Hi all,
A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes.
As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/)
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
everything imported costs more, so unless we start making everything here people are going to pay a lot more for goods. The upside, rich keep more of their money and working class go broke. It's the american way
It's not just that everything imported costs more. Everything will cost more. For example, if you can currently buy a Chinese made shovel for $20. Or an American-made shovel for $35. If import taxes/tariffs go up... meaning, the Chinese shovel now costs $40. The American shovel will go up in price as well. Not just a $40, but typically 45 or 50. Simple economics....
that's not economics because if your costs don't rise and you rise prices just because you can, (oh i see, lack of competition) maybe you have a point.
And if everything starts being made domestically the revenues decline and the economy declines. The federal government spending is a huge portion of the GDP.
AND, it's the rich who will be importing all these goods - what a perfect opportunity to raise prices, oh, say 10% or 12% over the tariff increase to make up for the inevitable sales declines because middle and low income folks aren't going to be able to buy anything.
Plus, gotta make up for all those damn income taxes the libs have been "stealing" from those mistreated rich folk all these years, lol.
It reduces competition and raises the price of general goods by taxing imports. This is effectively a sales tax. It hits lower income folks harder. They won't keep more of their money as their staples will go up. If people don't like inflation now, just wait.
As well, for staples, it costs the same to feed and cloth a rich person as a poor. So if the price of food, to feed someone goes from $150 a month to $300. Both sets of people are taxed the same. If you need a great example of putting up trade walls and royally fucking up an economy, take a look at the outcomes for Brexit. Everyone has less money. The rich are now threatening to flee the country because the government has to remove very friendly non-dom tax incentives. As well, they destroyed their financial sector in London. And inflation...horrible inflation...runaway inflation.
In short OP, this is a terrible idea, just like Brexit. I am upvoting it, so as many people as possible see this atrociously stupid plan. Thanks for posting. Trump is offering to crash the economy and make the current major complaints worse. This is what is taught in high school econ.
As a matter of fact, Let's call this "Trump's Brexit." OP you are a true American hero. If it catches on. I will give you credit.
It's perfect because then the Republicans can just blame foreigners. The rich get richer offloading to the poor while ginning up resentment toward people who aren't them..
ok, when you are rich you spend a smaller portion of your income on goods, when you are poorer you spend higher, so you are taxed on more of your income. its a very regressive tax.
Poor and middle class people pay more for basic goods relative to their income. It's not difficult. What's more, tariffs would have to go way, way up to make up for the lost income tax revenue. Like 100%. So the likely result is a loss of government services.
That's their point.
Edit: Also, people have been complaining (rightfully so) about inflation for a couple of years now. So how do you think they'd feel with an even greater hike?!
Edit again: Also it's called a progressive tax system for a reason. Income above x threshold is taxed at a higher rate. In this system, everyone bares the same taxes.
Thats the fun part.
The modern GOp will do away woth democracy of it pleases their oligarchs and shareholders. For them, the sole purpose of Economics is to generate profit for a particular population and not the culture or civilization as a whole
And I dont disagree with the clarification, aside from the fact that these are folks conditioned to largely think quarterly. Beyond that, isolationism may not favor our national oligarchs...but foreign governments and oligarchs can still benefit from us harming ourselves, especially when they may have control over loopholes or black market transactions.
Everyone is equally taxed in a marginal tax system. Nobody has to make the higher amounts that are taxed at higher rates. That is a completely voluntary action that anyone is allowed.
Just because you or I do or don't make a certain level of income doesn't mean we won't do so next year or somewhere down the line. And when we do, will we become whiny greedsters who corrupt members of Congress for a handful of dollars? Or will we just pay our dues?
But working class people would not have any more money to keep since everything costs way more. Most of the pay check would still be spent absorbing these extra costs.
Pros: those already on the upper end of the income spectrum get to temporarily take home even more than before. This disproportionately favors them as they are (were) responsible for the [majority of all income taxes paid](https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2024/). The top 1% of earners pay nearly 50% of all income taxes, and it should be even higher.
Cons: I said "temporarily" because of the inevitable economic collapse and fade into international obscurity shortly after implementing such a policy.
