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[flagged] The Economic and Fiscal Effects of the Trump Administration's Proposed Tariffs (yale.edu)
106 points by danboarder 15 days ago | hide | past | favorite | 66 comments



The biggest increase is in the price of natural gas. The US is a net exporter of natural gas. But the US imports from Canada to serve the northern US and exports to Mexico to serve northern Mexico.[1] So there's cross-border traffic for economic reasons.

More pipelines could eliminate this. Texas flares off unwanted natural gas.[2] Tariffs will provide an incentive to collect that. But they won't be built if the tariffs aren't long-term.

That's a more general problem. Manufacturing and extraction won't come back to the US unless businesses are convinced this is a long term change, not a bargaining point. This action was taken under the International Emergency Economic Powers Act.[3] That's temporary, at least in theory. It's the most expansive use of the IEEPA ever. There will probably be court challenges. The challenges probably won't succeed.[4]

[1] https://www.eia.gov/naturalgas/archive/analysis_publications...

[2] https://today.tamu.edu/2020/08/03/the-problem-with-natural-g...

[3] https://en.wikipedia.org/wiki/International_Emergency_Econom...

[4] https://crsreports.congress.gov/product/pdf/r/r45618


> Manufacturing and extraction won't come back to the US unless businesses are convinced this is a long term change, not a bargaining point.

I wrote that yesterday. Today, "Trump pauses Mexico tariffs."[1] The Wall Street Journal is covering this heavily. Businesses have no idea what to do yet. WSJ article: "Trump’s Tariffs Usher In New Trade Wars. The Ultimate Goal Remains Unclear."

For now, you can't go to a bank and borrow to expand your US plant that needs some tariff protection to be profitable. Too risky if policy changes. Can you insure against "Trump risk"? Hedge with futures?

[1] https://www.cnn.com/politics/live-news/trump-tariffs-preside...


2023 review of Robert Lighthizer book, https://foreignpolicy.com/2023/07/16/trump-trade-war-robert-...

> he proposes truly radical policy recommendations to delink the United States and China. He would hike tariffs to towering levels, end the benefits China has received from the United States for joining the World Trade Organization (WTO), cut off investment between the nations, block Chinese social media companies, halt cooperation on technology—and keep the measures in place until China’s trade surplus, now nearly $400 billion, disappears. In other words, for decades if not forever.


Would anyone care to also vouch for Animats top level comment here ( https://news.ycombinator.com/item?id=42915372 ) - I have as it appeared to be flagged dead for no good reason ( I suspect a super user might have fat fingered another intended action ).

Seems bad form to kill a good faith comment made with effort, at least disagree or counter, etc.


I also vouched, but it's not [flagged] and it's weird because he's not been banned (check his history, dang is good about telling people he's banning them, especially people who have been on the site and active for years). I suspect he triggered one of the filters or something.

EDIT: @defrost one of those links caused your comment to become [dead], I think it was the tamu one but I'm not certain. I did mail the mod about it though and Animats comment is live again.

EDIT AGAIN: dang responded. It was the tamu.edu link, somehow that domain had ended up as a spam domain. Animats' comment had been restored by vouches.


It is weird - no obvious swear words, etc ...

.. and none of the links appear to trigger a dead status.

aaaannnd it's back. Odd.

@Jtsummers - Interesting, I believe you, I didn't see it, it probably triggered a "shadow dead" condition.


> Seems bad form to kill a good faith comment made with effort, at least disagree or counter, etc,

If there were multiple fictional social media lobbying teams, which did not have continuous hourly coverage, then downvoting bots could be used during short intervals between time zone work hours.


You can tell if something was auto-killed or flag-killed by if it is [flagged][dead] or just [dead]. In this case, Animats' comment was not [flagged] which suggests either moderator action (unlikely, it was instant I saw it at 0 minutes and it was dead), a banned account (not in this case, check his history), or a spam or content filter.


Thanks, good to know.


This is clearly designed to keep people busy worrying about their survival while Elon and them continue on with their hapless refactor.


> This is clearly designed to keep people busy worrying about their survival while Elon and them continue on with their hapless refactor.

Huh? Trump's not engaging in some conspiracy to protect Elon. He's always liked tariffs, and this is him doing what he believes.

Cut it out with the weird conspiracy theories. They're not helpful.


