How? Trickle down has failed every time it’s been employed, most recently in Kansas. And as far as I can tell, massive tax cuts for the donor class is all we’re getting this budget cycle.
It’ll hurt the S&P500, sure. Far less clear how it’d benefit the working class, tho. Like, how does that work? You’d expect a decline in economic activity (ie fewer jobs, and lower or negative wage growth for what jobs do exist), and an increase in prices. That doesn’t help anyone much except _arguably_ the predatory super-rich (who can buy stuff up cheap), but even then it’s not a clear win for them either.
How do you see some sort of benefit for the working class? Has Trump, Musk, or literally anyone associated with this administration ever made any move towards that? Trump in particular is famous for not paying people.
Tariffs are an inefficiency that lowers profits and raises the cost of goods but they also create manufacturing jobs which benefit the working class. That's my mental model- I'm not an economist. I also strongly disagree with the tariffs on Canada and Mexico and almost all of the current policy decisions. There might be a method to the tariffs madness though is all that I'm saying.
This can kind of be the case with narrow, directed tariffs (protectionism of a vulnerable uncompetitive industry, for instance see https://en.wikipedia.org/wiki/Chicken_tax), or in a developing country that has mostly primary industry (that is extractive industry, mining and that sort of thing). In a developed country, it’s a lot more complicated; a lot of that manufacturing probably depends on imported materials or parts (so tariffs hurt it from that direction) and a lot of the market is probably export (which tariffs also hit, for tariffs more or less inevitably lead to retaliatory tariffs).
And where you have heavy protectionism, the _consumer_ tends to suffer, as the protected industries have little incentive to make their products good or cheap. See British Leyland; for quite a while the British government attempted to keep it alive by heavily restricting the import of actually good cars. Spoiler: it did not work.
Say we put a tariff on socks. And Hanes opens a sock factory in the US. Is a few hundred sock jobs going to help the millions who aren’t making socks? Does working in the sock factory pay enough to buy computers and cars and other higher margin goods?
Generally speaking, for broad tariffs, the answer is “No”.
Tariffs could mean a few hundred sock jobs but also cotton jobs, nylon jobs, rubber jobs, dye jobs, etc.
All more expensive than importing but supports local economies. Again, I'm not an economist, and tariffs are not a panacea, but they are also not useless.
They’re useless when used as blunt instruments as we’re seeing today. Broad tariffs on raw materials and goods - the cost hurts the general public more than any benefit to the few.
There’s a place for tariffs. Protecting against countries that undercut us by skirting international labor or environmental laws is a decent example. Protecting a specific, narrow industry that has national defense implications could be another.
But against Canada and Mexico? GTFO. That’s nonsense that’s going to hurt the average consumer.
I agree with everything that you've said. I think you're attacking args I haven't made- im against almost all of the current admin's policies including the tariffs. I'm pretty much only pro tariffs on China
As an European with seizable(for me) position in SP500 etf, which I never inteneded to liquidate, am actually thinking to completely deinvest from US. Purely because of what Trump did and will do to Ukraine and because of his dismantling of postwar Atlantic security architecture
Here I was, thinking that the most self-sacrificing action an American well off enough to have retirement savings (no immediate tax on capital gains) could take would be to divest from all domestic stocks and funds and shift to international ones.
Might not turn out to be as self-sacrificing as I thought.
Since the Trump administration took over, Tesla shares and Musk’s wealth are up by hundreds of billions, tens of thousands of working class are fired, prices are up, tariffs are making imports more expensive, welfare help programs are cut, retaliatory tariffs are reducing exports.
How is your mental model literally backwards from reality?
