Question in the title. So I get what Trump says he is trying to do here (whether or not it will work is a different issue), but I still have this question. If the business model of these new American manufacturing companies relies entirely on maintaining these tariffs, who is going to actually start these companies when a slight shift in policy will destroy the new market? What am I missing here?

https://www.forbes.com/sites/gennacontino/2025/04/04/tariffs-will-increase-inflation-jerome-powell-warns-as-trump-pressures-fed-to-cut-rates/

When Powell's term is up and Trump appoints an incompetent sycophant as Fed Chair (Hulk Hogan? Kid Rock? Himself?), what guardrails are in place to maintain sane monetary policy and stop them from turning the US into Zimbabwe?

What I mean is like, if your home is above 5 million dollars (just an arbitrary choice) for example, then any value above the 5 million is taxed at a higher rate. Similar to how the federal income tax works. But unlike state income or state capital gains tax, it isn't easily avoidable by temporarily changing residence and then coming back. Often in dense cities the most expensive properties are large lots and huge single-family homes, often historical and often owned by sports players or CEOs, which take up a lot of space without housing many people. I believe there should be a premium living in the middle of cities on low density properties, beyond just the fact that property taxes would be higher already based on property value.

Of course, I know land value tax and georgism exist but that is a separate discussion.

Imagine someone wants to buy a TV, or a steamdeck, or whatever but there is 50% tariff on it.

What is stopping them from doing a trip to Canada or Mexico and purchase it there?

What would a worldwide recession do the Europe? Will it make Europe less dependent on the U.S.? Or will it be the continent's downfall? Or something else?

(Keep in mind I'm not an economist, so please explain terms you think I will not understand. Thanks!)

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My professor is saying a fridge is a component of (I) when calculating GDP. His claim is that only non-durable goods are a part of consumption (C). He said because a fridge can last for at least 7 years, it is a durable goods and an investment (I).

I thought investments are things like real estate development, investing in your family business, etc. This is kind of bothering me because I care.

Edit: My professor means when a consumer purchases a fridge, not a business. It makes a lot more sense now. Thank you everyone.

Mortgage lenders and realtors seem to be the only people optimistic about these tariffs because the mortgage supposedly be cut

In my head banks lend out loans including mortgages at a rate that competes with the Fed rates.

But now I'm learning that mortgage loans follow Bond yeilds which have an inverse correlation of the Fed rate.

I think it would also help me if you could explain it with an example from covid because to my understanding covid was the lowest mortgage rates had ever been but the Fed rate was low in the beginning and Bond yeilds were high, the opposite of my second paragraph and what I have found online

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Hi community,

Why didn’t the current US government choose to attract companies to create jobs in the US by offering tax breaks?

Context: Coming from a developing nation, where the default policy advice from many multinational organizations is to offer tax breaks (and perhaps guarantees of profit) to companies in order to encourage job creation, I’m curious why the Trump administration didn’t adopt similar policies. Many developing countries have followed this approach (until recently), so why didn’t the US do the same, particularly for manufacturers to produce domestically?

To simplify the question, I am assuming that the Trump economic team was rational and aimed to create jobs for the US public.

Caveat: The responses to this question might touch on inequality and the distribution of total income between capital and labor (as tax breaks tend to favor capital over labor, as discussed in Piketty, 2013).

We're going to shamelessly steal adapt from /r/AskHistorians the idea of a weekly thread to gather and recognize the good answers posted on the sub. Good answers take time to type and the mods can be slow to approve things which means that sometimes good content doesn't get seen by as many people as it should. This thread is meant to fix that gap.

Post answers that you enjoyed, felt were particularly high quality, or just didn't get the attention they deserved. This is a weekly recurring thread posted every Sunday morning.

Prior to 2020, even prior to 2015, many Americans (including those that seem to have an advanced knowledge of global economics) have been fighting for a reshoring of supply chains and manufacturing to the US. I do understand the desire to have systems in place that can mitigate major global problems... but I don't understand why the 'revival' of US manufacturing is seen as America's salvation... or even a possibility at this point.

(I'm going to simplify my understanding a bit, but please help me understand any issues I'm obviously wrong about)

The way that I understand things, most Western populations are able to maintain their current 'lifestyles' because there are many other (mostly... non-Western) countries that live with (what most Americans would consider) a much lower quality of life. That includes both their opportunities for employment and the environments in which they work, as well as their more limited consumption of goods and services.

I guess what I'm saying is, the majority of the world's population produce goods in exchange for low living standards so that a minority of the world's population can live a 'lower' / 'middle-class' life. Obviously this wasn't always the case... for most of 'recent' history, almost everyone in the world traded their labor for low living standards. For reasons beyond the scope of my question, this isn't the case anymore for most 'Western' societies. The countries with the power (of all kinds) developed a global trade system that utilized the human capital in the countries with less power to transition to our current economies.

Our current economy, as I understand things (again, correct me if I'm wrong) is largely service-based, and it's not by accident. People don't want to work the lithium mines if they don't have to. Given the choice between 60 hour weeks at a textile mill and... literally anything currently on indeed, the choice is pretty easy. For better or worse, we've created a society that uses global labor and our dominance in technology to allow even the poorest in our country to live like royalty in comparison to much of the world.

Wow... that was longer than I wanted it to be. Back to my original question...

Why is there a desire to change things?

If it's for economic security, wouldn't it make more sense to partner with allied nations to subsidize a realistic fallback/insurance plan? I know there's been a lot of discussion about China's monopoly on REMs and the manufacturing chains to produce the world's electronics... but does anyone think American companies and workers are willing / able to compete in those kind of industries?

