andreisterescu.bsky.social
Economist @ec.europa.eu ECFIN | Formerly @ecb.europa.eu | European 🇪🇺 and International Economic Policy | Views are my own and do not represent those of my employer
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Tariffs could help bring some capacity back to the US, shield some of it from global competition. Like subsidies, public procurement, or state investment, etc. they’re a way for govs to shape outcomes, but how they’re used matters more. By themselves, they won’t do much.
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A short explanatory of the "logic"🤡 behind the tariff calculations by @adamtooze.bsky.social
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Another contributing factor is the US financialised and ICT driven growth model. Financialisation fuels demand through credit and asset inflation and also enabled the expansion of ICT-based service sectors. Manufacturing lost its central role.
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The problem is not so much the decline in manufacturing employment per se, but rather a decline in manufacturing share. This is a natural process as the US moved into a post-industrial development stage, but financial openness and persistent global imbalances also weakened domestic industry.
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Much of the decline in manufacturing jobs is due to automation/ productivity gains, not just trade, even though global trade imbalances reinforce it, and services growth. So even if some production returns, it would probably involve more capital-intensive processes that don’t require many workers.
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For the EU it works better with the 2024 USTR figures.
ustr.gov/countries-re....
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Worse, it’s even more baseless. They just took the the goods deficit-to-imports ratio and divided it by half. With the EU, that’s $235.6bn trade deficit divided by $605.8bn in total imports from the EU, we get 38.9%. Divide that by half, round up a bit, you get 20%.
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Yes, cause they run trade-in-services surpluses with a bunch of countries.
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It’s really dumb. They took the deficit-to-imports ratio. For the EU, if we divide the $235.6bn trade deficit by the $605.8bn in total imports, it’s 38.9%.
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For other countries they just apply 10% min. if the trade-in-goods balance is even.
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Checks out for the EU at least. The goods deficit-to-imports ratio for 2024 is 38.9%. If we divide that $235.6bn deficit by the $605.8bn in total imports, that’s the ratio.
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Also speed isn’t always competence. Speed can make for headlines, but many decisions are disruptive (in a bad way), have to be walked back, challenged in court, or can cause deeper institutional harm. The US is kind of a case in point right now.
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As to bureaucracy and responsiveness, the critique here is that the EU (institutionally) is too inward-looking and inflexible, especially in a fast-moving, unpredictable world. Maybe, but not uniquely so. Most modern governments have deep bureaucracies that aren’t exactly sleek startups.
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It is an embarrassment. Probably a politically motivated initiative (at least in part) by the rector of the school who, after just a couple of days following the announcement, filed his candidacy for the presidential elections (although it hasn’t been validated).
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What about increase in public debt from the fiscal package?
"By then, Germany’s debt-to-GDP ratio could be 10 percentage points higher than it would have otherwise been, he added. But maybe that’s a price worth paying for a safer and more livable country.” (3/4)
www.iwkoeln.de/fileadmin/us...
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There is an ongoing debate about whether the SGP should be adjusted to allow for increased defense expenditures without penalising member states with a many arguing that the current rules may constrain necessary investments in defence.