re: breaking: Trump puts 25% tariff on Colombia, bans travel, sanctions their banking sector

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This thread is fascinating.

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What “economy” classes have you taken? What do you do for a living?

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There are two layers to what Trump is proposing. The one that he highlights is the tariffs. He calls himself the tariff man, and he says there’s going to be a very high tariff on everyone, and particularly on China. This is just a really bad idea. It’s not a bad idea in a complicated way, it’s a bad idea in a very simple way, which is that low-income Americans have a high import content of their consumption. It’s just a matter of arithmetic, there’s no complicated economics. If you raise the price of imported goods, there’s a hit to the incomes of all Americans, but more to lower-income Americans. It’s a terrible, stupid, and pointless negotiating tactic because a tariff is a tax on your own consumers. If you’re threatening to tax your own consumers in a way that they would obviously hate and resist, you’re not going to do it. So it’s pointless rhetoric.”

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Why are the billionaires rallying around Trump? Why do we see Elon Musk and Howard Lutnick from Cantor Fitzgerald and John Paulson and so on? Well, one thing to note is the import content of consumption for rich people is quite low. So, actually, he’s not threatening their pocketbooks at all with the tariff thing

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A second piece is that he’s offering to extend or expand the tax cuts that he put in place in his first presidency, and those are disproportionately favoring rich people, directly and indirectly. See, the embrace of tariffs is Mr. Trump’s innovation relative to the modern Republican Party. Where Mr. Trump has not broken with the Republicans, [where he’s] in fact exacerbated their fall into fiscal insanity in recent decades, is with the tax cuts.

“When your economy is booming, you should be strengthening your fiscal accounts, you should be bringing in revenue, you should be reducing your debt relative to GDP. The key number is not the dollar amount of your debt, it’s how much debt you have relative to your economy, relative to your ability to pay.

“The Republicans became enamored of tax cuts above all else in the 1980s, with the Laffer Curve fallacy, the idea that if you cut tax rates, you get more tax revenue. It doesn’t work. The related idea is the trickle-down, that you cut the taxes of rich people and lower-income people get higher wages. Well, that doesn’t work either.”

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You’re a bus tour guide

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