> Event studies around discrete tariff shocks on Brazil (50%) and India (25–50%) confirm: export prices did not decline. Trade volumes collapsed instead.
Even if it was, the problem is that this is a classic trap where protecting your own market will result in overpriced goods in the home market. We would be paying extravagant amounts for everything. Most other countries wouldn’t have that problem and would result in being stuck in time like a lot of the former Soviet Union.
American trade policy has gone so far in the direction of Mercantilism that both the Neoliberal and the Keynesian economists can agree on something. That's not a good thing.
There does seem to be indications that the actual tariffs collected seems far lower than the actual tariffs promised, likely just half of what was promised:
I understood part of the point of the tariffs as encouraging on-shore production of some items by increasing the price of their imported counterparts.
Such protectionist practices were used by China to bootstrap their own automobile industry, before they became competitive in the global market. Of course, China had surplus capacity of untapped cheap labor, which America does not.
Barring an evolution in automated manufacturing, or an overhaul of regulatory policy, I'm pessimistic it's possible to accomplish the same in the US. But, in principle, tariffs have a valid place in supporting an emerging local industry.
American Conservatives explicitly admitted they are not part of the reality-based community (their words) back in 2004 [1]. In 2017 Kellyanne Conway offered "alternative facts" (her words). In a lawsuit, Fox News admitted that Tucker Carlson's commentary was not to be taken literally. Alex Jones similarly claimed in a lawsuit that his work is "performance art" and is playing a character like The Joker. [4]
It's constantly disappointing how the apparent intellectuals who frequent and operate HN will rally to that side out of libertarian convenience and out of annoyance and disgust at "wokism". And then will inevitably be shocked when everything goes sideways again. Hopefully the education will stick longer this time than it did after G.W.Bush.
I guess one explanation of the delusion would be "surely if exporter product is more expensive they will have to lower price to compete with locally made product, and if they do not the local equivalent will just sell better".
Doesn't really work when main reason for product existence on market is either "no equivalent" or "this particular subgroup is only imported" (say given specifically tasting cheese).
Because people vote for the name on the ticket and not the dude he planned to put in charge of the economy who, economically speaking, has always been a madman on a corner soapbox ranting that every other economist doesn’t understand the effects of tariffs. He’s great.
It is, but there has been lots of resistance to this understanding. Part of why is repeated lies. Bessent just the other day was going on about how tariffs are the “signature” economic policy of the administration. This is a person who was highly trusted on economic topics, now supporting anything Trump does blindly. Trump keeps saying things like “tariffs brings us trillions”, which is obviously false but a lot of his base accepts it as the truth. One reason why this works is the base has been told that news media lies to them and that only a few people in social media can be trusted.
Tariffs do hurt the exporter nonetheless, which I suspect is a goal in itself for Trump and some of his supporters. Agents aren't rational, this is eco 102.
An exporter could in theory reduce prices specifically for the US market to avoid sell volume decline (which happens when consumers face higher prices because of tariffs). But in most cases they cannot because profit margins are no high enough to begin with.
How could that possibly have not been the case. A tariff is no different from the cost of any input into the price of a finished good. There is some sense in which price increases are limited by supply and demand, but if the market won't pay for the production cost of the good, then the market will cease to provide that good. There are only two possible outcomes, long term -- either the price goes up, or the product becomes unavailable.
There's an argument that domestically produced goods would substitute for imported goods leaving the market, but markets are so global and intertwined now that even domestic goods have imported inputs that are also affected by tariffs, and there often are no domestic goods or not enough domestic goods produced to act as a price-competitive substitute, and companies are not going to invest a ton of money into expanding domestic capacity, when tariffs are imposed on the whim of a lunatic and will probably be eventually tossed out by the supreme court or congress.
Americans will rightly be suspicious when a think tank in Germany writes about tariff relief that benefits them. Of course, we should all be critical always – that's the first word in the term "critical thinking".
Nitpick: The Kiel Institute is not a think tank in the sense that people would understand the word.
It is a federally funded research organization (part of the family of Leibniz institutes) similar to a university but without teaching. Here's a list of the others [1].
These are independent, high-quality research institutions without political money or a designated political agenda.
As an American, I wasn’t suspicious at all. I don’t know anyone personally who I think would be, either.
Your comment serves nothing but to suggest anew that Americans _should_ be suspicious. Either that was your aim to begin with or you’re okay with that result.
Some PRC manufacturers uniquely exposed to US market probably ate/split tariffs, but US like 5% of PRC exports, so it only matters so much. And after initial shock, most figured out to tranship/reroute and arbitrate lower tariff rates elsewhere and preserve margins.
Otherwise "broad" producer price index down primarily due to coal prices getting creamed by renewables, also cheap RU gas. When fossil/input prices drop, PRC PPI always drops. Industrial profit index for manufacturing sectors up 5-10%. Note broad industrial profit index down because it heavily weights state owned / SEO fossil sectors (aforementioned coal+oil dropped by 20-40%). Decompose industrial profits and story is PRC manufactures getting cheap energy and cheap inputs while growing profits more than they lower prices, aka why PRC winning trade game in the first place.
I actually think Trump is going to lose big soon. One turning point was the death of Renee Good. Past this point the ICE stormtroopers may kill anyone else too, no matter who that is - just step in front of a car and shoot when the car moves.
For serious penalty, all those TechBro cronies need to have all assets seized. They are imcompatible with democracy.
There’s no solidarity movement coalescing around Good’s death. When the local police chief invoked “say her name” in a public statement on it, it caused a bunch of acrimony and resentment instead.
I think Americans past the point where individual instances of police violence can shock us into taking political action (which is extremely risky in any case). It’s going to take kilodeath crimes, I imagine.
The most depressing thing about the tariff fiasco is how stupid and gullible many people are because a significant number of them thought that the other country was somehow going to pay the tariff.
I don't mind people being ignorant. We all are at some point. We all learn. But what's really depressing is that people who wear their ignorance and intentional unwillingness to learn like it's a badge of honor.
In the early 2010s I had discussions with people who pushed the idea of the resurgence of anti-intellectualism in the US, which I dismissed at the time. I think about that a lot.
“I have a foreboding of an America in my children's or grandchildren's time -- when the United States is a service and information economy; when nearly all the manufacturing industries have slipped away to other countries; when awesome technological powers are in the hands of a very few, and no one representing the public interest can even grasp the issues; when the people have lost the ability to set their own agendas or knowledgeably question those in authority; when, clutching our crystals and nervously consulting our horoscopes, our critical faculties in decline, unable to distinguish between what feels good and what's true, we slide, almost without noticing, back into superstition and darkness...
The dumbing down of American is most evident in the slow decay of substantive content in the enormously influential media, the 30 second sound bites (now down to 10 seconds or less), lowest common denominator programming, credulous presentations on pseudoscience and superstition, but especially a kind of celebration of ignorance”
Carl Sagan, The Demon-Haunted World: Science as a Candle in the Dark
What's the problem about it? Trump cuts one kinds of taxes and introduces others in place. I see it reasonable because it means going from taxing good things (people making money, people holding property) to taxing bad things (imports that drain cash from the country). Direct net result is perhaps zero, but indirect one is what it's for.
