The cashflow of Customs and Excise Taxes has nearly doubled in two months.
By Wolf Richter for WOLF STREET.
Collections from customs and excise taxes spiked by 81% in April from March, to $17.4 billion, more than double the average monthly collections in 2023 and 2024, according to Treasury Department data today.
And in March, collections from customs and excise taxes ($9.6 billion) had already increased by $1 billion from February ($8.9 billion). Over those two months, collections nearly doubled (+95%).
This $17.4 billion is the amount in customs and excise taxes that the Department of Homeland Security – which includes the law enforcement agency Customs and Border Protection – transferred in April into Treasury’s checking account at the Fed, the Treasury General Account.
A chart like this is kind of funny. But it shows that something substantive is happening. Tariffs are taxes paid by businesses. How much? It’s adds up:
For example, GM just announced that the new tariffs would cost it $4 billion to $5 billion this year and lowered its earnings forecast with respect to that. It has also begun to shift production to the US to dodge some of those tariffs.
GM manufactures components in China, it manufactures its Buick Envision at its joint venture in China and imports it, it imports vehicles and components from Mexico and Canada, it imports components and materials from around the world. After its bailout out of bankruptcy by the US government in 2009, GM focused on China and Mexico and shed dozens of US production facilities for components and vehicles. So now there’s a price to pay.
GM cannot pass on the tariffs to consumers because automakers are having to discount their models and throw incentives at the market to sell their vehicles so that they can keep their production lines going. After the massive price hikes during the pandemic, there is no more room left to hike prices. Consumers have had it.
But profit margins in the auto industry have been huge following those massive price hikes, and the companies can eat those tariffs, show up with lower profits, and still be fine. See GM.
And not just in the auto industry. Nonfinancial companies in the US made out like bandits during the era of massive price increases — and they have plenty of room to eat the tariffs:
Some of the largest most profitable US companies pay little in corporate income taxes in the US because they manage to keep much of their profits outside the US, where they’re taxed in low-tax jurisdictions, such as Ireland. Apple is a great example of this – as we know from a 2013 US Senate investigation.
If Apple manufactured consumer electronics in the US, it could no longer shelter its income earned from those US sales, and would have to pay corporate income taxes on it in the US (or engineer another tax shelter). Tariffs level the playing field.
Trump specifically singled out Ireland on Liberation Day. The US had a larger trade deficit in goods with tiny Ireland ($87 billion in 2024) than with Germany ($85 billion).
This $17.4 billion in Customs and Excise Taxes was just the initial shot.
For mere mortals, it’s impossible to keep up with tariff chaos. Trump had imposed various tariffs before April 2, but on “Liberation Day,” he imposed additional tariffs, and later paused some of those additional tariffs for 90 days, while leaving the prior tariffs intact. Except with China, where he later raised the Liberation Day tariffs to 145%, after China counter-tariffed. But some China-made products have already been exempted from the additional 145% tariffs, such as smartphones. The governments of China and US are now sort of talking, or at least talking about talking. Numerous negotiations are apparently underway with corporate executives and with governments of other countries, each one trying to get their special deal. So whatever.
The “de minimis” exemption from all tariffs for shipments of $800 or less remained in effect throughout April and shippers didn’t pay any tariffs on them in April. But collections started in May.
That loophole accommodated an increasingly large flow of imports directly from China and other countries to US consumers and retailers. In the last fiscal year, 1.36 billion shipments came into the US tariff-free through that loophole, more than triple the number of shipments in 2018 (411 million shipments), according to Customs and Border Protection.
The stated dual purpose of tariffs is to first change the math for manufacturing in the US, and second, to increase tax revenues. Tariffs were the original tax revenues in the US, predating income taxes.
In terms of manufacturing in the US: There have already been numerous announcements of large investments in US manufacturing facilities by manufacturers across the board. These investments will take time to play out – years of big investments in the US before mass production can start. These investments alone are a big boost for the US economy. And companies such as GM that already have plants in the US have started to shift more production from their foreign plants to the US plants.
Other countries use far higher tariffs. India charges up to 110% on imported cars. China charges enough so that it’s not possible to sell mass-produced imported lower-priced cars in China. If you want to sell mass-produces cars in those countries, you have to make them there. And it worked for them, without a lot of moaning and groaning from GM, Tesla, Ford, etc.
Manufacturing in the US – and the investment, know-how, infrastructure, etc. that come with it – is immensely valuable to the US economy, including for its secondary and tertiary benefits, and also for the large amounts in federal, state, and local tax receipts these activities generate.
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Do you expect some of the exemptions to be lifted over time? The iPhone makes a massive profit so to me that would have been a natural one to keep in place. Not clear of the rational on many of them while of course others made sense.
I guess I am highly suspicious as well that the billionaire class doesn’t have ulterior motives like pushing through another corporate tax cut being paid for with tariffs and cuts in other places.
Trump does whatever the last person he talked to told him.
So he probably talked to Tim Apple last.
Trump is fairly independent-minded, but he can probably be manipulated. The tariffs are signs of independent thought, influenced by public opinion.
Ambassador,
My guess is, similar to any political person elected with big money, is they get a leash. Right now the leash is long and they are waiting to see if they get what they want (lower taxes, regulation, and so on). If Trump’s plans cause too much havoc then that changes. His Congress will continue to back him as while he can’t run again, I don’t sense the cult disappears and they can risk reelection issue. I use the word cult with both sides so nothing personal. In the end, politics is always dominant, not economics.
Damn…..I have been feeling so damned wealthy lately, and for no obvious monetary reason that I can see.
This must be the cause of it all, eh?
Hi Zoroto,
Your biases are showing. Investing based on emotions rather than reasoned logic is generally not conducive to -oh never mind, why should I care?
Best wishes to all, especially Wolf who continues to demonstrate for me at least, the best things in life are free.
Glen – Trump got elected while spending a fraction of the money his opponent spent. I doubt money was a factor or as much of an influence on Trump as popularly thought. Of more value was explicit support from people like Musk and Musks postings on X were probably more valuable than any amount of money.
Trump is transactional. If something does does not post quick results or has big immediate costs, he adjusts.
I’m happy to give him 4 years and then pass judgement, for whatever my judgement is worth.
You can be guaranteed that all the extra money coming into the government will one way or another end up in corporate and plutocratic pockets: tax cuts, subsidies, bailouts, no bid contracts, etc. One would have to be an idiot to expect anything else as it that would be to expect Republicans to act in a way they haven’t in generations.
I expect crony capitalism to continue as it has for decades. Tariff favoritism will rule the day. If you buy $TRUMP coin you’ll get your exemptions, otherwise you’re gonna be looking for a low tariff country to produce in or producing goods destined for the US in the states.
