You should look at the trade from in value added basis and how the trade benefits different couturiers differently.

Take for example US vs China. US products exported to China have value added close to 80-90%. Chinese products exported to US have value added around 40%. If Chinese import stuff, join them together into a thing that has export value $100, only $40% of the value stays in China. When the US does the same $80-$90 of the value stays in the US.

Trade agreements are negotiated over long time to be beneficial for everyone involved and nobody can claim that US is easy negotiation partner that has been taken an advantage. US allows higher taxation from other countries in exchange of some other things (lobbied by the the financial sector inside the US).

In general the whole "imports bad, exports good" outdated folk mercantilism is just silly. It's unfortunate that the political discussion anywhere can't raise above that.

First I agree that some countries will protect industries they consider to be of national interest or are just politically important, like the Canadian dairy industry. I actually think this is OK.

Second I think it is true that there is some hypocrisy here on both sides. It's fair to say US trading partners impose tariffs on US goods and ask why the US shouldn't do the same.

But the US doesn't play fair here either. Take wheat. Or agricultural products in general. In the US (and the EU) these are massively subsidized.

If you're talking about tariffs, you should also include subsidies.

But it gets worse: as an example the the US has historically blocked Australian agricultural products (including wheat) on quarantine grounds. While protecting local ecosystems is valid (eg Australia has, I believe, the only disease-free farmed salmon in the world) it's also used as a barrier to trade. It's clear the US here has historically used quarantine as an excuse to protect US farmers (ironically when Australian farmers aren't subsidized and US farmers are).

Fun fact: this little trade spat led to a deal in ~2006 that resulted in the Australian-only E3 US work visa.

The problem here is we have a complete buffoon in the White House who is the poster-child for anti-intellectualism. So, why put tariffs on Chinese tech goods? Those are primarily just assembled in China these days. China imports most of the parts from Korea, Japan and other places.

It's also clear that China plays favourites with local tech companies. It's a fair question to ask why the US should open up to Chinese tech companies when China won't reciprocate?

Australian dairy exporters have been suffering from this because a traditional export market (SE Asia) has been flooded with cheap (subsidized) dairy products from the EU (particularly Italy IIRC). This typically gets labelled "dumping".

Now market forces (and since subsidies are in play it's not really market forces) will otherwise kill the local industry. When those producers are gone and a change of government ends the dumping those producers don't magically reappear. It takes time.

This sort of thing is why so often self-sufficiency and key industries are touted as being in the national interest.

US export industries are more high tech with higher wages, imports are comparatively low tech. When US imposes tariffs it creates low-tech jobs in the US. When the trade partners impose tariffs they destroy high tech jobs in the US.

The net result is high tech jobs lost, low tech jobs gained. Overall economic efficiency goes down due to loss of high tech jobs and benefits of specialization.

I can kind of follow your argument. I can see how it might be true for, say, the recent US steel tariffs (although I don't know enough to say that steel production is 'low tech' these days).

But, in general, doesn't your argument depend upon which mix of goods the US includes in the tariff?

I mean, I wouldn't call car engines, cell phones, memory chips, television sets, game consoles, etc 'low tech' but the US imports a good deal of them.

I also wonder how countries like Germany and Japan manage the blend of tariffs. They certainly produce a lot of high tech goods.

Making them is pretty low tech, there's a team of people that design machines, robots, and human processes to manufacture the parts. That would be high tech but it's not that many jobs, and many of those jobs were already here. Then, there's a few people to get the stuff the robots can't do, and a couple guys to grease the robots, and a couple guys to maintain the conveyors and such. None of those are really high tech jobs. The senior machinery tech and the senior robotics guy and a sysadmin may be 'high tech' but most of the work, even working with the robots, is swaping parts, lubing and calibrating. And that, while it pays more than the floor workers, is still far below what we would think of as a high tech salary.

But due to the political history of tariffs it becomes possible for politicians to claim (falsely) that tariffs will benefit the economy, when in fact they are (at best) a handout to specific industries.

What really boggles my mind about the groundswell of support for tariffs is that much of it is coming from people who would traditionally have frowned upon receiving welfare. Yet they are happy to receive it when it's called tariffs and also happy to receive bailout money when their industry is harmed by the tariffs.

Put another way, tariffs are simply a way of introducing the government into economic transactions. If a foreign government foolishly decides to tax its citizens via a tariff on US goods, this harms the foreign citizens. When the US then plays tit-for-tat and adds its own tariff, this punishes American consumers in an attempt to harm foreign exporters.