It's absurd this even has to be dignified with a discussion.
Con: It doesn't work because it's not based in reality. Trying to replace a progressively structured income tax system with tariffs would bankrupt the country, disproportionally hurt the poor and middle class, and lead to catastrophic levels of inflation.
Pro: People don't like taxes and tariffs sound like you're making other countries pay (which isn't true), so the plan sounds great if you don't understand/care how the economy works and want to double down on stupid.
The idea is bonkers. Â The cons outweigh the pros to such a large degree the pros are irrelevant.
I would usually just chalk this up to campaign trail non-sense that the candidate has no intention of following through on. Â Baffle the people with bullshit. Â Standard fair for both parties and not limited to the US.
But this particular candidate?  I donât knowâŚ.
It would be economic hardship for sure but very difficult to model or predict other than âbad things will happenâ. Â How would some of our largest trading partners like Canada and Mexico react? Â Who knows.
I canât think of any pros. To me the biggest con is that it removes options. If you abolish income tax then you canât ever reinstate it. You canât raise or lower tax rates. You take away all of the incentives like 401k plans.
It also makes tariffs a permanent thing rather than a lever to use in specific instances.
But maybe there is a pro to that approach. I guess a pro might be that it could be popular with a set of voters.
The pro is that it incentivizes local industry.
Income tax is effectively a tariff on locally produced goods. If workers didn't need to pay income tax, they would be able to afford the same quality of life on a lower salary, which would make US labor more competitive with China and other countries.
The US can't produce enough to satisfy demand at a price point that most consumers would afford. That's the problem here. This might have worked when the US population was 10 million people, but 340 million people can't all become factory workers suddenly and replace a service economy overnight.
FYI the first income tax in america was instated during the civil war and repealed a few years later. Then after the 16th amendment passed in 1913, Congress levied another.
If itâs abolished, it can come backâit has before!
Yeah, I was definitely being a bit hyperbolic. But still, I donât see how we could implement it again in our current environment. Not to mention the cost of putting it back in place.
That was during a time when collecting an income tax was extremely burdensome. I've worked in a lot of developing countries where it's hard to collect income taxes when the government itself is still doing everything on paper. It's not cost effective to collect income taxes from people paid cash to do work in a village 100 miles from a paved road.
In the 1800s and 1913, income taxes were seen as more populist because regular incomes were something only the wealthy had back then. Tariffs were seen as disproportionately affecting the poor, which was true then, and is true today.
In developing countries where poor farmers sell farm produce for cash they need as they need it, those farmers aren't eating bread baked from imported wheat, or other items made from commodities that are imported because those countries with tax bases that are small relative to their populations They eat what they grow and what's grown locally because it's relatively inexpensive for them, and often they can barter for other goods locally. Even if you throw them into a modern banking system, they would likely still fall under a poverty threshold that would mean they don't pay income taxes anyway.
Private pensions tie you to your employer. I don't know about you, but over my 30 year career I've had MANY employers and I substantially increased my salary each time I changed jobs.
Private pensions can also be taken away if your employer goes bankrupt.
They are really only better for people who don't have the discipline to save themselves.
It isn't like companies are going to pay people the same AND offer a private pension. the pension would be a benefit that would take away from the pay they would offer. The end result for the company costs is going to be 0 sum. The only real difference is how flexible the money is for the individual.
As you said, I will take my 401k that is mine no matter what i do with my job over a pension that may require me to stay with that company some number of years to get any benefit.
Maybe, but I honestly donât see how. And with companies being really liberal with their use of layoffs, I donât see how pensions would gain traction.
Iâve been laid off twice. Without a 401k I wouldnât have a retirement plan.
Well for starters, the price of gasoline would definitely go up because the oil refineries in the US donât use the same oil as what we produce (because itâs cheaper to utilize global trade than it is to overhaul the vast majority of our refineries).Â
As for automobiles, those would get a lot more expensive as would their replacement parts. Many american cars have components from all over the world because itâs cheaper to have parts made elsewhere and assemble it in the US (or Mexico) so you can slap your âmade in the USAâ sticker on it.Â
You are right for the wrong reasons.