Imports are needed and important, not "bad". Most countries import goods. Why? Because not everyone produces everything. That is how society started and still works today.
In India, every tax imposed on a business goes straight to consumer. The consumer receipt even mentions some of those taxes item-wise. I thought American consumer also might see this on their shopping receipts? Who thinks businesses would swallow taxes?
> In India, every tax imposed on a business goes straight to consumer. The consumer receipt even mentions all those taxes item-wise.
As someone in India, this statement is incorrect. There are no consumer receipts in India that show the import duties (which is what tariffs are) as an amount or as a percentage. There are plenty of goods sold in India that are imported, duty paid, and the costs are passed on to the consumers (with no explicit mention of that in the invoice or receipt).
You may be confusing these US tariffs with local taxes in India like GST. In the US, sales tax is shown in the consumer receipts (if or as applicable in the state, county, city, etc.).
In India and in the US, import duties are not shown in consumer receipts, except in the case where an individual is importing something and is liable to pay the duties and levies directly. Indians would probably revolt if they actually knew how much customs duty they’re paying for all the goods they buy individually.
Your speaking of VAT. And even though it’s pointed out on the receipt, it doesn’t mean that the consumer pays all of it compared to a scenario without tax: just imagine you’re a businessman and a VAT of 20% is introduced. Would you be able to increase the prices of all your goods by 20%? For some, maybe. For others with fierce competition and hesitant buyers? Maybe not. The same shows the other way around: imagine a VAT of 20% is abolished. Would you lower all your prices by ~16.6%? Probably, but only for those items that you know your competitors will reduce the price for as well. The terminology to look up is elasticity of supply and demand. There are nice graphs that show the effects of different kinds of interventions.
I think it's the opposite. These were announced 9 months ago and none of the doomsday predictions have come to pass. There's been major impact to some things but for the most part the economy has hummed along without a blip. Certainly not the everything in Walmart is going to get 34% prognostications that some were making:
Americans using foreign inputs or buying from companies that do. If you phrase it like that, then there's obvious solutions to reduce the effects of tariffs.
I'm glad they've done the work here and put a figure on it - the impact absolutely needed to be quantified - but I also have to say... to the surprise of absolutely no-one with even the most basic grasp of how economies function.
People, lots of people, lots of people who have a really deep understanding of national and global economics (unlike me), have been warning about this since talk of tariffs became common currency a year ago.
I wouldn't like to comment on HN's political leanings in the round and, obviously, there are a large portion of non-US readers/commenters on the site (including me), but will say this: there are a portion of you who voted for this. Exactly this.
What were you thinking? What was going through your heads? I'm genuinely curious.
EDIT: Wow... well, having asked the question, it looks like I now have a lot of answers and perspectives to read. Thank you all for taking the time to comment.
It isn't US specific and what goes into people's head is what propaganda wants it to be.
Economics tell people the clear impact, but it doesn't make the news. We get fed with whatever the political influencers decide to tell us. Did the brits expect the consequence of brexit? No but that's because they deemed whatever the news said to be unreliable on this topic. Which for once happened to be true.
A lot of Americans believed the guy they wanted to believe in, because they didn't want to believe the people they didn't want to believe in.
You're assuming that modern politics across most of the World has something to do with rational, logical thought. Russia, China, Europe, the US, the Middle East - they are all in a quagmire of irrational fractures between the public and the political classes who want power/control for benefit of themselves rather than for the benefit of that public.
It's not unique to the US, it's just that they look like they are speed running it from outside.
Those same economists warning about tariffs also warned it would lead to runaway skyrocketing inflation and quote "the mother of all recessions" [1] [2] [3], which objectively did not happen. The same economists were nowhere to be seen when prices doubled 2020-24 and the official inflation numbers were 13%.
Once again proving that economists are engaged in mere astrology.
You also frame the argument that the last administration was tariff opposed, after they issued a 10% blanket tariff on the US' largest trading partner and tariffed Canadian wood products, directly causing house prices to skyrocket during the pandemic. You will never consider those impacts, because you're engaged in a fundamentally political argument, not an economic one.
The US has 4% GDP growth and a 2.7% inflation run rate. Wage growth is exceeding inflation again. Data doesn't lie, but economists do. Routinely.
As a Brit who studied history, the parallels to 1930s Germany are too strong for comfort. So I would suggest reading up on that for some answers.
Although as the comparison hopefully makes clear, you worrying about tariffs is missing the point, it's more a question of basic democracy at this point. I'm also somewhat concerned about your (edit: as in the USs) new found lust for Lebensraum, because again, that went well last time.
The election is a state at a moment in time. Before the election, to affect the state, propaganda machines target whatever is lower on the maslow hierarchy of needs for the voters - pesky tariffs are a tiny issue compared to that boogeyman that wants to target your children. Someone’s freedom is a pesky thing compared to that immigrant boogeyman going after your retirement savings. Once people have voted because they are scared for their life savings and their children, the elected can do whatever they want and target whomever they want with impunity for several years. Especially if they start building their own militia and threatening the judiciary.
This authoritarian model has proven very successful for anyone Putin and his aparatus has installed anywhere. Now it may be franchised even further.
I'm not American but tariffs might be a way to "make America great again" because it makes it harder to trade with other countries. This means that it makes it relatively easier than before, to trade within the USA.
Another effect is that it serves as a tax. Easy for me to say but I think Americans aren't taxed enough.
Like you observed, no one with a grasp of economics thought exporters would absorb the cost of these tariffs. That includes myself, a person who supports tariffs. I don't think it should be necessary to explain why tariffs might be desirable, because they were not invented by idiots, but I will explain briefly.
Tariffs make foreign imports more expensive. This dissuades people from buying them. Some of those people will instead buy equivalent American made products, now that the price difference has lessened. I consider that a good thing. There will be pain while local manufacturing ramps up (or forever, if it never does) for products that have no domestic equivalent. That sucks, but sometimes things need to suck before they improve. Paying off the national debt, for example, is something I support, even if we have to slash a lot of useful spending for awhile. I think most rational Republicans are voting for these sorts of things despite knowing they will make things temporarily worse, in the hopes of an eventual better. The left tends to never do this, for they are very attuned to the immediate suffering their plans cause. The right tends to be less sensitive to the short term suffering their plans cause; the right thinks that the alternative, a slow decline, is worth the pain to avoid. Trump has bungled the implementation of the tariffs, but I still support their use in general.
Fundamentally it makes no sense to me to support a minimum wage for your countrymen, but also support them importing massive amounts of slave made goods. You are creating rules on the supply side that the demand side does not have to follow, which only harms your own domestic businesses. Your own country's businesses have to compete against slave labor while paying living wages; for most manufacturing this is just not possible. You are incentivizing off shoring, which harms your working class, who have to compete with subminimum wage workers. Workers rights must be paired with tariffs, or every additional worker right is a demerit on his hireability against foreign workers without those rights! If you want your country to produce anything, and to have a strong working class, you either remove minimum wage, or you implement tariffs. We cannot simultaneously support strong domestic workers rights and mass importation of sweatshop goods that were made without them. It hollows out the country.
