This morning, a co-author and I spent most of an hour trying to figure out the appropriate way to weigh HHI indexes at a national scale to represent what an average person faces. We had lots of options. We could average all of the markets together and then divide by the number of markets. We could do it endogenously (bad idea). We could do a modified population weight. We had lots of choices. And these choices matter because counties and markets are not created equal. Big changes in New York City likely will impact more people than a double that size change in Peoria, Illinois.
I’m just pointing this out as the new tariffs place really big numbers on a few countries (mainly China) and lower numbers (but still 5 to 10 times as high as the 1/19/25 levels) on lots of other countries. The typical country has lower tariffs today than they would have anticipated last week, but the composition changes and there is minimal real change in average tariffs on imports.
Very informative chart from Washington Post
— Albert Weale (@albertpweale.bsky.social) April 11, 2025 at 6:15 AM
So when we see messy problems with lots of numbers, think about weights.
Steve LaBonne
Another good question is, how much money is actually being collected, and exactly how? There was no pre-existing administrative structure capable of dealing with the regime Trump purports to have set up.
Walker
Apparently no tariffs are being collected because DOGE screwed the system up
cnbc.com/2025/04/11/customs-reports-glitch-in-system-used-by-freight-for-tariff-exemptions.html
Steve LaBonne
@Walker: [Nelson haha GIF]
Jay
And it’s a generalization. Canadian softwood is now at 35%, so a 3BDR in the US just got $55,000 more expensive.
It also doesn’t touch “counter tariff’s” which the US FTMSM seems to want to ignore, or outright ban’s like Canada’s “No US Booze” or China’s “No US LNG”.
And then, there are the consumer boycotts
Did I mention US Treasury Bonds and mortgage rates?
Steve LaBonne
@Jay: The bond market is what did for Liz Truss and what forced Trump to pretend to back down.
sxjames
What would be more interesting to me is the tariff rate before April 2nd, when this all started. My understanding is that for most countries the current 10% rate (good for 90 days?) is more than the pre April 2nd / historical rate. If that is the case, then the American consumer is still facing a price hike.
Jay
@Steve LaBonne:
Didn’t stop the mortgage rate from jumping to 7.1%, if you are “blessed”.
Just a matter of time before it’s back up to 27% for the favored.
I remember those days.
Reagan, (spits).
Chetan Murthy
@sxjames: My understanding is that the entire mail-order-from-China drop-ship business got vaporized: $50/package minimum tariff, where before it was $0.
Jay
@sxjames:
Average global tariffs were 1.2%, market wide. Globally. Varied by products and countries, eg. Canadian Softwood was at 25%, Canadian steel and aluminum, 0%.
Jay
@Chetan Murthy:
CBS’s software had a brain fart and shut down.
Your Shien order is ready for delivery, tariff free, which you will later owe, if the software is ever fixed. Don’t worry, the pre-puberty DOGEshitters are on it.
And Chinese vendors have already set up alternate “Country of Origin” cut outs, basically re-shipping, so that the tariff you pay is only 10%.
sxjames
@Jay: Average global tariffs were 1.2%, market wide. Globally. Varied by products and countries, eg. Canadian Softwood was at 25%, Canadian steel and aluminum, 0%.
Mmm…average global tariffs were 1.2%, now sounds like 10% (more or less. Including the 145% tariff on products from the PRC in the average is kinda beside the point, in that the actual response will be evasion / black market /alternate sources with their own price premium.)
Anyways, thanks for the response.
lowtechcyclist
@Jay:
So the typical 3BR house built last year would have had $157,000 worth of Canadian softwood in it? I’m trying to get my head around that.
Jay
@sxjames:
CBS’s software has shut down, so $0 tariffs are being collected by the US, as of today.
Jay
@lowtechcyclist:
25% of the wood used in the US, is Canadian, and much of it cannot be duplicated by US suppliers. 74% of “engineered” wood like parallam and beams, are Canadian made. Plywood, OSB, etc. Those arn’t counted, just 2″ x 4″s, standard lumber. Finished products are tariffed but tend to not counted.
Using Canadian “engineered” floor joists, you can build a house 32′ wide, with out a supporting substructure, so the alternate is either steel joists, or a supporting wall down the middle.
Softwood tariff’s have pissed us off forever, but I guess that now you can clearcut US National Parks, it will not be an issue.
Chetan Murthy
@lowtechcyclist: lumber-takeoff.com/blog/how-much-wood-does-it-take-to-build-a-house/
I certainly don’t work in that biz, but googling, it seems $3-$10/BF is the range. 3000sqft house needs 24k BF (board foot). So $120k of lumber seems a credible estimate.