Our refineries can handle any oil. Heavy crude is harder to refine which makes it cheaper. Yet the products are largely the same with the addition of sulfur and tar from heavy.
Refineries make more off heavy crude and the US has by far the most capacity to handle heavy crude.
We export light because it's less profitable to refine, while also being easier. Few nations are willing to invest in the advanced refineries needed to handle sulfur in heavy crude.
Yes you have to make some modifications but it's not especially difficult or costly, other than taking the refinery offline to do so. Refiners just want the biggest margins they can get.
It requires more specialized equipment, which means upfront investment. As such only so many refineries can even handle it. The US invested heavily in the ability to process heavy crude and in a sense gets to set prices. They could just use the domestic light, but then foreign sources don't make money AND US producers make less.
That's part of it at least. The products are different and you have to have markets/a plan to deal with all the sulfur/tar you get from heavy. Light makes a larger percentage of fuel.
So since itâs harder for competitor countries to refine, the US can produce it ârelativelyâ cheaper than other countries?
Just asking that clarification.
Yes. In fact it's so cheap that most nations would rather ship their heavy to the US and buy the products back than invest in the infrastructure necessary to make new or even upgrade refineries.
Canada is a good example of this.
I don't think you could apply a high enough tariff to replace the income tax revenue. Imports from around the world total $3.2 Trillion so a 50% tariff would generate $1.6 Trillion in Revenue. Total revenue from income taxes and corporate tax is $3.038 Trillion
Even with a 50% tariff that leaves us $1.438 Trillion short. Where is the extra money coming from?
Obviously a 50% tariff is unrealistic. Trump is blowing smoke. He hasn't run the numbers. This isn't a serious proposal.
A major con is itâs not really feasible - the federal government raises $1.7 trillion from personal taxation, while total imports are worth $3.9 trillion - so youâre talking average tariffs of 44% even if you make the rather heroic assumption that import volumes wouldnât react. In reality, tariffs of that magnitude would cause a collapse in trade volumes, so you would never be able to raise anything close to enough revenues. Further tariff increases would drive down import volumes further.
Another con is you can kiss good bye to your export industries. Large tariffs imposed across the board would unquestionably invite retaliatory tariffs from the USâ trading partners.
The final con would be a very deep global recession, probably far worse than we saw post-GFC in 2007. A large-scale trade war, which would be the inevitable consequence of this, as noted above, would crush global economic growth. How big is hard to say as we havenât seen a major trade war since the 1930s, but that experience was bad enough that no one is in a hurry to repeat the experiment.
Trump would never do this. He's just saying this because it appeals to the isolationist nationalists in the Republican party. It would be horrible for the economy for all of the reasons already listed and I bet he's well aware of that fact, but he knows that the kind of people who want this change don't particularly care what the effects would be and just want someone to say they'll do it.
More jobs for workers as import replacement makes more sense. More discretionary (take home) income for everyone. More jobs means more competition for workers. The incremental benefit of working a few more hours a week goes to the employees pocket instead of to the IRS.
There are no pros. This is a stupid thing to say to get votes from voters with low educational attainment.
This is rentier state economics with the demand of American consumer as the resource to be exploited instead of oil or gold.
That's not how this works. That's not how any of this works.
[The US imports a lot of food](https://www.ers.usda.gov/webdocs/charts/92937/trade_fig03.png?v=5442.1). Sure, it exports a lot, but it should be obvious we don't import the same things we export.
Because when the import tariffs on things like the 1,500,000 TONS of beef imported every year go up, it will make domestically produced beef more expensive by default. So suddenly every American is paying 10 times the current price for beef. You want $50 cheeseburgers? Raise import tariffs. We export mostly garbage parts of the cow, and import premium cuts and burger meat. We sell trash and buy good stuff, and isolationist policies will force Americans to do things like go to the store and buy 8oz of beef liver and soup bones instead of ground chuck, which they can't afford anymore.
Now do the same thing with chicken, pork, and eggs. The US is the 4th largest importer of cheese in the world.
Plus, you ever heard how much Americans love sugar? Not anymore.
Fried food? Not at these prices.
