Derek Scissors: Chinese Tariffs Don't Matter to the US Economy

Tariffs and Their Macroeconomic Impact

• 💡 Chinese tariffs are argued to not significantly matter in a macro sense to the American economy, except for those specifically tied to China.
• 🎯 The primary reason is that China does not buy a substantial amount from the US, outside of a few specific companies and products like Tesla, Starbucks, Nike, and chicken feet.

Transshipment and Tariff Evasion

• 🚀 Chinese goods are likely to transship through other countries to find the lowest tariff route into the US, a tactic they are adept at.
• ⚠️ Raising tariff rates on China, even significantly, will not deter this, as Chinese goods will simply become uncompetitive or find alternative pathways.
• 🔍 The focus should be on enforcing existing trade agreements and Customs and Border Patrol efforts rather than simply increasing tariff percentages.

Flawed Tariff Calculation

• 📊 AEI scholars identified a flawed calculation in the administration's tariff formula, suggesting it was manipulated to achieve desired high tariff outcomes.
• 🧩 The formula's assumptions were questioned, indicating it was designed to produce specific, high tariff numbers rather than an accurate reflection of trade policy.
• 💰 This manipulation suggests the tariffs are intended to be a permanent fixture rather than a temporary negotiating tool.

Tariffs as a Negotiating Tactic

• 🗣️ While President Trump may negotiate, the current tariffs are based on an outcome rather than other countries' policies, making them ineffective for negotiation.
• 🔑 Other countries cannot directly influence the outcome-based tariffs, only their own policies, rendering the tariffs incapable of achieving their stated goals.
• 📈 The tariffs are unlikely to achieve what the Trump administration claims because they are not structured to do so.