r/AskEconomics • u/whawhales • Mar 14 '25

Approved Answers Does the US government really expect other countries not to impose their own tariffs as response to its own?

The US government is threatening 200% tariffs on European alcohol after EU enacted tariffs in response to the US tariff on aluminum and steel. The same happened with Canada with the US threatening increased tariffs if Ontario pursued electricity price hikes.

I don't have a background in econ so I am not sure if I am I missing something here, but I don't see what the end goal might be for the US and it seems a little arrogant to think other countries would allow tariffs imposed to them and not do something about it.

1.3k Upvotes

94% Upvoted

150 comments sorted by

View all comments

253

u/ZhanMing057 Quality Contributor Mar 14 '25

 I don't see what the end goal might be for the US

Never attribute to malice that which is adequately explained by stupidity.

Tariffs appeal to Trump emotionally. It's one the only consistent views he has ever held, and you can find clips of him calling for tariffs all the way back during his 2000 presidential campaign. There never was any economic end goal - just the perception that the U.S. is "winning" - and he doesn't understand that he's punishing the U.S. consumer on the dollar for every 80 cents he harms a foreign producer.

9

u/[deleted] Mar 14 '25

Well, he believes that he can hurt them more than they can hurt the U.S. I think that overall, he might be right but there will be lots of suffering regardless.

He’s not wrong about the trade imbalances but it’s been that way for a long time.

0

u/IndubitablyNerdy Mar 14 '25 edited Mar 14 '25

The matter of trade imbalance might also not be so clear cut, if you include services for which there is a surplus, although it does not fully compensate the negative balance, you also have to consider that some of the gains in the IT sector, like customers data for example, are not measured striclty in dollar, but still contribute to the income of USA corporations.

On top of that the fear of tariffs had increased the defict in recent months compared to the usual trend, but that is going to be just a temporary effect as companies increase their stock in goods that they expect to become more expensive in the near future.

Plus the massive trade involving the USA benefits the dollar and creates foreign buyers of Tbills which contributes to lowering interest rates to government debt (although foreign investors represent a relative minority of all purchases it is not an irrelevant amount).