Pardon me, but that seems like asking is the wind still blowing in the midst of a tornado or hurricane.
For instance, the billionaire class is in control with one of their own exposing the foolishness of the idea of an imperial presidency for the US. Every once in a while we need to elect someone in the throes of age related incompetence. I noticed Trump in the background acting out tell tale signs. That went unnoticed by the specter of a debilitated Biden.
Have you not heard Andreason’s encyclical as he transitions from a mortal to a God. It makes me think that the folk wisdom about the curse of wealth may not be as colloquial as assumed.
Enter ‘Trump as Pope’ for a pic
When I heard about this I assumed this was a prank image possibly made by political enemies. Nope: It’s released by the White House! Imprimatur!
If there was any doubt this guy is weird.
Who will have to fall on their sword when the outrage from conservative Catholics hits the fan? Remember T’s favourite word on that POS ‘The Apprentice’ ?
To return to economics, T has just said: “if there is a short recession things will return to normal’
So now you have a recession warning from the horse’s …..mouth.
BBC:
“The New York State Catholic Conference accused Trump of mocking the faith. The post comes days after he joked to reporters: “I’d like to be Pope.”
“Trump is not the first president to be accused of making a mockery of the Catholic faith. Former US President Joe Biden caused outrage a year ago when he made the sign of the cross at a pro-abortion access rally in Tampa, Florida.”
I don’t know who coined the term Trump derangement” but it seems fitting for many as they hold seemingly opposing beliefs about the same man. He’s either an idiot, or a genius and is manipulations of the stock market. Easily manipulated or refuses to listen to experts. A billionaire or a bankrupt failure.
If the tariffs work there will be silence from economists and the MSM.
Doubt that. Every headline from the MSM would make you think the entire US economy and stock market have melted down, we’re in another great depression, and WWIII is here. They are getting clowned so badly right now. They look like asswipes.
Correct Depth Charge. Not only do they dramatize their (supposed) tariff effect predictions, the language they use to do so is actually humorous. It tends to the violent.
Companies don’t reduce their payrolls, they “slash” them. Countries are not negotiating tariffs, they are engaging in a “trade war.” And companies are not carefully considering how to handle these tariffs, they are feeling the “trade turmoil.” And so on.
Slash, war, turmoil, etc. The seas boiled and the skies fell. The potential bad is CONSTANTLY overemphasized, the potential good is consistently ignored. Such is the state of the agenda-driven US MSM.
…most ‘news’ (mebbe we need a different term, ‘sequence of public events”, perhaps) is mundane. ‘Responsible’-reporting of it is, a priori, a bit slower to arrive, being subject to thorough and properly-factual vetting before publishing (thank you, Wolf!), and is rarely instant or ‘entertaining’. That said, ‘Muricans have overwhelmingly preferred their ‘news’ to be infotainment/social-media gossip/bias-confirming/op-ed-flavored (if they follow it at all) in the wake of the suspension of the Fairness Doctrine (and in no small part the advent of the Digital Age) and the following necessity for ANY ‘news’ outlet to generate ad-revenue-attracting readership/views to make their business-necessary bucks in competition with the other players in our massive national entertainment market. Don’t overly-cuss the messengers, they’re only giving the crowds what they they actually want…
may we all find a better day.
Well said….as usual, dustoff.
I watch a lot of stuff I dislike strongly, just to see who they are advertising to…..I bet I singlehandedly bumped plenty Fox shows Nielsen ratings, and some really rotten talk and game shows. (a bit, anyway) On floor….bad back usually pain free, then.
My opinion of my fellow citizens is getting awfully low, (or maybe my ego is getting bigger) especially as far as education, experience, and verbal ability go.
Glad for people like you and Wolf….when he lets me post.
Still only financial site I go to and only social media site…..ought to get me a few damned posting points…..yes I do push limits, and not just Wolf’s.
Take care.
Allow me to put my tinfoil hat on for a moment.
But wouldn’t the doomsday coverage present a situation where panic buying creates more shortages than the tariffs?
Or at least it creates so much confusion that there is much finger pointing and nothing really gets resolved?
Also, it keeps nagging in the back of my mind how much foreign lobbyist money circulates in the USA.
That said, there are so many self-serving agendas coming from all directions that it creates a perfect storm of confusion.
Yes the doomsday megaphones are focused on convincing the every day people to not believe their lying eyes. In fact, the stock market is less than 6 pct below it’s recent peak price. The most highly priced stock valuations in history.
Putting pressure on the Fed to lower interest rates, drastically.
We have multiple asset bubbles to deal with. China is about to spread their deflation across the globe, frantically trying to sell their excess production too societies that are trying to sell their excess production to the agnostic Americans who think that money is meant to be spent.
Tomorrow, the sun comes up with the dawn sanitizing yesterdays mistakes.
The recession will not be televised, the depression will happen more slowly, but the US is NOT the big kid on the block anymore.
We’ve Made America Small Again!
…good retake of Gil Scott-Heron, but still believe the revolution WAS televised (over that longest-running series, the one of our individual lives) but few deeply-understood what they were seeing, or even wanted to, if they were watching at all…
may we all find a better day.
There is other media than what you call MSM. Fox is larger than CNN and MSNBC combined. All the very conservative media like Newsmax and their brotherhood are alive a well. The social media and Joe Rogan podcasts are very influential and huge!
Nah, they will double down.
Cool story, but what kind of revenue would we get from appropriately taxing billionaires?
It’s not either or. But ultimately, tariffs are a tax that comes out of importers’ profits. Billionaires are billionaires because they own big chunks of companies. And some of their companies are now getting taxed through tariffs. So this may be one way to tax some billionaires indirectly, a little bit.
Unless, of course, those companies simply mark up the price paid by the end users. This shifts most if not all the financial burden on to the end users. Non-tariff example: when inflation increased, a number of companies boosted their prices more than the amount needed to make up for inflation’s adding to their cost of goods sold.
Tariffs work well at making domestic manufacturing more competitive with foreign manufacturing. This works because the price of imported goods is increased by the tariffs (nobody likes to sell at a loss).
The end result will be the rest of us paying most or all of the tariffs in the form of higher prices. Unless, as the joke goes, the importers sell their goods at a loss, and hope to make up their losses through volume.
“The end result will be the rest of us paying most or all of the tariffs in the form of higher prices.”
Read what I said in the article, my dear friend. The entire thing. I used to tell people to RTGDFA, but people don’t like it so I don’t say it anymore unless I’m forced to. Read especially the GM example. There is a huge amount of info in this article, including on corporate profits, including a neck-breaking chart of corporate profit growth. You will keep being lost unless you listen to what companies are actually telling investors and what they’re doing.
