p.enthalabs

Trade (and Tariffs)

xkcd.com · Read Story HN original

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> The present understanding is that the tale's moral supports team effort and recognition of the vital part that all members play in it. In more authoritarian times, however, the fable was taken to affirm direction from the centre.

Oof.

I think a lesson is going to be taught, all right.

Unfortunately the feedback loop in nations is much slower than in bodies.

That’s the whole trick: if the feedback cycle is long enough, the next person gets blamed for it, not the current.
The most impressive thing about Trump is that he managed to shorten up the feedback loops on an overwhelming number of his policies.

You would expect the US industry to silently absorb his trade policies and only break decades after he leaves. Somehow, they aren't healthy enough for that.

Slack is expensive. At least it has a cost that is not always appreciated.

Everyone has been optimizing to increase profits for decades. A 1950's US economy would have taken a lot longer to collapse.

I think we’re on course to be in really rough shape by 2028. I hope it’s rough enough to spark genuine change in our politics.
I think we’re on course to be in really rough shape by 2028.

Exactly: just in time for somebody else to take the blame.

That depends, Trump certainly wants a fourth term (yes, fourth, he's counting the one that was "stolen").

I think, realistically, the limiting factor won't be the politics, it will be his health. He's 80 years old.

To make the analogy even more perfect, the character should be holding a saw rather than a hammer.
Or a gun, because America is famous for its gun culture, and it would be more clearly "shooting yourself in the foot".
This is a pretty reductive take. If a nation works 6 days a week, 12 hours a shift then obviously they will outcompete any nation where people work 5 days a week for 8 hours.

Protecting workers from that kind of competition seems fair. Tariffs aren't bad in itself. They are just a tool.

Unfortunately fools wielding a tool like this can cause a lot of damage, but that's true for any tool.

I don't think the comic is claiming that all tariffs in any context are bad, that would indeed be a reductive, bad take.

Given the timing and the metaphor of blood being sent to and from a limb, this is almost surely a reference to the tariff threats against Canada.

Oh this is a good point. I was not aware of new developments with US-Canada today, that makes the more-than-normal stingy reactions expected.

Sorry, I'm European and can't keep up with the erratic US Gov. I read a summary at the end of the week.

The US would be better off if more people followed your example.
I never realized I've been working this much.
That is a ... pretty reductive take as well.
"If a nation works 6 days a week, 12 hours a shift then obviously they will outcompete any nation where people work 5 days a week for 8 hours." - This is not obviously true to me, can you explain why it is for you?
Imagine a factory line where each worker makes 10 items per hour.

In, say, China a worker doing 996 will make 720 items. Te average working hours in the Netherlands are 36 hours or so per week. Making 360 items.

As long as there is free trade the Chinese factory will simply outproduce the Dutch one since they utilise their capex better.

Obviously European workers can't be reasonably asked to compete in an open market when labour laws, salary, health inspection etc... in China are at a 1920 Dutch level.

You seem to be assuming that productivity scales linearly with time spent working, which doesn't seem to inherently be true.

If your factory workers spend twice as long working, it's likely that more widgets will get made. I'm not certain you can generalize too far from that, though.

So this is just not correct. First off a factory can run 24/7 regardless of the shift length, which is what will determine the total productivity. Second off it assumes there are no trade offs in terms of more errors or anything else by having longer shifts. Third off it assumes that factories in different countries are going to be equally effective with each other, instead of different nations/areas within nations specializing in certain areas. It also ignores the economic benefits that come with having people in your nation having more leisure time, higher education, more time with children, etc. It's a very simplistic model that is also very incorrect.
It's not a perfect example of course but the gist that tariffs do and should protect workers is true.

Tariffs aren't inherently bad, they're a tool.

Eh, I think every industrial society has independently arrived at something like 36-44 hours of factory time per week (plus overtime up to a max of something like 55 hours) , simply because that's the actual optimum[1]. While tariffs might work for other stuff [2], I think you're right that they can be a narrowly applicable scalpel, but plausibly you accidentally picked a bad example.