Shakti
It’s almost as if Trump is trying to create a Laffer curve test run — but with bombastic announcements of ridiculous tariffs.
Of course this was sketched on a cocktail napkin and heavily promoted by a Reagan administration OMB guy/Bear Stearns guy/Fox Business personality/Trump administration guy who snorted 100K/monthly of cocaine — in 1994 money. Kudlow is on tv now claiming The Art of the Deal is in full swing or some shite.
Martin
The good news about your analysis is that you don’t have to worry about getting it right or wrong because it’ll be out of date long before you can get it published.
The next big operations research rabbit hole is going to be papers focusing on the importance of information stability to decision making. That’s not exactly new ground, but it seems like we need a refresher on it.
Martin
@Shakti: I’ve seen much more cohesive plans sketched out on cocktail napkins. This does a disservice to cocktail-based strategic planning.
Baud
Peale
@Chetan Murthy: On the plus side, if there is any, Americans have been building larger and larger houses since the 1980s even as household size declines. Then to top that off, they need to fill those houses with more furnishings than they need. So they go into debt and those things tend to come as imports these days. We could balance quite a bit of our trade in goods imbalance by reducing the size of our houses by 30%.
Martin
@Chetan Murthy: I’m not too upset by that. That business was supercharging climate change. That said:
I will miss some of the wilder products out of that channel, though. My USB-3 soldering iron is fantastic and it’s only thanks to that channel that it exists in the US.
Jay
@Baud:
Commies!!!!!!!!!!! Vital Fluids!!!!!!!!!!!!!!!!
Martin
@Peale: Climate emissions are directly proportional to house size. SFHs are a problem that we aren’t dealing with, and while I hate this mechanism for dealing with it, because it’s just going to result in homelessness which is not an okay trade off, at some point we needed to deal with it, and we just aren’t.
I welcome $10/gal gas for the same reason, but raising it to $10/gal tomorrow would be a catastrophe.
Chetan Murthy
@Peale: 100% with you. I chose 3000sqft only b/c ….. well, we all know that’s what most Americans think is a reasonable sized house.
Martin
All this said, feature working as intended.
lowtechcyclist
@Chetan Murthy: Yabbut those 3000 sq ft houses are going to have 4-5 bedrooms. Shoot, even my dinky 1500 sq ft house has 4 br.
Chetan Murthy
@lowtechcyclist: Ha, fair cop: cnbc.com/2024/06/25/the-typical-newly-built-house-in-the-us-is-shrinking.html#:~:text=The%20typical%….
typical new house is 2.4k sqft. I underestimated Americans.
Jay
@Chetan Murthy:
When we built the place, in the place we used to live, R50 walls, R100 roof, (cold roof as well), Artic windows and doors,
750 sq feet. 2 BDR.
Just for a test, over a long winter’s weekend, before it was finished, I heated it with a single 100watt incandescent light bulb. 70F when I left, 69F when I returned.
-35C outside.
Peale
@Martin: Yeah. Since they want McKinley economy soo bad….The problem is that they think all those houses that we deemed worth saving are the ones that they’ll be living in. Nope. But we can bring those conditions back. First 80% of us need to be renting. Mortgages are…hahahaha. 5 year mortgages and if your one of those lucky duckies who get one of the new shipbuilding jobs for Trump’s envisioned American built container fleet, you’ll be looking at living in a tenement with 8 other people or if you have an enlightened employer, a dorm room with 20 beds for you and the girls from the suburbs who have moved out of their homes to take those mill jobs until they find a husband.
LOL. Labor in the US has always been expensive. But that doesn’t mean the economy in 1890 revolved around providing 3 cars and a 4 BR 8 bath house for 2.1 people to cavort in.
RevRick
It’s almost as if the GOP’s touting of the average family getting a $3500 tax cut is bogus. The bottom 20% percent loses income while the top 1% gains $180,000? (I hope I’m approximating fairly accurately). As Sen. Sheldon Whitehouse pointed out, citing the dry economics language of the marginal utility of money, a gain of $1000 in income for someone who makes $60,000 has a huge positive impact on their lives, but someone who is a $100-millionaire won’t even notice that amount.
Jay
@Peale:
The 1890 economy revolved around not starving to death.
Good times.
Jay
Yes, it is.
Craig
Direct tariff effect, I’m in the airport in Vancouver. No bourbon. No US spirits, only Bud. Shit just got real
Matt McIrvin
@Martin: The problem that tax incentives against environmentally damaging consumption are also incredibly regressive, which is why some right-wingers kinda like them as revenue sources (and they’d end up being a kind of sumptuary law), is a hard circle to square.
Al Gore tried to do it by proposing a completely revenue-neutral carbon tax that would be rebated progressively, which, if you ask an economist, is probably the right way to do it. Is there any political universe where that can happen? A tax that nobody uses to cut another tax or even fund the government? Good luck with that, guys.