But I repeat, no serious economist (someone who studies the economy scientifically) supports tariffs. They are a political phenomenon and the rhetoric used to support them has no basis in reality. There have been countless blog posts and articles from economists since the president began talking about tariffs that have pointed out the many ways in which the president confuses the meaning of some of the big numbers he presents as justification, etc.

The understanding that tariffs are foolish is a universal among economists and is not remotely a partisan issue.

It's one thing to want to grant welfare to a specific industry for some political reason, but completely another to introduce a distorting factor like a tariff.

I have a trade deficit with my grocer, for example. Why? Because I chose to exchange money for groceries. How is this bad? The same applies to nations.

The grocer example isn't really applicable. We both use the same currency so the grocer can use the local currency I pay for groceries to buy goods elsewhere or pay their employees. With foreign trade you have different currencies and a current account, the trade equation isn't as straightforward. An accurate analogy would be buying groceries via a barter system where I'd exchange good or services for groceries or a promise for future goods or services (eg, "luke-bucks") in exchange for groceries.

The trade shocks should not be handled with tariffs or restricting trade. It's domestic policy issue.

So of course the worker who over-invested in job A and was compensated based on that over-investment is going to be worse off in job B when he/she has under-invested in the skills needed for job B.

The fields that are best for workers today are those that have built in required continuing education, or fields in which rapid change is widely acknowledged and understood by the workforce (software engineering, etc.)

This is an important point, and I think plays into the question about tariffs (which, to be clear, I think are probably net negative).

The conventional argument is that free trade is a Kaldor Hicks [0] improvement, not a Pareto improvement. KH means that the sum of benefits and costs is positive, and it would be possible (in principle) to tax the beneficiaries and pay off the people harmed and create a synthetic Pareto outcome.

You could view tariffs as a clumsy attempt to apply the Kaldor-Hicks concept. I personally think there are much better ways, but I think the argument is at least plausible.

[0] https://en.wikipedia.org/wiki/Kaldor%E2%80%93Hicks_efficienc...

We've seen a lot of innovation in the area of free trade, commerce, etc., but virtually no innovation in education, on the job training, and other areas where policy can help make the economy stronger overall.

So in my view, tariffs are used in a way that is meant to undo the damage from decades of neglect of our educational and skills training infrastructure.

This doesn't call for a more nuanced view on trade (freer is always better), it is a call for us to begin to think rationally about job training.

Whatever job anyone has today, whatever product is demanded today, etc., will not necessarily be the same tomorrow. When we pretend otherwise -- such as the fiction that first world nations should manufacture steel -- we invite all sorts of bad policy when what we really needed was honest understanding that economies change.

Keep in mind that most moral progress over time is not the result of rational people convincing others of something that was previously opaque, it is due simply to economic progress. In other words, moral progress is a luxury we buy with prosperity.

Where we lag in this area most today is that we fail to understand that we must invest heavily in job training, education, entrepreneurship, and other areas that create new life when industries change, move abroad, or shrink.

It so happens that in US politics there are some influential electoral districts that contain steel mills and which have suffered from economic globalization. Sure the easiest way to placate those districts is to introduce tariffs or use other means to offer welfare that prevent those impacted from adapting.

Most of the buildings that house startups in urban parts of the US were once used for manufacturing or meat packing. This is a good thing in the medium term.

But creating job training or investing in new industries to replace old ones is not economics, it's social policy. We should not make the mistake of confusing it with economics.

Mercantilism as a zero sum game where you export more than you import and then you get rich reasonable first theory if you start to think trade from the scratch, but it's wrong.

It was already debunked by Adam Smith in "The Wealth of Nations" 1776. Then came Ricard's comparative advantage (1817), the emergence of Classical Theory Of International Trade, then New Trade theory then New New trade theory.

Every area of politics that touches issues like medicine, chemistry, genetics, climate science, macro economics, trade economics, urban economics, etc. is always facing arguments that were outdated hundreds or thousands of years ago.

The obvious endgame is not for the US to keep these tax increases. The administration stated the goals fairly clearly, and almost(?) none of them are controversial:

https://www.whitehouse.gov/briefings-statements/president-do...

Tariffs are leverage. Economists not liking them is a lot like an economist pointing out that manufacturing bullets has a fair bit of dis-utility. It's true at face value but you might want to use them for something like if there's, you know, a war going on. If a war is ongoing and an economist wants to talk about how bullets have a lot of dis-utility when we could be manufacturing more spoons, that's fine I guess. But it misses the whole point.

