The Economics Conundrum (In My Head) - The Tariff Panic

A central focus of Trump's economics is tariffs. Most of Trump's tariffs these days seem to be a form of economic warfare. He inflicts tariffs in order to persuade foreign governments to adhere to American political demands. But that wasn't how Trump introduced the practice of assessing tariffs to the American public.

Trump's original reasoning was to encourage manufacturers to produce goods that are sold in America right in American factories instead of all the outsourcing that cost so many American factory workers their jobs. Actually, there were two things that triggered American manufacturing job loses, outsourcing to defeat high American labor costs and environmental regulations that drove manufacturing offshore. Trump addressed overregulation in his first term and encouraged wealthy investors and large corporations to build manufacturing facilities in America again.

At first, between 2017 and 2020 until Covid hit, that was working. Employment opportunities abounded. But for his second term he wanted something more, more American manufacturing and less dependence on foreign nations, especially China, which used money from American consumers to finance military strength opposed to America's own interests. Tariffs were his preferred solution, make foreign goods more expensive and encourage manufacturers to produce their goods here in America tariff-free.

The problem with tariffs is that they inevitably have to be paid by the consumer since they are taxes on consumer goods - higher tariffs, higher taxes on foreign goods, higher prices for foreign goods.

Caution, AI Generated Lies?

Here's the problem from the perspective of a wealthy investor, Warren Buffett. Investors benefit from outsourcing since it allows them higher profit margins. Since imposing these new tariffs, Trump has stated that it is the investors who pay the tariffs by lowering their profit margins, not consumers by paying higher prices. Investors like Buffett should shoulder the added costs, Trump suggested. Retail prices shouldn't rise.

So here's Buffett's pessimistic response:

Buffett Warns: "HUGE CRASH Will Hit All Seniors’ Savings in 3 DAYS!"

Oops! I missed this:

This seems to be something entirely new. It renders YouTube virtually useless, doesn't it? Imagine the damage this can do if it isn't stopped.

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