A question and answer from quora

That is a photo of a graveyard.  Included here for no reason.  Consider it an arbitrary visual. 

At Quora, I was asked recently whether Democrats are "mentally incapable of understanding that the purpose of tariffs is precisely to make foreign products more expensive in order to make domestic products more competitive?"

I answered for you, Democratic friends.

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friends. 

There is room for some confusion, in part because our Dear Leader himself seems to have multiple ideas about what “THE purpose” of tariffs is. Tariffs are such wonderful things, in his view, that they can serve many purposes. In part, yes, he does seem to want to encourage what some economists call “import substitution,” where buyers in an importing nation learn to bring their own supply chain within the borders.

But: no one has ever postulated that import substitution is a smooth or costless process, and Trump is not leveling with us about the costs, likely because he has not thought this through, he just thinks his advisers have.

Beyond that, he doesn’t seem to agree with you that this is THE purpose, (a) the only one. He also sees tariffs as (b) a way to raise revenue (never mind from WHOM exactly right now, other answers have addressed that), and as (c) a bargaining chip to help him negotiate on other matters. Here is a problem —these three purposes obviously conflict.

Tariffs can’t be a bargaining chip UNLESS you are willing to bargain them away, and stick with that. If you get an agreement on, say, fentanyl enforcement in return for a no-tariff promise, you have to be willing to stick with that. Thus, no tariffs to the extent agreed upon, no revenue, and no import substitution effect either. If the US chief executive goes back on his word on this, it makes the word of the US itself on such matters questionable and will hurt the ability of any forthcoming US govt to negotiate anything of value.

Incidentally, Trump does not seem willing to stick to his word. During this transition period he has threatened tariffs on Mexico and Canada that would directly violate the USMCA trade agreement among our three countries that HE negotiated and agreed to during his first term. Are Republicans mentally incapable of understanding that your word loses value when you break it?

The point, though, is that the three goals are at odds. If tariffs are bargained away like chips, they give the Treasury no revenue and they do not create import substitution. Likewise, if they are going to stay in place for a prolonged period (which would seem important for import-substitution purposes) they cannot be bargaining chips. Again, if they are going to be high enough to produce import substitution, they will not produce continuing payments, so their value as revenue will peter out. (And they will be replaced by…?) If they are low enough to be sustainable as a revenue source, their value in forcing import substitution is going to be limited.

And yes, I think democrats are sometimes obtuse about this subject. Some deliberately, some not. I think Trump is much more so. And I hope that all he really wants is the chance to make phone calls to foreign leaders. He can keep getting off those calls and telling us, “President X of country Y agreed to everything we want. I win again.” On this scenario, he doesn’t actually have to do anything, and we get passed the next couple of years (until the next Congressional elections) without much harm being done.

Just keep telling him, “yes, Dear Leader, that was a brilliant call. How about another round of golf?