We had that surge of goods inflation in 2021-2022 because there was a tsunami of free money and no one cared anymore what anything cost. That’s over. There is no more free money. Interest rates are high. Wages are rising but not by much. But now prices of goods are VERY high, and consumers HATE those high prices, budgets are tight, and they’re resisting price increases on goods, every company says that, and it will be every tough to pass on any price increases on goods to consumers without losing lots of sales. And companies understand that, and they’re telling investors that the tariffs will come out of their big-fat record profit margins. See GM.
This explanation does not make Trump look bad and must therefore be incorrect.
Every little bit helps!
Define appropriate? Nationalizing 5% of their equity every year and selling on the market?
There is no such thing in the macro world as ‘taxing the (rich) billionaires, is there? There are only public sector taxes that one way or another fall on the private sector economy.
Precisely ! There are only private sector taxes that pay for it all. I don’t understand why the people would think that Trump’s tax cut’s for the top 10 pct of taxpayers is beneficial too them.
The average American is not the same as the median American. The minority is fat and happy while the majority, carrying the burden of patriotism struggle. So that the billionaires don’t have too pay their fare share of taxes.
The marginal tax rate system was designed in the logical manner that the more one was personally rewarded by the system the more they should pay for a decent society, the kernel of their good fortune.
It’s not as if they’re kind too have stormed the beaches in Normandy. Quite the contrary. They are the kind who benefited from the frozen American bodies left after the bulge.
I hear that the chief instigator of the whole scale transfer of essential domestic manufacturing to the Communist Chinese Party is now promoting American produced widgets.
dang – compliments for presenting a subject often-skirted in taxation discussions: who is willing to take on the ‘life tax’, and in what numbers and proportion to their economic position in the nation during those historically-inevitable, bloody times of national need? (…and remembering that those who did, but didn’t make it home, never heard a “thanks for your service” in preserving it for those who remained there…).
(…and a good D-Day advent reminder, my maternal grandfather crewed on an LST at Utah Beach).
may we all find a better day.
The top 1% wealth bracket paid approximately $855 billion of the $2.14 trillion of tax revenue collected in 2022. The top 5% wealth bracket paid $1.3 trillion of the $2.14 trillion collected. The idea that the wealthy don’t pay their fair share is another MSM-driven fallacy.
Again, you are only taxed when you are making money. Somewhere along the line, people like you established your point of view as valid. It think it was coincident with the acceptance of Milton Friedman’s whose lunacy can;t be described as anything other than a recipe for despotism.
Unfortunately, we adopted his doctrine of wealth accruing to the leisure class. What else should we expect from a spoiled brat of the aristocracy.
My dad was shot in the face defending this country. He had a different point of view about America. He was a lot more social Democratic like America has generally been.
Now go back and figure what percentage of their wealth increase annually they pay in income taxes.
Exactly. Last year, for example, the top 5 percent saw their assets grow massively, but incurred almost no tax unless they sold those assets and paid tax on capital gains. I am a person who lives off passive investments. Last year my average tax rate compared to wealth increase was about 2 percent.
If this makes you feel better, John, then you go right on believing that it’s somehow meaningful. You’ve got lots of company, after all, as JK Galbraith observed years ago:
“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.”
So the modern Conservative wants to keep more of the fruits of their hard work.
And the modern liberal wants to be entitled to a free living wage without performing any work.
I guess which you consider to be worse depends on your values.
Selfishness and greed are nowhere near the evils of envy and theft. The former can be mitigated by charity, the latter cannot be mitigated except with more evil.
Hawk,
Just my hunch, but I bet you’ll get your chance to play “Survival of the Fittest” pretty soon……and discover how “hard” your work really is.
Nice jeremiad, Crunchy.
‘My secretary pays a higher percentage of tax than I do’
Warren Buffet.
Multiply the amount in the chart in the article by 12, and you get about $216 billion collected from tariffs. Divide that by the annual amount of taxes collected by the federal government of around $2.18 trillion to get the percentage of tariff income to income tax income, and you arrive at a figure of around 10%. Substantial, to be sure. This, however, assumes no loss of income to be taxed and no loss of jobs, also taxed. During the Great Recession, individual income tax revenues fell by about 16%.
If tariffs are essentially a tax on companies that they can’t pass along to consumers, then their earnings fall and their valuations drop. The uncertainty around tariff policy is “risk” in the financial markets, so the denominator of the NPV equation gets bigger. These factors combine to drive down stock prices. Now people feel less wealthy, and the general public spends less. At the same time, now people feel less wealthy and stay at work longer, foregoing retirement and stopping natural turnover in jobs to younger people. At the same time, slowing sales are likely to result in job losses, again driving down tax revenues. So it’s complicated.
The 900 or so billionaires in the unites states have collective wealth of around $16 trillion. Of course none of this is income. With wealth of that magnitude, a smart billionaire simply takes out loans against their wealth to support the cash flow of their lifestyle and, surprise, no income tax. Of course it’s not this easy with layer upon layer of LLCs and shell corporations moving money around, making it nearly impossible to track any of it. Can you put a “wealth tax” in place? Maybe, but nobody to date has found a practical way to do this.
To simply look at the tariffs in a vacuum is intellectually vacuous. according to a study by The Tax Foundation, a tax increase equal to 1% of GDP can result in about a 3% decline in GDP over three years, mainly due to drops in consumption and investment.
If the goal is to rebuild the middle class, a noble pursuit in my estimation, increasing tariffs alone is not enough to bring good manufacturing jobs back to the United States. People pursuing these jobs need training and relocation assistance to get to a point where they can fill these positions. In addition, they likely need organized labor to get the concessions they need to drive wages. There appears to be no appetite for any of this in the current environment.
Much of the tariff positioning is wishful thinking. As my mother says, “if wishes were horses, then beggars would ride.”
Sure GM and the big companies who have enjoyed bigger profits since COVID (that chart is shocking) can afford to absorb some tariff expense. The pain will be felt by small and medium sized companies that squeak by. In others words, the little guy is the one who will be crushed and many have to close up shop.
Small and medium companies are nimble and should be able to source their products locally, which is the whole intent. It’s the big comapnies who’ve leached off globalization and will not be able to adapt very quickly, in my opinion. Poor GM, they will have to make more stuff in the USA and reward shareholders with 4B less buybacks…..brings a tear to my eye.
Lots of small and medium size manufacturers in the US have been killed by imports over the past decades. Don’t you feel sorry for them? Manufacturing in the US was gutted by four decades of “globalization.” Whole towns were gutted. Don’t you feel sorry for them? Millions of people that had decent jobs in manufacturing lost them and could never find anything like it again and had to work in fast-food joints. Globalization has done huge damage in the US. Go to some of those towns to see!
