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Tariffs

Steelmann said:

1982: The lumber war between the US and Canada​

The US was convinced that it could see the wood for the trees, as it battled Canada over softwood lumber.

The root of the conflict was the fact that Canada grows and harvests lumber from public land, with prices determined by the government. On the other hand, the US harvests lumber from privately owned lots.
In 1982, the US argued that Canada was unfairly subsidising its softwood lumber, which led to several rounds of conflict, tariffs and retaliatory tariffs.

The lumber war continues. Canadian lumber faces an existing 14 percent tariff in the US, even before Trump’s threat to add 25 percent more.

The US imports almost half of its wood products from Canada, according to the Observatory of Economic Complexity.
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The real reason this specific issue exists really has NOTHING to do with Canada.

Yes, our lumber is harvested from privately owned lots, BECAUSE our government continues to try and appease environmental groups that feel this whole country should be a protected wilderness. They continue to buy and use Federal Judges to block sales of PUBLIC owned timber on PUBLIC owned land. By doing so we get to watch it burn up every year. If we were actually able to harvest our own VAST RENEWABLE RESOURCE we wouldn’t need to import lumber from Canada, subsidized or not.
 
Confluence said:
great explainer, appropriate tune:

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While this in a VACUUM is true, Trump is not doing this in a vacuum.
1. The destruction of regulatory agencies will remove countless red tape barriers.
2. The implementation of DOGE to identify and stop corruption through waste, fraud and abuse will result in reduced wasteful and fraudulent spending.
3. Forcing our so called allies to accept that paying their fair share is the new requirement will result in reduced spending.

There is a multi-pronged approach being done to solve the very issues, of which that slideshow wishes to ignore. The slideshow is correct on a number of points, all of which are also being addressed as we speak. That group conveniently chooses to ignore the fact that their very own solutions are being done at the same time.

It makes one wonder why this is. Could it be because recognition of these parallel actions would not allow them to criticize Trump’s actions as easily or at all? Just another biased propaganda hit piece, likely paid for by those who are losing access to the Government teat, and the power and control that ability offers.
 
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Steelmann said:
.

What makes the recent tariffs that Trump has threatened different is “the breadth of the tariff standouts,” Sweet said. “The first trade war included mostly targeted tariffs but this time around across-the-board tariffs are being proposed, making it nearly impossible to hide from them.”

He added: “Another big difference is that Trump is threatening tariffs on economies that are extremely integrated with the US economy, including Canada and Mexico.”
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To use your own analogy, the rich are much more able to absorb the pain. America is vastly more able to withstand a trade war than either Mexico or Canada. This trade war, while it will inconvenience America’s economy, it will destroy Mexico’s as well as Canada’s in a prolonged conflict. Eventually removing ALL BARRIERS to trade between all 3 countries will benefit each country and make North America stronger as a result.
 
MT~Forged said:
While this in a VACUUM is true, Trump is not doing this in a vacuum.
1. The destruction of regulatory agencies will remove countless red tape barriers.
2. The implementation of DOGE to identify and stop corruption through waste, fraud and abuse will result in wasteful and fraudulent spending.
3. Forcing our so called allies to accept that paying their fair share is the new requirement will result in reduced spending.

There is a multi-pronged approach being done to solve the very issues, of which that slideshow wishes to ignore. The slideshow is correct on a number of points, all of which are also being addressed as we speak. That group conveniently chooses to ignore the fact that their very own solutions are being done at the same time.

It makes one wonder why this is. Could it be because recognition of these parallel actions would not allow them to criticize Trump’s actions as easily or at all? Just another biased propaganda hit piece, likely paid for by those who are losing access to the Government teat, and the power and control that ability offers.
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I don't remember if I saw it here or somewhere else, but someone said that we're eagerly awaiting for President Trump and his people to burn the whole thing down and piss on the ashes.
 
