I’m going to be scathing in my critique because these people are both dishonest and incompetent and deserve to be called out on it.
Here’s their formula:
It’s a ridiculously simplistic formula.
First, a stylistic quibble. What is up with those asterisks in the denominator? I’ll give the authors the benefit of the doubt and assume that they wanted the formula to be understandable by people who aren’t familiar with standard math notation, in which the juxtaposition of variables indicates multiplication. But to see it written that way in an official document is just… weird.
The i subscripts in the formula just indicate that the formula is to be applied to one country at a time — country i. I’ll therefore omit the ‘i’s from the rest of the discussion.
∆𝜏 is the amount by which the tariff currently being placed on that particular country should change (according to the Trump administration bozos) in order to drive the bilateral trade deficit to zero. In other words, 𝜏 (the existing rate) + ∆𝜏 (the change in rate) would be the correct final rate (according to the formula) to achieve the dubious goal of a trade balance.
The inanity of insisting on bilateral trade balances
We’re off to a bad start already, because the notion that every bilateral trade deficit should be zero is ridiculous on its face. Let’s look at a simplified example. Suppose Malawi sells us only mangoes, and the US (henceforth ‘we’, since I’m American) sells them only air conditioners. In order for the trade deficit to be zero, we need to buy the same dollar amount in mangoes that they buy in air conditioners, and we should adjust the tariffs we impose on Malawi until that happens. Why is this desirable? Why should the amount of mangoes be linked to the amount of air conditioners? Who the hell knows? It’s just Trump’s idiotic obsession, and it makes no sense.
To make the stupidity even more obvious, think of an analogous situation. Ernesto sells tacos from a taco truck, and George runs a landscaping business. George occasionally buys tacos from Ernesto, and Ernesto hires George to mow his lawn. Suppose Ernesto pays more to George each month than George spends buying tacos from Ernesto. Is Ernesto being cheated? Is he subsidizing George? No and no. George gets every taco he pays for, and Ernesto gets his lawn mown on schedule. It would be ridiculous to say that either of them is being cheated, and ridiculous to say that the goal should be to make the amounts even.
Why is Trump obsessed with trade deficits? It’s because he is confused enough to believe that the existence of a bilateral trade deficit — a trading deficit with a particular country, Malawi in my example — means that they are cheating us and that we’re subsidizing them. He actually believes that we are just handing over the money, getting nothing in return. In reality, we get every frikkin’ mango we pay for, and they get every air conditioner they pay for. No one is being cheated, and to demand that the dollar amounts should match is idiotic and pointless.
Trump actually declares in his executive order that trade deficits are a “national emergency”. He does this because he doesn’t have the authority to impose tariffs unless it’s a national emergency. Otherwise, the job falls to Congress, where it belongs. Trump is lying about the supposed national emergency.
The formula
According to the USTR statement, the x in the formula is the dollar value of what we export to a particular country, while m is the dollar value of what we import from them. The numerator, x – m, is therefore equal to the trade imbalance. If x is bigger than m, then the difference is positive, and we are running a trade surplus. If x is less than m, then x – m is negative, and we have a trade deficit. But note that they have it backwards in the formula: it should be m – x, not x – m. Why? Because the denominator is positive. If both the numerator and denominator are positive, as they would be in the case of a trade surplus, the formula would deliver a ∆𝜏 that is positive. In other words, the formula as written would actually increase the tariffs for the countries with whom we have a trade surplus, and it would decrease the tariffs for countries with whom we have a trade deficit. The formula therefore punishes the (supposedly) good guys and rewards the (supposedly) bad ones, which is opposite to the administration’s intentions. One more indication of their clown car incompetence.
They could easily have corrected the formula if they were aware of the error. Just put a negative sign in front of the formula, or swap x and m, or redefine x and m as the amounts exported and imported by the other country, instead of the amounts exported and imported by the US. Any one of those three would fix the problem, but no.
Let’s assume that we have corrected that mistake for them and that the numerator now equals the amount of the trade deficit, not the surplus. What about the denominator? Well, it just so happens that the values they chose for 𝜀 and 𝜓 are 4 and 0.25, respectively. Those multiply to 1, thus canceling each other. How convenient. These charlatans actually and blatantly chose the values so that they would cancel out, instead of using the most accurate numbers they could find in the literature. They cheated.
