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#11 | Posted by humtake at 2025-08-20 12:08 PM
So Trump's strategy is working then...
Fact. Yes, it's "working" exactly as expected - higher prices/"inflation" caused by higher taxes (on only ~13.5% of GDP which are imports, but many of these are components of other "domestic" products) while at the same time weakening exports which constitute more than 30% of S&P 500 companies revenues - double whammy!
Meanwhile, manufacturing actually losing jobs (-11,000 in July), and Philadelphia Fed Mfg index, which was expected to be only slightly lower, is back in negative territory (-0.3 from 15.9 in June) while all the 73K jobs gained were in health and social services.
Companies in America will see it's lucrative again to produce goods long since left behind because it wasn't worth producing given imports were cheaper.
Fantasy. Artificially increasing prices of imports through taxes (or [effectively] banning imports) is not going to make "companies in America see it's lucrative again to produce [expensive] goods" in the US and invest in the factories in the US. Been tried 'under Trump' and 'under Biden' - it's called 'industrial policy' (incentivized or repressive) - never mind finding "qualified/skilled" people to staff them... and for what purpose? Spending trillions of dollars to recreate what you could buy much cheaper from somewhere else, because Trump discovered he could con economically illiterate with "US trade deficits"?
Maybe try filling real deficit of ~400K people with "necessary skills" to be employed in manufacturing?
Trump's "Trade wars are good and easy to win" is nothing but "Back to the Future" from free-trade capitalism to the wars of failed pre-industrial pre-18th century mercantilism.
upload.democraticunderground.com - full text of Reagan's 1988 speech on free trade:
|------- "... We too often talk about trade while using the vocabulary of war. In war, for one side to win, the other must lose. But commerce is not warfare. Trade is an economic alliance that benefits both countries. There are no losers, only winners. And trade helps strengthen the free world." -------|
"Progressives" used ["targeted"] tariffs to protect unions from competition - how well did that work out? When Trump does it, and on massive scale, MAGA-bots fully buy into right-left populist policies of protectionism (Trump got many union votes), while "progressives" are rethinking:
www.progressivepolicy.org - History Shows Tariffs are Anti-Prosperity - 2025-03-18
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Thus, more people hired in America. Thus, more money being made and spent by those being employed. Thus inflation cools.
Fantasy. This clearly misstates/reverses the effects on job market and money supply - you are just reciting nonsensical Trump economic talking points here. We've been importing disinflation for 40+ years.
Moving people from one job "organically" created by "the economy" to another, artificially created by the government, doesn't lead to "more people hired" - it creates artificial shortages and inflation.
And with fewer/weaker USDs sent out of the US, who is going to buy growing US debt, especially if rates are low, as "Erdogan" Trump wants Fed to force?
theconversation.com - Turkey's economy is paying the price for years of policy mistakes - 2024-04-03
Higher costs = higher prices = higher "inflation" needing higher money supply growth and interest rates. And it becomes "systemic," not a one-off.
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