MT~Forged said:
It’s all in what you perceive as making a country better. As someone who has lost a job due to downsizing and had to make hugely difficult decisions I sympathize with others, but not enough to protect their jobs while we hit the iceberg. Trump knows that he is going to bear the heat, but is still willing to do what needs to be done. I can’t think of a better character trait this country needs right now.
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Agreed
MT~Forged said:
Trump’s efforts to fix things are not the problem, the problem is that we have had people in power with no backbone or were in it to steal all they could for as long as possible. Any normal company or household would have long since gone under. The ONLY reason America is still afloat now is because spineless politicians can continue to vote to print more money to kick the problem down the road while getting their piece of the grift pie.
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This kleptocracy is a global issue .
MT~Forged said:
I am perfectly willing to deal with the hardships if it gets us to a better footing. Tariffs aren’t really going to impact me to a huge extent, as I don’t buy much anyway and almost nothing new that will be affected. It costs us right about $800-900 a month to survive bare bones, and can do that for years even if we were to not have Social Security available in 2 years. Chances are that the worse it gets the better our investments will do, unless a total collapse wipes out all our assets. Rising interest rates mean our huge number of CD’s will get better rates.
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I'd expect the same lower rates from the Fed to keep consumers spending. Social Security has never been the marketing "Lock Box" that those in said it was. Resetting government spending means resetting all future projections. This reversion to 1850ish economic policy will rattle the notion of any and all entitlements, including Medicare, SS, Defense appropriation, etc

MT~Forged said:
Hard times are much more preferable to catastrophic times. Yes, Trump may cause hard times but that is much better than the other option.
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Careful what you wish for.
MT~Forged said:
BTW - I have been seeing that the oil market is on the verge of crashing, so that will be good for energy costs and allow Trump to claim victory over high gas prices. He has already been able to claim better egg prices, much to the Democrats dismay.
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Agreed
MT~Forged said:
I hope you are all stocked up on toilet paper for the next upcoming release of a pandemic virus.
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We are good, thanks. We just came thru 6 days without power/water/heat as an ice storm took out the fragile grid structure. Over 40% of my county is still without power, so we are fortunate.
Generators, chainsaws and a well stocked supplies room are very helpful.
So yep, we have many months of TP because we live in rural areas with long, cold winters
 
Does anyone have a handle or reference article/PR showing the tariff "formula" and expanding the logic behind its basis?
TIA
 
Confluence said:
Does anyone have a handle or reference article/PR showing the tariff "formula" and expanding the logic behind its basis?
TIA
Click to expand...
I used Perplexity AI, as it provides the sources to validate the answers it provides. I did NOT review the sources for this.

The Trump administration's "reciprocal" tariff formula uses a simplified calculation based on bilateral trade deficits, despite claims of accounting for various trade barriers. Here's the breakdown:

Tariff Formula​

The core calculation for each country's tariff rate follows this equation:

U.S. Trade Deficit with Country
Tariff Rate = ----------------------------------- × 0.5
Country’s Exports to U.S.
  • Trade Deficit: Calculated as U.S. imports from the country minus U.S. exports to it (m - x)25.
  • Minimum Floor: A 10% tariff applies even to countries with which the U.S. has a trade surplus14.
For example, China's 34% tariff was derived from:

$295B deficit
----------------- = 67% → 67%×0.5 = 34%
$440B imports

Basis and Logic​

The administration claims this approach:

  1. Proxies Unfair Practices: Assumes persistent trade deficits reflect foreign tariffs, regulations, and currency manipulation15.
  2. Simplifies Complexity: Avoids quantifying thousands of non-tariff barriers by using deficits as a catch-all metric5.
  3. Aims for "Zero Balance": Seeks to eliminate bilateral trade deficits through import reduction5.

Criticisms and Observations​

  • No Direct Reciprocity: The formula ignores actual foreign tariffs on U.S. goods, despite the "reciprocal" branding24.
  • Elasticity Parameters Neutralized: The USTR's formula included terms for import price elasticity (ε = 4) and passthrough (φ = 0.25), but these cancel out (4 × 0.25 = 1), rendering them moot26.
  • Economic Concerns: Experts warn this blunt approach could spark retaliatory measures and harm U.S. consumers through higher prices24.
The White House defended the methodology as a "kind" compromise, though critics argue it prioritizes political objectives over nuanced economic analysis14.
 
I saw a post on Facebook this morning of Nancy Pelosi condemning the trade disparity between the US and China in 1996, and promoting tariffs just like Trump is doing now.
It was a Tic-Toc video, I don't do that and am just too dumb to know how to transfer it here. But if you get a chance to view it, it is pretty funny, and sad at the same time.
 
