The Tariff Beatings Will Continue Until Morale Improves - Paul Krugman
From
Tangerine Toddler@21:1/5 to
All on Tue Jul 8 13:15:35 2025
XPost: alt.fan.rush-limbaugh, alt.atheism, alt.home.repair
XPost: rec.arts.tv, aus.politics
The Tariff Beatings Will Continue Until Morale Improves
News flash: Trump is still Trump
Paul Krugman
Jul 8
READ IN APP
The video above has nothing to do with the subject of this post. A big red- headed woodpecker got to work right in front of me yesterday, and I thought
Id give him a few seconds before getting to the dreary subject of tariffs.
Yes, tariffs. Many investors seem to have deluded themselves into believing that Trump was done disrupting world trade, and some economists, myself included, were hoping that we wouldnt keep having to write about stupid, feckless trade policy. But here we go again.
By now we were supposed to have scores of trade deals signed. Instead, yesterday Trump began posting letters on Truth Social (diplomacy! ) telling
a variety of countries that they would face high tariffs on Aug. 1. The
first two letters were to South Korea and Japan, both told that Trump would
put a 25 percent tariff on all their exports. Some countries are facing
even higher tariffs. Overall, the tariff rates announced so far look very
close to the widely ridiculed Liberation Day tariffs announced on April 2.
Honestly, Ive written so much about tariffs that its hard to find new
things to say. But let me offer a few notes on where we seem to be now.
These tariffs are really, really high
One way to look at the newly announced tariffs is in the light of history.
The infamous Smoot-Hawley tariff of 1930 pushed the average tariff rate to about 20 percent. So far every country that has received a letter will be facing rates higher than that.
Another way to look at it to ask how much we would expect these tariffs to reduce trade. The key number is the elasticity of substitution in world
trade the percent fall in imports caused by a one percent rise in import prices. The median estimate from many studies is 3.8, which implies that in
the long run 25 percent tariffs will reduce trans-Pacific trade by almost
60 percent. Thats a lot.
Side note: If I were a government employee, this post would probably be
flagged for DEI because I just used the word trans.
There were never going to be genuine trade deals
These tariffs are going to hurt South Korea and Japan, although theyll hurt
U. S. consumers even more. So why didnt Korean and Japanese negotiators
make big enough concessions to satisfy Trump?
Because there was nothing for them to concede. South Korea has had a free
trade agreement with the United States since 2012, so most U. S. exports to Korea face zero tariffs. Japan, like other wealthy nations, has very low tariffs on most goods. Neither country, then, was in a position to offer
big tariff reductions, because their tariffs were already minimal.
Here's part of Trumps letter to South Korea, alleging that the countrys
Tariff, and Non Tariff, Policies and Trade Barriers are responsible for the bilateral trade imbalance:
Notice that Trump offered no specifics because there arent any. How were
the South Koreans supposed to end unfair trade practices that exist only in Trumps imagination?
Heres an analogy that occurred to me: Imagine that you have a belligerent neighbor who threatens to take revenge unless you stop dumping trash on his lawn. You reply, truthfully, that you arent dumping trash on his lawn. His response is to accuse you of being intransigent and slash your cars tires.
The only possible out here would be a series of fake deals, in which
countries pretend to have offered significant concessions and Trump claims
to have won big victories. Some people still think that will happen the
new tariffs arent supposed to take effect until Aug. 1. But the tone of
those letters and Trumps clear obsession with tariffs make me doubt that
hell call the tariffs off, in part because of my last observation: Attempts
to mollify Trump always end up emboldening him to demand more.
Why make a deal with a man who will surely break it?
As I already mentioned, South Korea and the United States have had a free
trade agreement (KORUS) since 2012. This agreement wasnt some vague
memorandum of understanding. It was the result of years of tough
negotiation, followed by intense political debate in both countries before
our respective legislatures passed the enabling legislation.
Yet Trump is simply ignoring that hard-won agreement. His letter to the
South Koreans doesnt even mention KORUS, let alone explain why the United States is reneging on its solemn promises.
Japan doesnt have a free trade agreement with the United States. But it
does have Most Favored Nation status, which means that under international trade law it is entitled to face tariffs no higher than those America
committed to under the last major global trade agreement, the Uruguay Round that concluded in 1994. Again, these tariff commitments werent embodied in
some casual memorandum. They were the result of years of negotiation, whose results had to be approved by Congress.
