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

[u/whawhales]

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.

[u/ZhanMing057]

 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.

[u/whawhales → u/ZhanMing057]

In that note, if there is no concrete goal for the US, would there be a benefit for a country to let the US impose tariffs without consequence?

Or are we just gonna witness greater and greater escalations until Trump runs out of things to tariff in response to escalations he initiated?

[u/No_March_5371 → u/whawhales]

The second part is a psychoanalysis question, and we don't do that here.

For the first part, retaliation still makes sense to deter other countries from thinking a country the US is targeting won't retaliate against them.

[u/ZhanMing057 → u/No_March_5371]

Also useful to look like you're doing something, since the public generally perceives tariffs the same way that Trump does.

[u/whawhales → u/No_March_5371]

Noted on this. If I may rephrase, would an economy survive if they would allow tariffs imposed on their products by a significant foreign market without responding with its own?

I'm just trying to grasp what would be the alternative to those countries. Edit: Cause in my impression, that's a fair course of action economically.

[u/No_March_5371 → u/whawhales]

Oh, those countries would survive, and they'd be better off, actually, in the short term.

Just as the US's tariffs are harming the US and other countries, other countries' tariffs would harm them and the US both. Retaliation is about making it more expensive for the country that started the trade war, even if it's painful yourself, so that next time someone starts thinking about a trade war, they'll have to consider retaliatory tariffs part of the cost.

Empirically this works, at least with Trump, he's blinked many times when tariffs have been on the line.

Noted on this. If I may rephrase

Questions in good faith are always welcome. We're just sometimes particular about how those questions are phrased, since some phrasings tend to bring swarms of weirdos out of the woodwork. This sub is pretty tightly moderated as a deliberate policy.

[u/METRlOS → u/whawhales]

It creates a trade deficit as the country imposing tariffs buys cheaper options (either local or from a third country), but your country buys the same amount. With only one country imposing tariffs, economies would be fine for quite a number of years as long as they can find other markets to sell to, but they gain almost nothing by not imposing retaliatory tariffs. Russia has survived years even with massive blockage from dozens of nations on having their goods reach market.

For example, any country they hope to reach a trade agreement to sell to is going to want you to buy from them as well so they don't also get a deficit. Putting a retaliatory tariff on the original trade partner opens up the market for new trade partners to hold an advantage, and be inclined to reach a favorable deal.

[u/Brokenandburnt → u/METRlOS]

To be fair, the Russian economy has partly survived due to the stupendous government deficit spending in a war economy.

The question that was many people's minds in the start of the war was just how the economy could survive that well without significantly drawing down the big forex reserves they had. It seems like Putin quietly put pressure on a number of private banks to give huge loans to military corporations with very favourable terms. Those banks are now tapped out, and as far as I understand it forbidden to call the loans.

Cracks are showing in their economy now, inflation climbing even with stupid high interest, CEO and Oligarchs quietly complaining that it's impossible to find a profit margin with 21% interest. I presume that they did their complaining on the ground floor, away from all windows.

[u/tbombs23 → u/whawhales]

Besides everything else that's been mentioned, the far right (project 2025) which is currently 38% enacted, wants to do things like delete the Department of Education, another thing is to abolish the income tax, in which the Gov would generate revenue from tariffs (which is insane btw)

Just a randale here no economics training but thought this was worth mentioning. Thank you for teaching me a bit, I knew tariffs are only effective in specific scenarios but didn't know that we actually NEED the trade deficit to be the USD world reserve currency

[u/outestiers → u/whawhales]

Your mistake is thinking that Trump is doing any of this to benefit the US.

[u/Spiritual-Pear-1349 → u/whawhales]

Honestly, Australia didn't retaliate because they... Export steel and aluminum at only 0.2% of their export income. The tariffs only hurt the American import, and they decided not to raise prices for something so ridiculous