Edit: I am rate limited though I would like to reply to some of my interlocutors. I will reply later.
> but I also have to say... to the surprise of absolutely no-one with even the most basic grasp of how economies function.
Exactly: tariffs are taxes in another guise. They only serve to create an (artificial) price advantage of local over imported goods for as long as they're levied.
> What were you thinking? What was going through your heads? I'm genuinely curious.
I also can't fathom why the crowd (not just a HN subset) that was clamoring for tariffs thought it'd be anyone other than them shouldering the increase. Perhaps their influencers didn't spell it out for them?
Now everyone gets to pay more - and not just in the US.
Tariffs could make sense economically, but even in that case, they would "hurt consumers", because that's the whole point - address the imbalance between consumption and production currently being made to add up with constantly increasing debt.
If you were going to do that though, it would be more like a 10-20% blanket tariff on all goods. No exceptions, no special deals, and you can't use tariffs as a negotiating tool. So that's not what's going on and the current approach doesn't make any sense economically
The same thing as usual: people don't like how things are going, they demand change, but they're not specific, so the result is extreme, and then people demand change again, and on it goes. There's no great insight or rationale going on. People are just dumb animals in hats.
The incidence result isn’t surprising, but incidence alone isn’t a full policy critique. Consumers bear most taxes in general: corporate, VAT, payroll, etc.
The real distinction is that tariffs are conditional. Currently, firms can avoid them by changing sourcing. That makes them more behavior-shaping than revenue maximizing.
Given that the U.S. never reversed the TCJA corporate cuts from 2020-2024, tariffs are one of the few active levers currently increasing the marginal cost of offshore supply chains.
But it's only a lever to behavior changes if it's possible for domestic supply chains to compete with the costs global + tariff supply chains. My understanding is it's pretty much unfathomable for US manufacturing to compete on even with eye-watering tariffs on any reasonable timeline, let alone the handful of years (I suspect) the local companies will expect tariffs to continue. So I expect it's just lever for government revenue and citizen pain. The past 40 years or so of neoliberalism has effectively and intentionally dismantled domestic manufacturing.
Outside the specious argument that other countries would pay, the other more serious argument was that tarrifs would promote the growth of domestic alternatives.
Yes it will hurt, they argued, but the long term effect will be a stronger and more independent domestic economy. And the pain is worth it for that end. There's plenty of evidence that what actually results are inferior products from domestic companies insulated from international competition, but that was the pitch.
There's also a large group in the base that voted for this who already had an ideological "buy local even if it costs more" philosophy, so to them the proposal was just to force everyone else to join their cause.
to the surprise of absolutely no-one with even the most basic grasp of how economies function.
No, it is surprising, as noted in the article, because basic economics suggests that suppliers will adjust pricing, and eat some of the tariff to keep their products competitive. Page 5:
This finding was initially surprising to some observers. Standard economic models suggest that the incidence of a tariff depends on the relative elasticities of supply and demand. If foreign exporters face highly elastic demand (meaning buyers can easily switch to alternatives), they might be expected to absorb part of the tariff to remain competitive.
I’ll never be able to respect someone who voted for tariffs because they were upset about inflation. Five minutes on Google would have shown how dumb that was.
> What were you thinking? What was going through your heads? I'm genuinely curious.
I’m adamantly against all forms of illegal immigration. There are plenty of people around the world that want to come here and are willing to wait in line. I’m perfectly fine with the intentions and methods of the current administration.
I’m in favor of doing whatever we can to increase our manufacturing base for the future. I’m perfectly fine with paying more for imported goods that I don’t actually buy anyway. Paying 95% for crap from China that I have no intention of purchasing does not impact me.
I hate all taxes and do not consider it charitable to spend other people’s money. Taxes are a necessity as we need to fund government functions. But it is those functions that should be limited. Because government is generally terrible at most of them.
>> Paying 95% for crap from China that I have no intention of purchasing does not impact me.
I highly doubt you are not purchasing "made in china" or "made in taiwan" products. You likely just don't know. Even your Macbook or GPU card is made in China or Taiwan as are lots of components used inside "made in US" products. Same goes for clothing and shoes, american "brands" made in China, Bangladesh, etc.
Moreover:
- you don't have fully-local alternatives for everything
- it takes a long time and a lot fo money to build factories for local alternatives
- cost of labor is much higher in your country
The end result must be higher prices for everything on your side, and it's starting to show.
>> There are plenty of people around the world that want to come here and are willing to wait in line. I’m perfectly fine with the intentions and methods of the current administration
In the past, I was considering moving to US. I think it would be relatively easy for me (EU citizen, good IT work history). And I visited US couple of times as a visitor. But since Trump and recent ICE "methods", I am honesly scared to even visit US again near-term. I am glad I live in EU.
> What were you thinking? What was going through your heads? I'm genuinely curious.
The point when Trump was elected was to make americans buy american and to get international companies to move their production to the U.S.
In Sweden they did something similar when they thought people were buying too much cheap stuff directly from China instead of from the middlemen paying taxes. The solution was to add a tariff on cheap goods from China specifically.
I don't enough to know if it works, but it's not a new strategy. In Trumps current politics though it's used more as a bargaining tool and not something that's supposed to stimulate the economy, is anyone even claiming it is the goal?
It's still a bit of a mystery to me TBH. Not that Americans are paying it, but where's the cash?
The headline suggests it was all passed into consumers. So why is inflation still so low? If you add 10-30% to prices (granted, of imports, not of houses, domestic food etc), you'd expect more.
If companies were eating it (which apparently they aren't) then their profitability should be down. But that doesn't seem to be the case either.
So..??? It's like that riddle with the three guys buying a pizza. Where did the money go?
Who ultimately pays the tariffs is missing the forest for the trees, their primary function is to tax, and taxation virtually always reduces spending. Don't want to pay tariffs? Buy domestic. Tariffs are the single reason (or one of very few) that the US isn't flooded with BYD electric cars from China. China's dirt cheap labor could decimate the US auto industry, but for tariffs and trade regulation, but I repeat myself.
One of the main reasons we end up with populist leaders who make decisions not in the interest of their population, but in service of their own pursuit of power, is social media and the attention economy.
If people stopped spending hours each day scrolling through Instagram, TikTok, and Facebook feeds, media incentives would change. Journalism would become more thorough and responsible, rather than optimized for outrage and clicks. People’s attention spans would recover, making them more capable of listening to opposing views and engaging in meaningful discussion. The overall quality of public debate would improve, and political leaders would be chosen based on objective, long-term policies rather than emotional manipulation.
The reinforcement-learning algorithms that drive these feeds are fundamentally unnatural. They represent a massive, uncontrolled social experiment on humanity—one that is far too powerful for our psychological reward systems to handle.
