I have seen a lot of know-it-all democrat voters posting in the last few days about how Trump's economic strategy is bound to fail and those who voted for him for economic reasons are fools. Obviously I am extremely sceptical of these people, as economic literacy has never been a strong point of progressives (not to mention how they are all suddenly experts, like how they were for virus propagation, climate change, etc.).
Nonetheless, I myself am no economist. Can somebody with a better understanding explain the strategy to me, and also any potential ways in which it COULD backfire in the way progressives are suggesting?
I just think it's funny that the party of 'tax the rich...and the middle class...and everyone else' whine about how tariffs are taxes, and will increase prices, and how taxing them will just trickle down to the consumers.
Now, I'm no expert on this, but it is somewhat true. It is a tax, it will raise prices. But, the thing is, it also brings back money into the US; it will raise wages (especially in conjunction with mass deportations and the psychological effect alone reducing further illegal immigration), and keep more wealth circulating in our country, instead of flowing overseas to, sometimes literally, fund slavery. It will help US companies compete with foreign countries. Eventually (hopefully we get another Republican next election, as it will need some time to truly flourish), it will more than normalize. More US manufacturing, higher wages; all that is good.
Also, if Trump is serious about lowering taxes (and I have no reason to think he isn't, since he did it last time), it could offset tariffs almost immediately.
So, yes, tariffs are a tax, and will raise prices. But if done well, it's really a nonissue, even in the short term, and a big potential net positive in the mid to long term.
Also, as somewhat of a libertarian, I have to break with them on this issue. Again, not an expert, but it seems to me that this is more libertarian autism, and them letting the perfect be the enemy of the good.
They love to whine about how tariffs are "war," economic and financial war. And, well, that's somewhat true, but conflating it with a hot war is incredibly stupid. Also, all nations are (or should be) in a natural state of competition. Each nation are (or should be) involved in making life for their people better. If foreign countries are taking jobs, the government should try to dissuade that to some extent, as well as reduce the regulatory and tax burdens on domestic production. Especially when we have the resources needed to churn out massive domestic industry.
One of a nation's prime areas of influence is, of course, the border. It's one of the things that defines a nation. Tariffs are, to some extent, government meddling in the economy, which can often be disastrous. But, it's not exactly meddling in domestic economy; it's just giving your own people a boost compared to foreign imports. I think that's fine. Again, not an expert though.
It's funny when even Keynesian economics requires tax increases to make that bag of shit work; government borrows and spend when times are bad, and taxes and repays the debt when times are good.
Of course, no one actually does that, which is why the US economy is a series of bubbles, deficits, and ever-increasing inflation.