From a small northwestern observatory…

Finance and economics generally focused on real estate

Unilateral tariffs

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It occurs to me that a few people might not understand why unilateral tariffs against Mexico might be a suicidially bad idea, the global equivalent of “Hey, hold my beer while I try this!”

Here are a few random reasons, just off the top of my head, why this is an amazingly stupid idea… in no particular order…

  1. Any tariffs on imports from Mexico will be born, 100%, by American consumers, and generally those at the bottom tier of the consumption curve.
  2. It pisses off our one of our two nearest trading partners, and will undermine our relations with the other one.
  3. It opens the door for China to create and expand a hedgemony in the Pacific Rim….
  4. …which, in effect, nullifies the Monroe Doctrine (3 & 4 being the most devastating problem — no one in the Pacific Rim will trust us ever again).
  5. Since the left coast of our country is vitally dependent on Pacific Rim trade, it’s…. well… I’ve already used the word suicide.  Given that Washington, Oregon,  Hawaii, and California didn’t vote for Trump, why does he care???
  6. We export zillions of things (trucks, airplanes, software, indie movies, timber, building products, video games, wine — just to name the things that come from MY ZIP CODE) to the Pacific Rim.  Kiss those asses goodbye.
  7. Google “Smoot Hawley Tariff Act of 1939” and see what you get.
  8. Unilateral shifts in complex demand curves are theoretically unsupported (OK, that one requires a bit of graduate level econ, but bear with me here.)
  9. On a practical level, I can now import anything I want from El Salvador at a price 1% higher than I previously received from Mexico.  Thus,  I’ve simply baked in a 1% consumer inflation to be borne entirely by folks who shop at Wal Mart (see #1 above).
  10. Oh Christ it’s such a stupid idea….

Written by johnkilpatrick

January 26, 2017 at 3:42 pm

Posted in Economy, Finance, Inflation, Uncategorized

Tagged with , , ,

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