[1] Caveats apply. For example more advanced machinery with higher stress may necessitate shorter shifts; while highly motivated creative work might permit longer shifts at times.

[2] Adam Smith -for instance- was mostly against tariffs, though he identified certain exceptions such as national defense reasons.

Protecting Workers, I'd add a couple more; it's not smart to be fully dependent on a trading partner or partners for critical and essential products, such as food, tariffs can help ensure you maintain domestic industry. Also helping to control dumping by an aggressive trade partner to ensure a domestic industry isn't destroyed.
So since the math extrapolates linearly and there is apparently no cost, why would anyone settle for anything other than 1680 items per week?
Right at first approximation you'd certainly think so!

At second approximation, the <Dutch> factory in that example might net make a larger number of items per hour because the workers are more alert and concentrated and make less mistakes. So the <dutch> factory and the <chinese> factory might actually be producing the same number of items.

Of course then there's more steps to this, and you need to start actually looking at systems and what you're optimizing for etc etc.

And, not everything is factories. For instance, if your operator (at eg. Smit or Mammoet) is operating a large crane that's lifting a 100 ton oil platform, maybe you'd prefer them to be wide awake and on the ball, regardless.

Are you aware of comparative advantage? What matters is opportunity cost, not raw output. (Also, unit labor cost is wage per hour divided by output per hour, so the number of hours worked is not really relevant. In other words, longer hours make workers richer and not their output cheaper.)

This was worked out by David Ricardo 200 years ago. You still benefit from trade even if (granting the argument) you are worse at producing everything.

Although it is not a law of nature, and it is not linear across the hours.. In general if I work M-F more work will be done that if I just work on Monday morning.
It is clear that more work is done if you go from 1 day to 5 or 1 hour to 8, but that still includes plenty of time for rest.

Does the same hold for going from 5 days to 7 days or 8 hours to 16 hours?

A reasonable person should agree at some point adding more time will make people less productive due to lack of breaks, rest, etc.

Is it obvious where the line is? if so, where?

So you’re saying if I work at mcdonalds 60 hours a week i’ll make more than an investment banker working 40 hours a week? Awesome, i’m filling out a job application now!
https://en.wikipedia.org/wiki/Four-day_workweek

"As of July 2022, more than 80 UK companies and organisations are recognised as having permanently implemented a four-day working week"

"As 50% of workers claim improved productivity during the period, the Manufacturing Technology Centre (MTC) announced it will permanently provide a four-day workweek to its 820 employees"

This is an example of “person pretends to not understand a simple thing thus naming conversation impossible”
The comic satirizes the 2026 US tariff rationale, vs. worker protection tariffs. But I do often think about Noam Chomsky's opposition to NAFTA[0] when talking heads explain why tariffs are bad.

[0]: <https://chomsky.info/secrets03/>

Just as a note: if you work 6x12 shifts, you're actually working less efficiently, because you'll be regularly fatigued, make more mistakes, need more rework, etc etc. You might end up with the same net yield as if you'd done 3x6 hour shifts.

(edit: And only if you don't fall asleep at the controls and destroy the factory first. 12 hour shifts are brutal. At least one place I know bans you the next day if you exceed 11h, for your own protection if nothing else)

(edit2: This was documented in the 1st world war when munitions factories that tried to ramp up by increasing shift durations past a certain point ended up hardly improving productivity, but did increase accident and sickness rates to the point that it was starting to hurt the war effort. )

Unfortunately in our hyper partisan, sound bite, climate you can’t discuss the trade offs of tax policies anymore you either support the party line or you’re the enemy.
I am European... Tariffs are completely normal here we protect our workers all the time.

It seems I've 'stung the wasps nest' on HN by not denouncing them outright it seems.

How many 100% tariffs do you have on every good from an entire country?