Anti-tax Republicans including the current admin obviously don't want tariffs around either. But they do want to use them for a short while as a tool to get China to stop the practices outlines above. No one in the republican administration intends to impose the tariffs for the sake of collecting tax revenue or anything like that.

We're told that finally a master negotiator is at the helm and that he will renegotiate trade deals that leave the US at a disadvantage.

One data point that offers evidence counter to that view is the president's vocal opposition to NAFTA, a deal that resulted in a large (mostly) free trade zone and lower tariffs on US goods than on those from the other participants.

I think the most likely explanation is that the tariffs are viewed as a way for the executive branch to unilaterally redistribute wealth to key swing states that have been hit hard by globalization.

If your speculation is true, then the administration must believe not just that escalating tariffs will move trade negotiations to the brink and will allow the US to negotiate freer trade... but it must also believe that the negotiated freer trade will be economically significant nationally AND to the swing state areas hit hard by globalization.

It is my understanding that if the above is true about the administration's beliefs, that the numbers quite obviously do not add up.

So while the US would certainly be better off with freer trade, the economic cost of tariffs is not enough to move the needle economically in a significant way (per an analysis done by Reason magazine). This directly contradicts the claims made by the administration.

So unless there is a deep factual discrepancy between the analysis conducted by Reason magazine and the analysis the administration is doing, the tariffs seem intended mainly as a tactic to rally key groups of voters, and there appears to actually be no broader strategic significance or possible negotiated outcome that would achieve the goals the administration claims will be possible via the tariff escalation.

That said, the tariffs are probably a smart way to try to win a few elections. They allow the public to view other nations as adversaries and to rally behind the US "winning" over other nations. They also prop up the fiction that trading partners are in fact adversaries rather than cooperators. Such adversarial rhetoric is obviously a useful political tool.

So since this kind of us vs them, zero-sum rhetoric has been such a key element of the administration's message, I find it unlikely that it would ever seem desirable to remove the tariffs and to reframe the US relationship with other nations as constructive rather than as adversarial. Why give up such a useful enmity if it's working politically?

My concern is that the tariffs will cause unexpected and sudden economic harm, which could quite suddenly cause a lot of the players to lose their perspective and actually begin to act adversarially.

FWIW tariffs also reduce trade cooperation between nations and reduce the disincentive for armed conflict.

For example, let's say a country artificially keeps prices low for microchips in an effort to infiltrate the US market (for whatever underlying reason). Or some other country's clothing is super-cheap because they use forced labor.

I'm no economist, and I'm not even well-versed in the subject. I don't even know if these are real-world scenarios. But it's things like this that have always bothered me when people advocate for straight-up libertarianism, or complete lack of government oversight. Because there are always people who don't play fair.

International trade theory's core concepts are structured as a n-player game, with n being the number of nations. That is to say, a nation has a fixed amount of resources. If a domestic policy is chosen to optimize for the production of cheap microchips (because you can't produce under-cost for a significant period of time), you are impacting the production of other goods.

When a nation optimizes for the production of a good it can produce advantageously (see: comparative advantage), the world benefits (As you make less of the goods you produce less efficiently). Sure, individual members within the nation may receive subsidies or subsidize others, but that's a domestic issue.

It's difficult to explain this in the level of detail that it warrants to the layman, because the underlying theory is built upon a substantial chunk of underlying economic theory. The biggest issue with Econ is that it's simply unintuitive, and that it takes a lot of effort to switch your mindset.

Not being antagonistic hear - but your sentence reads like you meant it in absolute terms, as if they are never a good thing.

That's quite a claim - can you elaborate on it? Your post gives a trivial example, would be great to hear your actual reasoning.

It has no relationship with the health of the economy whatsoever. Firms within an economy have their choice of whether to import inputs from domestic providers or foreign providers, and they choose the option that offers the best value.

Let's use the example of a company that is considering opening a 50K square foot call center for customer service. The company will decide whether it makes sense to open that call center in an expensive place like downtown San Francisco, but it may also consider opening it in a place that would be more affordable.

If you focus only on the call center workers in downtown San Francisco, it will look like perhaps a tariff should be created by the city of SF to prevent firms from opening call centers in Iowa. After all, where will those call center workers find jobs?

But think about the rest of the firm. Maybe with the money it saves by opening the call center in Iowa, it can open an R&D office in downtown SF instead. Maybe in a few years the R&D pays off and now the firm can hire 1000 more workers in SF for other jobs.

