AG

@aghamilton29 · Twitter · 2025-02-02 15:22 UTC

That's obviously what will happen, but some people dismissing it as a negotiation tactic fail to understand that there are real consequences in the meantime. People only think in terms of finished goods, but the impact of a generic tariff is more significant on the supply chain. Let me give an example: A lot of manufacturing suppliers have fixed contracts for years. So they can't survive if you suddenly raise their costs by 25% on all the subcomponents and raw materials they get from Mexico/Canada, and can't suddenly adjust their supply chain on a whim. They can try to renegotiate their contracts, but that takes time and their customers will be resistant (plus that will mean higher prices for end consumers). In the meantime, they have to cut costs to stay afloat. That means cutting jobs, reducing investment, hiring freezes etc. That's real people getting hurt. The economy does well when it is relatively stable. Imposing random tariffs without an end goal is the opposite of stability. If there was an attached demand (we will impose this unless you take back these illegal immigrants etc.), then it kind of makes sense because it resolves itself and companies don't need to react/panic during the negotiation. But when it's just a general, we are randomly raising costs and there is nothing else attached, it does serious harm. It's also not clear that it's legal. A President doesn't have unlimited powers to impose tariffs, it has to be within the scope of what Congress has authorized. This means there will also be lawsuits (depending on the specifics) that will cost millions to taxpayers to defend (similar to Biden's abuses on student loans, eviction moratorium etc.).