After that suspiciously convenient choice of parameters, the formula is now just ∆𝜏 = trade deficit divided by total imports:
Do they actually apply this formula? No. They massage its output even more. They divide ∆𝜏 by two, for no good reason. That means that for the formula to match the actual tariffs, they should multiply the denominator by 2. They fail to do that, as you’d expect. Why 2? My hypothesis is that even those dunces realized that the numbers they were getting from the formula were ridiculously large, and dividing by 2 was a way to get them down to a range that they considered reasonable. More number fudging with no theoretical justification.
Next problem: according to the corrected formula, ∆𝜏 should be negative in the case of trade surpluses. That is, we should decrease the tariffs on imports from those countries. If the existing tariff rate is small enough, it should even go negative, according to the formula, in order to balance our trade with that country. Trump doesn’t like that, so he has arbitrarily declared that everyone will pay a minimum of 10%, whether there’s a trade deficit or a trade surplus. In other words, the policy, which is already misguided, is also unfair — it says that it’s OK for the US to screw other countries by imposing high tariffs, even if they’re doing the “right” thing and allowing us to run a trade surplus with them.
The actual rates
Here are the charts spelling out the actual tariff rates.
The chart labels them “Reciprocal Tariffs”, but that is a lie, since the formula doesn’t take into account the tariff rate charged by the other countries on our exports to them. It’s completely missing from the formula. They aren’t reciprocal tariffs, they’re misguided tariffs in response to trade deficits, and they punish US importers instead of the countries selling us those goods and services.
The label on the middle column is wrong for the same reason, and it’s even further wrong because it depicts a bilateral trade deficit as a quantifier of “currency manipulation and trade barriers”, which it isn’t. We can run a bilateral trade deficit for no other reason than that Americans want more of what the other country is selling us than they want from us. That’s not “currency manipulation and trade barriers”, and the Trump administration is dishonest for trying to sell it that way.
The numbers in the middle column are apparently those that come straight out of the formula. You can tell, because the tariffs that are actually being imposed by the US are just the middle column divided by 2. That’s the arbitrary factor of 2 I mentioned above. The only exceptions are in those cases where dividing by 2 would leave a less than 10% tariff, in which case the tariff is set to 10%. Gotta make sure that everyone gets screwed at least that much.
The US Trade Representative’s explanation
Now some excerpts from the USTR statement. The very first paragraph:
Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners. This calculation assumes that persistent trade deficits are due to a combination of tariff and non-tariff factors that prevent trade from balancing. Tariffs work through direct reductions of imports.
Well, duh. The phrase “tariff and non-tariff factors” covers literally every possible factor in the entire world. Yes, there are actual reasons that we buy more in mangoes from Malawi than they buy from us in air conditioners. Therefore we should conclude that we’re getting ripped off?
While individually computing the trade deficit effects of tens of thousands of tariff, regulatory, tax and other policies in each country is complex, if not impossible, their combined effects can be proxied by computing the tariff level consistent with driving bilateral trade deficits to zero.
Not by any reasonable person. You need to do the homework before making policy decisions that will affect the entire world economy. If they want less of what we’re selling than we want of what they’re selling, that can lead to a trade deficit, independent of all the factors they list above.
This doesn’t mean that trade practices can’t be unfair, but it does mean that to assume something nefarious is going on merely because we’re running a bilateral trade deficit is stupid.
If trade deficits are persistent because of tariff and non-tariff policies and fundamentals, then the tariff rate consistent with offsetting these policies and fundamentals is reciprocal and fair.
No. If we like Malawian mangoes more than the Malawians like our air conditioners, nothing is broken. Nothing is unfair. No reason to blindly punish the Malawians. It just means that American demand for Malawian mangoes is greater than Malawian demand for American air conditioners. No big deal.
A case could be made for nudging the US’s global trade deficit — which is the aggregate trade deficit we’re running with all of our trading partners put together — toward zero, but trying to eliminate every bilateral trade deficit is bonkers. These people are clueless.
Consider an environment in which the U.S. levies a tariff of rate τ_i on country i and ∆τ_i reflects the change in the tariff rate. Let ε<0 represent the elasticity of imports with respect to import prices…
Right there they say that ε < 0, but a few sentences later they assign it a value of 4. The last time I checked, 4 was greater than 0, not less. Their sloppiness is consistent, at least. What is wrong with these folks?
let φ>0 represent the passthrough from tariffs to import prices, let m_i>0 represent total imports from country i, and let x_i>0 represent total exports. Then the decrease in imports due to a change in tariffs equals ∆τ_i*ε*φ*m_i<0. Assuming that offsetting exchange rate and general equilibrium effects are small enough to be ignored, the reciprocal tariff that results in a bilateral trade balance of zero satisfies:
As noted earlier, they have the numerator backwards. It should be positive for a trade deficit, not negative, in order for ∆𝜏 to be positive, which represents an increase in tariff rates.
