No. of Recommendations: 18
Can someone explain this to me in simple words? All I keep coming up with is this syllogism.
Trump says tariffs are going to bring so much money to the treasury that we won't even have to pay income taxes.
Trump is negotiating with countries to reduce their tariffs.
I think the logic goes something like this, if I can try to MAGA-splain:
1) The U.S. market is so important to every other country on earth that they will agree to do almost anything to have access to it - all that is needed is a President strong enough to force them to do it.
2) Therefore, we can impose 10-20% tariffs on every country on earth, and they will pay them, because doing business in America is to important to pass up (the Administration has apparently made clear that the 10% baseline tariff is here to stay, and it's not clear whether they will entertain removing the additional product specific tariffs like the 25% tariff on steel or autos).
3) We can also threaten to impose maximal tariffs on them on top of the tariffs that won't be removed (like we have with China), and they will be so fearful of that happening that they will agree to remove nearly all their trade barriers and agree to buy tons of U.S. stuff to avoid the super-high tariffs. And pay the 10-20% tariffs too.
4) Therefore we will not only get tons of tariff revenue, but we will also get massive increases in our exports.
* * *
There are a lot of problems with the above, but the main one is that first assumption is fundamentally wrong. The U.S. is certainly important to our global trading partners....but unlike what Ron Vara might have thought, they're not going to do anything to maintain access to it. All those nations have domestic constituencies that they have to answer to, so they cannot and will not merely prostrate themselves before the U.S. As one wag put it, we're doing a reverse Godfather - we're making them an offer they can't accept. Because as great as having access to the U.S. market is, it's only worth so much.