Have you been paying attention to the kinds of things these people publicly say and do?

https://www.marketwatch.com/story/kaboom-elon-musk-predicts-...

https://www.msnbc.com/rachel-maddow-show/maddowblog/trump-ad...

Do you know who the vice president is and what ideology he subscribes to? One of his muses had an interview recently:

https://www.nytimes.com/2025/01/18/magazine/curtis-yarvin-in...

Then there's this faction, who have been blasting their ideas for decades but now have the trifecta of US government power: https://static.project2025.org/2025_MandateForLeadership_FUL...


> Have you been paying attention to the kinds of things these people publicly say and do?

Yes, I have. You didn't understand my comment, which was the motives for the tariffs (hint: they're not there to distract from Elon).


It's not about Elon specifically but on the general dismantling of the government in general.


> He's always liked tariffs, and this is him doing what he believes.

This maybe so, but he still doesn't understand who pays them or why his cronies like them so much. Tariffs transfer wealth from consumers to the government while simultaneously raising inflation. DOGE and friends want to privatize as much government as possible to extract money from it as a grift. Tariffs also hurt SMB sellers who cannot strategically front-load inventory like megacorps can. Furthermore, inflationary policies help out the 0.001% who can financialize weakening currencies while simultaneously making everything more expensive for ordinary people, effectively reducing average and unlivable wages to be even more unequal compared to the soon-to-be trillionaires. It's an ostensible nationalist/protectionist move that's cynically all about $$$$. The average American should anticipate paying $2000 more per year by the time 2026 rolls around for all of their expenditures... for absolutely nothing of value while not receiving a raise to account for it.


I would just like Trump to be honest with his supporters about what tariffs really are and what they entail.

He repeatedly implies that these are fees that other countries will shoulder to “bring them into compliance.”

The truth is (as I’m sure you all know) these are fees that we pay to the federal government separately when we import goods from these countries. Other countries don’t pay a dime.

On top of that, supply chains don’t (or can’t) change at the drop of a hat. Large scale onshoring takes time and investment.

So the reality for the average American is that the crippling inflation we’ve endured for the last 3 years is not going away, and we’re going to pay an extra 25% on top of it for the vast majority of our imported goods (which is basically everything nowadays).

The thing I can’t figure out is if he really doesn’t know how tariffs work, or if he’s just a liar. Either way it doesn’t make him look good.

And from any reasonable analysis I’ve seen, I just don’t understand how this is going to bring anything back home. It’s just going to raise prices and cause more suffering for those who can least afford it.

But I think most people understand that it’s not actually about accomplishing any goal in particular or about solving any problem, it’s just a bro flex.

Awesome. Your guy can flex. Congratulations. All your shit just went up 25%, so now you’re paying too. Elections have consequences, as they like to say.


> The thing I can’t figure out is if he really doesn’t know how tariffs work, or if he’s just a liar. Either way it doesn’t make him look good.

The second proposition has already been proven many times over. The first is very likely also true.

> And from any reasonable analysis I’ve seen, I just don’t understand how this is going to bring anything back home. It’s just going to raise prices and cause more suffering for those who can least afford it.

It won't. I think the best thing we can hope for is that it brings economic frustrations to an untenable boiling point and either forces the administration to correct course (ultimately still costing us significantly in terms of global trade positioning) or it spurs the idiots who voted for this administration into action agains the administration.


They’re too busy high-fiving and laughing like jackasses over their revenge porn fantasies coming true to notice.

For now at least.

There’s a lot more Cleetuses than Elons though. And Cleetus is the one who’s going to suffer.


> The truth is (as I’m sure you all know) these are fees that we pay to the federal government separately when we import goods from these countries. Other countries don’t pay a dime.

The mistake you're making is only considering first order effects (gov collecting tariff taxes), and ignoring second and greater order effects (how people respond to those taxes).

The truth about tariffs is actually more complicated: https://www.nytimes.com/2025/01/20/opinion/trump-tariffs-tra...:

> A good place to start disentangling things is the argument ad nauseam over who pays for tariffs — the consumer or the foreign producer? Contrary to what both sides sometimes assert, the question has no simple answer. “Despite over a century of theoretical debate on the incidence of tariffs, sound empirical evidence on who bears the burden of trade tariffs is sparse,” according to a 2015 article in the University of Chicago’s Chicago Policy Review.