To calculate reciprocal tariffs, import and export data from the U.S. Census Bureau for 2024. Parameter values for ε and φ were selected. The price elasticity of import demand, ε, was set at 4.
Which inside the Trump administration is less than 0, lol. And how convenient that εφ multiplies to 1, as noted above.
Recent evidence suggests the elasticity is near 2 in the long run (Boehm et al., 2023), but estimates of the elasticity vary. To be conservative, studies that find higher elasticities near 3-4 (e.g., Broda and Weinstein 2006; Simonovska and Waugh 2014; Soderbery 2018) were drawn on. The elasticity of import prices with respect to tariffs, φ, is 0.25.
It wasn’t to be conservative. It was to fudge the numbers so that the product εφ came out to be 1. And picking a value of 4 for elasticity isn’t “being conservative” in the sense of “this value is more likely to be correct”. It’s conservative in the sense of “we’d better make this number big because otherwise the tariffs will be so outrageously huge that everyone will see that we’re idiots.”
Think about it. They want φ to be small (whether or not the evidence supports it), because they want to maintain the fiction that other countries will mostly absorb the tariffs and that importers and retail customers will shoulder less of the burden and therefore experience less inflation. On the other hand, a small φ balloons the value of ∆𝜏 to ridiculous levels. So they set 𝜀 to 4 to bring ∆𝜏 down, even while acknowledging that the true value of 𝜀 is closer to 2.
The recent experience with U.S. tariffs on China has demonstrated that tariff passthrough to retail prices was low (Cavallo et al, 2021).
I haven’t verified that, but either way I would sure like to see the actual number. Why didn’t they include it? Is it really 0.25? In any case, the question of pass-through to retail prices is irrelevant when you’re trying to determine which country is absorbing the cost of the tariffs. It’s the pass-through factor to importers that is relevant, and that is close to 1, even if the pass-though to retail customers is less. That means that US importers are bearing the cost of the tariffs and passing some of that cost on to consumers. It’s inflationary, and it’s a tax by the US government on US importers, not a tax on foreign countries. Which contradicts Trump’s whole rationale.
The reciprocal tariffs were left-censored at zero.
No, they were “left-censored” at 10, as you can see by looking at the charts. 10 is the minimum tariff you’ll see in the third column of the charts.
Higher minimum rates might be necessary to limit heterogeneity in rates and reduce transshipment.</p
No explanation of why “heterogeneity in rates” is to be avoided, and no comment on the fact that it isn’t avoided, given the large range of new tariff rates in the third column of the charts. That means there’s still plenty of incentive for transshipment. Take Vietnam, for instance, with a new rate of 46%. There’s a *lot* of incentive for them to transship through one of the countries with a 10% rate.
Tariff rates range from 0 to 99 percent.
There is no inherent limit. Tariffs could be 100%, 180%, or 2100%. 99% is an arbitrary limit. Tariffs could even be negative in a perverse world, in which case the government would be giving importers a bonus for importing more and nudging us toward a trade deficit. Obviously that wouldn’t happen in practice, but my point is that the 99% is arbitrary, and anyone who thinks tariffs are limited to being less than 100% doesn’t understand tariffs.
The unweighted average across deficit countries is 50 percent, and the unweighted average across the entire globe is 20 percent.
It’s pointless to state the unweighted average. An unweighted average is really just a weighted average with all of the weights set to 1. That gives Liechtenstein equal weight with China, which is stupid. Our trade volume with China is some 1,770 times as great as our trade volume with Liechtenstein, but these geniuses are weighting them evenly and presenting the average as if it had some kind of significance. Morons.
Weighted by imports, the average across deficit countries is 45 percent, and the average across the entire globe is 41 percent. Standard deviations range from 20.5 to 31.8 percentage points.
Here, they tell us that the import-weighted average of tariffs is 41 percent. Combine that with their assumed pass-through rate of 0.25. meaning that exporters in other countries will shoulder 75% of the tariff burden. That’s unrealistic and it clashes with the actual data, but even if you take the Trumpers at their word and assume that only 25% of the additional cost due to tariffs is passed to importers, that’s still over 10%, because 0.25 * 41% is greater than 10%. 10% import inflation! So much for Trump’s campaign promise: “I’ll reduce prices on day one.” Idiot.
