Quote from: Julian M on April 04, 2025, 17:36:58If US consumers wanted a tangible example of the impact tariffs, there you go.
Sucks,doesn't it?
To be fair, tariffs are just a tool. They can be used for for good or bad motives depending on why and how they're implemented. Many countries in the past have used them effectively to protect local infant industries and pretty much get out of economic poverty. Thus turning them from 3rd world countries into leading 1st world economies.
The problem is, the way he's done it isn't going to reduce income inequality at all for the average US citizen. He's randomly just applying tariffs to everything and everyone. There's no specific plan here to strengthen a target industry here. He's also not going anywhere near far enough. One of his motivations for doing this is to get international companies to open up and move their production facilities with the US.
But the people aren't there. The entire industrial complex ecosystem isn't there or underlying tissue of support systems. It takes decades to train workers with the right skills, to build the infrastructure needed/suited for those industries and having university departments doing research in those specific areas of need. Unless you've all these, you're not going to achieve very high productivity on a big scale.
Then there's the US financial system, which is just an environment that is so parasitic in nature, that it won't allow Mr. Trumps plan to work. The whole point of giving protection is so that your domestic companies aren't just protected from foreign competition but also receive additional resources as they can charge a little more. With this extra cash, they can use this resource to invest in raising productivity.
This is what happened in several countries that were successful in implementing tariffs. But the current US financial system is going to do the opposite and actually just drain all these extra resources from these companies furthering income inequality even more. In the last 25 years, the top American corporations have given something like 90%-95% of their profits to shareholders, instead of making the necessary investments in actual people to make a highly productive workforce.
US domestic production in the industries he's trying to jumpstart again have been dead for atleast 30-40 years. Rebuilding all this entire ecosystem and support network is going to take more than 4 year presidential term but more like decades.
Source: Interview with the leading Economist Ha-Joon Chang on 'Can tarrifs make you richer?'
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