U.S. President Donald Trump said on Tuesday he intends to impose auto tariffs “in the neighborhood of 25 per cent” and similar duties on semiconductors and pharmaceutical imports, the latest in a series of measures threatening to upend international trade.
On Friday, Trump said levies on automobiles would come as soon as April 2, the day after members of his cabinet are due to deliver reports to him outlining options for a range of import duties as he seeks to reshape global trade.
Trump told reporters on Tuesday that sectoral tariffs on pharmaceuticals and semiconductor chips would also start at “25 per cent or higher, and it will go very substantially higher over the course of a year.”
Is Trump trying to do a speedrun to destroy America? Why are people not freaking out? Does the media have them so locked down they can’t even see what’s in front of them?
Yes, by enacting a plan concocted by conservative shit holes over the last 40+ years and documented for everyone to see in Project 2025.
Reasonable people who are aware are freaking out. Reasonable people that are focused on more personal things are likely to catch on once the effects reach them personally.
Conservative cultists will just blame whoever their propaganda tells them to.
By flooding information ecosystems with absurdist spectacles alongside draconian policies, the regime induces cognitive dissonance that paralyzes coherent opposition
As long as he hates brown people, it’s all good.
So, first of all, I’m making this comment assuming that these tariffs are going to actually be imposed, then stick and not be quickly yanked. My guess is that they’re probably going to stick.
A tariff is a tax on consumers that benefits otherwise-uncompetitive domestic producers.
There are three items here.
For semiconductors, there’s been a – plausible, to me – argument that having domestic chip fabrication has national security implications. The US doesn’t presently do a lot of modern chip fabrication, and if you figure that AI and some other important things may be constrained by access to chips, or that physical access to chips might be security-critical, that may be a strategic good.
It has a downside in that it will make chips and the products they contain cost more for American citizens. But I don’t think that the idea that having domestic chip fabs is advantageous is all that strange. Under the Biden administration, we had legislation also passed, the CHIPS and Science Act, which subsidized domestic chip fabrication. Does basically the same thing, same rationale, just that with the Biden approach, the taxpayer pays and the government doles out money and under the Trump approach of using tariffs, the entities specifically using the chips pays a tax on those chips, and domestic manufacturers basically get a benefit relative to foreign competition.
The idea is that there’s a positive externality to having chip manufacture be domestic. I have no idea whether 25% is a reasonable tariff, but the idea of a tariff isn’t intrinsically unreasonable, I think.
For autos, I think that this is mostly domestic politicking. There are important swing states that manufacture automobiles, and transferring money from Americans purchasing autos to auto manufacturers has been a theme; in Trump’s first term, that was one area that he established a higher domestic parts requirement for within NAFTA->USMCA.
I guess that it’s theoretically possible that there’s a national security benefit – I mean, in World War II, American ability to domestically manufacture automobiles at scale was quite important – but I kind of doubt that we’re going to see that kind of sustained conflict. And I’m skeptical that we’re really at massive risk if we don’t produce autos domestically. I also think that it’s probably possible to have them manufactured in friendly countries.
So I think that that’s most-likely economically-inefficient. Americans who buy autos will unnecessarily pay a tax, which will benefit domestic automakers. Part of domestic politicking, and a result of the fact that Presidential elections favor swing states, and currently, swing states do auto manufacture. Call it an inefficiency baked into the way our political system works.
I don’t know the story about pharmaceutical manufacture. I mean, COVID-19 did highlight that it could be important, in a global pandemic, to have domestic or at minimum friendly supply chains of certain medical goods, but I think that the US did pretty well already on vaccines.
kagis
It looks like Elizabeth Warren, a prominent progressive Democratic senator, recently sponsored a bill aiming to benefit domestic pharmaceutical manufacture, with a public justification of national security:
https://www.warren.senate.gov/newsroom/press-releases/warren-smith-renew-fight-to-strengthen-us-pharmaceutical-manufacturing-capacity-and-end-over-reliance-on-foreign-countries-for-life-saving-drugs
It also says that she worked with Marco Rubio (Republican, and now a cabinet member in the Trump administration) on related material:
So I’m guessing that it may be that there’s some level of bipartisan support for protectionist policy for pharmaceutical manufacture on national security grounds.
https://www.bls.gov/mxp/publications/regional-publications/charts/top-6-pharmaceutical.htm
It looks like the top place in the US to do pharma manufacture is Puerto Rico, which I’d guess has something to do with its special tax and regulatory status.
kagis
Yes:
https://en.wikipedia.org/wiki/Pharmaceutical_industry_in_Puerto_Rico
So my guess is that this one probably isn’t just domestic politicking; Puerto Rico isn’t politically-critical.
I have not read up on the material, and one could certainly go looking further, but I suppose that a pharmaceutical tariff could be reasonable, if we’re worried about access to medicines in a second COVID-19-style situation. At minimum, I doubt that support for such a tariff is something specific to the Trump administration.
Are there downsides? Sure. It’ll make medication more expensive for Americans. It’ll make cars more expensive for Americans. It’ll make electronics (and things made with electronics) more expensive for Americans. The real question is whether any benefits to having domestic sources are worth that additional expense, for each item.
My own guess is that there’s probably an argument for some level of tariff for chips, albeit maybe not 25% – which is a questionably nice, round number – probably not a very good justification for cars, and possibly some level of justification for pharmaceuticals, this last item based entirely on what I quoted above, as I’ve no prior familiarity with the situation.
Cars and car parts are largely produced in Mexico or Canada. The supply chain is heavily integrated across both borders, with parts being sent back and forth for production and assembly. A 25% tariff would increase the cost of cars drastically. It would take a long time before local plants could be planned and built. Consumers would take a huge hit.
They are being manufactured in friendly countries. Canada and Mexico are both friendly countries. Trump and his policies are making enemies of them very quickly. Soon the US won’t have any friends left.
Yeah, I’m not saying that it wouldn’t have an impact, but rather that I don’t think that the rationale is internalizing an externality – it’s being done for political reasons.
People are purposely ignoring the news. They can’t be bothered until the shit hits the fan and then suddenly they’re going to be screaming and yelling , why nobody told them.
The 88% that didn’t vote for him are. US Governance is slow to react to anything and has yet to figure out this is a real problem, those that aren’t bought and paid for by Orange Burger Troll.
The US has a lot of contributing factors that make it more difficult for individual citizens to react, so far.
Among many other reasons.