> ...It’s true that up front, a U.S. tariff is levied on Americans, not foreign producers. But what really matters is who bears the ultimate cost. If the foreign producer continues to charge the same amount at the border, then the final price goes up by the amount of the tariff, and the American bears the full cost. But if the foreign producer cuts its price at the border by the amount of the tariff so that the final price paid by the American is unchanged, then the foreign producer bears the full cost of the tariff.

> Typically, the cost will be split. Americans won’t have to bear much of the cost of the tariff if the foreign producer is willing to accept a smaller profit to hang on to its share of the U.S. market. That calculation will vary product by product.


I don't want to insult you, but I do want to insult the NYT quotes you posted. Frankly, they are about the dumbest effing comments I've read in a while.

I will just pose a simple question- how many industries that trade in real goods have margins in excess of 25%?

How many industries do you know of that would keep going in the face of a 50% haircut to their profit?

Those quotes say nothing and are pure conjecture.

I will tell you exactly who will pay the increase (and then some, because there's always juice on top of juice): we will; you and I, and every person and family we know. That's who.


> how many industries that trade in real goods have margins in excess of 25%?

The fentanyl industry maybe?


Not sure if serious.

It’s not like fentanyl goes through customs (legally) now. Not sure how tariffs will help.

Also not sure why we’re being punished because our government can’t or won’t stop fentanyl smuggling across the southern border. I don’t see how that’s my fault. Or yours for that matter.

Are we going to slap tariffs on Colombia too for all the coke that also doesn’t clear customs?


> how many industries that trade in real goods have margins in excess of 25%?

Key point here is "real goods". Services in general, digital or financial especially, i could see it, but i guess those aren't concerned.


> Those quotes say nothing and are pure conjecture.

Apparently not: https://www.nytimes.com/2025/02/02/world/us-tariffs-canada-c...:

> When Mr. Trump imposed tariffs on China during his first term in the White House, some studies found that part of the cost was passed on to American consumers. Suppliers in China also cut their prices in many cases to offset part of the cost of the tariffs. [emphasis mine]

> I will tell you exactly who will pay the increase (and then some, because there's always juice on top of juice): we will; you and I, and every person and family we know. That's who.

It's worth noting that you're basically quoting a line of political attack. From the same article I linked above:

> Democrats spent the weekend hammering the message that Mr. Trump was responsible for making life in America more expensive.

> “In one reckless move,” said Representative Gabe Vasquez, Democrat of New Mexico, “the president just raised the price you pay for gas, the truck you drive to work, a computer for your small business and everything at the grocery store, from avocados to tequila.”

Underneath all that noise, I'm sure things are far less simple than any side's attacks claim. Unfortunately, all almost anyone hears on any issue are political attacks, which are blasted from the rooftops.


My experience was markedly different.

With computing equipment from China, there wasn't enough margin for them to lower prices (or they just refused).

So we paid for all of it.

Read their wording carefully: some studies found...many cases to offset part of the cost...

This is weasel language that purports to convey a lot of meaning, but is (I feel intentionally) light on actual facts.

You can't just strong arm people into giving you a better deal. Logic would dictate that any company who is competetive in the market is already giving you their best price.

These tariffs are punitive and not even protectionist (which I could at least respect), because we don't, can't and/or won't manufacture the vast majority of the items we import from these countries.

P.S. citing easily observable facts are not a political attack. You have no idea what my political persuasion is, and frankly, just because I have a strong distaste for DJT doesn't mean I'm a Democrat. Some people know what a spade looks like, no matter who they pretend to be.

P.P.S. additionally, had this administration annonuced a comprehensive plan to make capital available to American industry to step up and onshore the manufacture of these goods, I would be singing a very different tone.


> My experience was markedly different.

But your experience with IT equipment does not generalize to all trade between the US and China, which includes more than just IT equipment.

> This is weasel language that purports to convey a lot of meaning, but is (I feel intentionally) light on actual facts.

I don't think it's weaselly, rather it's one of those areas that's not black and white and there is a lot of variation, which does not lend itself to a crisp, succinct summary. One of the cases in the original article I linked was the supplier gives a little on margin, and the importer overall pays more due to the tariff, but not the full amount, and that's what the second article seemed to be describing.

> P.S. citing easily observable facts are not a political attack.

That kind of thing can totally can be part of an attack: the most effective attacks usually start with easily observable facts (and then omit others to fit the desired narrative), because that gives them more credibility. And I didn't mean to imply that you were making an attack, I was just noting that rhetoric is in the air due to the frequent political attacks, which often leads to it getting repeated.