Now there are manufacturers in the US, big and small, that will thrive with these tariffs. “Call me pro tariff”: Whirlpool CEO Marc Bitzer. Whirlpool still manufactures its US products at numerous plants in the US, including in Tulsa which they started when I was still there. Whirlpool and manufacturers like it with lots of production in the US will benefit.
Good on you Wolf, a rare sense of reality on the tariffs issue, America has been penalised by other countries for an excessively long time. In fact a lot more pain could still be required.
American workers have been penalized by American finance. Foreign countries took advantage. Ofcourse.
It’s wrong to say “the US” has been punished. The US working class has been punished, but the knowledge class (used to call them white-collar) have flourished under globalization.
This is partly why the working class swung away from the Dems in the last few cycles, especially white working class men, who as a class were the most harmed by globalization.
America has not been penalized at all by other countries, it’s been penalized by its own government spending too much on useless projects and destroying prosperity, on top of regulating so much to the point of negative net benefits. It’s still incredible that the US has managed to maintain some growth nonetheless, and redistribute so much of the revenue produced through private markets.
Blame American capitalists for this not other countries. It sounds like China captured Tim Cook and forced him to move factory to China. Instead Tim and every other American capitalist that moved manufacturing there, felt he could earn more there and that’s the only reason why they moved. Trump tried to return manufacturing during the first mandate and nothing happened. Let’s see how it turns out this time.
I recommend the book “Dignity”, written about the devastation to small towns and the people affected throughout America from the globalization wave that took away manufacturing to foreign shores.
I myself grew up in a blue collar town that once teemed with small and medium sized manufacturing.
Now? None, not one manufacturer is left.
Bringing manufacturing back to America while improving our country’s finances would be a great result
Can you provide the authors name. There are dozens of books online with that in the title. Thank you.
Chris Arnade is the author of “Dignity”
Great book by this interesting former Wall Streeter
Thanks for the book recommendation. I just borrowed it from the library.
I would also rec Sinclair Lewis’ “The Jungle” and Dalton Trumbo’s “Johnny Got his Gun”
Always good to try and see as many sides to the story as possible.
I’ve listened to a billionaire joke at my house about why he only drives his 150′ powerboat during the day, rather than at night along the Mexican Coast….”We don’t like to hear the sound of a fisherman’s panga boats bouncing off the hull.”
Compassion at it’s finest. Yes, this guy offshored his company to China.
Thanks for mentioning Whirlpool.
WHR was started in a small garage in Benton Harbor, Michigan in 1912 by the three Upton brothers, Lou, Fred and Uncle Emory. Until the early 1960s most of it assembly operations remained in the local area.
Today, all the component manufacturing and assembly operations have moved elsewhere. Only the WHR corporate headquarters remain. The population of Benton Harbor and Berrien County have shrunk since 1960 as well, mirroring in no small degree the decline of Whirlpool’s local manufacturing base.
As for Benton Harbor, like Whirlpool, I was born there and I’m gonna die there. Luck beats skill, every time. Thanks mom and dad.
The problem I see is the re-emergence of labor unions and the push for higher wages and benefits. This will drive up costs again, and I fear we will see a repeat “globalization” in production/manufacturing once Trump is gone and the tariffs are negotiated to very low levels between our trading partners.
Perhaps “right to work” states will prosper, as they have in the automotive assembly industry in the southeastern US.
If voters choose to throw away their manufacturing progress for some cheap Temu hauls then they deserve what is coming for them.
Wolf, Like I made comment couple of days back, I spent last 20 years in manufacturing and I have seen jobs getting shipped to other countries by closing US manufacturing plants. Its funny, looks like Whirlpool has suddenly found a religion on domestic manufacturing. Same Whirlpool which closed Evansville, Indiana plant with absolute no warning in 2010 and 1100 people lost their job. Mayor was present during the announcement to calm people down. I have also seen the plant Whirlpool built in Monterrey, Mexico after closing Evansville plant and that plant is huge.
Your article on employment couple of days back was great presenting facts and there was a debate going on in comments between illegal migrants and which side of the isle you are on. At some point we also need to discuss companies which hire people without documentation. We are punishing non documented workers by deporting, fine. We need to punish companies even more because they are breaking law and they know it and they have all the tools and lawyers on their side to save them from any penalty.
So basically you’re saying the next Democratic president will give it all away again and we go back to work at Walmart warehouses and fast food as the factories shut down again?
Boy, that will make for a great campaign slogan.
AR
“We need to punish companies even more because they are breaking law and they know it and they have all the tools and lawyers on their side to save them from any penalty.”
Agreed! We had that system in place, including a requirement to use E-Verify, and daily fines per illegal employee, so if you get caught with 100 illegals who worked there for two years, it would be 2 x 260 x 100 x fine. It the fine was for example, $500 per day, you’d be fined $26 million. But that system got attacked by an onslaught of legal action, and judges put limits on it, and that system was abandoned and E-Verify is now voluntary.
How naïve!
Everyone knows which companies are hiring illegal immigrants. Trump knows. DOJ knows. ICE knows. Illegal immigrants streaming in and out of Koch factories 24/7. No one bats an eye.
Instead of going after these big criminal enterprise, they go after Chinese restaurants instead.
Wolf,
I don’t think fine is appropriate. Hiring illegal immigrants is a serious federal crime. It is a felony. But this law is selectively enforced. Mom and pop shop owners get arrested and thrown in jail but Koch enterprise does at massive scale and no one cares.
Of course I feel bad for them. But you can’t undo decades of globalization with the stroke of a pen and a tweet, in one quarter. A gradual shift in policy to encourage the migration of manufacturing back to the US over time would make more sense. This chaotic shock and awe chainsaw approach by an ill-informed narcissist who insists the tax is paid by the exporting countries is not a realistic approach.
You have to start somewhere.
It is not just starting now, re-shoring of manufacturing jobs has been ongoing since the shale boom made energy production skyrocket. It accelerated further during Covid when far flung supply chains caused all kinds disruptions. Tariffs started during Trump 1, carried on during Biden, and being ratcheted up further now have only accelerated things. Smart companies have seen this writing on the wall for a while now.
Meh. https://fred.stlouisfed.org/series/VAPGDPMA
Blake,
The chart you linked is a ratio (manufacturing value added) divided by (GDP). So if GDP soars because of services — which it did in 2023 and 2024 – and manufacturing grows slightly less fast, the percentage would drop, even though manufacturing grew substantially.