A scalpel is one thing.

Dynamite is something else.

I was not aware this comic was a reation to new developments for US-CAN. I thought it was just a generic take on tarrifs and responded accordingly.

I agree the current US strategy behind tariffs is pretty retarded. Good example of fools trying to use a powerful tool.

Yeah, I think you've got it. Agreeing with you and continuing my thought:

If I had to guess at the comic author's intention...

It's commentary that the logic is flawed. If this is why you're doing tariffs, you're not using them correctly.

Not that tariffs should never be used.

Context is important. 100% tariffs on Canada is stupid, 100% tariffs on China because we don’t want any industry dependent on a major military adversary is something worth discussing even if the answer is to not do that in the end
It would certainly help if people wouldn't believe flat-out lies.

Like, "other countries pay the tariffs."

No. They don't.

How can we have nuanced conversation about the trade-offs, if the leader of one political party blatantly lies about a fundamental detail of how tariffs work?

600% reduction in the price of drugs?

We can't even start a discussion with people who believe this. At all. They reject any information, even their own knowledge of how numbers work.

I wish we would call them "taxes on imports" instead to reflect what is actually happening.
Merriam-Webster: "The meaning of TARIFF is a schedule of duties imposed by a government on imported or in some countries exported goods."

Apparently the dictionary is "woke."

Wikipedia: "A tariff, or import tax, is a duty imposed by a national government, customs territory, or supranational union on imports of goods and is paid by the importer."

Oxford Economics: "Tariffs are taxes imposed by a government on goods and services imported from other countries."

I know what tariff means, I just think many people don't realize it means "taxing US citizens" and not "sticking it to some country we don't like"
Sorry, I didn't mean to imply you didn't know.

I meant, "Yes, you're so damned right! It's even in the dictionary! I wish people would educate themselves and not believe lies!"

100% agree
I have never met anyone who thought other countries paid the tariffs. Im sure they exist but this seems more like something retractors say to make themselves feel smarter than people in support of tariffs. People who care at all about tariffs tend to know how they work.

The president says a lot of really stupid things and those stupid things are highlighted, but that’s not indicative of the average and one of the main talking points about tariffs is that they increase costs in order to incentivize local suppliers

My dad worked 12 hour shifts for decades (4 days on, 4 days off). Anyone working 72 hours a week isn't going to last long.
> This is a pretty reductive take.

Yes, because it's a one-panel comic.

> Protecting workers from that kind of competition seems fair. Tariffs aren't bad in itself. They are just a tool.

At the cost of consumers paying for goods/services?

Your take is as reductive as the take in the comics.

People in a nation working 5 days a week for 8 hours are getting paid less and less over time. Heck lot of people now need double shifts to make ends meet totaling up to 12 hr or even more. They can only afford a Christmas light from the nation mass producing it by working 6 days a week, 12 hr shift.

And lets not pretend this was only about protecting workers. There were multiple agendas:

1. Bring back jobs 2. Remove trade barriers between countries 3. Make US rich by collecting huge amount of tariffs

All three can't be true at the same time. If jobs are brought back then you aren't going to collect huge amount of tariffs because nothing is being produced outside. If trade barriers are removed then that comes at a cost of slashing tariffs so you can't really collect huge amount of tariffs.

The foolish reasoning highlighted in the comics is the reason there is so much trade war.

Have you ever heard of comparative advantage?
> If a nation works 6 days a week, 12 hours a shift then obviously they will outcompete any nation where people work 5 days a week for 8 hours.

If a nation has a decades-long technological lead over another nation, then obviously it will outcompete it in many industries and enjoy major advantages in trade. But somehow that advantage doesn't seem to count in your argument. Cherry-picking one side's advantages is not an analysis of international trade; it's just bias.

The context here is that president Trump has an interesting view of trade deficits / surpluses. Specifically, he frequently cites cases where the US has a trade deficit with another country -- where the US is spending more in that country than that country is in the US -- as if that country is "taking money" from the US.