Good job, Trump supporters. By voting for him, you put power in the hands of these dishonest and incompetent economic doofuses.
Alan Fox,
You are trolling Alan. You need to understand what Sealioning is. It is not about asking a clarifying question.
No, but I think it is a minor issue, that is used as a stick by parties with racist agendas, and not just in my country.
This is a bit of a side-track, but let me indulge you. Once more: Google is your friend. How about this?
WHY is that such a big problem for you?
Come to think of it. No it isn’t…
Corneel,
Thanks for this. I have confirmed the Wiki data.
Because when immigration is illegal due to open borders it is a process out of control which can result in increase various crimes and increased economic burden on US citizens.
The us voters do not support open boarders and this issues highly favoured Trump.
colewd,
This is you
What?!? Did your read Jock’s comment at all before you replied to it?
ETA: I am currently reading “How Migration Really Works” by Hein de Haas. Perhaps you should pick it up as well as an antidote against both leftwing as rightwing migration myths.
I doubt it.
€9.50 on Kindle. Is there another way to buy and avoid contributing to Jeff Bezos?
Alan Fox,
In the words of MUNG. Hi Troll 🙂
colewd,
Mass shootings are so rare in my country that one which took place in my county was just marked by a special programme on its 15th anniversary. So yeah.
I was recently in Port Arthur, Tasmania, site of a 1996 mass shooting that directly led to tighter controls. Same. Sensible countries do something about it.
I read it and it did not check out like the murder rate statistic you quoted on gun control which looks legitimate. Jocks statistic does not encompass problems arising from gang and terrorist border crossing such as drug and human trafficking.
I think you have a pretty tough sell that unregulated immigration into the US will be an accepted policy.
Edit: I also think Keiths has a pretty tough sell with US voters that our 3 trillion dollar10 year trade deficit with China should go unchecked.
Allan Miller,
Hi Allan
Corneel’s statistics he cited on the murder rate got my attention. I agree the US needs better gun control.
The Telsey Advisory Group tracks week-over-week retail price increases, and Erin Burnett at CNN and Carl Quintanilla of CNBC have reported on some of the numbers:
Barbie doll: +42.9%
DKNY puffer: +37.5%
Tractor Supply drill kit: +3.8%
Amazon Echo: +38.5%
Abercrombie and Fitch jeans: +33%
Let me reiterate: those are price increases over a single week according to CNN, which obtained the report from Telsey. The numbers are astounding. And even if they somehow misinterpreted the report, so that those numbers reflect increases from pre-tariff levels, they’re still astounding. (I went looking for the report to confirm that these are week-over-week numbers, but it isn’t available online. That makes sense, since the Telsey Advisory Group is a for-profit outfit and unlikely to just give away their data for free.)
Quintanilla posted a screenshot of part of the table. You can view it here.
From the ABC interview yesterday:
Interviewer:
Trump:
Interviewer:
Trump:
Interviewer:
Trump:
Interviewer:
Trump:
Trump, on Truth Social:
Yeah, Biden planted a time bomb that just happened to go off at the same time you announced your tariffs. What a coincidence. Clearly, you’ve had nothing to do with the plunging stock market.
Um, Donald — that’s already happening. Prices are skyrocketing and US port traffic is down. Major CEOs are telling you that empty shelves are likely soon.
If you knew about the “overhang”, why did you promise to bring prices down on Day One?
Inflation at 3.0%, stock market at record highs, unemployment at 4%. Terrible, terrible numbers.
Yes, and we can trust you on that since you always keep your promises. Prices down on Day One, the Ukraine war over in 24 hours, and “tariffs don’t affect our country.” I have total confidence in you, Orange Man.
colewd:
I’ve said no such thing. Disagree? Quote me.
keiths,
I believe you said single country deficits don’t matter. If I miss understood I apologise.
colewd:
I said that bilateral trade deficits contribute to the aggregate trade deficit only to the extent that they are not offset by trade surpluses with other countries. If you want to eliminate the aggregate trade deficit, you don’t need to eliminate all the bilateral trade deficits.
Suppose you’re dealing with four countries: A, B, C, and D. Let positive numbers correspond to trade deficits and negative numbers to trade surpluses. Your goal is to eliminate your aggregate trade deficit. One way to do that is to eliminate all of the bilateral trade deficits. After all,
$0 + $0 + $0 + $0 = $0
But there are infinitely many other ways to eliminate the aggregate trade deficit. What matters is that the bilateral trade balances sum to zero, not that they all be zero. For instance,
-$36 million + $40 million + $10 million – $14 million = $0
Why insist on zeroing every bilateral trade deficit when there are infinitely many other ways to eliminate the aggregate trade deficit? Especially when the “zero out everything” approach leads to needless harm?