And again Trump isnt even trying to explain why hes going back on a longstanding U. S. commitment.
The point is that Trump doesnt feel bound by trade deals America has made
in the past. Why should anyone expect him to honor any new deals he makes,
or claims to make, now?
Obviously this behavior isnt unique to tariffs. Many domestic institutions, from law firms to universities, have discovered that attempting to appease Trump buys you at best a few weeks respite before he comes back for more.
Its possible that the governments receiving Trumps tariff letters havent figured that out yet. But they will. And my bet is that the TACO people
Trump always chickens out are wrong in this case. Ill be happy to be
proved wrong, but right now it looks as if deeply destructive tariffs are really coming.
--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)
From
Chris Ahlstrom@21:1/5 to
Tangerine Toddler on Tue Jul 8 11:31:37 2025
XPost: alt.fan.rush-limbaugh, alt.atheism, alt.home.repair
XPost: rec.arts.tv, aus.politics
Tangerine Toddler wrote this post while blinking in Morse code:
The Tariff Beatings Will Continue Until Morale Improves
News flash: Trump is still Trump
Paul Krugman
Jul 8
<
https://paulkrugman.substack.com/p/the-tariff-beatings-will-continue>
<snip>
Side note: If I were a government employee, this post would
probably be flagged for DEI because I just used the word trans.
:-D
There were never going to be genuine trade deals
These tariffs are going to hurt South Korea and Japan, although
theyll hurt U. S. consumers even more. So why didnt Korean and
Japanese negotiators make big enough concessions to satisfy
Trump?
Because there was nothing for them to concede. South Korea has
had a free trade agreement with the United States since 2012, so
most U. S. exports to Korea face zero tariffs. Japan, like other
wealthy nations, has very low tariffs on most goods. Neither
country, then, was in a position to offer big tariff reductions,
because their tariffs were already minimal.
Trump does not know what he is doing. He's clueless.
Here's part of Trumps letter to South Korea, alleging that the
countrys Tariff, and Non Tariff, Policies and Trade Barriers are
responsible for the bilateral trade imbalance:
Trump does not know what the trade deal was with Korea. He
probably doesn't even know there was a trade deal. He's clueless.
Notice that Trump offered no specifics because there arent any.
How were the South Koreans supposed to end unfair trade
practices that exist only in Trumps imagination?
<snip>
Why make a deal with a man who will surely break it?
<snip>
The point is that Trump doesnt feel bound by trade deals America
has made in the past. Why should anyone expect him to honor any
new deals he makes, or claims to make, now?
Obviously this behavior isnt unique to tariffs. Many domestic
institutions, from law firms to universities, have discovered
that attempting to appease Trump buys you at best a few weeks
respite before he comes back for more.
Its possible that the governments receiving Trumps tariff
letters havent figured that out yet. But they will. And my bet
is that the TACO people Trump always chickens out are wrong in
this case. Ill be happy to be proved wrong, but right now it
looks as if deeply destructive tariffs are really coming.
Trump will drop the tariffs if they agree to sponsor a new
Trump hotel and golf course :-D
--
I didn't know he was dead; I thought he was British.
--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)
From
Chris Ahlstrom@21:1/5 to
Mitchell Holman on Tue Jul 8 16:42:12 2025
XPost: alt.fan.rush-limbaugh, alt.atheism, alt.home.repair
XPost: rec.arts.tv, aus.politics
Mitchell Holman wrote this post while blinking in Morse code:
Chris Ahlstrom <OFeem1987@teleworm.us> wrote in news:104jdkr$3km8e$2@dont-email.me:
Trump does not know what he is doing. He's clueless.
Anyone who uses the "Mr Japan" to address ANYONE is too addled to serve
in any public office.
<
https://www.al.com/politics/2025/06/trump-ridiculed-for-blanking-on-world-leaders-name-calling-him-mr-japan-dangerously-embarrassing.html>
Trump ridiculed for blanking on world leader’s name, calling him ‘Mr.
Japan’: ‘Dangerously embarrassing’
“Dear Mr. Japan, here’s the story: you’re going to pay a 25% tariff on your
cars, you know? So we give Japan no cars. They won’t take our cars,” Trump
told Bartiromo.
Worn out geriatric fart!
--
There is brutality and there is honesty. There is no such thing as brutal honesty.
--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)