Here is manufacturing value added by itself, and it soared since 2020 to an annual rate of $2.9 trillion at the end of 2024, up by 29% from Q4 2019.
https://fred.stlouisfed.org/series/VAMA
Couple different ways of looking at it I guess. Working in manufacturing for my entire career, it hardly feels like much has been ‘reshored’ here, compared to our glory days of past, but there has been progress recently I suppose. Let’s hope it continues, for both mfg employment and mfg output.
I feel sorry for anybody whose livelihood is completely ripped away in an instant because of a bureaucratic pen flick. Natural disasters are “fairer” than this – at least you can get insurance.
Big question is: Will the drunken sailors become infuriated if their splurge buying behavior is tamped down?
There are lots of big questions, hence the “uncertainty” in the business surveys and CEO reports. The test will be the festive season and we won’t know for sure how that has gone untl next year. it’s tough for retailers having to decide what to order now.
Good comment. I will suggest that the uncertainty originated, deep in the bowels of the consumer society.
A cold wind is blowing on the future status of employment opportunities. Except the repatriation of manufacturing too American soil will require a youngish work force too work.
One of the dumbest things, IMO, we are doing is treating our southern neighbors badly. I just hope they don’t try to reclaim all the states they used to own.
Another example is pharma companies stockpiling that drove the recent import spike, according to Brad Setser
Most of pharma companies also announced investment plans into domestic manufacturing.
Very few wealthy people in the US like tariffs. They are all globalists who have benefited from the import of cheap items from the ROW and exporting USD. Wall Street, Tech and Boomers who own stocks have benefited tremendously over the last decades.
CNBC, WSJ (NYT) and the likes seen to be railing about tariffs and the horrible things it will do to US. Glad to see a counterpoint.
This is so true. The profiteers hate all this tarrifs stuff with a passion!
Don’t forget consumers have also benefitted greatly from this as well. But our growing deficit isn’t great for them either so some balance is needed. Whether or not it succeeds is to be seen but perhaps in the mean time people simply don’t buy some of the things they never needed to start with.
If GM survives its latest recall of their defective 6.2L V8 motor, they will be golden. Many lined up to get into $80K truck debt while not expecting to be simultaneously not driving the vehicle they purchased and paying $1K to $1.5K monthly, when you add in car insurance payments, then they are all wet. Wolf thanks for putting the truth about tariffs in laymen terms, for us less knowledgeable to understand.
The 6.2L engine recall affects about 600,000 vehicles spread over four model years. Customers are instructed to take their vehicle to their dealer. Dealers will check out the engine. Some engines don’t have a problem, some can be fixed, and some have to be replaced. Some engines already croaked and had to be replaced. Considering the size of GM (in the US alone, it sold 2.7 million vehicles in 2024), this recall is a big expense, like quite a few recalls before, but not an existential threat. Big recalls due to ICE problems are not uncommon.
Survives? GM can’t build enough to satisfy demand. Wake me up when people aren’t lining up to buy new trucks/SUVs and hand their money over to auto manufacturers, then we can talk ‘survival’. All manufacturers do recalls, all manufacturers spend money on warranty, and all their suppliers have quality issues at times. It’s part of the business.
The key to tariffs has always been whether companies pass the price increase onto consumers. Wolf does not believe this will happen. Time will tell. The other problem with tariffs is countries tend to promise the moon to avoid new tariffs knowing there is a good chance the next administration will cancel/change them. Finally, wolf is correct, it is nearly impossible to understand long term benefits or risks because Trump changes his mind so often.
“Collections from customs and excise taxes spiked by 81% in April from March, to $17.4 billion, more than double the average monthly collections in 2023 and 2024”
$17.4 billion divided by two is $8.7 billion, roughly the increase for April. $8.7 billion times 12 months is $104.4 billion. I’m guessing the big numbers haven’t kicked in yet.
Thanks Wolf,
I’ve been following you for years but have hesitated commenting
because I am out of the league of most of your contributors.
It’s good to see you shedding some light on how badly US
corporations have been getting over on us for all these years and
that perhaps some of them are now going to get their comeuppance.
I grew up in the Pioneer Valley of Western Massachusetts and up
until the early eighties the valley hosted multiple large manufacturing
companies that employed thousands of well paid union employees.
Today – not one remains – having all gone to the southern states or overseas. There was no reason for them to leave as we are located
at the nexus of north/south transportation corridors with easy access
to Boston and New York and points N/S. No they went to places of cheaper labor and lax environmental laws to increase ” shareholder value” and CEO pay and left nothing but empty buildings in their wake.
While I don’t support this president on most of his policy positions I do agree with him on this. American corporations have no fealty to this country and should be treated as such.
This truth cannot be repeated often nor loudly enough. American business “leaders” and their co-conspirators among foreign comprador elites conspired to exploit domestic American and foreign working stiffs alike. And this went on for decades with the complicity of the US State Department which found the arrangement useful for its “containment of communism” program. You can read all of the gory details in Judith Stein’s “ Pivotal Decade: How the United States Traded Factories for Finance in the Seventies.”
Unsurprisingly, this has led to all manner of socioeconomic ills in America — and the refusal by your elected representatives and policymakers to acknowledge them and their source has led to a massive electoral revolt in the form of the MAGA base. Whatever you may think of the cack-handedness of the Trump tariff regime’s implementation, you cannot deny that there are numerous members of the administration who are finally determined to DO SOMETHING about this long-standing problem, unlike the decades of decay and neglect authored by the bipartisan efforts of their predecessors.
They saw the easy money/profits is in services.
Having once been an elected rep, I don’t think it was a “refusal to acknowledge them” as much as no clear understanding of the macrp issue and the influence the business leaders and co-conspirators really had.
It’s a capitalist country.
I would assume Temu will be scrambling With the de minimis exemption canceled
For products from China.
Temu is not ‘scrambling’ at all but rather simply cancelled all orders and cut off all shipments to the USA.
That’s great news. Americans can buy from US retailers and producers.
I went to Temu and they are still selling like gangbusters. If Temu stops, will U.S. retailers be able to get the all the products they sell since so much of their product comes from the same place Temu uses.
So your saying its much worse than “scrambling”.
I can’t imagine a life without Temu. How will I ever survive? What’s next, harbor freight not existing and I’ll have to go buy a USA made tool for $20 at a garage sale??? The agony!
Blake – a decline in ‘quality item’-availability in the garage-sale/thrift store supply chain has become very-apparent over the last quarter century, roughly lagging the earlier exit of those items from US-manufacture…
may we all find a better day.
Buffett knocks tariffs and protectionism: ‘Trade should not be weapon’
Yes, billionaires have hugely profited from globalization and offshoring, and became billionaires in part because of it. Billionaires hate tariffs. Their companies’ profit margins are going to get squeezed and they’re going to have to pay some taxes, what horror!!!
