Bessent confirmed to Treasury; presses for gradual increase to 20% universal tariffs
are they really this stupid? there must be a hidden agenda. ah, I know! WWIII!
The new Treasury Secretary is pushing for new universal tariffs on US imports to start at 2.5% and rise gradually, moving higher by the same amount each month. They could be pushed as high as 20%. They think this will create a US “Fortress of Solitude," but it will reduce the competitiveness of US industry and impoverish US consumers. Strategic tariffs are okay; universal tariffs are delusional.
They think a 20 percent tariff will solve our trade deficit. Here are the numbers:
In 2023, the United States imported goods and services totaling approximately $3.83 trillion.
A 20 percent tariff on all imports would raise $766 billion cet. par.
The US trade deficit in 2023 was $780 billion.
Of course, there’s no way that trading partners would not strike back. Can you say, “Smoot Hawley?” This could send the world economy into depression—along with the budget cuts DOGE may come up with.
And what comes after depression? War. There is an argument to be made that Trump is a Zionist Manchurian Candidate who will use Israel to incite the Middle East oil crisis that the Neocons believe will take China’s economy and government down and clear the way for NATO’s invasion of Europe in about two years.
I asked GPT-4o and DeepSeek, “What will be the effect of universal 20% tariffs on imports to the US? Please explain your reasoning step by step.”
GPT-4o:
mplementing a universal 20% tariff on all imports to the United States would have multifaceted economic effects. Here's a step-by-step analysis:
1. Immediate Impact on Import Prices:
Increased Costs for Importers: U.S. importers would face a 20% tax on all foreign goods, leading to higher acquisition costs.
Potential Price Hikes for Consumers: Importers may pass these increased costs onto consumers, resulting in higher prices for imported goods. This is particularly concerning for essential items like food, electronics, and clothing.
2. Inflationary Pressures:
Rising Consumer Prices: As the cost of imported goods rises, the overall price level may increase, contributing to inflation.
Impact on Domestic Goods: Domestic producers might raise their prices in response to reduced foreign competition, further fueling inflation.
3. Effects on Domestic Production:
Potential Boost for U.S. Manufacturers: Higher import costs could make domestically produced goods more competitive, potentially stimulating local industries.
Supply Chain Disruptions: Many U.S. manufacturers rely on imported components. Increased costs for these inputs could lead to higher production expenses, which might be passed on to consumers.
4. Consumer Behavior and Demand:
Shift in Consumption Patterns: Consumers may reduce spending on higher-priced imported goods, opting for domestic alternatives or foregoing purchases altogether.
Decreased Purchasing Power: Higher prices can erode consumers' real income, potentially reducing overall consumption and slowing economic growth.
5. International Trade Relations:
Retaliatory Tariffs: Trade partners may impose their own tariffs on U.S. exports in response, harming American exporters.
Trade Volume Reduction: Increased costs could lead to a decline in both imports and exports, affecting global supply chains and international trade dynamics.
6. Government Revenue and Fiscal Policy:
Increased Tariff Revenue: The U.S. government would collect more revenue from the imposed tariffs.
Potential for Fiscal Adjustments: The government might need to implement policies to counteract negative economic impacts, such as subsidies for affected industries or social assistance programs.
7. Long-Term Economic Growth:
Potential GDP Contraction: Studies suggest that significant tariffs can lead to a reduction in economic output. For instance, a proposed 20% universal tariff combined with a 60% tariff on Chinese goods was estimated to reduce long-run economic output by 1.3%.
Investment Uncertainty: Trade policy instability can deter both domestic and foreign investment, hindering economic growth.
Conclusion:
While a universal 20% tariff aims to protect domestic industries, it carries risks of higher consumer prices, inflation, strained international relations, and potential economic slowdown. Policymakers must carefully weigh these factors and consider mitigation strategies to address potential adverse effects.