Consider Trump’s ridiculous 47% tariff on Madagascar. We’re running a trade deficit with them, so Trump idiotically concludes that they’re cheating us and that we’re subsidizing them. He therefore punishes them with an exorbitant tariff. In reality, the reason for the deficit is simply that the Malagasy want less of what we sell than we want of what they sell. No one is being cheated, and no one is being subsidized.
What does the tariff “accomplish”? It jacks up prices on the vanilla, clothing and textiles we import from Madagascar, and it imposes undue hardship on the Malagasy (for instance, 60,000 or so textile workers will lose their jobs if the tariff stays in place). They are being punished by a moronic US president for “crimes” they didn’t commit.
And you and I get to pay more, needlessly, for the vanilla we consume. Gotta get those vanilla imports down so that the American economy will boom, right? Lol. I’m not a big fan of the government trying to control the amount of vanilla I buy. How about you?
I forget. Did anyone respond to the suggestion that Trump tariffs are not primarily for balance of trade?
This is awkward. If you had read my citations you would know that ALL of the data shows that immigration reduces crime and reduces economic burden. Are you going to engage the data, or just continue spouting falsehoods?
Yes. We are aware. Many Americans are ill-informed and (and this, actually, is the problem) incurious.
But it DOES! It encompasses all crimes, violent and otherwise, committed by anyone in Texas. There’s tons of other studies too, all with the same unsettling-for-racists result.
An “Open Border” means that there is no significant restrictions on the flow of people across the border: think France|Germany. The US does not have an Open Border. What you are whining about with your ignorant Fox News talking points is a ‘leaky’ border. Sorry to be the one to have to tell you, but the US border has always been leaky, and it always will be leaky. It is just too big to effectively interdict the border. That’s why your attempt to conflate a bunch of different issues is misguided — the only connection between them is “things Bill would like to blame on brown foreigners”. All those brown people sneaking into the USA are a benefit across the board: MUCH less likely to commit a crime than a ‘real American’, they pay taxes and Social Security, they contribute to the economy, etc, etc. How the hell you connect them to fentanyl is beyond me. Do you realize how ridiculously easy it is to smuggle drugs into the USA. If you were able to hermetically seal the Southern Border, they can switch to the Northern Border, or the Eastern seaboard; good luck policing those two. How the hell you connect them to human trafficking is also weird, and yet again makes you appear racist. According to the DoJ :
So smart people think about the effects of immigration policy and enforcement. Smart cities assist Federal immigration authorities fully to apprehend violent criminals, but refuse to assist the Feds in rounding up undocumented immigrants. This demonstrably makes these cities safer. Why? Because it helps everyone’s safety if undocumented immigrants are willing to report crimes.
Pop quiz: An immigrant can be undocumented, yet legal. Explain how. Bet you can’t.
Yes. I said that this is precisely how Trump framed it. That’s exactly what his formula is about. Of course he also says fentanyl and revenue raising, and undermines the equalisation by a 10% floor and 50% discount, and the wrong values for the Greek letters, so you have to check which day it is to see what they are primarily ‘for’.
I guess we can chew on this develoment:
https://www.bbc.com/news/articles/c5ypw7pn9q3o
petrushka:
Elaborating on what Allan said, Trump and his administration are all over the place when it comes to the stated purpose of the tariffs. It depends on the phase of the moon and which side of the bed Trump wakes up on.
The tariffs against Canada and Mexico were originally supposed to pressure them about fentanyl and illegal immigration, and if they stepped up their enforcement, the tariffs would be relaxed. Never mind that fentanyl seizures at the Canadian border were only 0.2% of the total, and migrant apprehensions only 1.5%, making Trump’s “national emergency” justification for Canadian tariffs laughable.
At other times it has been about how we are supposedly subsidizing other countries and being cheated by them, so that they need to be punished by “reciprocal tariffs” that aren’t actually reciprocal.
Still other times it has been about generating a (supposedly) enormous tax revenue stream from foreign countries and using it to reduce or eliminate the federal income tax. That’s stupid on multiple counts, because a) the tariffs are paid by Americans, not foreign countries, so you’d be replacing a tax on Americans with a tax on Americans; b) the tariff revenue would be far less than needed to replace the income tax; and c) since the tariffs are paid by Americans and would amount to a consumption tax, it would be a regressive tax that disproportionately burdened poor and middle-income people.