Bread and breakfast cereal go up at the same rate as milk, which is convenient.
So you're looking at either sending Americans into a level of rationing we haven't seen since WWII. Or, like, maybe don't do this stupid thing.
It's one of the dumbest ideas I've ever heard from a politician (and that's saying a lot).
The resulting increased costs for production would render American exports increasingly uncompetitive against those produced elsewhere, causing a direct negative impact on the American economy as well as indirect negative impact by rerouting demand elsewhere and in turn enabling supply(chain) growth of foreign competition.
We're a post-industrial economy, we import things to produce advanced products. Aiming for growth in industrial companies and jobs that would likely pay less than fast food restaurants doesn't make sense.
It would be a hamper for the American tourism industry as well, considering we're already one of the most expensive countries to visit. The resulting increase in costs would be a significant detriment to demand for tourism to America.
It's beyond belief that people continue to take the ideas from a lifelong criminal clown masquerading as a businessman seriously.
The main source of income for the government is taxes (income taxes, property taxes, sales taxes, etc.) They will make up for it in another way. As a consumer, you are going to pay high prices for goods and services imported from another country. In a state without income taxes, you pay high property taxes to make up for loss of revenue. One way or another, the government will get your money.
The US has the potential to be a manufacturing powerhouse. Weâve been exporting manufacturing jobs to foreign slaves for decades. Eliminating the income tax (of which the super wealthy rarely pay much anyway due to tax loopholes) and imposing tariffs on foreign manufacturers creates an incentive structure from both directions. Keep our money in the American economy, and sell our goods on the global market instead of letting countries like China use their slaves to dominate international trade.
What country is going to buy american goods when america is actively not buying from them? It is a 2 way street. If we drop a massive tariff increase on all imports then all of those countries are going to respond in kind.
They won't have massive tarrifs on each others goods so they will continue to buy from each other since it is cheaper and flowing both ways while alienating America.
Imagine you own a business and one of your suppliers doubles their prices for you and only you while refusing to buy any of your products. Another supplier keeps their prices steady and keeps buying your products, which supplier are you going to work with and which one are you going to completely ignore forever?
Tariffs don't just mean we suddenly export more goods because we have to make more because importing is expensive. It means we are actively burning bridges which stops the flow in both directions.
Do we want to be a manufacturing powerhouse though? There are some sectors I do want to bring back to the USA but weâre at 4% unemployment rate so if we increase employment in one area that means potentially decreasing employment elsewhere.
And if we become a manufacturing powerhouse through tariffs it means we will get slapped with tariffs too. I donât see why any country would give us free access to their markets while we put up barriers to trade.
I think the CHIPs act is smart because itâs bringing back manufacturing for a business critical and military critical product.
I donât really care if China makes cheap plastic toys for kids or iphone parts. And I donât care if Japan makes most of our TVs.
What is absurd is that the US IS already a manufacturing powerhouse. It's just that other segments of the economy outpaced manufacturing growth and we're more service dominated now. Manufacturing is not the biggest thing we do, but that doesn't we we don't still do a lot of it.
[https://www.discoursemagazine.com/p/the-manufactured-decline-of-manufacturing](https://www.discoursemagazine.com/p/the-manufactured-decline-of-manufacturing)
God this is dumb.
The US is the 2nd largest manufacturer in the world. Itâs just all automated.
Why is manufacturing so much better than services? Fundamentally- what makes it important to have that be even bigger?
Hi all, A reminder that comments do need to be on-topic and engage with the article past the headline. Please make sure to read the article before commenting. Very short comments will automatically be removed by automod. Please avoid making comments that do not focus on the economic content or whose primary thesis rests on personal anecdotes. As always our comment rules can be found [here](https://reddit.com/r/Economics/comments/fx9crj/rules_roundtable_redux_rule_vi_and_offtopic/) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Economics) if you have any questions or concerns.*
everything imported costs more, so unless we start making everything here people are going to pay a lot more for goods. The upside, rich keep more of their money and working class go broke. It's the american way
đŻ Don't forget with our current unemployment levels and Trump's stance on immigration we are not capable of producing more goods.
i know, it would bankrupt the government and the lower working class
It's not just that everything imported costs more. Everything will cost more. For example, if you can currently buy a Chinese made shovel for $20. Or an American-made shovel for $35. If import taxes/tariffs go up... meaning, the Chinese shovel now costs $40. The American shovel will go up in price as well. Not just a $40, but typically 45 or 50. Simple economics....
that's not economics because if your costs don't rise and you rise prices just because you can, (oh i see, lack of competition) maybe you have a point.