One of the things that I find comical is the biased media talks about how tariffs hurt the populace of America. Then in the next breath they talk of countries that are ADDING reciprocal tariffs on American goods to help themselves.

If adding tariffs is so bad for the economy, wouldn’t ADDITIONAL tariffs be even worse for those countries? Or does doubling down on tariffs by OTHER countries act as offsetting penalties and they cancel out the negative effects?
 
Badcat said:
I used Perplexity AI, as it provides the sources to validate the answers it provides. I did NOT review the sources for this.

The Trump administration's "reciprocal" tariff formula uses a simplified calculation based on bilateral trade deficits, despite claims of accounting for various trade barriers. Here's the breakdown:

Tariff Formula​

The core calculation for each country's tariff rate follows this equation:

U.S. Trade Deficit with Country
Tariff Rate = ----------------------------------- × 0.5
Country’s Exports to U.S.
  • Trade Deficit: Calculated as U.S. imports from the country minus U.S. exports to it (m - x)25.
  • Minimum Floor: A 10% tariff applies even to countries with which the U.S. has a trade surplus14.
For example, China's 34% tariff was derived from:

$295B deficit
----------------- = 67% → 67%×0.5 = 34%
$440B imports

Basis and Logic​

The administration claims this approach:

  1. Proxies Unfair Practices: Assumes persistent trade deficits reflect foreign tariffs, regulations, and currency manipulation15.
  2. Simplifies Complexity: Avoids quantifying thousands of non-tariff barriers by using deficits as a catch-all metric5.
  3. Aims for "Zero Balance": Seeks to eliminate bilateral trade deficits through import reduction5.

Criticisms and Observations​

  • No Direct Reciprocity: The formula ignores actual foreign tariffs on U.S. goods, despite the "reciprocal" branding24.
  • Elasticity Parameters Neutralized: The USTR's formula included terms for import price elasticity (ε = 4) and passthrough (φ = 0.25), but these cancel out (4 × 0.25 = 1), rendering them moot26.
  • Economic Concerns: Experts warn this blunt approach could spark retaliatory measures and harm U.S. consumers through higher prices24.
The White House defended the methodology as a "kind" compromise, though critics argue it prioritizes political objectives over nuanced economic analysis14.
Click to expand...
In short, once again the administration has no idea WTF it’s doing.

 
Ron Burgundy said:
I don't remember if I saw it here or somewhere else, but someone said that we're eagerly awaiting for President Trump and his people to burn the whole thing down and piss on the ashes.
Click to expand...
If only that was the plan. Trump is not lighting the fire to burn everything down, contrary to what you hear from the media. The attempt is to control the crash and offer some kind of controlled landing.
 
 
Badcat said:
I used Perplexity AI, as it provides the sources to validate the answers it provides. I did NOT review the sources for this.

The Trump administration's "reciprocal" tariff formula uses a simplified calculation based on bilateral trade deficits, despite claims of accounting for various trade barriers. Here's the breakdown:

Tariff Formula​

The core calculation for each country's tariff rate follows this equation:

U.S. Trade Deficit with Country
Tariff Rate = ----------------------------------- × 0.5
Country’s Exports to U.S.
  • Trade Deficit: Calculated as U.S. imports from the country minus U.S. exports to it (m - x)25.
  • Minimum Floor: A 10% tariff applies even to countries with which the U.S. has a trade surplus14.
For example, China's 34% tariff was derived from:

$295B deficit
----------------- = 67% → 67%×0.5 = 34%
$440B imports

Basis and Logic​

The administration claims this approach:

  1. Proxies Unfair Practices: Assumes persistent trade deficits reflect foreign tariffs, regulations, and currency manipulation15.
  2. Simplifies Complexity: Avoids quantifying thousands of non-tariff barriers by using deficits as a catch-all metric5.
  3. Aims for "Zero Balance": Seeks to eliminate bilateral trade deficits through import reduction5.

