Quote:
Originally Posted by Roughneck
What's impractical about an oil export tariff?
An in-demand resource heavily integrated into their economy that is expensive and time consuming to find a replacement for, if there is an economic case to find an alternative at all. The economic effects would be felt quickly and cause internal pressure to find solutions.
It just might be the most practical economic response the country has. You're confusing practicality with whether or not you like it, which is irrelevant.
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Most of this is spot on.
However, suppose the worst case scenario plays out. Trump says "Ok you want to tax energy exports, then F##K yourselves."
There definitely aren't a ton of alternatives for them, but there are alternatives.
None of the alternatives will be nearly as cost effective, but again there are options.
They most definitely wouldn't be able to make up for the 4.5 million bbl/D we send them. Their economy would be devastated.
But they get to continue on.
It literally kills us.... Nearly 1/4 of our exports, $200 billion, gone over night. Nowhere to send it, no capacity to deal with it ourselves. Then what?
Reality is, we have very little-to no leverage if you are willing to go down to the "scorched earth" scenario. US/Trump have alternatives, though obviously much worse. We don't. Trump knows this, we all know it.
Is using our most important export, by a large margin, as a bargaining chip, BEFORE we even know if a response is necessary, really worth it?
Or do you think finding a diplomatic solution (I truly believe this is what Smith is doing) might be a better option BEFORE any additional tariffs have even been applied?