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Posted

Please do not litter this thread with political garbage.  Whether you support Trump or not doesn't matter.  The fact is that he's the President and has just stated he's implementing 25% tariffs on Mexico and Canada starting tomorrow.

The purpose of this thread is to discuss the ramifications of these tariffs on the economy at large, inflation, and our individual wallets.

Not just from the tariffs the US is levying, but any retaliatory tariffs from the target countries.  A list that is likely to grow.

The most obvious impacts will be increased gas, automotive and produce prices (along with my beloved tequila).  But can the Surly economists walk me through the broader implications?

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Posted

Probably going to fuck up beef prices because we import feeder cattle from both to fill the gap with the smaller current herd and your Texas feedlots are more reliant on those cattle to keep the yards filled and need them to be cheaper because your feed is more expensive than it is up in the heart of the corn belt. We can expand the herd but biology makes it take a lot longer than pigs and chickens. 

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Posted
  On 1/31/2025 at 5:25 PM, DixonHur said:

Please do not litter this thread with political garbage.  Whether you support Trump or not doesn't matter.  The fact is that he's the President and has just stated he's implementing 25% tariffs on Mexico and Canada starting tomorrow.

The purpose of this thread is to discuss the ramifications of these tariffs on the economy at large, inflation, and our individual wallets.

Not just from the tariffs the US is levying, but any retaliatory tariffs from the target countries.  A list that is likely to grow.

The most obvious impacts will be increased gas, automotive and produce prices (along with my beloved tequila).  But can the Surly economists walk me through the broader implications?

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In practice, the domestic importer pays the tax, not the foreign exporter.  The tariff costs are ultimately passed to domestic consumers.  Tariffs MAY hurt foreign exporters by making their goods more expensive and reducing demand and lowering trade volumes.

Not only do foreign goods become more expensive, but there is inflationary pressure on prices from domestic producers as they can now charge higher prices since foreign competitors are forced to charge higher prices to cover tariffs.  In all scenarios, consumers lose.

Targeted countries will undoubtedly levy retaliatory tariffs, which makes them ultimately self-defeating.

 

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Posted
  On 1/31/2025 at 5:40 PM, Guadaloopy said:

Targeted countries will undoubtedly levy retaliatory tariffs, which makes them ultimately self-defeating...

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which could ultimately lead to the dissolution of NAFTA USMCA and completely wreck the Texas economy.

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Posted

Should have been titled the guacamole war. The tariffs will lead to retaliatory tariffs which will lead to negotiations.

Posted
  On 1/31/2025 at 5:50 PM, Bolero88 said:

The real issue is: how the hell does the president have unilateral power to declare tariffs? Shouldn't this be done by Congress if at all? Just bogles my mind that one person could have that kind of power. Real stupid system we have here. 

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Congress has effectively ceded that authority to the president for decades now.  Not great, bob.  

Posted
  On 1/31/2025 at 5:50 PM, Bolero88 said:

The real issue is: how the hell does the president have unilateral power to declare tariffs? Shouldn't this be done by Congress if at all? Just bogles my mind that one person could have that kind of power. Real stupid system we have here. 

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Congress bailed on the power to implement tariffs after the massive Smoot-Hawley fuck-up in the 1930s.  They then passed laws allowing the Executive branch to levy tariffs under the justification that it could do so more dynamically than Congress.  Of course, that all supposed an Executive branch that was respective of history and the general norms of international trade.  Congress could take back the authority any time it wants, but this Congress absolutely will not.

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Posted

Something like 30% of the lumber we use each year comes from Canada, and I believe the US Forest Service just paused or cancelled bidding for their own production.  Combine that with higher demand for rebuilding from Helene and the LA fires and lumber costs are about to explode. 

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Posted
  On 1/31/2025 at 6:17 PM, Pig Bellmont said:

Is it political to point out that these tariffs are prohibited by the trade agreement his administration negotiated and signed? You’d think it’s in the government’s interest to respect treaties or trade agreements with our allies - but nah fuck all that. Let’s disrupt favorable international relations for funsies. 
 

Oh also you seem to be missing impacts on housing due to lumber tariffs, increased costs for aluminum, the Fed keeping interest rates high, private sector more likely to implement hiring freezes to stockpile cash in case of an economic downturn, and the retaliation against goods we export which all will inevitably make kitchen table issues more expensive and also destabilize the stock markets. 
 

Should we also ignore that it seems a material motive for the administration is rooted in misunderstanding the definition of a trade deficit? Because that seems like an important part of this whole situation too

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It is political to a point, but it is good color.  

I'm less interested in the how, who or why as I am in the thought process behind tariffs, there impact on the consumer, lessons from previous trade wars, how long they typically last, how they are typically resolved and the lasting impacts on the economy of the country imposing them.

Trump ran a campaign on being the "tariff king" so I don't think his implementation of tariffs is unexpected or particularly noteworthy.  The impacts are ...so that's what non-political means in this context.