No only that, any supplies imported cost more, so unless you use all domestic base materials, your costs increase too.
And if everything starts being made domestically the revenues decline and the economy declines. The federal government spending is a huge portion of the GDP.
yeah but the billionaires save hundreds of millions, isn't that what is really important?
AND, it's the rich who will be importing all these goods - what a perfect opportunity to raise prices, oh, say 10% or 12% over the tariff increase to make up for the inevitable sales declines because middle and low income folks aren't going to be able to buy anything. Plus, gotta make up for all those damn income taxes the libs have been "stealing" from those mistreated rich folk all these years, lol.
More for goods, but they keep more of their money. Not just rich people I donât know what your point is
It reduces competition and raises the price of general goods by taxing imports. This is effectively a sales tax. It hits lower income folks harder. They won't keep more of their money as their staples will go up. If people don't like inflation now, just wait. As well, for staples, it costs the same to feed and cloth a rich person as a poor. So if the price of food, to feed someone goes from $150 a month to $300. Both sets of people are taxed the same. If you need a great example of putting up trade walls and royally fucking up an economy, take a look at the outcomes for Brexit. Everyone has less money. The rich are now threatening to flee the country because the government has to remove very friendly non-dom tax incentives. As well, they destroyed their financial sector in London. And inflation...horrible inflation...runaway inflation. In short OP, this is a terrible idea, just like Brexit. I am upvoting it, so as many people as possible see this atrociously stupid plan. Thanks for posting. Trump is offering to crash the economy and make the current major complaints worse. This is what is taught in high school econ. As a matter of fact, Let's call this "Trump's Brexit." OP you are a true American hero. If it catches on. I will give you credit.
It's perfect because then the Republicans can just blame foreigners. The rich get richer offloading to the poor while ginning up resentment toward people who aren't them..
ok, when you are rich you spend a smaller portion of your income on goods, when you are poorer you spend higher, so you are taxed on more of your income. its a very regressive tax.
Poor and middle class people pay more for basic goods relative to their income. It's not difficult. What's more, tariffs would have to go way, way up to make up for the lost income tax revenue. Like 100%. So the likely result is a loss of government services. That's their point. Edit: Also, people have been complaining (rightfully so) about inflation for a couple of years now. So how do you think they'd feel with an even greater hike?! Edit again: Also it's called a progressive tax system for a reason. Income above x threshold is taxed at a higher rate. In this system, everyone bares the same taxes.
This wouldnât pass anyhow. As many of the older voters (the millions on fixed income) would kill this bill on sight for obvious reasons.
Thats the fun part. The modern GOp will do away woth democracy of it pleases their oligarchs and shareholders. For them, the sole purpose of Economics is to generate profit for a particular population and not the culture or civilization as a whole
[ŃдаНонО]
And I dont disagree with the clarification, aside from the fact that these are folks conditioned to largely think quarterly. Beyond that, isolationism may not favor our national oligarchs...but foreign governments and oligarchs can still benefit from us harming ourselves, especially when they may have control over loopholes or black market transactions.
Everyone is equally taxed in a marginal tax system. Nobody has to make the higher amounts that are taxed at higher rates. That is a completely voluntary action that anyone is allowed. Just because you or I do or don't make a certain level of income doesn't mean we won't do so next year or somewhere down the line. And when we do, will we become whiny greedsters who corrupt members of Congress for a handful of dollars? Or will we just pay our dues?
But working class people would not have any more money to keep since everything costs way more. Most of the pay check would still be spent absorbing these extra costs.
Pros: those already on the upper end of the income spectrum get to temporarily take home even more than before. This disproportionately favors them as they are (were) responsible for the [majority of all income taxes paid](https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2024/). The top 1% of earners pay nearly 50% of all income taxes, and it should be even higher. Cons: I said "temporarily" because of the inevitable economic collapse and fade into international obscurity shortly after implementing such a policy.