But if we rewind and consider the situation with tariffs. The firm still decides to open the call center in Iowa but now must pay a tariff, which reduces the profitability of the decision. Now it can't afford to open the R&D office and ends up a few years later going out of business.

Or, suppose that the tariff is high enough that the firm does open the call center in SF. Due to the costs there is still no money to open the R&D office and so the company still fails.

The counter-intuitive thing about economics is reasoning about counter-factual scenarios... all the things that might have happened if things had gone differently.

In the above example, SF loses the higher skilled R&D jobs due to the tariff and also loses the 1000 new jobs a few years later. But it's easy to ignore those since they are counter-factual. The politicians can point to the SF call center employees and say "See, the tariffs got these people jobs, look how we're helping the economy!"

But the truth is quite the opposite, the tariff prevented the company from having the capital to invest in R&D, cost the Iowa call center jobs AND the SF R&D jobs AND the 1000 other jobs that would have happened due to growth.

In a nutshell, the mindset that makes people think tariffs are a good idea is anchored on the idea that the economy is static and that someone is winning only at the expense of someone else losing. In the tariff supporter scenario, Iowa would have "won" if SF had not instituted those tariffs to keep the jobs at home.

I use SF and Iowa as an example here just to make the concept more simple and to remove the confounding ideology of nations being adversarial to one another. Trade makes otherwise adversarial nations into partners and allies, so you could substitute SF and Iowa for the US and Canada respectively.

I'm not going to pretend to be an economist, serious or otherwise, so I won't dispute this notion.

Tariffs appeal to the naive idea that trade imbalances between two nations are a bad thing.

This, however, needs some augmentation.

Tariffs are a tool. Like most tools, they can be used multiple ways.

Tariffs aren't only for balancing trade. The most common use is to punish another country economically for engaging in an action, such as doing business with the wrong people, or imposing other tariffs.

Tariffs are also used to create jobs. To me, this is the most important function of a tariff, and one which the current American has very visibly implemented repeatedly.

A high import tariff on a particular type of product can help create jobs in that sector domestically.

There are vast numbers of people in every nation who are not able to — and will never be able to — code a program, or invest in the stock market, or found a startup, or work a robot assembling a car. But they can snap plastic forks off of a mold in a factory, or drive a forklift in an aluminum plant, or mix the concrete that paves the roads you drive on every day.

These are actual, real human beings who deserve to have jobs and dignity.

In SV this these people are often dismissed as undesirables who just need to be "re-trained." But a significant percentage of the population cannot be re-trained, for various reasons ranging from mental capability to physical limitations to family obligations to things you an I will never experience.

The real re-training that has to happen is in the chattering internet classes who think the majority of the nation is like them, and it's OK to leave everyone else behind because... progress.

A tariff won't create the next American entrepreneur. But if it keeps 10,000 people from becoming homeless, I'm all for that.

I'm not sure, however, how you can say that working in a steel mill that would not be in business if it weren't for tariffs on imported steel comes with any dignity. Sure there is the dignity of showing up for a job and doing good work, but ultimately that job is being funded by welfare, and is itself a handout being received by the worker.

The economy is a rapidly changing thing, and there is no reason to believe that any industry that is thriving today will still be thriving in a decade.

But rather than undertake the worthy and challenging task of positioning our economy (via job training, entrepreneurship, etc.) to be resilient to change, we prop up industries that are much more efficiently done elsewhere.

Consider how this would have played out in the early days of the automobile. Soon most of the blacksmiths who had been gainfully employed putting shoes on horses would find themselves out of work because people started preferring motorized cars to horse-drawn transit.

By your logic, we should have idealized that horse-drawn era and should have put policies in place to guarantee that all of those blacksmiths were able to continue the dignity of their trade even though their skills were demanded much less.

While there is something nostalgic about the days of horses and pre-industrial society, most of the important humanitarian (moral, etc) advances that have been made since then have been due to the proceeds of the improved economic output of an industrialized economy.

What happened to those blacksmiths? Some probably ended up out of work and had to struggle to survive, while others likely transitioned their skills doing metalwork in the industrial sector.

All humans have value as humans and I believe that the vast majority have strong work ethic and a desire to support themselves and their family through work and discipline.

Nonetheless, as the economy changes rapidly, we find that we (industrialized nations) have lagged significantly when it comes to our educational system. Our modern schools still do many things the same way they were done in a one room schoolhouse.

