What should other nations do? My strong recommendation to Canada, Mexico, Japan, the United Kingdom, and the European Union is to join together to create a free trade zone that excludes the United States, imposing at least a 10 percent tariff on all imports from America.
They should also threaten to limit American banks’ access to their public stock markets, put limits on what their citizens can invest in American companies annually, and increase taxes and regulations on American digital platforms.
They will be tempted to negotiate and do so individually. They should not. They need to negotiate from a position of strength. A non-U.S. free trade union will give them that strength.
It’s very much not the same.
USA puts tariffs on the whole world. We’re just putting it on one country.
We’ll trade with other countries more.
While Americans are sinking into isolationism.
This is a good tariff.
No, a good tariff includes a plan on what to do with tariff revenue. Ideally, such a plan should re-invest into incentives for local businesses to replace the foreign ones.
An import tariff is a tax on citizens. Taxes must be justified.
The effect of tariffs nationally should be considered before the international effects. Especially with import tariffs.
If you want a good tariff to target America, you should look at export tariffs. This is generally seen as less favourable, as this often means reduced sales for local businesses, but the actual payment is borne by the other nation. Canada has been doing this with their export tariffs on electricity to the US, and that seems to be a truly effective bargaining chip because the US can’t stop buying it, so Canadian businesses don’t actually see lost sales. It’s literally Canada charging the US more for the same.
Import tariffs mean less business for the other country, but more expense for your people.
Export tariffs mean less business for your country, but more expense for their people.
Both result in raising tax revenue for your country. This is why governments are entertaining the idea of tariffs, not because they’re good for their country necessarily, but because it might be a very good political opportunity for them to raise more money.
What makes the tariff good for the country is what the money is spent on. Trump will not spend it on America, he will steal it. If other countries want to create tariffs they should at least have a plan to make good use of the money, otherwise they’re no better than Trump.
Export tariffs would cause even fewer European goods in USA. Nah, let’s not do that.
We’re quite lucky that China is tariffed more than Europe. Causing us to remain the economic world order of china selling to us and then we selling to USA.
We need to keep that intact while we can reorganise.
We want to sell to the USA, we don’t really depend on USA products. We have a highly educated work force. USA only has a service market. Europe has the necessarily educated workforce to invest in tech. Like le chat AI mistral for example.
We’re going to hit them where it hurts.
We’re not aiming at hurting Americans directly. But at their companies.
If we put export tariffs, then it’s better for European companies to relocate to USA.
The export tariff on electricity is simply because the USA needs the resources of Canada’s vast amount of land which is little used by their small population. Whole different story. Here it’s also likely that the population of the nation needs the electricity itself while a foreign country is able to offer more for it. Just a country looking at necessities for its population.
Protectionism hurts us all, but export tariffs would be saying “you don’t tariff us enough”. We produce specifically for export, it’s not needed locally. The EU is world’s largest trading hub.
USA buys less from us, we will buy less from USA. There’s lots of other countries to do free trade with.
Not necessarily. Canada has had some success with tariffing exports of electricity. The key part here is that the US can’t stop buying electricity, so sales from Canadian electrical businesses don’t go down, the US just pays more to Canada.
The point being, a tariff has to be clever. It has to minimise the damage at home and maximise the damage overseas. Trump’s tariffs don’t do this, because he’s trying to damage America just as much as he’s trying to damage everywhere else.
Other countries should not do what Trump’s doing, as it will damage their own country.
That’s the thing, a retaliatory tariff probably won’t hurt them. For one, it would only (mildly) affect certain US businesses. For another, people generally don’t have an alternative source, so they end up just paying the tariff. Both US businesses and local people get hurt, the only benefit is that the government gets more money - but that’s not really a benefit if the government isn’t re-investing it. The US government doesn’t really care about US businesses, so they’re not going to capitulate. In the end no one wins except the two governments have more money to piss up the wall.
We’re already looking at buying less from the US wherever possible. People want alternatives, and the US isn’t a cheap source (like China is) so it’s already easy for local businesses to undercut them on price - you don’t need to add a tariff to tip the balance. Tariffs won’t incentivise people, they’re already incentivised, they need options.
If a tariff isn’t paying for such an option then it isn’t worthwile.
Okay let’s try this on an example. ArcelorMittal in Belgium producing steel and exporting it to USA. Since they put tariffs on us, it will reduce how much we will sell to USA. Lowering demand. Good for Europe as now steel will be cheaper locally. Bad though because lower demand and lower prices will hit the profit margin, causing parts of the factory to be shut down and labourers to be layed off.
What prevents ArcelorMittal from opening a factory in USA to avoid the tariffs?
In general, making these investments takes 3 to 4 years and by then trump administration will be replaced. The short term effects of the trump administration is going to be so catastrophic that the potential gains will only be visible long after trump is gone.
The shock will cause the population to elect someone that will lower tariffs. Most definitely. For better or worse of USA. Only countries like China can do such long term economic shifts because their leadership stays the same for a long period of time.
So, companies in this case will be afraid of moving to USA. Trump is fucking his country up.
I agree, no need for retaliatory tariffs.
But let’s say this would be a trade war with China, a stable government.
Different example.
The car industry in Europe Vs the surge of China’s electric vehicles.
We could have electric cars for as cheap as 8000 euros. As consumer this would be fantastic.
But the car industry is a gigantic part of our economy. Wouldn’t it be better to shift them toward competing with china’s industry?
China subsidises their electric vehicles.
What should we do? Accept the Chinese taxpayer’s funding of the cars that we consume in Europe?
Is this risky long term? We would start depending on China for car imports. We would lose a key industry in our region. With Russia we learn that we need to be independent in our key industries.
What should we do in this context you think?
In that context I think tariffs are absolutely valid. In particular, as you mention, because China is subsidising their EV market and thus discounting the export price. A tariff should raise the price of the imported good such that the local good can compete - and we’ve seen this with extreme tariffs on Chinese EVs. Trump actually led the way on this in his first presidency, proving he is the proverbial broken clock. Now Europe also has tariffs on Chinese EVs.
Ideally, this should also involve ring fencing the tariff revenue and exclusively re-investing it into incentives for local businesses to pick up the slack of the imported businesses. This rarely happens, but it should.
This doesn’t work when tariffing the US, though. The US is often already more expensive for the things people import from there. People buy US goods and services because they want the US version; there is no better alternative. The tariff just makes US products even more expensive, costing buyers more. The only thing it does is raise revenue for the government.
In other areas even tariffs against China have been meaningless. If China sells a trinket for 1/10 the price of local industry, then even a 100% tariff would mean the Chinese product costs 2/10 of the local price. People will still buy the Chinese product over the local one, but now they just pay more. Maybe they buy less, so Chinese businesses make less money, but they’ll probably pay more overall. The government get this extra money. This is what Trump is doing in the US with his general tariffs on China, there’s no plan behind them and they’re all but meaningless - the only thing they do is raise tax revenue for the government.
If the only thing a retaliatory tariff does is raise revenue for the government, then it’s no better than what Trump is doing.
A good tariff should minimise the effect at home and maximise the effect against the foreign country the tariff is meant to penalise. I don’t think that’s viable with import tariffs against the US, the effect at home just isn’t worth the minimal damage it would do to US businesses.
Yeah we should focus on key industries that we can gain from. A general tariff is pretty insane.
We just gained a global discount thanks to trump on our imports on products that we can utilise adequately.
Thanks for the explanation