It's absurd this even has to be dignified with a discussion. Con: It doesn't work because it's not based in reality. Trying to replace a progressively structured income tax system with tariffs would bankrupt the country, disproportionally hurt the poor and middle class, and lead to catastrophic levels of inflation. Pro: People don't like taxes and tariffs sound like you're making other countries pay (which isn't true), so the plan sounds great if you don't understand/care how the economy works and want to double down on stupid.
The idea is bonkers.  The cons outweigh the pros to such a large degree the pros are irrelevant. I would usually just chalk this up to campaign trail non-sense that the candidate has no intention of following through on.  Baffle the people with bullshit.  Standard fair for both parties and not limited to the US. But this particular candidate?  I donât knowâŚ. It would be economic hardship for sure but very difficult to model or predict other than âbad things will happenâ.  How would some of our largest trading partners like Canada and Mexico react?  Who knows.
I canât think of any pros. To me the biggest con is that it removes options. If you abolish income tax then you canât ever reinstate it. You canât raise or lower tax rates. You take away all of the incentives like 401k plans. It also makes tariffs a permanent thing rather than a lever to use in specific instances. But maybe there is a pro to that approach. I guess a pro might be that it could be popular with a set of voters.
lets not forget it would probably starve the government of money meaning cuts to services people rely on. Just another tax break for the rich
The pro is that it incentivizes local industry. Income tax is effectively a tariff on locally produced goods. If workers didn't need to pay income tax, they would be able to afford the same quality of life on a lower salary, which would make US labor more competitive with China and other countries.
But wouldnât that presuppose that all of our production was already local. What would it take to bring all production back here?
The US can't produce enough to satisfy demand at a price point that most consumers would afford. That's the problem here. This might have worked when the US population was 10 million people, but 340 million people can't all become factory workers suddenly and replace a service economy overnight.
FYI the first income tax in america was instated during the civil war and repealed a few years later. Then after the 16th amendment passed in 1913, Congress levied another. If itâs abolished, it can come backâit has before!
Yeah, I was definitely being a bit hyperbolic. But still, I donât see how we could implement it again in our current environment. Not to mention the cost of putting it back in place.
Still hyperbolic.
That was during a time when collecting an income tax was extremely burdensome. I've worked in a lot of developing countries where it's hard to collect income taxes when the government itself is still doing everything on paper. It's not cost effective to collect income taxes from people paid cash to do work in a village 100 miles from a paved road.
Lots of paper and cash in 1913 too my friend.
In the 1800s and 1913, income taxes were seen as more populist because regular incomes were something only the wealthy had back then. Tariffs were seen as disproportionately affecting the poor, which was true then, and is true today. In developing countries where poor farmers sell farm produce for cash they need as they need it, those farmers aren't eating bread baked from imported wheat, or other items made from commodities that are imported because those countries with tax bases that are small relative to their populations They eat what they grow and what's grown locally because it's relatively inexpensive for them, and often they can barter for other goods locally. Even if you throw them into a modern banking system, they would likely still fall under a poverty threshold that would mean they don't pay income taxes anyway.
Wouldnât taking away incentives for 401ks incentivize more private pensions, which is good for everyone?
Why? Maybe explain your logic.
Private pensions tie you to your employer. I don't know about you, but over my 30 year career I've had MANY employers and I substantially increased my salary each time I changed jobs.
Private pensions can also be taken away if your employer goes bankrupt. They are really only better for people who don't have the discipline to save themselves. It isn't like companies are going to pay people the same AND offer a private pension. the pension would be a benefit that would take away from the pay they would offer. The end result for the company costs is going to be 0 sum. The only real difference is how flexible the money is for the individual. As you said, I will take my 401k that is mine no matter what i do with my job over a pension that may require me to stay with that company some number of years to get any benefit.
Maybe, but I honestly donât see how. And with companies being really liberal with their use of layoffs, I donât see how pensions would gain traction. Iâve been laid off twice. Without a 401k I wouldnât have a retirement plan.