What needs to happen is education. Education on how the attention economy works. People must learn to resist becoming social media junkies, because every hour surrendered to these platforms reinforces the very systems that distort public discourse. When we lose control over our attention, we don’t just harm ourselves—we actively worsen the societal conditions that enable manipulation, polarization, and poor political leadership.
> One of the main reasons we end up with populist leaders [...] is social media and the attention economy.
This problem of democracy was already discussed in ancient Greece. Social media might have exacerbated it, but it's not new. Over the millennia, nobody found a valid solution, or at least one that is devoid of other problems.
Education is not the solution, as we are probably the most educated populations in history and we are all still prone to the same problem. And who decides what is the correct education? Every side has their own definition, so there you have another problem.
Depends on your goals - what I see is it increases US government income to help reduce deficit ( without the political fall out from raising direct taxes ), and at the same time encouraging businesses to move manufacturing to the US to avoid tariffs.
And in terms of burden - the cost hits the poor the most - but if your a billionaire funder of US political parties that's the point.
For a non-US person the most worrying aspect of this is that it also helps make the US more self-sufficient which means it's better prepared to go to war - which is not really good news.
> What were you thinking? What was going through your heads? I'm genuinely curious.
I know two people who voted for him.
Person one has voted Democrat her whole life. Has worked for the Democratic Party. Has a son who was a Democratic elected official. But she lives in Texas, and watches too much local news, and believed that murderous immigrants were pouring over the border, guns blazing, taking out innocent American citizens daily at the beach and grocery store. So she voted for him because she believed only he could stop this from happening.
Person two is a wealthy white boomer. His business already runs in America. He actually has an advanced degree in economics. He believed that the tariffs would only be used surgically by smart people to protect American business. He is not personally affected by any of the racist policies or any of the other shenanigans. So he voted for him because he liked the protectionist and tax cut policies.
He regrets his vote. I haven't spoken to her in months because she stopped talking to me when I kept show her that her "facts" were made up.
Where on the US ballot was there an option to vote for tariffs?
If I recall correctly, we vote for presidents, senators and the congress who have policy stances on a variety of issues. There are usually only two options, one of which stands for open borders, not enforcing laws, socialism and demonizing people who choose the other option on the ballot.
A large cohort of independents didn't vote for republicans, they voted AGAINST democrats.
Do check, since one hopes I erred in reading the chart.
The victory of Trump is mostly the same process that gave the UK Brexit.
Just people acting based on the information they are being provided. If the other side is filled with feckless buffoons, and every source of news you have is telling you the same thing, then what else will someone do?
There are multiple research papers that indicate that this result (in terms of what you think the paper says) is not obvious. Indeed, to think this is the case, you need an extremely superficial understanding of economics based around "rules" that only exist in theory.
And, if you read the paper, you will find that evidence. How these work depends on initial conditions that vary and exporters will not react in a consistent way.
As a specific example, theoretical research in this area tends to make assumptions around the stationarity of margins that are obviously ludicrous in the context of reality in the US. It is quite easy to justify almost any policy with theoretical research in economics so people who have no understanding of economics will find evidence for whatever position they choose. Reality is quite different.
First, people vote on a candidate, not a single issue. Many voted for Trump despite his tariffs stance rather than because of it.
Second, reducing consumer prices was not the goal of the tariffs. The primary goals were to encourage companies to move manufacturing to the US and to be used as leverage in negotiating other matters with foreign leaders.
> to the surprise of absolutely no-one with even the most basic grasp of how economies function.
Trump and his entire administration admitted there would be short term pain, possibly a recession, but that it would be "worth it" to restructure the economy.
So the question is: how long does the pain last? And is the economy stronger when it's over (do we get over it)? It's been 9 months so far.
From my perspective the policy goals are very unclear since it seems like they're actively wielding tariffs both as a means to reorganize the economy and as a weapon to bully other countries. Mainly bullying. The intended effectiveness on our economy seems difficult to judge.
The founders were skeptical of direct democracy because it assumes people have time and expertise they mostly don’t. People should not be voting based on their understanding of tariffs. It’s why we ended up with a republic.
But social media changes the equation entirely. It gives us the speed of direct democracy without any of the structure or responsibility. It pushes people to judge candidates issue-by-issue, often on topics they don’t understand well, while eroding the deliberative layers a republic is supposed to have.
The problem isn’t people or education — America didn’t get this far because Americans are any smarter or dumber than anyone else. It’s the design of the systems. The founding fathers built a system that has so far lasted almost 250 years.
You cannot expect people to change — safety protocols, procedures, govenments — it’s about the systems.
> What were you thinking? What was going through your heads? I'm genuinely curious
Many people were thinking Joe Biden was looking old... Until 2 months before the election when a faceless political elite replaced him with a candidate who had repeatedly lied about Joe Biden looking old. The American public might be stupid, but they don't like being treated as though they are stupid - which is exactly what the DNC did.
There is basically no overlap between the things that economists generally say are good (free trade, carbon taxes, cap-and-trade, immigration, land value taxes, organ trade, congestion pricing, etc…) and the things that populists of either the left or right say are good (rent control, price controls, tariffs, wealth taxes, debt relief, minimum parking requirements, etc…).
Why would you (or anyone) be surprised that economically sound policies are not popular? They are not popular in the US. They are not popular in Europe. They’re not even popular on HN.
For reasons I don’t understand, almost everyone hates economics.
> What were you thinking? What was going through your heads? I'm genuinely curious.
I don't think it's a simple answer. A couple things that likely contributed (I'm not an expert, just my opinion): there is an EXTRAORDINARY amount of propaganda being spread, whether people realize it or not, on and off the internet that gets consumed nearly 24/7. This happens on both sides of course, but think about some of the events leading up to the election. Musk bought twitter and quite literally turned it into a multi-billion dollar propaganda machine.
The general "drain the swamp attitude" that the administration parroted during the election (and first term) represented a change from how "traditional" politicians/government do things. People value that even if they don't understand/think about how it would affect them personally. This ultimately lead to demonizing the federal work force and mass random firings (in many cases having nothing to do with merit).
Trump also represented a push towards traditional values and national identity, which for some people was more important than whatever economic plan Trump had to improve things in the country. Other than tariffs, did he even have a plan? I don't know. But many people didn't/don't seem to care.
> What were you thinking? What was going through your heads? I'm genuinely curious.
See Brexit. As Michael Gove said, the people have had enough of experts; for a certain sort of person, not understanding things is a badge of pride, and they're more liable to trust people like Trump, who transparently do _not_ understand things, than _experts_.
Cost is not the only factor voters considered, bringing manufacturing jobs and expertise back to US is a big part of the tariff push. If cost were the only factor everyone would buy the cheapest crap off temu or amazon. People are willing to pay a premium for the hope of bringing manufacturing back and reducing reliance on foreign sources.
But here’s the hard truth: the US has needed to raise taxes for decades given its inability to reduce spending.
Hence they massively inflating runaway deficit. If this is the only way Americans will accept tax increases, and they aren’t willing to decrease spending, then this policy will ironically end up being the only way forward to climb out of the financial hole.