Criticisms and Observations​

  • No Direct Reciprocity: The formula ignores actual foreign tariffs on U.S. goods, despite the "reciprocal" branding24.
  • Elasticity Parameters Neutralized: The USTR's formula included terms for import price elasticity (ε = 4) and passthrough (φ = 0.25), but these cancel out (4 × 0.25 = 1), rendering them moot26.
  • Economic Concerns: Experts warn this blunt approach could spark retaliatory measures and harm U.S. consumers through higher prices24.
The White House defended the methodology as a "kind" compromise, though critics argue it prioritizes political objectives over nuanced economic analysis14.
Click to expand...
Thank you.
Clearly not reciprocal tariffs, and clearly blunt tools for all trading partners, regardless of the actual rationale of a trade deficit.

Looks like a tax on the US consumption of any imported goods. Paid by Americans. Short term pain by those who can least afford higher priced goods in return for the hope of good things later.

Tariffs worked great in the 1820s and 1920s!!
 
Steelr4evr said:
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1. All the "successes" she mentioned were about the southern border crossing. No data on less fentanyl yet.
2. Ther are no backdoor Chinese car plants in Canada:
"So far, there are no concrete signs that an influx of Chinese vehicles is destined for North America. While Chinese automakers began showing their products at key events such as the North American International Auto Show in Detroit more than a decade ago, there has been little movement in the meantime. The Chinese auto industry has some significant hurdles to overcome to enjoy success on our continent. Political tensions around China-North America relations, a lingering import tariff of 27.5 percent on Chinese cars, and tax credits for Americans who buy EVs built in the United States are making Chinese launches south of the border increasingly unlikely. Any car companies that can’t break through in the U.S. are unlikely to take a solo run at the significantly smaller auto market in Canada" from here:
3. The woman rants about the USMCA, a trade agreement that was the idea of the previous Trump Administration, negotiated by his people and signed by POTUS 45. WTF?

So that guy saying "show this to folks who don't understand macroeconomics " was not only wrong, but demonstrative not of macroeconomics but populist narrative rather than international economics. Like WTF?
 
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A surprisingly strong jobs report showing 228k jobs added in March wasn’t enough to prevent $5 Trillion in market losses caused by tariffs meant to create… jobs. Idiocy!
 
Confluence said:
Does anyone have a handle or reference article/PR showing the tariff "formula" and expanding the logic behind its basis?
TIA
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Superman said:
you need to summon @Ron Burgundy
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Not specifically, Google is your friend, but President Trump's basic idea is that our tariffs on your stuff will be the same as your tariffs on our stuff.
You put a 25% tariff on our cars and we put a 25% tariff on your cars, etc.
 
Confluence said:
Thank you.
Clearly not reciprocal tariffs, and clearly blunt tools for all trading partners, regardless of the actual rationale of a trade deficit.

Looks like a tax on the US consumption of any imported goods. Paid by Americans. Short term pain by those who can least afford higher priced goods in return for the hope of good things later.

Tariffs worked great in the 1820s and 1920s!!
Click to expand...
And just like that, suddenly Democrats hated taxes.
 
Confluence said:
1. All the "successes" she mentioned were about the southern border crossing. No data on less fentanyl yet.
2. Ther are no backdoor Chinese car plants in Canada:
"So far, there are no concrete signs that an influx of Chinese vehicles is destined for North America. While Chinese automakers began showing their products at key events such as the North American International Auto Show in Detroit more than a decade ago, there has been little movement in the meantime. The Chinese auto industry has some significant hurdles to overcome to enjoy success on our continent. Political tensions around China-North America relations, a lingering import tariff of 27.5 percent on Chinese cars, and tax credits for Americans who buy EVs built in the United States are making Chinese launches south of the border increasingly unlikely. Any car companies that can’t break through in the U.S. are unlikely to take a solo run at the significantly smaller auto market in Canada" from here:
3. The woman rants about the USMCA, a trade agreement that was the idea of the previous Trump Administration, negotiated by his people and signed by POTUS 45. WTF?

So that guy saying "show this to folks who don't understand macroeconomics " was not only wrong, but demonstrative not of macroeconomics but populist narrative rather than international economics. Like WTF?
Click to expand...
I'm a car guy. Total gearhead.
IMO it is unlikely that China will make inroads to the U.S. car market because of our crash protection and emissions standards. It would require too much of an investment in quality. Remember how well the Yugo worked out here.

Truck in Italy:
Italy Truck.jpg

Truck in U.S.:
Ranger 7.jpg
 
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