Commerce Secretary Howard Lutnick said Sunday that the administration’s decision Friday night to exempt a range of electronic devices from tariffs implemented earlier this month was only a temporary reprieve, with the secretary announcing that those items would be subject to “semiconductor tariffs” that will likely come in “a month or two.”
“All those products are going to come under semiconductors, and they’re going to have a special focus type of tariff to make sure that those products get reshored. We need to have semiconductors, we need to have chips, and we need to have flat panels – we need to have these things made in America. We can’t be reliant on Southeast Asia for all of the things that operate for us,” Lutnick told “This Week” co-anchor Jonathan Karl.
Is that actually true though? You have access to technology that was science fiction when your parents were kids, and at least in the US (I don’t know where you live), median inflation adjusted earnings are higher than they were 45 years ago.
Statistics obviously don’t matter to individuals at the fringes, but they are helpful in understanding trends. Maybe you are worse off than your parents were at your age, idk, but the statistics show that more people are better off than worse off (that’s what medians show).
In theory, yes. In practice, it’s a lot more complicated. There’s good evidence that Hoover’s tariffs, which were intended to revitalize American industry, turned a recession into a depression.
Tariffs make things more expensive, which means people buy less. If people buy less, companies produce less, which means they need fewer employees. This can become a terrible cycle where demand craters, jobs vanish, and inflation skyrockets. Tariffs can maybe work if targeting a specific industry, broad tariffs just make everything more expensive.
Economists tend to prefer stimulating the economy with lower borrowing rates, which reduces the cost to expand business, which can lead to more employment, which can lead to more money circulation, etc. It can also lead to more inflation, since there’s more dollars chasing the same number of goods, so it needs to be used with care (i.e. only when production/employment is lagging).
I personally think that, largely speaking, if imports are cheaper than local production, that’s a good thing! You’re getting more value for your money, so people can live a better life with the same amount of money. Since local production is no longer valuable, people can take more lucrative jobs, like services. Cheaper imports should be embraced, not tariffed, and people should be trained properly to qualify for those better jobs.
Look at the top 10 exports:
Those require a lot of expertise to produce, and they’re largely complex, finished goods. That means there’s a lot of non-factory type work that goes into them, unlike iPhones and plastic crap, which are mostly labor (the technical bits are already largely designed by Americans).
We should be looking to outsource more (anything we can’t automate), not less, and use the savings to improve education. If you want better jobs, more access to advanced tech, and generally a better life, this is how you get it.
I have nifty tech, yes, but I also have vaccination deniers, Nazis, and my fourth “once in a lifetime” economic crises. I’m never going to buy a house. I’m never going to retire. I’ll probably never even pay off my student loans.
I’m hardly an economist, right? But I agree with you, broadly speaking. But first covid, and now Trump round two is showing is the weakness of global integration. As long as everything goes smoothly, it’s jam for everyone. But let something screw up the logistics, or someone duck up the balance of trade, and everything can go to shit really fast. There are lots of things we can’t make here, but we rely on them. That is less than ideal.
I don’t know that tariffs are the way to address that issue, or even if it needs to be addressed at all. O do know that the way Trump is doing it is all wrong.
One of my sons is an accelerationist, and his argument has been that Trump is a piece of shit, but in the course of exploiting it for his own gain, he has ripped the mask off a lot of evil that’s already in the system. So now we know that we’ll have to undo all of Trump’s damage, but also that we can’t just return to status quo ante.
My view is that this is a problem statement, not a proposed solution. And it is clear that, consistent with the law of entropy, the clean-up process always takes more energy than making the mess did.
Agreed. With the added bonus that we have too live in the system while we burn it down. I’m not a huge fan of the idea, but then, I’m a maintainer by nature.
That’s because they aren’t “once in a lifetime,” they happen about every 8 years or so, historically speaking. The news sensationalizes everything.
You probably will buy a house, given that >60% of Americans are home owners. It may not feel like it, but incomes have a habit of going up, relative to inflation, so if you stay diligent in keeping lifestyle inflation under control, improve your skillset, and keep an eye out for better employment opportunities, wealth is pretty much inevitable.
Then again, I don’t know you, and statistics have a habit of not applying to individuals.
I think it’s the opposite.
We had shortages of some things in COVID, sure, but a couple years later, everything was largely back to normal, but with a bunch of extra inflation and some housing debt. That’s pretty good for a worldwide medical crisis! If we look at the current situation with eggs, which are largely locally produced, we can see that it’s not a problem unique to global supply chains.
What Trump is showing us is how important global supply chains are. His tariffs are completely wrecking the stock market, and if he commits, it’ll trickle down to increased unemployment and loss of good jobs, especially if other countries retaliate with tariffs of their own. Prices will go up, so you’ll just get less for your money.
Why is it less than ideal? As long as you have multiple options for suppliers, you’re not at risk of any one country screwing you over.
Do you grow your own food? Weave your own cloth? Build your own house? No, you pay others to do that so you can focus on whatever you’re good at. A ideational professional farmer is a lot more efficient than I at growing food, and the same goes for other jobs.
We can expand that to countries and it still largely applies. China is good at producing stuff, and the US is good at designing stuff, so we offload the less desirable production work and keep the design work in house. We don’t want to rely exclusively on China, so we also offload work to Vietnam, India, Mexico, and others. If relations worsen with China like they are now, we can shift production to other countries.
How is that a bad thing? I’m failing to see how the pre-Trump situation is bad.