I always thought that this tariff stuff is about restraining American consumerism first and coerce export oriented countries.
Also, this obsession over the importance of accessing US consumers feels ridiculous. If Americans aren't buying then it means more stuff for everyone else.
EU/China etc. sends actual things to US and US sends back dollars that are created out of thin air. It must be a restructuring pain more than anything since US doesn't actually export much goods. With the proliferation of cheap and available solar energy the trade with US can halt, endure the pain of restructuring came out of the other side with using the produced goods domestically instead of sending them to US and replace the US services with domestic ones. Then US can produce their things that they consume and have 350M market for the US companies instead of 7B.
It almost looks like Trump is Pushing for US irrelevance, its vey strange. Why would US be looking to abandone such an advantageous position? The people in the rest of the world are working their asses off, breathing toxic air just to obtain dollars.
There's an entire world to trade with. If the Americans choose to shoot themselves in the foot, we won't be the ones paying for the bandage.
Also, it's deeply naïve to assume tariffed countries would absorb the cost. Why would they? It's like going into a shop and asking for a discount because you just took out a loan. Why would the shop give you a discount for something you inflicted on yourself? And what makes you think other customers wouldn't ask for the same discount?
I bought a mini PC today. On the US website, it goes for $460, on the German website it goes for 360 euros or $420. But that price includes 20% tax so its actually $335.
Prices for the same product are about 37.5% higher in the US. It's nuts and the reverse of how it used to be not long ago.
> export prices did not decline. Trade volumes collapsed instead.
That is its own kind of burden. We are shooting ourselves in the foot here, but but I think we're getting the other guy's foot to the tune of a bit more than 4%.
It's mutually assured destruction logic. I hate everything about it, but this seems like a mischaracterization of its efficacy.
Trump has floated the idea of eliminating federal income tax completely, which would balance things out. I think I’d rather pay taxes in the form of tariffs than through income tax. The tariffs can help protect jobs from being outsourced, which has been a big issue over the last several decades. With everyone talking about out AI coming for our jobs, having more options for employment seems like a good thing.
I suppose the issue would be for those on the lower end of the earnings distribution, as they pay little to no federal income tax, but would be hit by a consumption tax. Though I do wonder if we could see wages increase when we don’t have to compete as much with low production costs in China.
US federal income tax raises vastly more revenue than tariffs ever have. Eliminating income tax would require tariffs at levels high enough to dramatically raise consumer prices and would certainly trigger retaliation.
Also, reduced competition from China does not imply higher wages unless labor has bargaining power and firms pass gains to workers. Historically it has been passed to shareholders not workers.
Finally, tariffs mainly protect manufacturing jobs. AI threatens white-collar and service work
As you pointed out in your comment. Trading income tax for tariffs is just shifting tax burden to the poor. Which the rich have been trying to do since the dawn of currency so at least the policy is consistent.
"Tariff" is indeed a beautiful word; one that led the most virulent anti-taxation crowd to passionately support new taxes. It's a fantastic example of how much the choice of words matters.
Few thoughts/observations on Tariff impacts now that we have a decent amount of time/data to look at:
Suppliers in China are dropping prices to offset the tariff impact - this is what I see in my direct industry and also in many adjacent ones. This is benefitting other countries that don't have Tariffs on Chinese goods since they can buy cheaper as well. I suspect this is a significant factor in the GBP/EUR strengthening in relation to USD. There was a point where there was such a pronounced impact to imported goods that the cost of shipping a container from China to US went from ~$3500 to <$1500 pre/post Tariff.
Large manufacturers (automotive certainly, but also raw materials production and component production) are actually moving facilities to the US, which was one of the intended effects.
US manufacturers are enjoying some price relief as landed costs of chinese-produced goods are increasing. Hard to quantify what this means but the frustrating part is that they are not reducing their prices just enjoying higher margins.
Countries outside the Tariff zone are enjoying more trade - Canada is a very real example of this policy backfiring - they just walked back the Chinese Automotive Tariffs in exchange for relief on agricultural reciprocal tariffs. Mexico is entering into similar agreements with non-US trade partners. Some products are releasing in non-US markets first and at lower costs than they are in the US.
US-sourced chipmaking is accelerating - Intel's new fabs are probably the most prominent example of this (albeit they are slow to pick up volume - I expect this will shift with TSMC rationing production to brands like Apple and Qualcomm).
I think the increase in cost to consumers is painful and that the current Tariff rates are excessive + there is a lot of "cheating" where Chinese suppliers are declaring lower cost of goods on import to reduce the landed cost of Tariffed goods - there doesn't appear to be enough resources to police this policy fully.
All in all an interesting economic experiment and it will certainly take years for any of these realities to have a measurable positive impact domestically.
If customs duties act like a domestic tax, wouldn't that mean that they should initially be considered neutral? They would then be another type of consumption tax. Any assessment would have to be made in the context of the tax system as a whole. Are consumption taxes too high overall? Too low? Or just right? Who pays the taxes? Is that fair? Who and what are the taxes collected spent on? Etc.
Neat as in fantastic - it literally can't get any better - for the oligarchs. Tax the poor, and tell them we're collecting money for them, from the foreigners.
Raise and lower the rates willy-nilly, no need to really justify why you're squeezing who.
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[ 2.8 ms ] story [ 95.9 ms ] threadWhat if that was the intended result?
I fear that they already decided that issue when they chose not to intervene and now have the excuse of "lol well can't undo it now" ready to go.
Edit: It appears Trump & Co intend to replace SCOTUS if they lose the tariffs ruling ... https://www.nytimes.com/2026/01/19/us/politics/trump-tariffs...
--------
There does seem to be indications that the actual tariffs collected seems far lower than the actual tariffs promised, likely just half of what was promised:
https://www.nytimes.com/2026/01/03/business/economy/trump-ta...
Such protectionist practices were used by China to bootstrap their own automobile industry, before they became competitive in the global market. Of course, China had surplus capacity of untapped cheap labor, which America does not.
Barring an evolution in automated manufacturing, or an overhaul of regulatory policy, I'm pessimistic it's possible to accomplish the same in the US. But, in principle, tariffs have a valid place in supporting an emerging local industry.
It's constantly disappointing how the apparent intellectuals who frequent and operate HN will rally to that side out of libertarian convenience and out of annoyance and disgust at "wokism". And then will inevitably be shocked when everything goes sideways again. Hopefully the education will stick longer this time than it did after G.W.Bush.
[1] https://en.wikipedia.org/wiki/Reality-based_community
[2] https://en.wikipedia.org/wiki/Alternative_facts
[3] https://www.npr.org/2020/09/29/917747123/you-literally-cant-...
[4] https://mashable.com/article/alex-jones-defense-performance-...
Doesn't really work when main reason for product existence on market is either "no equivalent" or "this particular subgroup is only imported" (say given specifically tasting cheese).
There's an argument that domestically produced goods would substitute for imported goods leaving the market, but markets are so global and intertwined now that even domestic goods have imported inputs that are also affected by tariffs, and there often are no domestic goods or not enough domestic goods produced to act as a price-competitive substitute, and companies are not going to invest a ton of money into expanding domestic capacity, when tariffs are imposed on the whim of a lunatic and will probably be eventually tossed out by the supreme court or congress.