DeepSeek:
Implementing a universal 20% tariff on all imports to the United States would have significant and wide-ranging effects on the U.S. economy, global trade, and international relations. Below is a step-by-step analysis of the potential impacts:
1. Immediate Impact on Prices
Higher Costs for Imported Goods:
A 20% tariff would increase the cost of imported goods, as importers pass on the additional cost to consumers. This would lead to higher prices for a wide range of products, from electronics and clothing to raw materials and machinery.Inflationary Pressure:
The increase in prices for imported goods would contribute to inflation, as consumers and businesses face higher costs for everyday items and inputs. This could erode purchasing power and reduce disposable income.2. Impact on Consumers
Reduced Consumer Choice:
Higher tariffs could make some imported goods prohibitively expensive, reducing the variety of products available to consumers.Lower Standard of Living:
As prices rise, consumers may cut back on spending, leading to a decline in overall consumption and a potential reduction in the standard of living.3. Impact on Domestic Industries
Protection for Domestic Producers:
Domestic industries that compete with imports would benefit from reduced foreign competition. This could lead to increased production, job creation, and investment in these sectors.Inefficiency and Lack of Competition:
While some domestic industries may thrive, the lack of foreign competition could reduce incentives for innovation and efficiency, potentially leading to lower-quality products and higher prices in the long run.4. Impact on U.S. Exporters
Retaliation from Trading Partners:
Other countries are likely to retaliate by imposing tariffs on U.S. exports. This would make U.S. goods more expensive in foreign markets, reducing demand and hurting U.S. exporters.Loss of Export Markets:
Retaliatory tariffs could lead to a decline in U.S. exports, particularly in sectors like agriculture (e.g., soybeans, corn) and manufacturing (e.g., automobiles, machinery).5. Impact on Supply Chains
Disruption of Global Supply Chains:
Many U.S. industries rely on imported components and raw materials. A 20% tariff would increase production costs for these industries, potentially leading to supply chain disruptions and reduced competitiveness.Relocation of Production:
Some companies may move production overseas to avoid tariffs, leading to job losses in the U.S. and further weakening domestic manufacturing.6. Impact on Economic Growth
Short-Term Slowdown:
Higher prices, reduced consumer spending, and disruptions to trade and supply chains could lead to a slowdown in economic growth in the short term.Long-Term Uncertainty:
The uncertainty created by such a significant change in trade policy could discourage investment and hinder long-term economic growth.7. Impact on International Relations
Strained Trade Relationships:
A universal 20% tariff would likely strain relationships with key trading partners, including allies like the European Union, Canada, and Japan, as well as competitors like China.Risk of Trade Wars:
The imposition of tariffs could escalate into a full-blown trade war, with countries imposing increasingly restrictive measures on each other's goods. This would further disrupt global trade and harm the global economy.8. Impact on Government Revenue
Increased Tariff Revenue:
The U.S. government would collect additional revenue from the tariffs, which could be used to fund public programs or reduce the deficit.Offset by Economic Costs:
However, the economic costs of reduced trade, slower growth, and potential job losses could outweigh the additional revenue generated by the tariffs.9. Sector-Specific Impacts
Agriculture:
U.S. farmers, who rely heavily on exports, would be particularly vulnerable to retaliatory tariffs, leading to lower incomes and potential bankruptcies.Manufacturing:
While some manufacturers might benefit from reduced competition, others would suffer from higher input costs and reduced access to foreign markets.Technology:
The tech industry, which relies on global supply chains, would face higher costs and potential disruptions, affecting innovation and competitiveness.10. Political and Social Implications
Public Backlash:
Higher prices and economic uncertainty could lead to public dissatisfaction and political backlash, particularly if the tariffs are seen as harming ordinary Americans.Geopolitical Tensions:
The tariffs could exacerbate geopolitical tensions, particularly with China, and weaken the U.S.'s position in international trade negotiations.Conclusion
A universal 20% tariff on imports to the U.S. would have profound and complex effects on the economy, trade, and international relations. While it might provide short-term protection for some domestic industries, the broader consequences—such as higher prices, reduced consumer spending, retaliatory tariffs, and disrupted supply chains—would likely outweigh the benefits. The policy could lead to slower economic growth, strained international relationships, and significant challenges for businesses and consumers alike. Careful consideration of these trade-offs would be essential before implementing such a measure.
Protection always reduces competitiveness.