> P.P.S. additionally, had this administration annonuced a comprehensive plan to make capital available to American industry to step up and onshore the manufacture of these goods, I would be singing a very different tone.

And we can agree that would be a good thing.


I know someone who works for a construction company that does big jobs, factories, airports, hospitals, etc, and asked him about building a new factory. He said if someone woke up tomorrow and said "I'm going to build a new plant", 2 years would be an aggressive timeline just for the construction. That doesn't take into account the planning, design, permits, machinery installation, etc. It wouldn't be producing anything until after his presidency.

Now, that's all fine and good, but construction materials like steel, wood, and aluminum are about to go up due to the tariffs not to mention supply chain disruption and stockpiling, making prices even worse.

Construction is going to contract. The publicly traded companies all went down as soon as this was announced. Noone is going to want to build this stuff while materials prices are going up.

There are other ways to encourage onshoring. 25% tariffs and a tariff war with our main trading partners ain't it.


Amen


>Other countries don’t pay a dime.

We will indirectly pay in reduction of demand, which will reduce the price or production. Maybe not 25%, but probably not 0%?

If we didn't pay for it, I wouldn't see our prime minister be worried about our industry and scared of trump.


Of course it will cost you in terms of loss of demand. But there’s no guarantee that your factories will be able to reduce prices though.

Everyone is worried about it. The global supply chain is a well oiled machine after the last 40 years. Problem is, Trump’s enablers and the media are too scared of retribution to tell people just how bad this will be.

It’s a solution looking for a problem.

You should have seen my frustration during Trump I explaining to my die hard Trumper why he kept getting customs bills from DHL, FedEx and UPS for his equipment and supply orders. I was literally exacerbated trying to tell him he was paying the tariffs that Trump enacted. It’s like he was incapable of understanding plain English because it conflicted with his Fox induced worldview.


I'm pretty sure his thinking is - say to every company that wants a break on the tariff - here, buy some $DJT, we'll take a look.


Wait, are you saying that a US president would take bribes?


Not directly.

The only type of business relationship his feeble little mind understands is quid pro quo.

He is incapable of nuance and is unfit to lead.

This is a man who went broke more than once in the casino industry. He’s either stupid or corrupt, take your pick.


If Trump was capable of being honest, he wouldn't be a twice-impeached felon.


The complete lack of charity in these neoliberal critiques always crack me up. Haha, those poor blue collar plebs don't know what's even in their best interest!

"any reasonable analysis"-- I will help you out, right now you can ask deepseek how tariffs helped power the asian economic miracle.


Even if I assume that is true, Asia in the 60s-90s and the USA in 2025 are very different geopolitical entities with very different trade relations to navigate and resources that they have/do not have available. This is the whole reason an analysis is necessary. Making good political choices is about taking relevant information and making trade offs, these levers are not some context-independent magic wand that we should hope will work because "hey it worked for the other guy".

You'll also note that good trade relations with the US, not pissing off your trading partners, were a key element to that success.

I'm sure deepseek will also let you know that tariffs are by and large considered a terrible strategy in the vast majority of circumstances.


Why would I ask an llm anything?

The asian economic miracle as you put it took place in countries with cheap land, essentially free labor (by Western standards), zero environmental protections, and cheap global shipping.

News flash Einstein, they weren’t buying our expensive shit to begin with. So they didn’t really need tariffs. Why? Because they lived in huts with no electricity or running water and ate rice and vegetables for every meal.

Neoliberal takes. I’ve been reading the Wall Street Journal daily since before you were born, back when it wasn’t just another mouthpiece for some rich asshole with an axe to grind.


You're a retard.


The asian economic uplift was powered by exports, not by reducing imports. Tariffs were the exact opposite of what they wanted as they were reliant on exporting their cheap labor and a trade war makes that much harder.

Latin american countries made the mistake of trying to build an economy by reducing imports through tariffs, as we can see it did not work.


Even if we put the costs associated with Tariffs aside, I feel like a big PITA with Tariffs is enforcing and regulating everything. Tariffs don't seem like smaller government. Or maybe I'm wrong and this is all pretty easy to enforce and regulate?


Tariffs should be one of the easiest to implement.

The state is already involved with imports, it just adds another item to the import tax bill. Even the price is already set, as import tax is determined by a percentage too.