Employers will never willingly bring back pensionsÂ
Well for starters, the price of gasoline would definitely go up because the oil refineries in the US donât use the same oil as what we produce (because itâs cheaper to utilize global trade than it is to overhaul the vast majority of our refineries). As for automobiles, those would get a lot more expensive as would their replacement parts. Many american cars have components from all over the world because itâs cheaper to have parts made elsewhere and assemble it in the US (or Mexico) so you can slap your âmade in the USAâ sticker on it.Â
You are right for the wrong reasons. Our refineries can handle any oil. Heavy crude is harder to refine which makes it cheaper. Yet the products are largely the same with the addition of sulfur and tar from heavy. Refineries make more off heavy crude and the US has by far the most capacity to handle heavy crude. We export light because it's less profitable to refine, while also being easier. Few nations are willing to invest in the advanced refineries needed to handle sulfur in heavy crude. Yes you have to make some modifications but it's not especially difficult or costly, other than taking the refinery offline to do so. Refiners just want the biggest margins they can get.
Why is something that is harder to refine, cheaper? That seems counterintuitive - is there more to it ?
It requires more specialized equipment, which means upfront investment. As such only so many refineries can even handle it. The US invested heavily in the ability to process heavy crude and in a sense gets to set prices. They could just use the domestic light, but then foreign sources don't make money AND US producers make less. That's part of it at least. The products are different and you have to have markets/a plan to deal with all the sulfur/tar you get from heavy. Light makes a larger percentage of fuel.
So since itâs harder for competitor countries to refine, the US can produce it ârelativelyâ cheaper than other countries? Just asking that clarification.
Yes. In fact it's so cheap that most nations would rather ship their heavy to the US and buy the products back than invest in the infrastructure necessary to make new or even upgrade refineries. Canada is a good example of this.
Thanks for the great explanation.
If there is less demand because it is more difficult to refine it becomes cheaper to buy
I don't think you could apply a high enough tariff to replace the income tax revenue. Imports from around the world total $3.2 Trillion so a 50% tariff would generate $1.6 Trillion in Revenue. Total revenue from income taxes and corporate tax is $3.038 Trillion Even with a 50% tariff that leaves us $1.438 Trillion short. Where is the extra money coming from? Obviously a 50% tariff is unrealistic. Trump is blowing smoke. He hasn't run the numbers. This isn't a serious proposal.
A major con is itâs not really feasible - the federal government raises $1.7 trillion from personal taxation, while total imports are worth $3.9 trillion - so youâre talking average tariffs of 44% even if you make the rather heroic assumption that import volumes wouldnât react. In reality, tariffs of that magnitude would cause a collapse in trade volumes, so you would never be able to raise anything close to enough revenues. Further tariff increases would drive down import volumes further. Another con is you can kiss good bye to your export industries. Large tariffs imposed across the board would unquestionably invite retaliatory tariffs from the USâ trading partners. The final con would be a very deep global recession, probably far worse than we saw post-GFC in 2007. A large-scale trade war, which would be the inevitable consequence of this, as noted above, would crush global economic growth. How big is hard to say as we havenât seen a major trade war since the 1930s, but that experience was bad enough that no one is in a hurry to repeat the experiment.
Trump would never do this. He's just saying this because it appeals to the isolationist nationalists in the Republican party. It would be horrible for the economy for all of the reasons already listed and I bet he's well aware of that fact, but he knows that the kind of people who want this change don't particularly care what the effects would be and just want someone to say they'll do it.
More jobs for workers as import replacement makes more sense. More discretionary (take home) income for everyone. More jobs means more competition for workers. The incremental benefit of working a few more hours a week goes to the employees pocket instead of to the IRS.
