Tariffs Catch-All

  • Thread starter Thread starter BubbaOtis
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Well, Suro is wrong in the specifics, so I'm hoping that he's ready to back down a little bit. In the main, he's correct -- the tariff calculations are ridiculous for a number of reasons in theory and at least one specific way empirically (i.e. the data does not exist). But that formula is not actually Trade Balance/Exports. It's more complicated. The formula also contained two greek letters, call them e and p, and those represent elasticity and pass-through of implemented tariffs. When you include those, it's actually a plausible model for the concept.

1. If you're trying to compute "what tariff is necessary to zero out the trade balance," and you are going to completely ignore exports, then you could get the job done without too much complexity by multiplying a) volume of imports, b) the amount that prices will go up in response to the tariff, c) the amount that imports will decline in response to the tariffs. And that's exactly the denominator in that silly equation, although they messed up in a couple of ways. The elasticity is itself a function of price level (and not just tariff), and pass through has to be a function of market concentration, but anyway.

Now, why did they divide that into the trade balance? I have no idea. I suspect it was a fudge to get the numbers higher. Trade balance/exports should always be less than 1 (I think) under realistic conditions, so it must have been used to get the numbers down. Like, the model probably spit out numbers in excess of 100%, and even Trump realizes that strains credulity.

2. The bigger problem is that it's conceptual nonsense. First, the US doesn't know what e or p is (in the equation above) so it's just making shit up. Second, there's no attempt to model the effects of doing all the tariffs at once (because it will produce way different results if you're tariffing everyone or only one). Third, zeroing the trade balance is not a desirable goal and doesn't even make sense. Fourth, there's no attempt to inquire what would happen to exports (which can't be held constant because they are specifically dependent on imports). So it's a load of bullshit.

3. But just FYI to avoid misinformation, I think Suro is wrong in his description of that formula. He's right that the numbers make no sense at all. The conservatives are going to jump on him about the technicality. If you discuss this with someone, you can now say that you've had the formula explained and it doesn't make any sense even if it's not technically what Suro described.
 
CFordUNC said:
That dude ain’t gonna show his sorry face around here for quite a while.
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A good number of posters here predicted back in January that the longer we moved into Trump 2.0 and the worse things got that nearly all of the board Trumpers who were still gloating over Dear Leader's election victory would vanish. And so here we are, just as these people predicted - Trump 2.0 has already been a disaster in a wide variety of ways, and most of his board defenders have vanished.
 
CFordUNC said:
I know someone planning to retire this year who is a diehard Trump supporter. Recently we got into a debate about how tariffs are a dangerous game of economic chicken that are going to cause a lot of pain for a lot of people unnecessarily. His response was that it was needed in order to "fix things.” I asked him if all manufacturing returned to the United States tomorrow, how would it directly help him as someone on the doorsteps of retirement- no answer. I asked him if it took a decade for manufacturing to return *and* we suffer another lost decade in terms of market growth how would it help him- no answer.

Best of luck, hoss.
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Good luck to those trying to retire on a fixed income. It wouldn't surprise me if some of those who are physically still able may have to get at least part-time jobs to afford the retirement they had imagined.
 
CFordUNC said:
He’s too busy closing deals and shit. Besides, politics aren’t that serious. And even if they are, there’s a transgender out there somewhere who caused this mess!
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Probably that female fencer that took a knee in protest against her transgender opponent and was disqualified. Fox News was having a field day with that story (you know, the real important stuff).
 
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