This is a bit peculiar, because it ignores the whole "the money we are spending is being exchanged for goods that come back to the US" part of the trade. I.e. it's not a problem that I have a "trade deficit" with the grocery store, because I have my groceries.

https://finance.yahoo.com/economy/policy/articles/trump-brag...

It also excludes money spent on services, which in most cases favours the US.
Look, my trade deficit with my barber is a real problem in our relationship. I need them to give me $20 for something, damnit.
> which in most cases favours the US

Used to favor the US. Trump's policies and behaviors are ruining the US' reputation as a stable trading partner by demonstrating what damage can be done by an idiot with unchecked power. The rest of the world is going to permanently veer away from US services because it's not impossible (and sadly likely) another feckless imbecile will get put in charge.

Actually you, like most of us, have a trade deficit with the grocery store and the movie theater, and a trade surplus with your employer. Which one is more enjoyable to have?
The experience of the trade deficit with the grocery store and the movie theater is more enjoyable, overall. I get films and ice cream and a good time out of it. From my employer I get a lot of sitting in meetings -- they have to pay me to make me put up with that!

My point is that reducing it entirely to "did I gain or receive cash-money from this?" isn't a particularly useful framing.

I think it's what can happen when we shift more towards an exchange orientation and away from a communal orientation. Or in other words, as we see the world more win-lose and less win-win.
Yeah that's the point. If you can get away with having a trade deficit not balanced by a surplus, that's a good thing because you get more movies and ice cream for less meetings. Trade deficits are good, people are just sending you free stuff.
It’s a silly question, since (short of a major life change or economic system change) you need the grocery store and the job to have decent quality of life.

You need to trade your labor for money, and you need to trade your money for food. I would argue that there isn’t a huge difference in the fundamental nature of those two trades. Framing them in terms of “trade deficits” is pointing out which direction money is moving in each instance, but fundamentally they’re both just trades.

Indeed that is true, which is the point of both OP(or at least my takeaway). Attaching a moral value to trade deficits or surpluses, as the current administration seems to be in favor of doing, is fairly nonsensical.
I dislike this analogy because a nation is not a person grocery shopping and anyway if a single grocery store was the only way to get food that would put me in a very lopsided relationship with them and the power dynamics in such a case are obviously bad for the person.

Nations have interests and there’s a real conversation to be had that a country should ensure it has strategic industries so its existence is never at the whims of another.

> a real conversation to be had that a country should ensure it has strategic industries

Then let that be the reason for tariffs rather than the bullshit argument of trade deficit = taking money.

In academic and think tank circles it is. Too many people treat political theatre and, frankly, entertainment pieces as reflective of the actual policy debates when they are mass media designed to get clicks.
Right but this is actual policy. The Trump Administration does actual policy built off poorly formed fiscal reasoning. That's why we see blanket tariffs. There is no strategy.

Maybe some smart people, somewhere, would hypothetically have a strategy. Those people currently hold no power. It's not "political theater", it's our ACTUAL politics. It's just so ridiculous that it looks like theater. Which just means the situation is worse than you originally thought.

This is one view. Another view is that maintaining economic interdependence between countries — aside from making both countries richer via specialization and comparative advantage — is a great way to incentivize cooperation and prevent them from killing each other.

Examples here: https://www.hoover.org/research/when-trade-wars-become-shoot...

Needs to be two-way though. What if we rely on China, but they don't rely on us? Well then they can destroy us at any moment. It needs to be MAD to be a deterrent.
Regardless the analogy of grocery shopping falls apart and shows a total lack of understanding the other sides worldview
Also, Trumps argument always ignores the bulk of US economy and exports: services.

Somehow we count shoes and timber but not gazzilions in financial and cloud services.

Economically, it's a problem long-term. Dollars only have value if you can buy things with them. Japan, China, Saudi Arabia - countries we've had trade deficits with - have been buying our business, infrastructure, and real estate.

