The Economy

Profit and loss?

That's not how geopolitics work.

 

When countries were on the gold standard it was considered extremely important to maintain the stability of your currency versus the price of gold. So tariffs made sense if a country did not want to devalue their currency.

Fixed currencies went away 50 years ago and are not coming back (when currency moves by electrons rather than bulk metal it becomes impossible to regulate effectively). So if the USA abandoned all tariffs with Canada what would happen? Canadian imports would initially increase but the value of the United States dollar would decrease, making US goods and services more attractive, and the economies would settle into equilibrium. Floating currencies are a market-based solution rather than the government-based solution of tariffs. But most countries don't do it because tariffs protect a specific interest group, such as farmers or steel workers.

Singapore has no tariffs, and the country has been an economic miracle.

 

Tariffs are also a bargaining chip, which is coin of the realm in Washington.

 

My money's on "No."

 

I can't speak to all tariffs in general, but the ones on China specifically remain politically useful at home and abroad. Barring an astonishing display of last-minute holiday shopping, China is going to miss its targets for purchases of US goods under the Phase 1 trade deal negotiated under the previous administration -- and not by a narrow margin.

What happens if the US-China phase one trade deal fails?

I'd wager Biden and his people want to retain some negotiating leverage over China, and unilaterally lifting tariffs risks looking like rewarding China for not living up to its promises. Plus, there's always domestic politics to consider. Republicans are no doubt already lining up attack ads on Biden and Democrats that highlight Xi Jinping calling Biden "old friend" during their virtual summit, so I can understand how easing up on China tariffs could be seen as needlessly giving Republicans more fodder (not that they need it). Being "tough on China" is the new "tough on terror/drugs/crime/the Russkies", so the old cycle of Republicans setting the agenda and Democrats feeling the need to double down or risk voters seeing them as "soft" on the issue of the day will begin anew.

 

"The situation has left us with a shortage of waiters and waitresses and bartenders and hotel workers, etc. It is why restaurants and bars around the country have help wanted signs on their windows, and some are even operating at reduced capacity because they don't have the staff to meet demand."

Is it such a bad thing to have fewer restaurants and hotels? Maybe these owners who make their livings taking disposable income from others should have to learn new industries, too. Their workers are.

I worked in restaurants for years, first as a dishwasher and later a waiter, made good money at a high end steak house, especially for someone who had dropped out of college at the time. That steakhouse is now closed, the owner retired.

If the pandemic has proven anything, it's how many needless bars and restaurants there are, mainly serving as a point of variety and convenience for people. There doesn't need to be a steakhouse, seafood place, Tex-Mex place, Indian food, etc., in every town. If I really want chicken curry, I'll drive a few towns to get it.

 

Seems to me there's a middle ground between increasing wages and increasing costs to customers to cover those wages...and that would be decreasing the pay of C-suite and payouts to shareholders to cover the costs of increased wages.

 

If I'm tipping 50 plus dollars on a meal that costs $250, it follows that there could be a bump up in prices that would account for the tipping. The staff gets higher wages and I don't have to tip anymore. But I'm not spending more money.