There are many reasons why this happened -- I'd argue that the biggest one was the state takeover of education during the industrial era to free up more workers by providing free daycare (not education). So the root cause of worker displacement is connected with industrialization, but it is due to state monopoly power and the destruction of liberal educational ideals in favor of daycare and rudimentary skills training. In other words, we should not teach people a trade we should teach them how to learn for themselves.

Our educational system today is still very trade oriented, and that creates calcification in the economy and is ultimately a grave threat to national security.

But politicians will of course prefer to prop up dying factories in dead industries in exchange for primary votes rather than tackling the much harder problem of figuring out how first world education should work in 2018.

If Mr. Widget isn't competitive at $100 vs. imports sold at $90, and you add a tariff of $10 so its "competitive", suddenly Mr. Widget's sales will increase. The other country, knowing their widgets aren't competitive (except $$ wise) then tariffs something like solar panels to protect a nascent solar panels industry.

Tariffs are a form of welfare for domestic corporations. Creating a new Mr. Widget on the assumption that tariffs will remain the same is an expensive gamble you take only if you are sure your widgets are better than Mr. Widget's widgets.

Subsidized loans (i.e. "The Bank of Boeing") are another example of welfare for domestic corporations.

The administration has also set aside $12 billion to relieve farmers hurt by the tariffs. [1] This money could come from the money generated by the tariffs, making it look more like a handout.

[1] https://www.npr.org/2018/07/24/631953880/trump-administratio...

I suppose many other countries are like that as well. Fickle because you know...people.

People just didn't know about the tariffs that already existed because the media didn't report on them, so politically, they didn't exist. (The idea that the media has this power but that it has not corrupted them is one I have a hard time understanding.)

My company is US based with some manufacturing done in the US, some in China and some in EU. We are constantly dealing with price changes due to tarifs, and consumers are going to get hit hard once the price increases travel up the food chain to the end product.

The way tarifs are talked about by our president is laughable and sad. That is not good for the US.

Trump plans to use $12 billions to help farmers hurt by tarifs. https://www.washingtonpost.com/business/economy/white-house-...

When prices are higher, consumers buy less. So those foreign consumers are indeed getting less for their money- so they will buy less US Goods, reducing the money coming to US producers. Instead, those foreign consumers will buy local goods at lower prices.

A tariff on "cheap shit from Amazon" is a heavily regressive tax, and acts to reduce total delivered value. Whereas taxing the well-off to pay for education and encourage investment increases total delivered value.

In some governments somewhere in the world, these programs are effective. But there's no guarantee they will be well run and well administered.

If a government justifies taxing more heavily to fulfill those functions, it's critically important that the government actually deliver the services effectively. The government's efforts must actually succeed. Otherwise, a lot of voters become skeptical and stop believing the promises.

UHC would actually save 2 trillion over 10 years (according to a very conservative Koch brothers study).

We need to end money in politics though, there needs to not be easy ways to bribe politicians.... It's becoming a circus, until corruption is tackled, nothing will function efficiently ever.

Some of these people may have ended up in a poverty trap all their lives, and never contributed. One may even go on to end cancer, or do something amazing with the extra opportunity they now have.

Education ALWAYS contributes to society as a whole, not just that individual. America needs to start valuing education more, I see dumbasses on social media and elsewhere who don't fact check anything, believe everything they're told and can't even tell which side of the civil war Lincoln was fighting on.

They are the same people Jay Leno used to make fun of by asking simple questions on his Jay Walking bit.

But I'm thinking we would use the money to more directly encourage investment. Small business programs are good here, including classes, mentoring, and small-business loans.

In the US, the workers demand a livable wage and healthcare from their employer. In other countries, the definition of livable wage is quite different (lots of poor/slave labor and no rules that protect employees from age restrictions, working hour restrictions, etc.). Some countries have government provided healthcare so that is not a cost that companies need to deal with.

Additionally, companies in other countries are able to externalize some of their major costs, especially in the area of pollution. In the US, you couldn't emit extreme amounts of waste and just dump it anywhere, you have to pay to "clean" it or face penalties. Other countries don't have such restrictions and are allowed to dump waste into rivers or the atmosphere without penalty.

So in the US you'd have to build a factory that is "clean" and complies with regulations. Then you'd have to hire and pay US workers a fair wage and likely subsidize at least a portion of their healthcare. You would also have to comply with worker regulations for these employees.

It's up to you to determine whether it should be ok to externalize these costs. Treating employees as effectively slave labor and the ability to destroy the environment and the habitats of living things.