Tarrif Math - Topic

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Apr 8 2025 02:57pm

Quote (bogie160 @ Apr 8 2025 10:51pm)

The tariffs are merely a tax. Would the economy crash if Congress allows the 2017 tax cuts to expire? By all accounts that would drain more money from the economy than the tariffs will.

The government needs revenue. The same people crying about tariffs are blasting the administration for wanting an extension on the tax cuts. The economy is highly dependent right now on high-income spenders, higher taxes on high earners means less consumption, impacting businesses and jobs across the country.

Is the deadweight loss of tariffs higher than the deadweight loss of taxation? I don't know, and I haven't seen anyone bother to run the math.

While tariffs are a tax, they are also an incentive for other countries to increase tariffs (see what is happening right now in the reality we all live in) which leads to a trade war where everybody loses. I personally do not really care if Trump cuts even more taxes for the rich and makes life for the average american even worse, you clearly voted for that. I do care about the global economy.

bogie160

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#72

Apr 8 2025 03:15pm

Quote (SkySwallower @ Apr 8 2025 04:57pm)

So add in the impact to US exports. Countries have an incentive to do what's in their best interest. Net exporters warring with their top customer probably isn't high on the list.

Goomshill

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#73

Apr 9 2025 12:03am

so some math

1693% inflation since 1945
508% inflation since 1975
111.5% inflation since 1995
35.9% inflation since 2015 which was just 10 years ago
https://www.bostonfed.org/publications/current-policy-perspectives/2025/the-impact-of-tariffs-on-inflation
impact of all tariffs on china and rest of world estimated as contributing a 2.2% increase to the 80% share of non-food non-energy basket of goods in CPI-U which amounts to potential for 1.76% inflationl;

Quote

Overall, we estimate that 6 percent of core PCE is directly imported, and 4 percent is indirectly imported; that is, spending on direct and indirect imports accounts for 10 percent of total US household consumption, excluding spending on food and energy.7
These shares have been consistent over the past two decades.

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