That is a silly comment Wolf regarding Buffett. Berkshire Hathaway is already one of the largest taxpayers in the country year in and year out. Berkshire Hathaway is a terrible example of a company that has “hugely profited from globalization and offshoring”. Buffett did not become a billionaire because of it.
Furthermore, Buffett is one of the biggest supporters of increasing taxes on the extremely wealthy.
Your comments are usually more well thought out than that one because that one was a clunker.
That is a silly comment JimL regarding Buffett. Even Buffett complained about the unfair tax code that encourages him and companies to pay minuscule tax rates.
Interesting. From the guy that 22 years ago railed against the Trade Deficit the U.S. had then ( about 1/6 of the size of today) and the danger it pertains.
I wonder what his solution is then?
Danger it portends ( darn that autocorrect……
His solution was something called “import credits”. Exporters would get a $1 credit for every $1 of exports. Importers would have to buy the credits from the exporters and use them for imports. Buffet saw the benefits as three-fold: 1. you could change the calculus a bit to give importers time to find (or build) US suppliers by, for example, giving exporters a $3 credit for every $1 exported and slowly moving to a 1 – 1 ratio over time, 2: politicians wouldn’t be picking which companies and countries would be the winners and losers, 3: exporters would be incentivized to further invest in the US and increase global exports, and 4: similar to 1, you wouldn’t have to go to 1 -1 and could leave a smaller net trade deficit which he thought was necessary to help fund global trade growth due to GDP growth.
Basically tariffs where the tariff revenue went to enhance exports instead of government spending. Liberals, of course, hated the idea.
That’s a really interesting idea. It reminds me of Keynes’ premise of the “bancor” — a unit of settlement of trade balances which would force the “cost” of adjustment (there being empirical evidence that trade imbalances lead to all kinds of problems, not least of which is war) equally upon the surplus countries as upon the deficit countries.
Harry Dexter White killed the idea because, well, a neocolonial empire was just too tempting for a certain class of American elites …
I am pretty sure Buffett has changed his mind on trade deficits from his talk about them 22 years ago given the fact that he has never repeated his criticisms as he regularly does on topics where his thinking is more solid.
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So these seemingly draconian tariffs turn out to be a 0.3% tax (10/3000) to be payed by the corporations.
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I’m in no way an expert in the matter, but I see four main issues with manufacturing returning to the USA >
1. High cost of housing – one can only pay an engineer/technician/manager so much.
2. Cultural Stratification in Corporations – middle and top management is by body and soul separated from the rest of the company.
3. Money making money with impunity – the product must retake it’s rightful position at the top of the economic pyramid.
4. Healthcare – the cost nees to come down.
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Health care has to stay at 10X the cost of other developed countries with equivalent outcomes as can’t take the hit to GDP if it was reasonable. Admittedly a more complex issue but companies to get to write off employee insurance and employees don’t get taxed on the benefit so could be worse. Take away tax free benefit of insurance and some changes might happen.
Ok so you would rather not have US manufacturing? Instead we can import everything and everyone can work as a waitress serving beer or a salesman selling the imported goods, or a trucker driving them to and from port. I’m envious of all the homes waitresses and furniture salesman and truckers are able to afford. These homes are flying off the shelf at these higher interest rates huh? It’s frustrating, watching them sit atop all their assets lol. The system is working so well, why change it huh?? 🤣🤣🤣
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I would love to see more competition, innovation and quality coming from the US. Everyone would. But the issues that are preventing the US from becoming competitive are internal matters more so then market forces. And these issues need to addressed, sooner then later. Hence the list.
///
It kind of goes back to creating jobs here that pay enough for those workers to afford the product they are making. Much of which we lack today. Partly due to the bad policies of past. Penalizing companies for leeching off globalization, is a good start in my mind. People might be surprised what they could afford if the money was actually coming into this country rather than going out of this country via the importation of cheap goods. We have an addiction that needs to be treated, much like wall street has an addiction to cheap money or ‘liquidity’ as they call it.
The US is a very competitive manufacturer if it involves lots of automation. All major Japanese, Korean, and German automakers manufacture in the US. Most of the Hondas and Toyotas you can buy in the US are made in the US. Every Tesla is. And they’ve been doing it profitably. So don’t tell me this dumb BS that it cannot be done. But there needs to be tariffs to change the math across the board and overcome direct and indirect subsidies in other countries, for manufacturing in the US to thrive.
The Toyota trucks assembled at the San Antonio plant use many parts manufactured at parts supplier facilities on the site. However some significant components come from Mexico and are not easily or quickly replaced by a US facility. Most automakers have various plants and part suppliers scattered among the three North American countries.
Escierto,
Before Tundra trucks were rolling off the line in San Antonio, Levi’s blue jeans were made there.
Levi’s no longer makes jeans in the USA. They now make their products in these nations:
Bangladesh
China
Egypt
El Salvador
Ethiopia
Honduras
India
Kenya
Lesotho
Madagascar
Malaysia
Mexico
Nicaragua
Pakistan
Siri Lanka
Turkey
Vietnam
My brand of jeans, Wrangler, are made in Mexico.
In fairness to LouisDeLaSmart, this is a case of “both-and” rather than “either-or”
The tariffs themselves are necessary, yet insufficient. The US also needs a robust industrial policy and a serious re-ordering of its domestic policy suite in order to lower the cost of production by squeezing out economic rents which have been allowed to metastasize during the long neoliberal nightmare. A good primer on the history of tariffs in the US is Michael Hudson’s “ America’s protectionist takeoff 1815-1914 : the neglected American School of Political Economy”
Companies moving production back to the US, government revenues increasing in the face of trillion dollar deficits, supply chains and logistics being slowly reawakened in forgotten parts of flyover country..
I was reading the news that the President is a rageful ogre steering the country on the course of economic ruin but I have a hard time seeing it right now.
Intuitively, it seems like a more comprehensive plan is required beyond tariffs to achieve whatever goal we have to do more manufacturing in the U.S. It sounds more like a long-term national strategy is needed. I guess we put tariffs in place, leave them there for perhaps 5 years and private investment will flow to support domestic manufacturing (or the investment could go elsewhere…seems like a gamble). And then we see if we have achieved the goal. It just seems way too simple to work, and too easy to rescind, as well (the POTUS could wake up one day and change his mind—would that surprise anyone?).
This issue of manufacturing drying up in the U.S. has been going on for my entire lifetime (I recall the “Buy American” bumper stickers from the 70s and 80s which is basically impossible now, as nearly everything is made outside the U.S.). So we have had a long time to work out a more complex plan than just tariffs. Is there anything else in the works, e.g. that Congress would fund as a long-term investment?
