to you know what (apologies to Abrahams and the Zuckers).
In one day, US taxes roughly $2.4 trn worth of goods (2023 amounts). Biggest one year tax increase in dollar terms since… ever, at $364 bn (if Trump goes through with plans). Automatic escalation clauses if the target countries retaliate (Canada already has declared).
My $364 billion tax revenue increase is based on a constant import levels. Assuming a (generously high) elasticity of one yields a $290 billion tax increase. The former is 1.2% of 2024Q4 GDP, the latter is 1%.
Estimates of the impact, given the reality, from PIIE. The authors of that study did not believe Canada and Mexico would retaliate. I think, for the former, that assumption has been OBE.
Must say I did not expect the trade war to begin in earnest so quickly. And I did not expect Canada and Mexico would be the primary targets, when I first wrote up the syllabus. What happened to China as the most egregious trade policy offender (a view I actually shared)?
This might entail re-arranging my Econ 442 teaching plan.
Thanks, Trump!
PS: Can I freeze avocados and tomatoes? Asking for a friend.
I nominate Randy Rainbow to write the lyric and and perform “Yes, We Have No Avacados”. Music by Irving Cohn, of course.
Menzie Chinn: “I did not expect Canada and Mexico would be the primary targets, when I first wrote up the syllabus. What happened to China as the most egregious trade policy offender (a view I actually shared)?”
Elon Musk has billions invested in car factories in China and it is one of his largest markets. Wouldn’t want to upset them too much. Musk has been kissing Xi’s *ss for years now for special tax breaks and exemptions from the usual China partnerships required for foreign business enterprises. Musk has also said that Taiwan should cede control to Beijing. Musk and Xi are quite chummy so Musk would be expected to lean on Trump to go easy on Chinese tariffs.
apparently trump wants war with Mexico, Canada and Europe. Apparently they are the enemy. On the other hand, Putin and Russia emerge unscathed in the trump war on the world. So the Republican position this morning is Russia good, Mexico, Canada and Europe bad. Reagan would be rolling over in his grave. hey rick stryker, econned and bruce, you have now been backed into a corner of waging war on your traditional allies while cozying up to your enemies. way to go, knuckleheads.
bruce, I hope you enjoy having your fixed income retirement get crushed by trump. bruce is going to get slaughtered economically over the next 4 years. but trump has told him we will need to suffer some pain, so he will go along with the plan enthusiastically. you are what is called a sucker, bruce.
Oh, and here is Trump’s new appointee to the State Department Darren Beattie:
“Taiwan will inevitably belong to China. It’s only a matter of time. Not worth spending any capital to prevent.”
Republicans are enamored with the authoritarians in China and Russia. They are envious and want Trump to be like them.
republicans thought they won the cold war over the soviet union. and they simply took a bended knee to the soviets and putin in their latest actions. apparently all that adoration about reagan was simply hogwash. because republican leadership is allowing the old soviet union to rise from the ashes. and we have no response. if you notice, fools like rick stryker have become noticeably silent the knuckleheads have realized what kind of buffoon they elected, but have no response to the chaos now. and my guess is china will be more powerful than the usa by the time trump leaves office, based on the regression i see thus far.
The same pattern was apparent among Bush II supporters. The second Iraq War was one reason for defection, but several of my colleagues who had been ardent Shrub supporters turned against him when it became clear that he didn’t care about the budget deficit. Policy guys care about policy. Narcissists don’t.
And Musk is bragging about bringing any wobbly Republicans to heel for the Putin loving Tulsi Gabbard. He is making personal phone calls to key Republican senators.
“Gee, it would be a shame if someone contributed $20 million to your next primary opponent.”
The oligarchs are in charge of the government.
By the time my comment is moderated and posted there will be several additional policy changes and backtracks from the Musk/Trump regime.
Also, the price of glue is up. I should have stocked up in November.