It is a federally funded research organization (part of the family of Leibniz institutes) similar to a university but without teaching. Here's a list of the others [1].
These are independent, high-quality research institutions without political money or a designated political agenda.
[1] https://www.leibniz-gemeinschaft.de/en/institutes/leibniz-in...
Your comment serves nothing but to suggest anew that Americans _should_ be suspicious. Either that was your aim to begin with or you’re okay with that result.
What source would you trust on this matter? Or rather: who has published something we could look at that contrasts these findings?
[1] https://mediabiasfactcheck.com/kiel-institute-for-the-world-...
Otherwise "broad" producer price index down primarily due to coal prices getting creamed by renewables, also cheap RU gas. When fossil/input prices drop, PRC PPI always drops. Industrial profit index for manufacturing sectors up 5-10%. Note broad industrial profit index down because it heavily weights state owned / SEO fossil sectors (aforementioned coal+oil dropped by 20-40%). Decompose industrial profits and story is PRC manufactures getting cheap energy and cheap inputs while growing profits more than they lower prices, aka why PRC winning trade game in the first place.
‘US Americans’ makes it sound as if a distinction is being drawn between Americans inside and outside of the US or something
For serious penalty, all those TechBro cronies need to have all assets seized. They are imcompatible with democracy.
I think Americans past the point where individual instances of police violence can shock us into taking political action (which is extremely risky in any case). It’s going to take kilodeath crimes, I imagine.
I don't mind people being ignorant. We all are at some point. We all learn. But what's really depressing is that people who wear their ignorance and intentional unwillingness to learn like it's a badge of honor.
In the early 2010s I had discussions with people who pushed the idea of the resurgence of anti-intellectualism in the US, which I dismissed at the time. I think about that a lot.
The dumbing down of American is most evident in the slow decay of substantive content in the enormously influential media, the 30 second sound bites (now down to 10 seconds or less), lowest common denominator programming, credulous presentations on pseudoscience and superstition, but especially a kind of celebration of ignorance”
Carl Sagan, The Demon-Haunted World: Science as a Candle in the Dark
As someone in India, this statement is incorrect. There are no consumer receipts in India that show the import duties (which is what tariffs are) as an amount or as a percentage. There are plenty of goods sold in India that are imported, duty paid, and the costs are passed on to the consumers (with no explicit mention of that in the invoice or receipt).
You may be confusing these US tariffs with local taxes in India like GST. In the US, sales tax is shown in the consumer receipts (if or as applicable in the state, county, city, etc.).
In India and in the US, import duties are not shown in consumer receipts, except in the case where an individual is importing something and is liable to pay the duties and levies directly. Indians would probably revolt if they actually knew how much customs duty they’re paying for all the goods they buy individually.
https://www.bbc.com/news/articles/cdxg7xpr2j0o
https://news.ycombinator.com/item?id=43561253
People, lots of people, lots of people who have a really deep understanding of national and global economics (unlike me), have been warning about this since talk of tariffs became common currency a year ago.
I wouldn't like to comment on HN's political leanings in the round and, obviously, there are a large portion of non-US readers/commenters on the site (including me), but will say this: there are a portion of you who voted for this. Exactly this.
What were you thinking? What was going through your heads? I'm genuinely curious.
EDIT: Wow... well, having asked the question, it looks like I now have a lot of answers and perspectives to read. Thank you all for taking the time to comment.
Economics tell people the clear impact, but it doesn't make the news. We get fed with whatever the political influencers decide to tell us. Did the brits expect the consequence of brexit? No but that's because they deemed whatever the news said to be unreliable on this topic. Which for once happened to be true.
You're assuming that modern politics across most of the World has something to do with rational, logical thought. Russia, China, Europe, the US, the Middle East - they are all in a quagmire of irrational fractures between the public and the political classes who want power/control for benefit of themselves rather than for the benefit of that public.
It's not unique to the US, it's just that they look like they are speed running it from outside.
Once again proving that economists are engaged in mere astrology.
You also frame the argument that the last administration was tariff opposed, after they issued a 10% blanket tariff on the US' largest trading partner and tariffed Canadian wood products, directly causing house prices to skyrocket during the pandemic. You will never consider those impacts, because you're engaged in a fundamentally political argument, not an economic one.
The US has 4% GDP growth and a 2.7% inflation run rate. Wage growth is exceeding inflation again. Data doesn't lie, but economists do. Routinely.
[1] https://www.msn.com/en-my/news/other/economist-warns-of-moth...
[2] https://www.cnn.com/2024/11/13/economy/inflation-trump-econo...
[3] https://www.cnbc.com/2024/06/25/nobel-prize-economists-warn-...
He only started that tariff stuff when he took office.
Edit: Clearly I was not following things well enough, sorry for the wrong information.
Although as the comparison hopefully makes clear, you worrying about tariffs is missing the point, it's more a question of basic democracy at this point. I'm also somewhat concerned about your (edit: as in the USs) new found lust for Lebensraum, because again, that went well last time.
This authoritarian model has proven very successful for anyone Putin and his aparatus has installed anywhere. Now it may be franchised even further.
Tariffs make foreign imports more expensive. This dissuades people from buying them. Some of those people will instead buy equivalent American made products, now that the price difference has lessened. I consider that a good thing. There will be pain while local manufacturing ramps up (or forever, if it never does) for products that have no domestic equivalent. That sucks, but sometimes things need to suck before they improve. Paying off the national debt, for example, is something I support, even if we have to slash a lot of useful spending for awhile. I think most rational Republicans are voting for these sorts of things despite knowing they will make things temporarily worse, in the hopes of an eventual better. The left tends to never do this, for they are very attuned to the immediate suffering their plans cause. The right tends to be less sensitive to the short term suffering their plans cause; the right thinks that the alternative, a slow decline, is worth the pain to avoid. Trump has bungled the implementation of the tariffs, but I still support their use in general.
Fundamentally it makes no sense to me to support a minimum wage for your countrymen, but also support them importing massive amounts of slave made goods. You are creating rules on the supply side that the demand side does not have to follow, which only harms your own domestic businesses. Your own country's businesses have to compete against slave labor while paying living wages; for most manufacturing this is just not possible. You are incentivizing off shoring, which harms your working class, who have to compete with subminimum wage workers. Workers rights must be paired with tariffs, or every additional worker right is a demerit on his hireability against foreign workers without those rights! If you want your country to produce anything, and to have a strong working class, you either remove minimum wage, or you implement tariffs. We cannot simultaneously support strong domestic workers rights and mass importation of sweatshop goods that were made without them. It hollows out the country.
Edit: I am rate limited though I would like to reply to some of my interlocutors. I will reply later.
Exactly: tariffs are taxes in another guise. They only serve to create an (artificial) price advantage of local over imported goods for as long as they're levied.
> What were you thinking? What was going through your heads? I'm genuinely curious.
