For the past year Donald Trump’s tariff mania has shaken the world economy. Firms and governments have been forced to contend with an ever-shifting patchwork of levies, deals and exemptions.
Having surged after Mr Trump launched his all-out trade world war in April, the money they earn for the government is no longer rising.
Before Mr Trump’s second term, America was collecting about $8bn-9bn a month in tariffs plus associated taxes and fees. By October it was snatching a bit over $30bn, equivalent to about 1.2% of GDP if sustained for a year (see chart 1)
Yale University’s Budget Lab estimates that 15% of the money earned from Mr Trump’s duties is cancelled out by lower tax revenues elsewhere owing to slower GDP growth.
Some/most of that might be reversed on SCOTUS decisions, who knows.
More and more coming around to the idea that tariffs, while economically illiterate and useless, might not be so bad.
30bn in extracted value is bad, but the federal government snatches up that from income taxes in less than a week:
So the idea being we redistribute tax burden from where it's super heavy to where it's kind of low... of course that won't happen, and the tariffs just ADD to the pile of taxation-related burden. Then WHY BOTHER?!
archive: https://archive.md/mIRe3
Why do I feel like the mainstream consensus opinion on everything these days is overreact
pretty much yeah.
I could answer "algo," "partisanship" or "dopamine nation" but what do I know
Yeah. All of the above is prolly the right answer.
Also, by raising the price level in the domestic economy, tariffs indirectly cause bracket creep in income taxes.
Sorry, not tracking. How does that work?
As a business tariffs add to my expenses, which reduces my net profit and reduces my taxable base. As an individual, it increases my expenses, which does nothing to my taxable base but reduces the buying value of my net cash after withholding. How would tariffs cause me to move up a bracket in either situation?
Think about people whose salaries have automatic cost of living adjustments.
Price inflation causes all of those salaries to rise, which pushes more income into higher brackets.
Those aren't salaries per se. Any mass cost of living increase is most likely retirement benefits from the government. Most companies don't do automated salary bumps. Minimum wage levels aren't even annual and sporadic instead without any alignment to the cost of living. More politics typically. And it's a myth that price inflation automatically translates to higher worker pay. Companies have been aggressively charging more and instead trying reduce pay or terminate payroll to maximize profit margins. This is not a new game; we saw the same thing in the early 1990s recession. So, I don't see the premise holding water that higher brackets are reached.
Most companies may not have automatic salary increases but it’s not uncommon for government/university jobs.
You certainly might be right that it’s more than offset wage losses elsewhere in the economy.
True, didn't think about that