Sometimes Trump says it’s about repatriating manufacturing by incentivizing domestic investment.
At other times it’s been about using tariffs as a negotiating tool in order to get foreign countries to lower trade barriers, including their own tariffs.
And yes, sometimes it’s about balancing bilateral trade. The very first sentence of the US Trade Representative’s explanation of the tariff formula states…
…which is stupid for all of the reasons we’ve already discussed in this thread.
Note that those disparate goals are self-contradictory. If the tariffs succeed in suppressing imports, then tariff revenue drops. If Canada and Mexico jump through the right fentanyl and immigration hoops, then tariffs will be reduced and revenue drops. If high tariff rates coerce other countries into negotiations, and tariffs are negotiated downward on both sides, then revenue drops. Oops. So much for all the revenue that was supposed to pour into our coffers from foreign countries (which would have come from Americans anyway). Sorry, folks, your income tax isn’t going anywhere. Oh, and the incentive for repatriating manufacturing? That’s gone now that tariffs have been reduced.
Even if Trump succeeds, he fails, measured against his own goals.
The upshot? Put an economic doofus in charge and you get a stupid, self-contradictory, self-defeating policy, implemented poorly.
And now J6 prosecutors fired for [checks notes] doing their job. They don’t arrest, charge or deliver verdict or sentence. It is simply a lawyer’s actual job to represent the case for or against to the best of their ability. This worrying development is met with a chorus of MAGA approval.
Nothing to see here.
keiths,
I don’t think any of your points touch on the primary motives.
The reasons for repatriating strategic manufacturing are not about economics.
Also, I think labor costs will be unimportant in ten years. The future is unpredictable, but the rise of AI and robotic manufacturing seems likely.
Seems likely that you are having AI do all your thinking for you, just like colewd.
Here’s an incident of an arrest of a judge that you may know about: Milwaukee County Circuit Judge Hannah Dugan charged with 2 federal counts in ICE case
Some context to the article: The judge is a state immigration judge. ICE agents lurked around the courthouse for weeks. That is, the modus operandi of ICE is to target immigrants that are easiest to catch, those who are orderly and show up to their appointments. If I were in the same situation, knowing that immigrants are facing obstruction to their due process that I am responsible for maintaining, I as a judge would also not cooperate with the overreaching agency.
ICE is not arresting gang members and hard criminals. Those shoot back. There has not been a single violent arrest reported, claimed or bragged about by ICE, so obviously they are targeting easily available peaceful documented people and doing random racial profiling to get some statistics going.
DNA_Jock,
No one in the past democrat or republican has advocated what you are advocating for. The border crossings were 4 times larger under Biden than under Obama.
Now, after 3 months of the change in the executive branch, border crossings are below the Obama level and appear to be dropping. You seem to agree we do have violent criminals from border crossings in our cities. How did they get here?
It does not account for increase in drug deaths and human trafficking that is occurring due to gang related entrances. Your argument seems to be that these problems are not reduced by better border management. This is an argument that has little merit IMO.
The evidence is strong that given the number of entrants that spiked during the Biden administration and have been dramatically reduced since he left office is that boarders can be effectively managed.
I think you now agree that very large trade deficits with given countries despite an overall balanced trade can be problematic. Do I have this right?
During this discussion I have not advocated for anything except “less horrendously racist immigration policies“. I do not believe that I am the first person to ever promote that idea. You keep trying to put words in my mouth about “Open Borders”. Stop it. Try reading what others write. It is a demonstrable fact that Boston is safer because it does not co-operate with ICE to round up undocumented immigrants. It is also a fact that an individual can be both undocumented and legal. That you cannot comprehend these things is the result of your ignorance.
Well, the vast, vast majority of violent criminals were born in the USA. Hence all the data about the US-born having higher rates of criminality (of all flavors) than immigrants, especially illegal immigrants.
Huh? Are you claiming that US-born individuals are driven to pimping and drugs by the presence of law-abiding undocumented immigrants? Because that’s the only way to square the data with your nativist claims here. Humm, you may have a point; I guess the L&O solution would be to ship all these US-born criminals off to a concentration camp in El Salvador – Trump says he’s considering that option, although (if history is any guide ) it’ll be his political opponents who get shipped off first.
