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Recently Trump made a big deal of the fact that he had induced Germany to reduce tariffs on American cars sold in Germany, from the existing 10% to 2.5% which is the American tariff on German cars sold in America. This was due to Trump's threat of reciprocal tariffs.
Now this is genius and should be carried to its logical extreme. That is, we should immediately lower all of our tariffs on foreign products to zero, and then threaten our trading partners with reciprocal tariffs unless they match our tariffs (0%). One should expect that our trading partners would succumb to that threat and immediately lower their tariffs to zero in order to avoid reciprocal tariffs.
Trump would then have accomplished in a couple of months what was never accomplished in 80 years of GATT talks, which essentially collapsed with the DOHA round under GHW Bush. That would be an astonishing achievement, never before seen in the history of the world, and the greatest move toward international trade liberalization possible. What more could a country do than lower its tariffs to zero?
Then comparative advantage would enrich the world. Would American manufacturers suffer? Not at all. Would foreign manufacturers suffer? Not at all. Those who wanted to regulate and tax producers into oblivion would fare worse than those who lower taxes and regulations and create a welcoming environment for producers. Trump invited companies to the US with a promise of lower corporate taxes. Yay, Trump!
Then he could go to work on subsidies (Ex-Im bank, energy companies, chip companies, etc., etc., etc.).
More prosperity. So much prosperity. We will all get tired of so much prosperity. We will say, it's too much, we can't stand all of this prosperity. Please. President Trump, we can't take it anymore....YYYYAAAAYYYYY!!!!
Will this happen?
Of course not.
But, imagine. The prosperity that would break out.
Discussion (17)
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If something should make it impossible for both me AND Steve Fast to serve, Nanocelt TheContrarian will be responsible for trying to teach all you people some basic economics.
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This sounds sweet.
And, it would cause all of those sudden tariff experts in the media during the election who said Trump was the dumbest guy evah for talking tariff tariff tariff to suddenly have to swirl around for something smart to say because they would realize that they had been had, simply part of the negotiation.
Cha-Ching.
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That would be a great idea but don't expect anything even remotely like that from Trump. He likes tariffs. He thinks we are going to make money by charging tariffs. It doesn't cross his mind that tariffs will raise prices for consumers. His Commerce Secretary said the same thing in a Fox interview recently, pooh-poohing the idea that 25% tariffs would cause inflation. The guy thinks that magically, 25% tariffs will just rake-in the dough while not costing our citizens anything.
Trump has been given a deserved approval boost and honeymoon period so far, but if inflation doesn't come down within about six months, people are going to sour on him. If he follows through with this retarded 25% tariffs across the board, he is going to wreck the economy and we're going to see Impeachment #3.
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Just the threat of tariffs have really slowed engineering hiring in the Detroit area. Between the uncertainty of tariffs and fuel economy/emission/electric requirements, companies are battening down the hatches -- not hiring, not investing. Fortunately , if they do have to hire, there are H1-Bs available so they don't have to hire evil , over priced Americans.
The unemployed among his voter base may well turn on Trump hard, at least those who haven't yet retired.
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