The issue here is this is entirely based on trade balances. these effective tariff rates are just ratios of the trade imbalances. Nothing more. No other policy considerations like currency policy or unfair trade practices or non trade barriers.
But even setting that aside, it is dumb because we are a services and ideas based economy, so we are a net importer of physical goods, but are a net exporter of intellectual ones - We take in flows to our capital markets, via services transfers, and through our vast multinational corporations who employ a lot of people here supporting our subsidiaries overseas. None of that shows up on trade balance.
We have a bunch of very high paid jobs making Netflix subs and providing banking services and designing phones and stuff which balances out the cheap clothing and parts and stuff coming in. It is very nice that we are able to have one person working at netflix or something to buy the labor of dozens doing back breaking manual labor overseas in balancing out those payments. And we are at 4.1% unemployment. To the extent we want high tech manufacturing, we can do subsidies or more targeted policy to get it back. We are a super rich nation because we have a lot of individual people creating wealth on the order of dozens in another country and we benefit from that in trade.
It's dumb to base this whole thing on trade imbalances because that's based on a fundamental lack of understanding of how our economy works or why this is such a rich country. It discounts that we are paying for these trade imbalances with stuff we make for free. It also discounts situations where we import from one country and export to another, and the country we have a trade imbalance with has in turn a trade imbalance with a country we have a surplus with.
Basically, it's disappointingly wrong and lacking any nuance on how the economy actually works. It also is bad policy that is going to create a giant mess if its the case for more than a couple months.
But even setting that aside, it is dumb because we are a services and ideas based economy, so we are a net importer of physical goods, but are a net exporter of intellectual ones - We take in flows to our capital markets, via services transfers, and through our vast multinational corporations who employ a lot of people here supporting our subsidiaries overseas. None of that shows up on trade balance.
We have a bunch of very high paid jobs making Netflix subs and providing banking services and designing phones and stuff which balances out the cheap clothing and parts and stuff coming in. It is very nice that we are able to have one person working at netflix or something to buy the labor of dozens doing back breaking manual labor overseas in balancing out those payments. And we are at 4.1% unemployment. To the extent we want high tech manufacturing, we can do subsidies or more targeted policy to get it back. We are a super rich nation because we have a lot of individual people creating wealth on the order of dozens in another country and we benefit from that in trade.
It's dumb to base this whole thing on trade imbalances because that's based on a fundamental lack of understanding of how our economy works or why this is such a rich country. It discounts that we are paying for these trade imbalances with stuff we make for free. It also discounts situations where we import from one country and export to another, and the country we have a trade imbalance with has in turn a trade imbalance with a country we have a surplus with.
Basically, it's disappointingly wrong and lacking any nuance on how the economy actually works. It also is bad policy that is going to create a giant mess if its the case for more than a couple months.