Not my argument. It is true that ‘better border management’ has not been observed to reduce crime, but that’s not my argument. My argument is that the immigrants are better behaved than the locals. This is not the case in Europe, but the transatlantic difference isn’t the immigrants…
Also awkward. You do know that the biggest driver of border crossings is the relative health of the economies either side of the border. In this regard, Trump is doing an absolute bang-up job of reducing immigration. Tanking the economy will do that.
P.S. Every time I read “boarders”, I think “spare some love for the oft-neglected day-boys, wouldn’t you?”
DNA_Jock,
Most frequently misspelled by those most exercised by them. It was a distinctive feature of Brexit, too.
If it had the merest whiff of strategy, it might be more forgivable. But it makes no attempt to specifically target those products that could be made domestically. Just scattergun. Dumbest of all, the blanket approach hits raw materials.
My opinion has absolutely no effect on the way the world works, so it costs nothing to wait and see.
Any claims regarding the merits of the policy need to be backed up by predictions. I’ll start. I have no predictions, other than predicting that anything you predict will be wrong.
Edit: I make one generic prediction:
If the stock market goes down, the Bloomberg headline will be, “Markets down due to trump policy”. If the markets are up, the Bloomberg headline will be, “Here’s how the markets are moving”.
petrushka,
So, like Bill Cole, you think it impossible to make rational assessments in advance. If this were so, Trump himself has no strategy.
Not worth me saying anything, then, eh? I hadn’t realised from your previous stance on evolution/ID that you were so opposed to the exercise of intellect.
colewd:
My position hasn’t changed. The point I’ve been emphasizing, over and over, is that bilateral trade deficits aren’t inherently bad, so Trump’s blanket policy of reducing or eliminating all bilateral trade deficits, including with countries like Madagascar, is dumb. (And by the way, bilateral trade surpluses aren’t inherently good either, though that would probably blow Donald’s simplistic “deficits bad, surpluses good” mind.)
Whether bilateral trade deficits are good or bad depends on circumstances and objectives. They aren’t inherently bad.
My personal trade deficit with the supermarket is a good thing. I buy things from them at a fair and affordable (for now) price, and they receive my money and make a small profit. It’s good for both parties. I don’t want to reduce the trade deficit, because that would mean either buying less of the things I actually want from the supermarket, or finding or producing things I could sell to the supermarket. I have no desire to do either of those things, both of which would make my life worse. My trade deficit with the supermarket is therefore a good thing, and achieving trade balance would worsen my life. Vive le déficit!
Suppose Germany slaps an 80% tariff on all American goods, so that the bilateral trade deficit balloons. Is that a good deficit? No, and it would be perfectly reasonable for the US to retaliate in that case by raising tariffs and applying pressure (assuming someone competent were in charge).
Does a persistent bilateral trade deficit with China pose some dangers? Definitely. For example, it can give China undue leverage over the US economy. The trade deficit causes China to accumulate lots of dollars, and they use those dollars to buy US government bonds. China is the second largest foreign holder of US bonds behind Japan. If China decided to dump a large percentage of its stash, that could cause chaos in the US economy.
It sounds like you’re concerned about China. If so, why aren’t you supporting a smart plan that targets China in particular, rather than a dumb plan that targets everyone, pisses everyone off, and weakens the US while strengthening China?
DNA_Jock,
Your argument is that the unprecedented spike in immigration during the Biden administration is due to the unprecedented. superior economy 🙂
keiths,
I think we have enough common ground at this point.
I would to be charitable argue that Trumps administrations use of the model is simply a starting principle for the negotiations.
I do think your criticisms are valid if they use the models as rigid calculations that cannot be negotiated.
I want to commend you on a op that stimulated good discussion.
Yeah, I think there’s a lot of truth to this. The US has, for at least a century, been a magnet for immigrants. We are a nation of immigrants. Our thriving economy under Biden (what The Economist called the envy of the world) certainly attracted armies of people from banana republics looking for jobs and safety. For the last century, the US economy has thrived on waves of immigrants from lots of different nations. Not to mention a lot of our scientific research and technology has been driven by our ability to attract and educate top talent from around the world.
Have you ever looked at the list of hundreds of prize-winners of high school scientific contests published in Scientific American? You will find plenty of Indian names and Chinese names and even African names. Not many European-sounding names. These kids represent our future in physics, economics, medicine, math, you name it. They are here largely because our economy attracted their parents. (And Trump’s effort to banish foreign grad students cripples schools financially while it impoverishes the US intellectually).