Under Biden, many of the Trump tariffs were left in place, esp on China. In addition, under Biden, Congress passed the CHIPS act that is throwing $60 billion in cash plus tax incentives and loans at chipmakers to build factories in the US. The first payment was made in late 2024 (government is slow-moving, and there are many due-diligence issues involved). Trump rebranded that program and left it in place. Under Biden, Congress handed hundreds of billions to different industries to manufacture in the US. Trump has not removed any of them as far as I know. That was the taxpayer funded carrot. Trump is adding the stick, and this time, the taxpayers collect, instead of pay. What’s not to like? Note the continuance from one President to the next: they both understand manufacturing in the US is a huge issue and needs to be addressed, and their manufacturing-related policies largely continued from one president to the next though they hated each other.
Thanks. I think it’s important to see the whole picture. Lots of focus on and drama around the tariffs but there should be political common ground that we need to be more self-sufficient and competitive, which if we are adults about it will require sustained investment by the government in all of the typical areas of education, R&D, infrastructure, etc. There is a very positive message that could be conveyed, but it seems to get lost in the divisive politics. “What’s not to like?” as you say but the overall strategic direction we need to be on is lost, it seems. It’s a very simple and positive message but it gets swamped by a lot of negativity.
Seems like most economists prefer the carrot approach. Let’s have more incentives, grants, and tax breaks for American manufacturers.
The stick approach can drive up prices, inflation, and harm the little consumers if not done more carefully.
I happened to be the idiot that pays for the carrots, LOL. Why should I transfer MY money via taxes and incentives to the richest companies in the world and their billionaire owners and CEOs? Do people realize that there is no free money? It comes from somewhere, and the carrots come from me, at my expense.
Oh, we can just borrow it? Yes, that’s the same idiotic attitude that has led to the $36 trillion in Treasury debt.
So no, incentives should be replaced by taxes on imports. It either helps pay for the debt incurred paying out those incentives or it creates investment and production in the US, which also throws off a lot of other activity and more tax revenues.
“Most economists,” as you say, including failed Krugman, who has now admitted that he failed, are responsible for 40 years of one-sided globalization, the dismantling of manufacturing in the US, the huge trade deficits, and the $36 trillion in Treasury debt. They blew it, and I cannot believe people still cite “most economists” as something like an authority on anything other than total failure.
US income taxes collect about $2.6 trillion in 2023, with another $2.2 trillion from payroll taxes. At the current rate of income from tariffs, we will collect an equal amount after 266 months (22 years) of tariffs.
At the April rate of tariffs of $17.4 billion, it would mean $208 billion a year. The entire amount paid by corporations in income taxes in the US in 2024 was only $489 billion. So tariffs would increase what corporations pay by 43% to $700 billion (at the April rate), a 43% increase is not nothing. If the revenues from tariffs increase as more tariffs are being implemented and collected, that percentage increase will rise further.
If corporate profit margins absorb the tariffs, then the tariffs will reduce net income resulting in lower corporate income taxes. Assuming a corporate tax rate of 25%, tariffs of $208 billion will reduce corporate income taxes by $52 billion. Tariffs will still increase what corporations pay by $156 billion, or 32%. Which is still a significant increase.
You assume that US corporations are even paying income taxes in the US. Many of them pay very little or no income taxes in the US, including drugmakers that run their US profits through Ireland, as Trump has pointed out, and there is nothing to reduce, and all of the tariffs would come out of the company’s profit. That’s the point. And Trump made that point. Tariffs would hit big tax dodgers the most.
FYI: The current top rate is 21%, not 25%.
I’m wrong to some degree to assume the US corporations paying tariffs are also paying corporate income taxes. However, I did not assume “US corporations are even paying income taxes in the US.” Your previous comment stated they paid nearly a half trillion dollars in 2024. At a corporate tax rate of 21%, that means US corporations reported taxable income well over $2 trillion, some portion of which must have been reported by corporations now paying tariffs.
LOL, only imported goods are tariffed, not services. Most of corporate tax collections are from companies that provide services.
LOL indeed. Are you suggesting corporations paying tariffs paid no part of the half trillion dollars in income taxes? GM alone paid over $2.5 billion in taxes in 2024.
Total corporate profits in Q4 were $3.77 trillion with a T, seasonally adjusted annual rate.
I concede I’m more wrong than you in my 32% figure, but your 43% figure is wrong because it assumes no US corporation paying tariffs was previously paying income taxes.
Hmm, perhaps we could just raise corporate tax rates. Or even better, target taxes at an increasingly economically disconnected oligarchical class. Seems like it might be more effective, and less disruptive.
It’s not either or.
It’s the person responsible for the tariffs who is also pushing to *cut* corporate tax rates, not to raise them. And it’s also the same person floating the idea of doing away with the income tax for most people because somehow the tariffs will make up the difference. It almost seems like the numbers and implementation don’t make any sense whatsoever and are in fact counterproductive.
It’s not “either or” but it’s also not “taking place in a vacuum.”
Related to tariffs it is really interesting to look at shipping graphs. Number of ships, how full they are, average time to dock/unload and so forth. LA/Long Beach should show some interesting changes soon, and the East Coast in a few weeks. Interesting to look at current trends compared to other key periods as well. Never really looked at it before nor knew just how detailed the information was.
Two items,
Back in the 80,s I have never forgot a 60 Minutes episode about a manufacturing plant closing and all the angry employees at GE for closing the plant. The final scene was the employees driving out of the parking lot for the last time. Most of the cars were Toyotas and Hondas. None are so blind as those that won’t see.
I’m struck by the number of people that have the good sense to read Wolf’s website but write comments filled with bias and emotions and no logic or facts.
“Most of the cars were Toyotas and Hondas.”
Most of the Toyotas and Hondas you can buy in the US are made in the USA. All Japanese, German, and Korean automakers have plants in the US. Many of these cars have far more US content than any Fords or GMs. If you see a nameplate, that’s just a brand. It doesn’t tell you where the vehicle is made. I’m struck by how little people know about manufacturing in the US. It’s like “manufacturing” is a four-letter activity that no one should know anything about.
If you see a BMW 4, 5, 6, 7, or 8 nameplate you can be absolutely certain it was made in Deutschland and is of superb and incomparable German excellence without any doubt.
1. The BMW Plant in Spartanburg, South Carolina is the largest single BMW production plant in the world. It builds BMW’s tops sellers in the US, including the X3, X4, X5, X6, X7, and XM models. These are BMW’s big models in the US: 207,594 sold in 2024, over half of its total sales in the US of 371,346.
