pay the higher prices for the tariffed goods?

And I thought the point as that they were supposed to be switching to American products?

XKCD have made a cartoon that explains the problem with this nicely:

XKCD:tariffs

So it's probably worth giving a bit of historical background on how we got here as well. And to be fair a lot of this is applicable to the UK as well.

After WW2 the US was the dominant world economy, this continued up until the mid 70's due to the energy crisis and competition from other countries.

The US manufacturing industry started to get growing competition from Japan and Korea. This was a precursor to what would follow with China.

The Communist Government in China seeing the economic collapse of the Soviet Union recognised it needed to massively grow the economy if they were going to stay in power.

This picked up in the 1990s and what really changed things was that China was admitted to the WTO in 2001 meaning it could export to other countries with much lower tariffs.

Because wages, safety standards, working conditions and environmental controls were much much lower in China plus they had cheaper but dirtier coal fired electricity, China could manufacture basic goods a lot more cheaply than the US. The flip side idea was that the US would sell back to China high value services and complex manufactured goods.

This was great news for the US consumers who could now buy clothing and manufactured goods (often through Amazon) at much lower prices which kept inflation really low.

The downside was that US workers in manufacturing etc could not compete with cheaper Chinese imports so they lost their jobs. The idea though was that the US would upskill those unemployed into more complex manufactured goods. Incidentally this same idea was what pushed the Blair Government to rapidly increase the number of young people going to University in order to upsell them.

Unfortunately it proved a lot harder to upskill an unemployed steel worker into a jet engine engineer or a textile worker into a software engineer. As a result these people stayed unemployed and were basically thrown on the societal scap heap but hey the rest of us could still get $3 t shirts and $ 50 DVD players.

Politically what has happened is that those forgotten unemployed or under employed workers that were thrown on the societal scrap heap got increasingly pissed off and through social media became increasingly further right or further left.

Which then leads us to politicians like Trump appealing to these people with slogans such as Make America Great Again".

The idea of the tariffs is to bring back manufacturing and jobs to the US. It is very much a gamble whether this comes off or not but being kind and assuming it does then the upside will be more jobs and the downside higher prices for a lot of stuff. Or more simply shifting the focus more towards workers and less towards consumers.

Yes I’m not sure their economics knowledge is keeping up.

They are expecting factories to be built in the us to give them the home built products Trump is promising to MAGA, but my understanding is that it will take years to build new factories and there would need to be a lot of imports (US needs to pay out on imports because of tariff wars) to allow this to happen anyway. I’m also no economist as you can tell, but it’s not hard to see where all this could possibly go wrong.

He’s gambling on us consumers being happy to pay vastly more on anything imported, so as to encourage domestic manufacturing. Except that there is no way that US manufacturing could ever be cheaper than stuff made in China etc so whatever happens US consumers lose.

I know a lot of Americans and not one of them voted for this tosspot. So I do feel sorry for them.

my job could well be affected, I work in pharmaceuticals and the share prices are about to plummet globally as the US has largely relied on other countries to make its pharmaceuticals for decades. So yeah they’ll be paying more for their medicines too. My husband works for an American company who relies on stuff imported from China. That’s looking good then. The whole mess could tip the whole world into a global recession. All because of the lunacy of a single man.

He is essentially saying buy American, come and manufacture your goods in America and no tariffs will apply to you. Imposing the tariffs is supposed to both encourage people to buy and make in America and also to raise an income for any items imported. However the money raised from the tariffs, or tax, will only end up getting passed onto the consumer. So American people will have to pay more for their goods.

I would reverse that - Trump, guided by idiots !!

This is good - BUT workers are also consumers, whichever way you try to put a positive spin on this, the less well off will be worse off for the foreseeable

Yes, he's banking on America being able to quickly ramp up its own manufacturing industry, but with fewer immigrants who often fill those jobs. And without the level of support, advice and funding that can only come from a functioning government - which they're destroying. Which leaves American business to plan and fund it all, but who wants to spend $80m or whatever on an advanced All-American Widget factory when Trump might back down or do some other crazy thing at any moment that renders your investment useless?

@Echobelly yep and it takes a long time to get those things in place and lots of dosh- when a future administration might quickly reverse it

He isn't making america more wealthy. Tariffs on phones (made in China) would mean they increase in price from 800 usd to 1600 usd for the cheapest model. Making iphones in the usa (Trump's dream) would mean an iphone costs between 30k to 100k usd which means Apple would probably have to close up shop and the iPhone would belong in a museum. This is because as Tim Cook explained in a Forbes article, america lacks the expertise to manufacture these phones and it would take a generation to produce the tooling engineers (would not even fill a room in the usa while in China they could fill several football fields). Apple has loads of well paid jobs in the usa though so I guess all those people lose their jobs too?

That is one example. 77% of toys sold in USA are made in China etc. You aren't making a country wealthy by bringing back low paid factory jobs or jobs which people have no ability to do (as it involves years training as an apprentice).

America excels in other areas I.e. software. There is this principle called comparative advantage of nations. Just because you can produce X good doesn't mean you should. No one wants to buy an iPhone that costs 30k (it would cost that as there is no way to increase that level of supply needed to make iPhone affordable with the present infrastructure and talent in usa). So the factories would stay in Asia and usa consumers just have to pay more. We possibly have to pay more too in the long run in a world with reduced trade.

Can I ask a question as well please- trump says other countries have already got tariffs on them so it’s reciprocal now- is this true? So for example have the UK been already charging the US 10% on their imports so he’s just done it back to make it fair?

Are they trained tooling engineer now. Someone in the trump administration was talking about Americans screwing phones together. This is what Tim Cook has to say:

The reason is because of the skill… and the quantity of skill in one location… and the type of skill it is," Cook said in a previous interview, adding that one of the essential skills is precision tooling.
"The products we do require really advanced tooling," Cook added. "And the precision that you have to have in tooling and working with the materials that we do are state-of-the-art. And the tooling skill is very deep here. In the US, you could have a meeting of tooling engineers and I’m not sure we could fill the room. In China, you could fill multiple football fields."

No, this isn't true.

What he showed in the press conference was not tariffs, but trade imbalance.

Poor countries sell more to the US than they buy from the US, and have been whacked with huge tariffs as a result.

Correct.
also he doesn’t understand that tariffs are different to VAT (which doesn’t exist in the US).
so the “tariff” that he thinks the UK is paying is mostly VAT which we pay on most things regardless of origin Eg any US product will not be at any commercial disadvantage because of British consumers paying VAT.

But while he talked about VAT, he certainly didn't include it in any tariff calculations which were purely based on any trade imbalance between the two countries.

He is the Liz Truss of the US. He’s bombed the global stock markets.

The Apple iPhone is 90% constructed in China now 104% tariff, but a Samsung is constructed in Vietnam which is being hit with a 46% tariff.

Trump seems to imagine all these tech giants, Pharma etc can bang up a factory in Pigsknuckle Idaho and provide US consumers with big want products next week.

The difference being China and Vietnam have got a decades long jump on manufacturing and have the workforce to man such plants.

I saw someone on the news say most Americans don't even want to mow their own lawns - who is going to start sewing jeans?!

It's like the Brexit thing where all the EU labour withdrew and no-one wants to pick fruit in the UK....surprise surprise