Now, it’s worth noting that these tariffs have not triggered a recession (yet), but remember the tariffs actually implemented on “Liberation Day” were lower than originally planned and carried many additional exemptions.
For example, 70 percent of American imports were covered under illegal IEEPA taxes. The administration then slowly added exemptions, including consumer electronics, bullion, minerals, and agricultural products.
Now, under section 122, the exemptions are broader still, and therefore these taxes only apply to about 40 percent of American imports.
If the goal is to re-industrialize America, tariffs are the wrong policy tool.
"consumers and workers lost out, while domestic producers benefited from the tariff policy."
Since domestic producers are also consumers of various goods, do they really benefit? Besides being consumers, they may also be employers and you explained that salaries will also go up due to higher cost of goods.
That’s a good point and there is some offset for producers. In aggregate, the tariff tax is basically a transfer from consumers to producers, and producers in this model live off producer profits, which go up a lot. Consumers, who live off supplied labor, are basically transferring their consumption to producers.
Great analysis
This is what we all predicted would happen.
Now, it’s worth noting that these tariffs have not triggered a recession (yet), but remember the tariffs actually implemented on “Liberation Day” were lower than originally planned and carried many additional exemptions.
For example, 70 percent of American imports were covered under illegal IEEPA taxes. The administration then slowly added exemptions, including consumer electronics, bullion, minerals, and agricultural products.
Now, under section 122, the exemptions are broader still, and therefore these taxes only apply to about 40 percent of American imports.
If the goal is to re-industrialize America, tariffs are the wrong policy tool.
"consumers and workers lost out, while domestic producers benefited from the tariff policy."
Since domestic producers are also consumers of various goods, do they really benefit? Besides being consumers, they may also be employers and you explained that salaries will also go up due to higher cost of goods.
I am not convinced anyone benefits!
That’s a good point and there is some offset for producers. In aggregate, the tariff tax is basically a transfer from consumers to producers, and producers in this model live off producer profits, which go up a lot. Consumers, who live off supplied labor, are basically transferring their consumption to producers.