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28 sats \ 8 replies \ @028559d218 16 Mar \ parent \ on: Trump’s False Tariff “Fairness” Argument econ
"They do provide significant short term revenue- tariffs of 20-25% on imports from your three largest trade partners is a substantial revenue grab."
This is what I found:
"Two separate tariffs – a 25 percent tariff on imports from Canada (except for some Canadian energy and resource imports that will be tariffed at 10 percent) and a 25 percent tariff on imports from Mexico – have been put on hold until March. We estimate these additional tariffs on imports from Canada and Mexico would increase revenue by about $110 billion over the rest of Calendar Year (CY) 2025 if they are allowed to go into effect. If made permanent, we estimate they would raise $1.3 trillion through Fiscal Year (FY) 2035 on a conventional basis. Accounting for economic effects, we estimate the combined tariffs (both the enacted and delayed) would raise $1.3 trillion through 2035.
So in other words, 130 billion per year on average... for 1.3 trillion over 10 years.
https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
"In fiscal year (FY) 2024, the government spent $6.75 trillion, which was more than it collected (revenue), resulting in a deficit."
130 billion / 6.75 trillion is .019 or... 1.9%. So it offsets less than 2% of federal spending.
"Yes they increase cost to consumers thus reducing consumption especially of imported goods thus reducing the trade deficit and thus the need to increase debt."
My understanding is that tariffs... have a 'negative' effect on US debt namely because they reduce foreign investment in the United States and number of 'overseas' bond holders.
From https://www.wsj.com/opinion/trade-deficits-are-capital-surpluses-why-tariffs-are-driving-us-stock-market-down-80f70799
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"The $918.4 billion deficit reflects an equal $918.4 billion capital surplus. In other words, foreigners are buying $918.4 billion more in U.S. assets—such as stocks, bonds and real estate—than U.S. citizens are buying in foreign assets. This demand for U.S. assets boosted the value of American stocks and bonds and helped fund the country’s growing budget deficit.
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"A simple example shows the relationship between trade and capital flows. Suppose an American buys a $40,000 Toyota made in Japan. Toyota has three options for what to do with these dollars. It can buy $40,000 worth of U.S. goods or services, in which case there would be no trade deficit. Or, because it expects the American economy to grow, it can invest $40,000 in U.S. capital—say, the S&P 500 index, U.S. government bonds or American real estate. It can also temporarily invest the funds in short-term, interest-bearing assets such as Treasury bills, commercial paper or bank deposits that enhance the lending capabilities of American financial institutions and fund short-term corporate borrowing needs."
In other words, a trade deficit is a 'capital surplus' and the US can export capital around the world and sell it... increasing the demand for US bonds stocks and real estate.
https://en.wikipedia.org/wiki/List_of_the_largest_trading_partners_of_the_United_States
Look at the substantial trade deficit USA has with almost all of its major trading partners!
Mexico Canada and China export ~ 505, 412 and 438 billion to US in 2024.
$1355 billion x ~ on average across the board say ~ 20%= $270.1 billion tariffs income.
That's a lot of debt servicing capacity- bringing the empire back from the brink of insolvency...in the short term at least until the consequential costs hit.
Even more if you hit the EU (605b imports 2024) as Trump has suggested he will.
He is a man on a mission to prevent the imminent insolvency of empire USA.
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This is why we have Bitcoin. To manage risk and 'pivot' away from the United States (and its debt and inflation specifically).
Why would foreign countries buy US bonds... when they can buy Bitcoin instead?
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Yes Bitcoin certainly provides a useful neutrality and mobility of capital and wealth.
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Plus the Chinese tariffs?
Another way of putting it is operating a trade surplus for the last 7 decades means USA owns less and less of USA and is increasingly owned by foreigners who own US real estate equities, bonds and businesses and increased debt to foreigners- eg China.
USA sold.
Failing to operate a trade surplus inevitably results in need to sell assets and or take on debt.
That's what the USA has been doing for decades.
Spin it how you like, USA has been for decades failing to live within its means- using its financial dominance to sell off assets and increase debt.
Selling US Treasuries simply increases the level of debt US is obligated to redeem.
IE debt trap requiring an endless cycle of increasingly large debt raising exercises.
Increased foreign investment simply means less profits and control remain in US hands.
These are not good things.
These are signs of decline and decay.
Tariffs are simply trying to delay the almost inevitable insolvency of the US empire.
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"Failing to operate a trade surplus inevitably results in need to sell assets and or take on debt.
That's what the USA has been doing for decades.
Spin it how you like, USA has been for decades failing to live within its means- using its financial dominance to sell off assets and increase debt.
Selling US Treasuries simply increases the level of debt US is obligated to redeem.
IE debt trap requiring an endless cycle of increasingly large debt raising exercises."
100% Agree. I wish more American understood this (and you're probably not even American).
The answers are:
- raise taxes and lower expenditures
- increase productivity of Americans (to raise tax revenue or increase wages)
- or ???
Saylor's 'speculative attack' through Stablecoins which Paul Ryan wrote about I think is being talked about in government. It will be interesting to see if it actually happens
#914617
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Trump is arguably trying 1 and 2, via tariffs which both raise revenue and reduce imports while encouraging domestic producers.
DOGE is also supposedly reducing expenditure as is requiring traditional allies to be more self reliance militarily.
3- concede defeat as the British did post WW2 and enable the transfer of hegemony in a manner as to preserve some of your wealth and power while accepting the age of US exceptionalism, is over...
Bitcoin is probably relevant here as a unique form of liquidity, wealth and capital free of any nation state dependency.
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Bitcoin is probably relevant here as a unique form of liquidity, wealth and capital free of any nation state dependency.
That's why it's amazing!
As far as #3 goes, that's exactly what Richard Wolf says.
If you haven't seen it it's a great watch. I'll check out the spider's web too...
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Yes I watched the Wolff video and largely agree with what he says.
Spiders Web is relevant to how declining empire of Great Britain preserved some of its wealth and financial system privilege.
Originally it was the British military who gained the Hong Kong territory lease thus positioning of British banks in Hong Kong which enabled British imperialism to gain access to Chinese markets and subjugate Chinese sovereignty as a result of The Opium Wars.
The Chinese have not forgotten the dual importance and strategic alignment of banking and military.
Today hundreds of CCP nominees are positioned within the HSBC and China via Hong Kong is reverse engineering the global trade payments banking protocols.
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