I might also point out that the native populations of many Western nations are not reproducing at replacement rate. Not just the US, this is also true of the UK, of Skandinavia, of Japan. The US population is growing solely because of immigration, and immigration is both an economic benefit and an economic necessity. How else could a shrinking taxed population support a growing retired population?
Perhaps you should stand back and see a larger picture. The US now has a shrinking economy, an incipient recession, few allies willing to trust us, and we are doing our damndest to stifle the immigration that made us great, to encourage a brain drain (and yes, our smartest people are leaving the country), to deprive most of our population of entitlements and services, to basically kill off research of all kinds in every field, in order to finance enormous tax breaks to billionaires and big corporations. It’s no secret those sitting closest to Trump at his inauguration were the heads of alphabet, meta, amazon, and Tesla.
Now, all of this will please the nation’s bigots (putting up a wall to keep brown people out) and big political donors (Musk contributed $280 million), but even their short-term gratification will wane as the nation contracts and the economy suffers from isolationism.
(You need to get more information from sources other than Murdoch’s.)
ROFL
Well, yes, you are starting to cotton on finally. Although the “spike” is only dramatic because net immigration completely tanked in 2020 and 2021, as did the economy. See if you can figure out why. We are nowhere near the sustained GDP growth and sustained net migration of the 1990’s. The correlation is impressive. Seriously, do you enjoy being so utterly wrong all of the time?
Flint,
Quite: the Canadians, French and Norwegians are yucking it up with programs to specifically entice the best and brightest to emigrate from the USA.
That’s how you run an immigration policy. 🙂
colewd:
As explained above, there is no consistent strategy, and the goals they’re pursuing are mutually exclusive.
If the goal had simply been to get negotiations started, they would have just picked some tariff rates. There would have been no need for their stupid formula, which attempts (clumsily) to calculate the exact tariff rates needed to balance trade. Why bother with a formula to balance trade if you aren’t trying to balance trade?
And remember, even if both sides were able to negotiate the tariffs down to zero, thus making the playing field absolutely fair and level, Trump would still think that the US was being cheated. Why? Because tariffs of zero do not produce bilateral trade balance. If Americans want more of Malawian mangoes than the Malawians want of American air conditioners, there will be a US trade deficit, despite absolutely a level playing field. Doofus Donald will see the deficit, think we’re being cheated, and will want to jack the tariff rates back up.
petrushka:
Trump has been saying “America is being cheated and laughed at, and we should slap tariffs on ’em” for decades, since the 80s at least. He’s obsessed, and I’d say that qualifies as a primary motive.
petrushka,
Now let’s go over to the White House.
Down = “Biden’s economy”
Up = “Trump’s”.
That’s kind of cheap. I do not believe in command economies. But that does not mean I disbelieve in protecting the commons from toxins, metaphorically speaking.
I believe that positive change evolves and can’t be forced. There’s a difference between protecting vulnerable people from violence and bullying, and trying to force people to right think.
If you are referring to my position on tariffs, I think it is rational for nations to protect strategic assets from likely adversaries. Even at the expense of efficiency. Those assets include the intellectual capital of manufacturing know how.
I would prefer if you limited yourself to things I actually say. What I would say about markets is, anyone who trades on ups and downs is either an insider or a fool.
keiths,
There’s more to that than balance of trade. China has been systematically shutting down strategic American industries. Pretty much the same way Russia shut down German energy production. Some people noticed the German mistake in the eighties.
So now I am an “adversary”. Multilateralism has died, it would appear…
This is not entirely unlike the problem with monopolies.
Monopolies are discouraged or broken up because, once established, they can set prices higher than the original prices prior to consolidation.
One of the immediate effect of the current trade war is that Apple is moving some production to India. This is not likely, in the short run, to lower prices or raise quality, but it prevents China from haven a monopoly.
Similar things can be said about semiconductor production. China is likely, in the next twenty years, to merge with Taiwan, and Taiwan is, at the moment, the only source of state of the art chips.
Short of war, the rational response is to ensure there are alternate sources for chips. Regardless of short term price increases.
“merge”. What a nice euphemism.
Why not? I mean, what’s to stop them now countries are rewarded for invading neighbouring states?
ETA: removed “sovereign”, since of course Taiwan is not acknowledged as a sovereign nation by many other states (because of China’s bullying).
DNA_Jock,
I have not seen data that supports this assertion. Actually almost all of your assertions :-).
https://usafacts.org/articles/what-can-the-data-tell-us-about-unauthorized-immigration/