Chetan Murthy
Is that really true? I thought that the rich consumed far more CO2 per Capita than the median, by significant multiples? I -do- agree though, that a flat tax on CO2 isn’t as effective as a progressive tax, so that the rich would pay a ton more b/c they consume so much more. Gotta deter the consumption.
Speaking of which, I read that some US city is going to start graduating traffic fines by the income of the offender. Which ….. about fuckin’ time.
Peale
@Jay: We were in a depression for the entire decade.
O.K. I was wrong. Homeownership rates in the US during the McKinley administration were in the high 40s. And continued to decline for 30 years.
Oh and would you look at all those grey bars on that beautiful chart. We managed to have recessions, panics, and depressions almost every 3 years in that lovely time.
Kelly
@Jay: I’ve been waiting a couple weeks for a contractor to bid on building a detached garage/shop, 576 sq ft, out behind our house. One nice building to replace two sheds that burned in the 2020 Beachie Fire. Must be kinda hard to figure out a bid in times like these. Here in Oregon the lumber and plywood will most likely be from local mills but national prices will apply.
Might be a bit easier to hire labor this summer.
Jay
@Craig:
The Bud is brewed in Abbotsford, what a waste.
Timill
@Peale: They’re just in denali about the whole thing…
Matt McIrvin
@Chetan Murthy:
They do! But their income and wealth are bigger by BIGGER multiples. So they can just shrug it off. Taxing consumption generally shifts more of the tax burden to poorer people.
Chetan Murthy
@Peale: I actually paid attention in my high school history classes, and I remember learning about the late 19th century as a time of perennial “panic of 18xx” recessions and depressions. And that one of the reasons the government got more involved in the management of the economy, was that eventually people got fed up with laissez-faire and the results you got — which was those panics.
Chetan Murthy
@Matt McIrvin: A fair cop. Yet another example where progressive taxation is required.
Kelly
@Jay: The increase in timber cut will be on National Forest and probably Bureau of Land Management forests not National Parks.
Hmm, did Elon leave enough people in those agencies to administer any sales let alone increased sales
ETA: I’ve read that the tariff mess is halting US log exports. Might bump up the USA log supply. I believe we’ll still have a mill capacity bottleneck.
Martin
@Peale: One of the big distortions in how we talk about these things is we focus on income as if it matters, and wealth as if it doesn’t. But a quarter of US home sales last year were investors, not homeowners, and they are driving the costs of housing up by turning it into a revenue stream. If they didn’t have so much wealth, they couldn’t do that, and they are growing wealth so rapidly relative to inflation that they are buying up more and more of the opportunities to grow wealth.
Houses aren’t that expensive to build. The high cost is usually due to scarcity tax on the land. My house’s replacement cost is ¼ of the value of the home. The other 75% is because we’re denying people the space to build more housing.
That isn’t to say income doesn’t matter, but you can have wages track faster than inflation and people will still get poorer because the wealth opportunities are getting much more expensive relative to inflation, because wealth imbalance is accelerating
When I was talking about how Democrats are whistling past the graveyard on the economy despite the topline numbers looking good, this is the kind of thing I was referring to.
Matt McIrvin
@Chetan Murthy: I never did figure out how it was that Trump figured the US was “strongest” in that time period. What you usually hear is that it was time of great “dynamism” and growth… but also incredible misery. And of course The US was busy killing Native Americans and rolling back the protections we’d given to the formerly enslaved.
I think the media myth of the Wild West has a lot to answer for–also plays into the “utopia in empty land” idea that I was talking about in the other thread. Someone’s always redoing the Frederick Jackson Turner thesis.
Martin
@Matt McIrvin: Right. The solution to both problems is to tax wealth directly and aggressively. That undercuts the rich’s ability to have an oversized carbon footprint (private jets, yachts, etc.) and you use that revenue to fund the climate transitions needed which also counts as infrastructure spending, and the like. If you do it right, it creates job opportunities as well.
lowtechcyclist
@Timill: Took me a minute for that one to click, but LOL’d when it did. Nice one!
Jay
@Kelly:
If they are “good”, there will be a caveat in the contract about material and labour costs, in their quote.
If the price rises, they will inform you and get your sign off.
I have had contracts start off at 2 pages, wind up being 40 pages, mostly due to the customers changes.
Stupid me, I always offered the customers the option of buying the materials, I would bill them for the work.
That’s a 20% to 50% mark up, I walked away from, while still walking them though the materials.
Nice, sucks.
Jay
@Timill: Mt. McKinley now.
lowtechcyclist
@Jay: That was the joke.