2. The BMW plant in San Luis Potosi, Mexico makes the 2-Series coupe (15,384 in 2024), the 3-Series sedan (31,330 in 2024), and M2 and exports them to the US.
So that covers volume-wise most of the vehicles that BMW sells in the US. A few smaller-volume models are still made in Germany, those that you listed, on top of which are the 5-series (25,315 sales in 2024), the 4-series (42,608 sales in 2024), and the X1 (27,306).
Back in the early 1980s only the Accord and Camray was made in Ohio and Kentucky. All other brands and models were imported.
Only? Those were the #1 sellers for both companies at the time. The Camry has been the overall #1 bestselling car in the US for decades, but in some years got beaten by the Accord. These were HUGE volume sellers until SUVs and pickups started taking over in the 2000s.
Not to mention Detroit made crap cars in the 80’s. I still recall the first Toyota 4×4 PU I saw. Year 1979. My friend bought it and drove it 300,000 miles. Not bad for $5,500….and double the gas mileage of a Detroit clunker.
It’s ironic isn’t it? Because at that time the domestic automakers had a lot of their production here, the glory days, kinda. But society is kind of short sighted and we don’t always play the long game. Look at the uproar over tarrifs now, people tend to hate what will ultimately benefit them in the long run, since it’s typically somewhat painful.
The China import route is dead. Net goods deficit to China will shrink substantially. With time, even Apple will shift production to India. At some point, there will be almost no physical good from China to US.
The flip side is that there will be far less service export to China as well. I think it is a good thing. US should use everything made in US regardless of cars or toys.
Howdy Folks. China cheats and other countries won t even accept US products while selling their junk in our country. Find your Made in the USA products when you can and purchase those……
Great news. It would only take 170 yrs, plus or minus to paydown the national debt
But joking aside….”Over the next 30 years, tariffs are expected to raise revenues of $16.4 trillion. (These revenues fall to $4.5 trillion and $11.8 trillion, respectively, on a dynamic basis.) This revenue can be used to reduce federal debt relative to the baseline path”
Conversely, how long to pay the national debt without the tarrifs? What’s the plan there and how long is the duration???!
People love to treat this as a drop in the bucket, maybe so, but it’s an attempt to fill the bucket at least. First I’ve seen in essentially my lifetime tbh
The debt is paid down every day. The problem is new debt is created every day. What is going to stop the government from using tariff income to reduce income tax income?
It goes up once the arithmetic is complete. Good point though, I guess we will see if the parabolic growth curve starts to flatten out or not. They could still fail to appropriate the money wisely, as politicians do
Several years ago an article appeared in the Foreign Policy magazine by Michael Hirsch titled “Economists on the Run”.
Some snippets of the article ……
Paul Krugman has never suffered fools gladly…. In a series of books and articles beginning in the 1990s, Krugman branded just about everybody who questioned the rapid pace of globalization a fool who didn’t understand economics very well. “Silly” was a word Krugman used a lot to describe pundits who raised fears of economic competition from other nations, especially China. Don’t worry about it, he said: Free trade will have only minor impact on your prosperity. …..
Now Krugman has come out and admitted, offhandedly, that his own understanding of economics has been seriously deficient as well. In a recent essay titled “What Economists (Including Me) Got Wrong About Globalization,” adapted from a forthcoming book on inequality, Krugman writes that he and other mainstream economists “missed a crucial part of the story” in failing to realize that globalization would lead to “hyperglobalization” and huge economic and social upheaval, particularly of the industrial middle class in America. And many of these working-class communities have been hit hard by Chinese competition, which economists made a “major mistake” in underestimating, Krugman says.
It was quite a “whoops” moment, considering all the ruined American communities and displaced millions of workers we’ve seen in the interim…..
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Say what you will about Trump, but I think he has more common sense than most of these so called experts.
It’s a shame that it took Krugman 40 years of preaching to admit that his sermon was a lie.
The damage has now been done, and he is one of the guilty parties.
Promoting globalization was standard economic thought among academics back in the 1980s. I was a grad student back then, and I thought it was stupid. Sure, prices for goods would go down, but only by sacrificing our national security, our manufacturing jobs, and our independence.
I worked at the zenith manufacturing plant about 1970 for a couple of months before they fired me and then my suicidal thoughts went away. There were probably a hundred women sitting at an assembly line and I had to keep them stocked up. I was running all day thinking this is insane.
Yes we need the robot revolution because working in manufacturing and coal mines can be tough, dirty, and soul crushing work.
About 15 years ago when my kid was delivering auto parts from an import wholesaler he got me a set of front brake pads for my car for $5. He said that’s what they pay for them.
The type of manufacturing plant you worked in 55 years ago has long vanished in the US, and time has moved on. Automation has ruled for decades and is advancing every year. Have a look at a modern plant in the US.
So has farming.
Yes, hugely. It’s amazing.
Thanks Wolf, I have been waiting for some data on the revenues generated by tariffs. More importantly now is the question of what our government is going to do with this windfall.
Thoughts?
Windfall??? The government has a $2-trillion+ a year DEFICIT (outlays exceeds tax receipts). Additional tax receipts lower the deficit and reduce the amount of bonds that need to be issued to fund the deficit.
Being somewhat sarcastic Wolf, but as your data points out, this did increase the tax receipts. So what the F%$k are you saying, increased tax receipts isn’t a good thing? Yes, they still have a long way to go…
…and Trump is increasing defense spending. Balance the damn budget already!
Wolf, is there a way to break down the tariff receipt data (%’s by commodity, country, etc)? I would ASSUME most of the increase was from products imported from China. Thanks.
No, this is financial flow data that comes in daily to Treasury. Don’t assume anything about tariffs. That’s always a mistake.
Questions I have are if US corporations can relocate their profit oversea, will they then buy significant less US government debt? And will this make a difference in the interest rates in US government debt?
Also for those exporting to with a surplus on the trande with the US, if the surplus is reduced, will purchase of US government debt also be redused?
1. “if US corporations can relocate their profit oversea…”
They’ve been doing that for years. A Senate investigation revealed in 2013 how Apple was doing it.
2. “will they then buy significant less US government debt?”
No, they buy huge amounts of US debt registered in a foreign financial center, such Luxembourg, or in a country like Ireland, and manage those assets from the US (see Apple investigation). You can see the US debt held by financial centers is gigantic and ballooning:
https://wolfstreet.com/2025/04/16/foreign-investors-massively-bought-us-treasury-securities-in-february-china-japan-canada-euro-area-uk-financial-centers-taiwan-india-even-brazil/
Sorry, a word important for the question did fall out.
The question was, “if us corporations can not relocate their profit oversea…”.