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The article seems to assume that only seeing a 5% price increase on items tarrifed at 25% must mean the foreign manufacturer taking a 20% hit. However, if domes
by SomewhatLikely 8y ago
The article seems to assume that only seeing a 5% price increase on items tarrifed at 25% must mean the foreign manufacturer taking a 20% hit. However, if domestic producers become profitable at the 5% higher level then we could just buy all our goods domestically and the foreign producer can stop manufacturing. In that scenario they aren't 'paying' anything except the lost profits on goods they no longer make. If their profit margin is under 20% then they aren't paying "the other 20%". Nobody is. Consumers are just paying 5% more for goods produced domestically. If we impose a tarrif of one thousand percent and prices go up 10%, nobody is paying for the other 990%.
- writepub 8y ago> In that scenario they aren't 'paying' anything except the lost profits on goods they no longer make. But they are paying a high price by losing market share. Profits are one thing, but revenues are a whole other. Revenues support jobs, higher revenues typically offer all sorts of "economy of scale" benefits, etc. If Chinese manufacturers lose access to their American consumers, they have a high price to pay
- atomi 8y ago> Consumers are just paying 5% more And also, buying fewer.
- nine_k 8y agoThe lost profits on goods they no longer make and sell = no money to repay, or maybe even service, their debt, or return investments. This may be a big deal if the amount of stopped exports is significant for a manufacturer.