I also can't fathom why the crowd (not just a HN subset) that was clamoring for tariffs thought it'd be anyone other than them shouldering the increase. Perhaps their influencers didn't spell it out for them?
Now everyone gets to pay more - and not just in the US.
If you were going to do that though, it would be more like a 10-20% blanket tariff on all goods. No exceptions, no special deals, and you can't use tariffs as a negotiating tool. So that's not what's going on and the current approach doesn't make any sense economically
The same thing as usual: people don't like how things are going, they demand change, but they're not specific, so the result is extreme, and then people demand change again, and on it goes. There's no great insight or rationale going on. People are just dumb animals in hats.
The real distinction is that tariffs are conditional. Currently, firms can avoid them by changing sourcing. That makes them more behavior-shaping than revenue maximizing.
Given that the U.S. never reversed the TCJA corporate cuts from 2020-2024, tariffs are one of the few active levers currently increasing the marginal cost of offshore supply chains.
Yes it will hurt, they argued, but the long term effect will be a stronger and more independent domestic economy. And the pain is worth it for that end. There's plenty of evidence that what actually results are inferior products from domestic companies insulated from international competition, but that was the pitch.
There's also a large group in the base that voted for this who already had an ideological "buy local even if it costs more" philosophy, so to them the proposal was just to force everyone else to join their cause.
No, it is surprising, as noted in the article, because basic economics suggests that suppliers will adjust pricing, and eat some of the tariff to keep their products competitive. Page 5:
This finding was initially surprising to some observers. Standard economic models suggest that the incidence of a tariff depends on the relative elasticities of supply and demand. If foreign exporters face highly elastic demand (meaning buyers can easily switch to alternatives), they might be expected to absorb part of the tariff to remain competitive.
I’m adamantly against all forms of illegal immigration. There are plenty of people around the world that want to come here and are willing to wait in line. I’m perfectly fine with the intentions and methods of the current administration.
I’m in favor of doing whatever we can to increase our manufacturing base for the future. I’m perfectly fine with paying more for imported goods that I don’t actually buy anyway. Paying 95% for crap from China that I have no intention of purchasing does not impact me.
I hate all taxes and do not consider it charitable to spend other people’s money. Taxes are a necessity as we need to fund government functions. But it is those functions that should be limited. Because government is generally terrible at most of them.
I highly doubt you are not purchasing "made in china" or "made in taiwan" products. You likely just don't know. Even your Macbook or GPU card is made in China or Taiwan as are lots of components used inside "made in US" products. Same goes for clothing and shoes, american "brands" made in China, Bangladesh, etc.
Moreover: - you don't have fully-local alternatives for everything - it takes a long time and a lot fo money to build factories for local alternatives - cost of labor is much higher in your country
The end result must be higher prices for everything on your side, and it's starting to show.
>> There are plenty of people around the world that want to come here and are willing to wait in line. I’m perfectly fine with the intentions and methods of the current administration
In the past, I was considering moving to US. I think it would be relatively easy for me (EU citizen, good IT work history). And I visited US couple of times as a visitor. But since Trump and recent ICE "methods", I am honesly scared to even visit US again near-term. I am glad I live in EU.
The point when Trump was elected was to make americans buy american and to get international companies to move their production to the U.S.
In Sweden they did something similar when they thought people were buying too much cheap stuff directly from China instead of from the middlemen paying taxes. The solution was to add a tariff on cheap goods from China specifically.
I don't enough to know if it works, but it's not a new strategy. In Trumps current politics though it's used more as a bargaining tool and not something that's supposed to stimulate the economy, is anyone even claiming it is the goal?
The headline suggests it was all passed into consumers. So why is inflation still so low? If you add 10-30% to prices (granted, of imports, not of houses, domestic food etc), you'd expect more.
If companies were eating it (which apparently they aren't) then their profitability should be down. But that doesn't seem to be the case either.
So..??? It's like that riddle with the three guys buying a pizza. Where did the money go?
If people stopped spending hours each day scrolling through Instagram, TikTok, and Facebook feeds, media incentives would change. Journalism would become more thorough and responsible, rather than optimized for outrage and clicks. People’s attention spans would recover, making them more capable of listening to opposing views and engaging in meaningful discussion. The overall quality of public debate would improve, and political leaders would be chosen based on objective, long-term policies rather than emotional manipulation.
The reinforcement-learning algorithms that drive these feeds are fundamentally unnatural. They represent a massive, uncontrolled social experiment on humanity—one that is far too powerful for our psychological reward systems to handle.
What needs to happen is education. Education on how the attention economy works. People must learn to resist becoming social media junkies, because every hour surrendered to these platforms reinforces the very systems that distort public discourse. When we lose control over our attention, we don’t just harm ourselves—we actively worsen the societal conditions that enable manipulation, polarization, and poor political leadership.
This problem of democracy was already discussed in ancient Greece. Social media might have exacerbated it, but it's not new. Over the millennia, nobody found a valid solution, or at least one that is devoid of other problems.
Education is not the solution, as we are probably the most educated populations in history and we are all still prone to the same problem. And who decides what is the correct education? Every side has their own definition, so there you have another problem.
Horseshoe theory and all that, populists gonna populist.
And in terms of burden - the cost hits the poor the most - but if your a billionaire funder of US political parties that's the point.
For a non-US person the most worrying aspect of this is that it also helps make the US more self-sufficient which means it's better prepared to go to war - which is not really good news.
So roughly 98% of the population was surprised?
I know two people who voted for him.
Person one has voted Democrat her whole life. Has worked for the Democratic Party. Has a son who was a Democratic elected official. But she lives in Texas, and watches too much local news, and believed that murderous immigrants were pouring over the border, guns blazing, taking out innocent American citizens daily at the beach and grocery store. So she voted for him because she believed only he could stop this from happening.
Person two is a wealthy white boomer. His business already runs in America. He actually has an advanced degree in economics. He believed that the tariffs would only be used surgically by smart people to protect American business. He is not personally affected by any of the racist policies or any of the other shenanigans. So he voted for him because he liked the protectionist and tax cut policies.
He regrets his vote. I haven't spoken to her in months because she stopped talking to me when I kept show her that her "facts" were made up.
If I recall correctly, we vote for presidents, senators and the congress who have policy stances on a variety of issues. There are usually only two options, one of which stands for open borders, not enforcing laws, socialism and demonizing people who choose the other option on the ballot.
A large cohort of independents didn't vote for republicans, they voted AGAINST democrats.
I like the idea of reaching across the aisle. However the divide is no longer the gap of a few feet. It’s a different world, with different rules.
I just checked yougov, and Trump has an 88% approval rating amongst Republicans.
https://today.yougov.com/topics/politics/trackers/donald-tru...
Do check, since one hopes I erred in reading the chart.
The victory of Trump is mostly the same process that gave the UK Brexit.
Just people acting based on the information they are being provided. If the other side is filled with feckless buffoons, and every source of news you have is telling you the same thing, then what else will someone do?