RevRick
@Jay: MrsRev and I live in a 920 sq ft, two-story, 3BDR duplex built in 1944. We raised our two children in it. Our son-in-law to be owned a 650 sq ft, three-story row home in Philadelphia. They sold it and now live in a somewhat larger duplex in the burbs.
House sizes have exploded since, because of several factors. Number one is zoning, which mandate lot sizes, setbacks, minimum spaces between homes, and parking minimums. This has two effects on home building.
First, building a single, stand-alone home is likely not feasible economically, which means that only those builders who can purchase large tracts, can navigate all the steps in the approval process, and then construct multiple houses are able to do so. And when all the costs are added up, you end up having to build McMansions just to break even.
Matt McIrvin
@Martin: There’s also this idea that directly taxing wealth is unconstitutional or tyrannical, but we already do it in a bunch of ways (real-estate and excise taxes run my city, and I’m glad to pay them, though many aren’t).
Matt McIrvin
@Jay: “How many legs does a dog have, if you call a tail a leg?”
“Five?”
“Four. Calling a tail a leg doesn’t make it so.”
Abraham Lincoln supposedly liked telling that one.
Jay
@Martin:
Clinton Street house, late 1980’s.
No real value, $21,000 dollars against $360K land value.
3 BDR, one bath, (former outhouse in the corner)
Maintenance, I had to replace 3 cedar shingles.
Stupid.
Matt McIrvin
@Chetan Murthy: I live in a duplex. I could afford much more house. What do I want with that? Would probably just accumulate a lot of junk to put in it.
Peale
@Matt McIrvin: More house = more debt = more anxiety.
More house = more stuff = more disappointment when stuff breaks, fades, deteriorates, and needs to be replaced.
I mean, the Buddhists figured this out 2500 years ago. If you want to be happy, don’t buy stuff just because you think “oh, that room is so empty.”
Timill
@Jay: It’s not just a river in Africa any more…
Geminid
@Matt McIrvin: Arguing that directly taxing wealth is tyranical is a subjective political argument. Saying it would be unconstitutional is an objective, legal argument.
A friend whose legal practice involved a lot of tax questions is pretty sure that a wealth tax would require a constitutional amendment, as did the federal income tax. He has no problem with a wealth tax on policy or political grounds, just questions the feasibilty.
There are plenty of legal arguments on this question both pro and con if you’re interested in that sort of thing. I’m not, and am only repeating what an experienced estate tax practitioner said.
RevRick
@Chetan Murthy:
Those Panics were due to speculative asset busts, the equivalent of the 1929 stock market crash and the 2008 housing bust. Those of 1819, 1837, and 1857 were related to land/cotton speculation and 1873 and 1893 were related to railroad speculation.
The mini Panic of 1907, triggered by specie outflows to deal with the San Francisco earthquake, which was the impetus for creating a central bank, the Fed.
YY_Sima Qian
@Jay: I suspect SHEIN & Temu had already gamed out the sudden decoupling & trade embargo scenario, probably because the PRC government had asked all Chinese companies to prepare contingencies for this scenario, in the past few years:
YY_Sima Qian
How the PRC is planning to cope with/ the sudden decoupling w/ the U.S.:
JD.com is one of the major online retail platforms in the PRC. Look for the likes of TMall, Taobao, Pinduoduo to do the same. This will also play well to the rising nationalism.
They are also probably expecting a sizable stimulus from the PRC government.
Matt McIrvin
@Geminid: One of the ways we get around that is gift and inheritance taxes, which happen when someone’s wealth gets transferred intergenerationally, but, God, the right succeeded so well at demagoguing that into oblivion by pretending it was going to steal middle-class inheritances and wipe out family farms.
Martin
@YY_Sima Qian: Contingencies. Plans. How novel.
Bill Arnold
@Matt McIrvin:
There are varying estimates of the mortality cost of carbon. A typical estimate is 1 human death (over the next century or so) per 1000 tons of carbon burned.
So estimate each person’s personal contribution to GHG releases, roll the dice/spin the wheel with losing odds proportional to their contribution, and if they lose, break them up for their organstake their assets.
People might change their behavior, e.g. more people with Jay’s 100 watt resistance heated house.
Bill Arnold
@Matt McIrvin:
It was the last part of the Gilded Age .
Mr. Trump likes gold decorations.
Matt McIrvin
@Bill Arnold:
What do you think this is, an Alabama prison?
apnews.com/article/organ-harvesting-university-of-alabama-corrections-department-ddf8f08ccedf4998961…
Sally
@Martin: He’s a cheap bribe, though. I’d have asked for much more – how much is that worth to Nvidia? Much more than a million.
Timill
@Sally: The million was only the cost of the dinner. The bribe will have been higher.