Dopey Oh dear. Krugman's analysis is valid but I wonder about some of his percentages ….. which he admits are back of the envelope stuff.
My gut feel is that the actual tariffs to be levied maybe less that Krugman's guess (I'd say 10% across the board) but the impact on the US and other economies maybe much higher. US prosperity (or otherwise) based on trade goes a lot further than the raw 12% Krugman quotes and any simple model does not take dynamic rebound from the impacts on other economies into account.
70% tariffs? That's scary stuff. I have this image of a much poorer America and a trashed USD.
Presumably Trump's current advisors (I'll try to ignore Krugman's sarcastic humour concerning these individuals even though I agree with it) seek to unwind the symbiotic relationship between China and the US. Maybe they believe they can get factors of production from alternative sources at similar prices. I don't know but that's what they may think. Can they?? is another question.
Simple models also don't take into account the time it takes to retool any economy and the losses which are incurred while reconfiguration remains incomplete.
Any proper analysis needs to consider the response of China and other key economies to so-called trade wars. China will IMHO move further towards free trade with every country other than the US.
Maybe China has closed down the current dodgy batch of cryptos (operating in its space) so that it can issue a crypto version of the Yuan.
