Tariffs Catch-All

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Tariff overnight news per Blomberg
1) Trump threatens EU with new tariffs and export restrictions of adv tech over digital services tax
2) Trump threatens China with 200$ tariffs over issue of rare earth e;ements supply to US. Pickimg a rare earth fight with China before US was prepared waS not smart.
 
"We project that increases in tariffs implemented during the period from January 6, 2025, to August 19, 2025 will decrease primary deficits (which exclude net outlays for interest) by $3.3 trillion if the higher tariffs persist for the 2025‒2035 period," Phillip Swagel, CBO’s director wrote. "By reducing the need for federal borrowing, those tariff collections will also reduce federal outlays for interest by an additional $0.7 trillion. As a result, the changes in tariffs will reduce total deficits by $4.0 trillion altogether."

An Update About CBO's Projections of the Budgetary Effects of Tariffs
 
ZenMode said:
"We project that increases in tariffs implemented during the period from January 6, 2025, to August 19, 2025 will decrease primary deficits (which exclude net outlays for interest) by $3.3 trillion if the higher tariffs persist for the 2025‒2035 period," Phillip Swagel, CBO’s director wrote. "By reducing the need for federal borrowing, those tariff collections will also reduce federal outlays for interest by an additional $0.7 trillion. As a result, the changes in tariffs will reduce total deficits by $4.0 trillion altogether."

An Update About CBO's Projections of the Budgetary Effects of Tariffs
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They expressly state that they are not allowed to take account of the effects of tariffs on the economy. So the estimate is nonsense. It's not the CBO's fault. It's House rules.
 
ZenMode said:
"We project that increases in tariffs implemented during the period from January 6, 2025, to August 19, 2025 will decrease primary deficits (which exclude net outlays for interest) by $3.3 trillion if the higher tariffs persist for the 2025‒2035 period," Phillip Swagel, CBO’s director wrote. "By reducing the need for federal borrowing, those tariff collections will also reduce federal outlays for interest by an additional $0.7 trillion. As a result, the changes in tariffs will reduce total deficits by $4.0 trillion altogether."

An Update About CBO's Projections of the Budgetary Effects of Tariffs
Click to expand...
Yeah, I posted that a few days ago when the update came out. A major shift of the tax burden to corporate and consumer taxes but not enough to offset the reduction income taxes to result in a balanced budget, much less paying down the debt. And as already noted, this estimate (a) assumes tariffs won’t change over the next decade (will be interesting to see what happens in the long term but in the near term Trump has proven wildly erratic) and (b) doesn’t include any offsetting impact tariffs might have on the economy.

I just read a story about a new study yesterday suggesting that the top 400 richest people are much more impacted by corporate taxation than income taxes due to how they make their money, so to the extent companies eat some or all of the tariffs, I guess there is an argument it is the equivalent of raising taxes on the wealthiest 400 people, but count me dubious on that. And the rest is a regressive tax on small businesses and consumers.
 
superrific said:
They expressly state that they are not allowed to take account of the effects of tariffs on the economy. So the estimate is nonsense. It's not the CBO's fault. It's House rules.
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Right, but that is true of most any CBO forecast, is it not?
 
nycfan said:
Yeah, I posted that a few days ago when the update came out. A major shift of the tax burden to corporate and consumer taxes but not enough to offset the reduction income taxes to result in a balanced budget, much less paying down the debt. And as already noted, this estimate (a) assumes tariffs won’t change over the next decade (will be interesting to see what happens in the long term but in the near term Trump has proven wildly erratic) and (b) doesn’t include any offsetting impact tariffs might have on the economy.

I just read a story about a new study yesterday suggesting that the top 400 richest people are much more impacted by corporate taxation than income taxes due to how they make their money, so to the extent companies eat some or all of the tariffs, I guess there is an argument it is the equivalent of raising taxes on the wealthiest 400 people, but count me dubious on that. And the rest is a regressive tax on small businesses and consumers.
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thought experiment...

If someone held a gun to your head and said your life depends upon giving the correct answer to this question :

Who will suffer more from Trump's economic policies ? The 400 richest people in America or small businesses and consumers ?

If that gun is held to my head, I would ask the person holding the gun, "Is this a trick question " ?
 
ZenMode said:
"We project that increases in tariffs implemented during the period from January 6, 2025, to August 19, 2025 will decrease primary deficits (which exclude net outlays for interest) by $3.3 trillion if the higher tariffs persist for the 2025‒2035 period," Phillip Swagel, CBO’s director wrote. "By reducing the need for federal borrowing, those tariff collections will also reduce federal outlays for interest by an additional $0.7 trillion. As a result, the changes in tariffs will reduce total deficits by $4.0 trillion altogether."

An Update About CBO's Projections of the Budgetary Effects of Tariffs
Click to expand...
The world economy will go to shit with stagflation, etc., for a decade but at least we'll reduce the federal deficit by $4 trillion. :confused:
 
ZenMode said:
Right, but that is true of most any CBO forecast, is it not?
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Typically, but:

1. Sometimes the House will specifically ask for dynamic scoring. Interesting that they didn't here.
2. The effect of dynamic scoring varies. For instance, the impact of the Trump tax cuts is generally estimated at 0.7% over a ten year period. That's 0.07%. That doesn't make much difference at all in projections. That's a rounding error, literally. And it's common sense, because it didn't try to remake anything. It just tweaked a few knobs.

By contrast, the difference between dynamic and static scoring for tariffs is enormous. Yale Budget Lab, in a static analysis like the CBO, reaches a result of about 0.5% over 10 years -- basically the same prediction as Trump tax cut in fact. But the dynamic scoring models, like the ones at Wharton, are predicting a loss of GDP of 6% over a longer period, which is like 0.5%-0.9% depending on your interpretation of the time frame. Other studies are estimating GDP decreases of a full 1.5% in 2026 and about 0.8% per year after.

So the difference between static and dynamic scoring is at least 10x bigger than with the tax cuts.
 
Bobfripp said:
The world economy will go to shit with stagflation, etc., for a decade but at least we'll reduce the federal deficit by $4 trillion. :confused:
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What's going to happen when taxes are raised on all of us to address the debt? Will it be that much different?
 
ZenMode said:
What's going to happen when taxes are raised on all of us to address the debt?
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It's the 'raised on all of us' part that's the issue. The deficit could be eliminated by increasing taxes, not just on income, but capital gains, inherited wealth, etc. on the wealthiest Americans. But the Pubs won't do it. The filthy rich are their base.

And tariffs are a tax on us ordinary folks, and the poor. The rich won't feel any pain, which is why they like tariffs.
 
Bobfripp said:
It's the 'raised on all of us' part that's the issue. The deficit could be eliminated by increasing taxes, not just on income, but capital gains, inherited wealth, etc. on the wealthiest Americans. But the Pubs won't do it. The filthy rich are their base.
Click to expand...
I don't believe we can pay off the debt on the backs of only the wealthy. Bill Clinton raised capital gains taxes to address the deficit and even he admitted that he raised them too much.
 
ZenMode said:
I don't believe we can pay off the debt on the backs of only the wealthy. Bill Clinton raised capital gains taxes to address the deficit and even he admitted that he raised them too much.
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You see this chart? ....

1756240246000.png

1% of Americans own 27% of the net worth in this country. 50% of Americans own about 2-3% of the net worth. Tax the rich, eliminate the deficit.
 
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