10 years ago
And, if you read the paper, you will find that evidence. How these work depends on initial conditions that vary and exporters will not react in a consistent way.
As a specific example, theoretical research in this area tends to make assumptions around the stationarity of margins that are obviously ludicrous in the context of reality in the US. It is quite easy to justify almost any policy with theoretical research in economics so people who have no understanding of economics will find evidence for whatever position they choose. Reality is quite different.
Second, reducing consumer prices was not the goal of the tariffs. The primary goals were to encourage companies to move manufacturing to the US and to be used as leverage in negotiating other matters with foreign leaders.
Trump and his entire administration admitted there would be short term pain, possibly a recession, but that it would be "worth it" to restructure the economy.
So the question is: how long does the pain last? And is the economy stronger when it's over (do we get over it)? It's been 9 months so far.
From my perspective the policy goals are very unclear since it seems like they're actively wielding tariffs both as a means to reorganize the economy and as a weapon to bully other countries. Mainly bullying. The intended effectiveness on our economy seems difficult to judge.
But social media changes the equation entirely. It gives us the speed of direct democracy without any of the structure or responsibility. It pushes people to judge candidates issue-by-issue, often on topics they don’t understand well, while eroding the deliberative layers a republic is supposed to have.
The problem isn’t people or education — America didn’t get this far because Americans are any smarter or dumber than anyone else. It’s the design of the systems. The founding fathers built a system that has so far lasted almost 250 years.
You cannot expect people to change — safety protocols, procedures, govenments — it’s about the systems.
Many people were thinking Joe Biden was looking old... Until 2 months before the election when a faceless political elite replaced him with a candidate who had repeatedly lied about Joe Biden looking old. The American public might be stupid, but they don't like being treated as though they are stupid - which is exactly what the DNC did.
See also Brexit.
Why would you (or anyone) be surprised that economically sound policies are not popular? They are not popular in the US. They are not popular in Europe. They’re not even popular on HN.
For reasons I don’t understand, almost everyone hates economics.
I don't think it's a simple answer. A couple things that likely contributed (I'm not an expert, just my opinion): there is an EXTRAORDINARY amount of propaganda being spread, whether people realize it or not, on and off the internet that gets consumed nearly 24/7. This happens on both sides of course, but think about some of the events leading up to the election. Musk bought twitter and quite literally turned it into a multi-billion dollar propaganda machine.
The general "drain the swamp attitude" that the administration parroted during the election (and first term) represented a change from how "traditional" politicians/government do things. People value that even if they don't understand/think about how it would affect them personally. This ultimately lead to demonizing the federal work force and mass random firings (in many cases having nothing to do with merit).
Trump also represented a push towards traditional values and national identity, which for some people was more important than whatever economic plan Trump had to improve things in the country. Other than tariffs, did he even have a plan? I don't know. But many people didn't/don't seem to care.
See Brexit. As Michael Gove said, the people have had enough of experts; for a certain sort of person, not understanding things is a badge of pride, and they're more liable to trust people like Trump, who transparently do _not_ understand things, than _experts_.
Similar to an extremely modest increase in local consumption taxes or income tax.
But here’s the hard truth: the US has needed to raise taxes for decades given its inability to reduce spending.
Hence they massively inflating runaway deficit. If this is the only way Americans will accept tax increases, and they aren’t willing to decrease spending, then this policy will ironically end up being the only way forward to climb out of the financial hole.
Also, this obsession over the importance of accessing US consumers feels ridiculous. If Americans aren't buying then it means more stuff for everyone else.
EU/China etc. sends actual things to US and US sends back dollars that are created out of thin air. It must be a restructuring pain more than anything since US doesn't actually export much goods. With the proliferation of cheap and available solar energy the trade with US can halt, endure the pain of restructuring came out of the other side with using the produced goods domestically instead of sending them to US and replace the US services with domestic ones. Then US can produce their things that they consume and have 350M market for the US companies instead of 7B.
It almost looks like Trump is Pushing for US irrelevance, its vey strange. Why would US be looking to abandone such an advantageous position? The people in the rest of the world are working their asses off, breathing toxic air just to obtain dollars.
Also, it's deeply naïve to assume tariffed countries would absorb the cost. Why would they? It's like going into a shop and asking for a discount because you just took out a loan. Why would the shop give you a discount for something you inflicted on yourself? And what makes you think other customers wouldn't ask for the same discount?
Prices for the same product are about 37.5% higher in the US. It's nuts and the reverse of how it used to be not long ago.
EU + South America start trading more while America shuts itself out.
That is its own kind of burden. We are shooting ourselves in the foot here, but but I think we're getting the other guy's foot to the tune of a bit more than 4%.
It's mutually assured destruction logic. I hate everything about it, but this seems like a mischaracterization of its efficacy.
I suppose the issue would be for those on the lower end of the earnings distribution, as they pay little to no federal income tax, but would be hit by a consumption tax. Though I do wonder if we could see wages increase when we don’t have to compete as much with low production costs in China.
Also, reduced competition from China does not imply higher wages unless labor has bargaining power and firms pass gains to workers. Historically it has been passed to shareholders not workers.
Finally, tariffs mainly protect manufacturing jobs. AI threatens white-collar and service work
Suppliers in China are dropping prices to offset the tariff impact - this is what I see in my direct industry and also in many adjacent ones. This is benefitting other countries that don't have Tariffs on Chinese goods since they can buy cheaper as well. I suspect this is a significant factor in the GBP/EUR strengthening in relation to USD. There was a point where there was such a pronounced impact to imported goods that the cost of shipping a container from China to US went from ~$3500 to <$1500 pre/post Tariff.
Large manufacturers (automotive certainly, but also raw materials production and component production) are actually moving facilities to the US, which was one of the intended effects.
US manufacturers are enjoying some price relief as landed costs of chinese-produced goods are increasing. Hard to quantify what this means but the frustrating part is that they are not reducing their prices just enjoying higher margins.
Countries outside the Tariff zone are enjoying more trade - Canada is a very real example of this policy backfiring - they just walked back the Chinese Automotive Tariffs in exchange for relief on agricultural reciprocal tariffs. Mexico is entering into similar agreements with non-US trade partners. Some products are releasing in non-US markets first and at lower costs than they are in the US.
US-sourced chipmaking is accelerating - Intel's new fabs are probably the most prominent example of this (albeit they are slow to pick up volume - I expect this will shift with TSMC rationing production to brands like Apple and Qualcomm).
I think the increase in cost to consumers is painful and that the current Tariff rates are excessive + there is a lot of "cheating" where Chinese suppliers are declaring lower cost of goods on import to reduce the landed cost of Tariffed goods - there doesn't appear to be enough resources to police this policy fully.
All in all an interesting economic experiment and it will certainly take years for any of these realities to have a measurable positive impact domestically.
What countries are those? As far as I know, most important markets have great tariffs on Chinese goods.
Neat as in fantastic - it literally can't get any better - for the oligarchs. Tax the poor, and tell them we're collecting money for them, from the foreigners.
Raise and lower the rates willy-nilly, no need to really justify why you're squeezing who.