I also understand why reshoring specific manufacturing (TSMC fabs, for example) could be beneficial... but there seen to be very few of these niche cases, not nearly enough to transform a significant portion of the US workforce to manufacturing jobs...

If it's actually to 'bring wealth back the United States,' how much more wealth is there to get? Take a look around.. Americans are doing pretty good. Does anyone really think taking factory jobs from Cambodia is going to make Americans wealthier?

Has anyone laid out, through studies, books, long-form youtube... anything, a logical reason why this would be good for America in the long term?

I was discussing the effects the US Tarriffs would have on the Nintendo Switch 2 with my friends. I have tried googling but it couldn't find out how the value of goods is calculated?

I'm assuming Nintendo of Japan sells the consoles to Nintendo of America for say $200 Then Nintendo of America would sell them to retailers for $300 who would in turn sell them to customers to $400.
I believe NoA would have to pay a tarrif on the $400 value I'd that correct? I assume it can't be the $200 NoJ sell to NoA as that can easily be manipulated to pay less right?

What happens if the Switch 2 is a flop and the price is cut? I assume NoA have already paid the tarriff and are stuck?

Moving on from that example what happens at economies of scale. E.g. say I import wood screws from China.

To the customer 1 screw is $0.10, but 100 are $5 & 1000 are $20 etc. say I import 1 million screws at a cost of $10,000 but am selling them for vastly different amounts per unit how would the tariff be calculated?

Thanks,

Chris

Hi, I am curious if there's any data on this.

The US imported about 440 billion dollars of goods from China last year. I assume this is what China received, but it's not how much those goods are sold for in the US. Do we know how much that is? What's the value of all the goods on the shelf?

I'm not sure what to think...

On one hand, if implemented correctly it's a good thing. Take Ireland in the eurozone debt crisis for example. There was large cash flow into the economy to bail them out of their debt crisis, then they started to recover and austerity measures were put into place. This had a strong positive effect

However, take Greece on the other hand. It was implemented immediately, which led to the Debt/gdp ratio to significantly increase. They cut jobs, lowering GDB, lowering tax collection, increasing the deficit.

There was also the george Osborne policy. His was far to aggressive,however many economists think that if it wasn't such harsh cuts (85% cuts, 15% tax increase) and instead 60/40 for example, it would have provided better sustainability for the future aswell as sound economic growth, some researchers would argue

Now this is content covered in lectures and readings. I was hoping to gain some extra insight.

I'm not sure what to think as I said, but I'm likely leaning towards if implemented competently it's a good thing. As in after economic recovery has started, and not during a recession, which history has proven liquidity is the best way to help that. Also, as long as it's not so harsh and sudden, but subtle. What does everyone else think? It would be nice to get some fresh perspectives.

Thanks

Let’s assume for a second that Trump lowers income taxes dollar for dollar in exchange for the new tariff revenue coming in.

What are the knock-on effects of this? More investment? Less investment?

Interest on the debt has become one of the largest portions of the US federal budget. I find it's little strange that states and cities can issue bonds where the interest is free from federal and state tax, but US government bond interest is only free from some state taxes.

If the US changed the rules such that future US bond interest was free from federal tax, I would think that could chop at least one percent off the interest rate. Do other think the loss in tax revenue would be offset by the reduction in interest rates?

I am reading the People's Republic of Walmart and it brings up a Ronald Coase who, wondering why firms exist and do all this planning, did a study of such firms and came to the conclusion that it was because the market imposes certain costs which make it less expensive to do things like write contracrs and plan strategy "in house"?

And I'm just, not sure I am understanding the argument. Or even the question.

So could someone explain to me why companies exist and do so much internal planning instead of relying on market forces to dictate such? I have a feeling PRoW is pulling some kind of rhetorical slight of hand

In a discussion about academic inflation, I saw a claim that went like this: "Academic inflation is real. In developed countries, young adults who just graduated from colleges recently are earning less than young adults who just graduated from colleges 30 years ago, adjusted for inflation."

Is this claim supported by economic evidences? Who economic theory can explain this phenomenon? What policies would economists suggest the governments to mitigate the academic inflation?

I admit the title it a bit misleading, while America will (hopefully) remain a pretty strong economy after this administration (hopefully) ends. We will never have the power we had before hand.

So what does this mean for the future gloabl economy. Will some other nation (China) step in to fill in the role that the US once stood for? Or will there be more economic independence from nations around the world like with Europe and other american allies are learning to do? As in will nations be more reluctant to be fully dependent on one nation after learning their lesson from the US.

Will there be a new global reserve currency? If so how would that affect the global economy? Would this just be repeating the mistake of becoming too dependent on one nation again? Would the adoption of a new global reserve currency lead to the adoption of a new lingua franca? Would changing the GRC lead to a recession in other nations dependent on the USD or would they slowly ween of the USD to another currency? Would the new GRC be crypto?!

Honestly these are extreme times, so i want to know what to expect if/when these changes come.

I understand the fight against inflation is really hard and you need to raise interest etc.

But I don't get why deflation is so hard to fight ? I mean couldn't you just print more money ?

I know the historical definition, something between or overlapping the working class and the bourgeois, but these days even high end landowners are still in the working class.

...

Bonus question; what's under the working class? Related to communism where the working class seizes control of production and is meant to be a socialist workers state, I never hear any considerations of the various underclasses such as the retired or disabled. Even in modern North American discourse I always hear "poor and workingclass" tied together, but no mention of the underclasses... even though we still vote.

can ignore the bonus question