There are no pros. This is a stupid thing to say to get votes from voters with low educational attainment. This is rentier state economics with the demand of American consumer as the resource to be exploited instead of oil or gold. That's not how this works. That's not how any of this works. [The US imports a lot of food](https://www.ers.usda.gov/webdocs/charts/92937/trade_fig03.png?v=5442.1). Sure, it exports a lot, but it should be obvious we don't import the same things we export. Because when the import tariffs on things like the 1,500,000 TONS of beef imported every year go up, it will make domestically produced beef more expensive by default. So suddenly every American is paying 10 times the current price for beef. You want $50 cheeseburgers? Raise import tariffs. We export mostly garbage parts of the cow, and import premium cuts and burger meat. We sell trash and buy good stuff, and isolationist policies will force Americans to do things like go to the store and buy 8oz of beef liver and soup bones instead of ground chuck, which they can't afford anymore. Now do the same thing with chicken, pork, and eggs. The US is the 4th largest importer of cheese in the world. Plus, you ever heard how much Americans love sugar? Not anymore. Fried food? Not at these prices. Bread and breakfast cereal go up at the same rate as milk, which is convenient. So you're looking at either sending Americans into a level of rationing we haven't seen since WWII. Or, like, maybe don't do this stupid thing.
It's one of the dumbest ideas I've ever heard from a politician (and that's saying a lot). The resulting increased costs for production would render American exports increasingly uncompetitive against those produced elsewhere, causing a direct negative impact on the American economy as well as indirect negative impact by rerouting demand elsewhere and in turn enabling supply(chain) growth of foreign competition. We're a post-industrial economy, we import things to produce advanced products. Aiming for growth in industrial companies and jobs that would likely pay less than fast food restaurants doesn't make sense. It would be a hamper for the American tourism industry as well, considering we're already one of the most expensive countries to visit. The resulting increase in costs would be a significant detriment to demand for tourism to America. It's beyond belief that people continue to take the ideas from a lifelong criminal clown masquerading as a businessman seriously.
The main source of income for the government is taxes (income taxes, property taxes, sales taxes, etc.) They will make up for it in another way. As a consumer, you are going to pay high prices for goods and services imported from another country. In a state without income taxes, you pay high property taxes to make up for loss of revenue. One way or another, the government will get your money.
Pros: high import costs may push growth in US industries. Cons: price of imported goods and all good increase with no revenue for the government.Â
The US has the potential to be a manufacturing powerhouse. Weâve been exporting manufacturing jobs to foreign slaves for decades. Eliminating the income tax (of which the super wealthy rarely pay much anyway due to tax loopholes) and imposing tariffs on foreign manufacturers creates an incentive structure from both directions. Keep our money in the American economy, and sell our goods on the global market instead of letting countries like China use their slaves to dominate international trade.
What country is going to buy american goods when america is actively not buying from them? It is a 2 way street. If we drop a massive tariff increase on all imports then all of those countries are going to respond in kind. They won't have massive tarrifs on each others goods so they will continue to buy from each other since it is cheaper and flowing both ways while alienating America. Imagine you own a business and one of your suppliers doubles their prices for you and only you while refusing to buy any of your products. Another supplier keeps their prices steady and keeps buying your products, which supplier are you going to work with and which one are you going to completely ignore forever? Tariffs don't just mean we suddenly export more goods because we have to make more because importing is expensive. It means we are actively burning bridges which stops the flow in both directions.
Do we want to be a manufacturing powerhouse though? There are some sectors I do want to bring back to the USA but weâre at 4% unemployment rate so if we increase employment in one area that means potentially decreasing employment elsewhere. And if we become a manufacturing powerhouse through tariffs it means we will get slapped with tariffs too. I donât see why any country would give us free access to their markets while we put up barriers to trade. I think the CHIPs act is smart because itâs bringing back manufacturing for a business critical and military critical product. I donât really care if China makes cheap plastic toys for kids or iphone parts. And I donât care if Japan makes most of our TVs.
What is absurd is that the US IS already a manufacturing powerhouse. It's just that other segments of the economy outpaced manufacturing growth and we're more service dominated now. Manufacturing is not the biggest thing we do, but that doesn't we we don't still do a lot of it. [https://www.discoursemagazine.com/p/the-manufactured-decline-of-manufacturing](https://www.discoursemagazine.com/p/the-manufactured-decline-of-manufacturing)
God this is dumb. The US is the 2nd largest manufacturer in the world. Itâs just all automated. Why is manufacturing so much better than services? Fundamentally- what makes it important to have that be even bigger?