I love how the US has already admitted it's weakness in this fight by not taxing energy products at the same level.


Recent times have made me ashamed of what this site has become. I'm with jaquesm- this is ridiculous.

Tons of new accounts <1mo throwing the discourse out with the bath water and no one stopping them.

HN has become the LA of websites. Y'all think everyone thinks like you and anyone who doesn't is just wrong. But when it all burns down and people are cheering you will be left wondering why.

It has devolved and only gotten worse. I feel those of us who are more center have slowly but surely gone AFK and now all thats left are the two extremes.

Comments flagged for absolutely no reason, the attacks- it even feels like dang has gone hands-off lately.

Since Trump's election I've seen nothing but rule-breaking everywhere, and it has become absolutely rampant.

I dont even come here for the comments anymore. yall can have the burning garbage heap this has become- it was a good run while it lasted.


And to no surprise, this interesting post about a new phenomena is flagged.

HN needs a better way to protect against people who try to suppress stories about inconvenient truths.

But maybe that's the point, so the tech-bros can continue to support the fascist government?


People buy now and then wait = inflation. Then they don't buy in the future = stagnation.


Some excerpts:

> In the medium-to-long run, the size of the US economy is persistently 0.2% smaller in real terms under the package

> The average effective tariff rate would rise by approximately 6.1-6.3 percentage points under the proposal, once consumers and businesses substituted towards domestic or non-tariffed imported goods.

> The individual commodity with the largest price increase is natural gas. The average price rises 8.4%

> Crude oil prices rise 1.1% in the long run.

> Auto prices rise 3.9% on average,


Thanks for the summary. Did they factor in any of the recently announced retaliatory tariffs?


"The Budget Lab modeled the economic and fiscal impact of the tariff proposal both with and without retaliation."


I just skimmed the article, I saw they mention retaliation, but what about further escalation? I.e. repetitive tit-for-tat?


At the imminent level. The tariff rate can and likely will go up.


How did these peeps do predicting the effects of Trump's first round of tariffs back in 2018 (the ones Biden kept in place)?


[flagged]


Haha, for better or worse, linguistic skill pretty often doesn't correlate that strongly with other forms of intelligence.


No, but intelligence usually correlates with attention to detail


I'm gonna guess that the people doing the research for the report and the people updating the website aren't the same people.


To be fair, the people specifically tasked with updating a website rather than doing macroeconomics research theoretically have spelling and other language skills as a much bigger part of their job. So maybe I was wrong about that part.


Depends on the detail really. There is near infinite amount of detail in the World and limited amount of time. You really have to choose your battles carefully.


Just say spelling


If I meant spelling, I would have said it.


Fiscal effects are what everyone focuses on, but tariffs have many other goals geopolitically. Those other goals include negotiations that may leave the economy better off than before.


So Trump's master plan is to renegotiate the free trade agreement that he already renegotiated during his last term? He obviously has no idea what he's doing. Is there even a point in signing treaties with the United States when you guys will just keep electing madmen that want to tear everything up every 4 years?


Tariffs as a negotiation tactic shows you can’t actually negotiate so instead you tax your own voters, you tax your own country and then act like you’re a big dog and a brilliant negotiator. It’s a joke. Any idiot can shoot their own foot. Trump is not playing 3D chess. Trump and many of his supporters don’t understand basic logic, economics, fiscal or monetary policy so they support Trump’s tariffs. Trump and many of his supporters think a trade deficit is bank account with a negative amount or is like running up a credit card. Morons. I have a trade deficit with my grocery store because I buy products from them and they buy nothing from me in return. Using Trump’s logic I should tax myself and pay more the the groceries because a trade deficit exists lol


This is the argument that I was responding to, and repeating it isn’t a curious approach.


> Fiscal effects are what everyone focuses on, but tariffs have many other goals geopolitically.

True, but it's exemplary Q2-term thinking. Whatever goals US is about to achieve, is it worth it to backstab allies over them? US proves itself as an unreliable partner, so long-term, other countries will work on decoupling from the US, minimizing its soft power. Over the next few years, Canada and Mexico will for sure pivot more towards EU.


Whose economy, though?


Or worse off.


Yeah, no country is going to be like "You've been punching us in the face for the last four years, but anyway, how can I bend over backwards and help you???" Basically, the admin is using every known trick in the book to break the economy and the standing of the USA as a world power.




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