Trump's Tariffs

Transcript

0:08
There's been way too much made about tariffs--
0:10
Tariffs are always bad economics,
0:13
tariffs aren't good,
0:14
tariffs are bad.
0:16
But these tariffs aren't nearly big enough,
0:20
and they're too easily substitutable
0:23
for them to cause very much trouble
0:25
relative to the size of the global economy.
0:28
The way to see that
0:29
is to think of these in terms of what they are,
0:32
the totality,
0:33
both U.S. tariffs imposed on foreign,
0:35
and retaliatory, imposed back on U.S.,
0:39
which come to, then,
0:42
amounts that are 15 to 20% of the tariffable total,
0:50
which gets you to a total tariff of about $100 billion,
0:55
which is tax
0:56
that some government will collect.
0:59
That's what it is.
1:00
It's tax that some government will collect.
1:02
When you get right down to that,
1:03
$100 billion global-tax increase
1:07
isn't really enough to cause a big problem
1:11
in what's an $80-trillion global economy.
1:14
It's way too small.
1:15
Is it bad? Yes.
1:17
Is it a negative? Yes.
1:18
But it's a small negative,
1:19
and it's even smaller than that,
1:21
because so much of this
1:24
is what can easily be substituted.
1:27
For example, on the one hand,
1:29
the Chinese tariffs against American soy beans
1:34
get sold through a broker to some foreign country,
1:38
like, let's say, to make up an example,
1:40
the Netherlands,
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who turn around,
1:42
and for a brokerage commission,
1:44
but only a brokerage commission, that would be less than 1%,
1:47
sell it back to China.
1:49
Once you put something on a ship on the water,
1:53
it's cheap to move it almost anywhere,
1:55
and then other, of course,
1:57
is that automobile tariffs,
1:59
which are much discussed,
2:01
the American autos sold into China,
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are not all,
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but are almost all manufactured in America
2:08
by European manufacturers,
2:11
who will instead sell from Europe into China,
2:14
and then from America into Europe.
2:16
These tariffs will be much smaller
2:18
than anything anyone talks about,
2:20
which is one of the reasons
2:21
that, since they've been announced,
2:23
the stock market's
2:24
been pretty much doing nothing but going up.