From Dr. Madsen Pirie:
Many things in the USA use aluminium or steel. It’s not just cars, white goods and buildings; it’s little things like the foil in cigarette packs or the safety caps on medications. By putting tariffs on foreign steel and aluminium, President Trump is making American manufacturers pay more to make their goods, and raising the prices they pass on to their customers. He’s enabling US producers of those metals charge higher prices than they otherwise would. American consumers will be poorer.
Not to be outdone, Jean-Claude Juncker, President of the European Commission, has threatened to retaliate by making EU citizens pay more for their Levi jeans, Bourbon whiskey and Harley-Davidson motor-cycles. He could have taken the US to the WTO Commission to have Trump’s tariffs struck down, but instead he chose to make his citizens poorer.
I prefer Teslas to Harleys, but I do wear Levis and I do mix the odd Bourbon into cocktails. Now I’ll have to pay more because President Trump has chosen to hurt his own citizens. There is a word for this:- Insanity.
Not to be outdone, Jean-Claude Juncker, President of the European Commission, has threatened to retaliate by making EU citizens pay more for their Levi jeans, Bourbon whiskey and Harley-Davidson motor-cycles. Ironically those are mainly luxury(-ish) goods so a higher price might mean people consume more of them. At least they will continue to consume about the same. Consider who is buying Harley-Davidsons these days. Late Middle Aged men contemplating their imminent death are unlikely to be put off by another 10%. More expensive bourbon? However so far all I see is a lot of posturing. Whether it comes to anything… Read more »
European steel makers are terrified that a flood of diverted steel would crash prices in Europe. [reported]
European non-steel-makers cheer at the prospect of cheaper steel. [not reported]
What happens to tariff income after it is syphoned from the pockets of your own citizens? The government gets it. IF that same government were to use it to pay down debt or to reduce iniquitous taxes elsewhere the net effect on the population would be nil. Apart from that minor detail of domestic production costing more and being free from competition. That’s why the tariffs have to be lifed. Domestic producers deserve a chance, not a sinecure.
No, that is the closed-system argument, under which it wouldn’t matter how high or low tax rates were because all the same money would continue to slosh around. Your IF is a big, as the drain-the-swamp President has not seen fit to shut down even Export-Import or the ethanol folly. Tariffs are a negative-sum game if only because they confer benefit based on lobbying rather than productivity. In contrast, the end-of-year tax bill raised government debt to gush money back to businesses, but only if they contrive to make a profit, whereas the unemployment “insurance” that Nancy Pelosi called the… Read more »
Hey, I’m OK with ‘all tariffs are bad’ as well as ‘all subsidies are bad’. I don’t think featherbedding domestic producers by either method is desirable. But maybe, just maybe, sometimes it’s necessary. Like with a strategic product. Arms. Or steel and alumin(i)um. But if you have to have either tariff or subsidy they should be limited in time.
The money going round thing is only to scale the damage in this particular case to people’s wealth. And it’s not much, so squealing about that harm is not the best argument.
Fort Hamilton Rye … makes a nice Old Fashioned or Manhattan or Sazarac … now with no “special” EU import tariff
Your theory being that China will always be there to make our aluminum and steel for us.
As their navy postures in the South China Sea.
Your economics is correct. But there is more to the world than economics.
Wash your keyboard out with soap. Economics has no home for the concept ‘money isn’t everything’.