Not defending tariffs, but there's a reason people care about trade deficits.

He doesn't have a view on trade deficits. To imply he does is giving him far too much credit. The "most powerful person on earth" in charge of the United States fundamentally doesn't understand trade deficits or tariffs.

We do a disservice when we act like he has a strategy or view about these things. He doesn't. He is ignorant of how they work, and to prove it you only have to listen to his own words.

People are very quick to make kneejerk reactions to tariffs while assuming the other guys have different opinions.

The Biden admin went after Canada repeatedly for unfair trade practices, and issued a blanket 10% tariff on Chinese goods.

The only difference is to what degree they wield the tariff hammer, and in which direction it is swung.

The one thing the current admin does have a point on is non-tariff meddling. Numerous countries make it almost impossible to sell goods in their countries while the same is not true in reverse, or they levy a high price in garbage regulatory fees (see the EU's new packaging identification directive that completely destroys small business), or in completely made-up fines for vague behaviors not even they can define (see the EU's DSA which is exclusively used against monopolizing American companies while completely ignoring monopolist and predatory EU ones like Booking.com).

> completely destroys small business

Citation needed, I'm in the EU and there is small business

https://www.recyclingtoday.com/news/eu-ppwr-pause-request-us...

This regulation forces very small businesses to pay thousands and thousands of dollars to comply and register in EACH EU country (what the hell's the point of the union, exactly?). Even if they sell only 10 widgets to Belgian buyers, they need to register in Belgium and pay the fee. Insane.

So a small business selling 5-10k of widgets in EU now has to pay 2-5k in business destroying regulatory compliance fees, putting them out of business. Incredible incompetence from the people who brought you ineffective cookie nag screens.

It's not possible to exist as a small business in the EU because they create regulations to destroy you.

Try creating a business in Germany. You need 25,000 euros to create a GmbH! In the US you can walk into the office in New York City and have an LLC for $9 per 2 years.

The EU is a nightmare hellscape of over-regulation. This is why there are essentially zero EU unicorns. EU bureaucrats support ONLY large and entrenched businesses.

Why does the restaurant across the street from my house need to register in Belgium?

Sounds like you've identified an opportunity to make a company that helps EU startups navigate bureaucracy. You could do all the packaging registration on their behalf.

There was a big discussion of this recently here, which will give you more information, but yes, it is in fact destroying a large number of EU small businesses.

The EU has recognized this and they are scrambling to fix it in legislation due later this year.

So we've gone from "completely" to "partially", and the source is still just handwaved?
> The Biden admin went after Canada repeatedly for unfair trade practices […]

What were these practices?

So that's one (in which Canada happened to win multiple rulings at NAFTA and WTO panels).

Any others?

> The only difference is to what degree they wield the tariff hammer, and in which direction it is swung.

You are ignoring a massive difference. Trump wants balanced trade with each individual country. Pretty much everyone else who wants the US to reduce or eliminate its trade deficit just wants that to apply to total trade, not to each individual country.

The main reason money was invented was so you don't have to have balanced trade with each individual trading partner.

What is booking.com doing that violates DSA?

It operates as a monopoly and 10,000 hotels have sued it for anti-trust in Europe.

Despite qualifying for DSA thresholds, the EU pretends it doesn't exist and is not a monopoly. Because it's not American.

Booking.com literally is classified as a VLOP (very large online platform) under DSA: https://digital-strategy.ec.europa.eu/en/policies/list-desig...

It's also not the only European company to be designated as VLOP, as you'll find some EU-based adult content sites on that page as well, but if you really want a European company that is inexplicably missing from this list, I'd go with Spotify.

Cool! Link me to their fine under DSA.
I don't really have any idea if tariffs are good or bad. What I do know is that just announcing that they will go into effect with very little notice and then they won't go into effect and then they do but then they are decalared illegal because they weren't passed through the official methods isn't good.