Posted
  On 1/31/2025 at 6:57 PM, DixonHur said:

This coupled with fewer Mexican laborers in US agriculture should drive the produce prices through the roof, no?

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I think it should be noted for ag at least, "Mexican" includes all of Central America. 

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Posted
  On 1/31/2025 at 7:19 PM, Covri said:

Here’s how this plays out. Trump issues tariffs, costs of goods go up across the board. Trump “negotiates” a cease on tariffs. Prices never come down. Corporations and billionaires make additional trillions in profit post tariffs. The 99% get poorer overall. 
 

 

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24 posts...it was a good run.

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Posted

I live in Alaska and heat my shop with heating oil. Most heating oil for sale in Alaska is imported from Canada. I will probably pay $200/month, directly, as a result of this policy.

For the nation at large, inflation will come roaring back. It may take a few months but I expect to see inflation tick back over 3% soon with a mortgage rates setting post-pandemic records.

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Posted
  On 1/31/2025 at 7:19 PM, Covri said:

Here’s how this plays out. Trump issues tariffs, costs of goods go up across the board. Trump “negotiates” a cease on tariffs. Prices never come down. Corporations and billionaires make additional trillions in profit post tariffs. The 99% get poorer overall. 
 

 

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GIF by Giphy QA

Posted

To be clear my post wasn’t political in the slightest I just used trumps name because he’s doing it. If it was Biden or Clinton or Bush my point would be the exact same.

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Posted

Sounds like I’m going to still be too poor to buy steaks at Costco. 
 

Great. 
 

I hope this doesn’t make it so I’m too poor to buy discounted steaks at Kroger. 
 

 

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Posted
  On 1/31/2025 at 7:50 PM, That Guy said:

Sounds like I’m going to still be too poor to buy steaks at Costco. 
 

Great. 
 

I hope this doesn’t make it so I’m too poor to buy discounted steaks at Kroger. 
 

 

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Do you even Dollar Tree, bro?

 

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Posted
  On 1/31/2025 at 7:53 PM, Captainant said:

It's gonna be fun when prices shoot sky-high due to all the economic warfare going on for really no reason at all. 

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We basically had the wheels down for the soft landing. And now we decided to go full speed into a concrete wall like the jet in Korea.

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Posted
  On 1/31/2025 at 6:50 PM, DixonHur said:

That sounds ominous, can you expand on it a bit?  

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I'm not sure which part you'd like me to expand on, but placing a 25% tariff on all imports from Canada/Mexico violates both the spirit and the letter of the free trade compact the US has with them under the USMCA and could result in one or all three from eventually pulling out of it after a series of tit-for-tat retaliatory measures. How likely that is would be anyone's guess at this point.

But, if that were to happen, the negative economic and fiscal impacts on the Texas economy and tax base would be quite painful, as the state relies heavily on international trade, especially with Mexico.

Of course, being smaller economies that are more reliant on us than we are on them, the impacts could be far-reaching in Canada and Mexico. For example, one-sixth of Mexico's GDP is tied to trade with the US, and I'm sure that eliminating a good chunk of that trade could be economically and socially destabilizing. And that, in turn, could cause a further increase in the number of migrants seeking to cross the border, much like the economic crisis they had with the devaluation of the peso during the 1990s.

A more technical read on the state of the USMCA and the potential impacts of tariffs can be found in this newly published report:
https://www.piie.com/microsites/2025/future-usmca

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Posted
  On 1/31/2025 at 7:55 PM, Auto Driller said:

We basically had the wheels down for the soft landing. And now we decided to go full speed into a concrete wall like the jet in Korea.

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don't ask why but this reminded me of one of my favorite episodes of MythBusters, the one where they see how fast of a collision it would take to vaporize a car (compact compact)

So here's our soft landing:

 

mythbusterscarsmash.gif.9c7570abf1f2d8f1aa938de862346a05.gif

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Posted
  On 1/31/2025 at 6:50 PM, DixonHur said:

That sounds ominous, can you expand on it a bit?  

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Some presidential tariff powers are delegated by Congress, generally, see the above CRS links.

Some are pursuant to treaties, which may permit and circumscribe POTUS or the US' ability to impose tariffs, in accordance with the treaty.

Tariffs imposed in violation of the treaty may breach the treaty, causing it to dissolve.

Posted
  On 1/31/2025 at 6:20 PM, wildcat09 said:

Something like 30% of the lumber we use each year comes from Canada, and I believe the US Forest Service just paused or cancelled bidding for their own production.  Combine that with higher demand for rebuilding from Helene and the LA fires and lumber costs are about to explode. 

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Also,  there's probably going to be a growing labor shortage in the real estate construction industry because of (No CR) reasons....

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Posted
  On 1/31/2025 at 7:19 PM, Covri said:

Here’s how this plays out. Trump issues tariffs, costs of goods go up across the board. Trump “negotiates” a cease on tariffs. Prices never come down. Corporations and billionaires make additional trillions in profit post tariffs. The 99% get poorer overall. 
 

 

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This is exactly the playbook.

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