3 ms·

Trump puts 10% tariffs on Chinese imports bringing billions into the treasury, China devalues currency to compensate... net effect: Americans pay the same pric

Trump puts 10% tariffs on Chinese imports bringing billions into the treasury, China devalues currency to compensate... net effect: Americans pay the same price but get billions in free tax money. Thanks, I guess?

kickopotomus 7y ago
A couple of things: 1) The tariffs are not getting paid by China. That money is coming from American businesses that buy from China. The tariffs just force those companies to look for cheaper alternatives. 2) The devaluation now makes China that cheaper alternative again even with the tariffs because now the USD goes further. End result now is it makes the tariffs more useless and China continues to disallow American imports.
- nostromo 7y ago
  Before the devaluing the US consumer was paying the tariffs. But they devalued to compensate for the tariffs. In effect, the tax is now being covered by China’s central bank.
  - cromwellian 7y ago
    US exports are also down 12%, the Chinese government embargoed all purchases of US Agricultural goods by State owned Enterprises (SOEs), which constitute about 1/3rd of China's GDP. Thus, the US trade deficit has been made worse, the US will continue to import from China. China's central bank owns a huge chunk of US debt, so in effect, this is being covered by the US government over the long term, i.e. see the _Twin Deficits Hypothesis_ that federal deficits and trade deficits are related. Also, the central bank in China didn't do anything to devalue the yuan, it was propping it up. A tariff decreases demand, ergo, it decreases demand for RMB vs USD, ergo, exchange rates drop and the yuan becomes cheaper from lower demand. There's a "symmetry theorem" in economics that predicts this outcome to restore equilibrium (trade deficits offset by currency adjustment). So let's stop trying to cook up more excuses for Trump's trade policy. His own economic advisers disagree with it, and the fiction that "mexico" or "china" will pay for these tariff actions he's taking is a straight up lie to the citizens of the country.
wavefunction 7y ago
Where's this nutty notion coming from that tariffs yield revenue to the government?
- pwinnski 7y ago
  Tariffs do result in money to the government... from US importers. My mother, for example, sells products on Amazon that are manufactured for her in China. She must now pay tariffs to the government when she has more products made for her, and has had to stop selling several products as a result, since the tariffs made them unprofitable.
- barbecue_sauce 7y ago
  The definition of a tariff?
belltaco 7y ago
What? You couldn't be more wrong. Tariffs essentially boil down to a tax on the American people, just like any other tax. Americans are paying more for the same products, and that money is going to the government which is using it in part to pay big US farmers.

kickopotomus 7y ago

A couple of things: 1) The tariffs are not getting paid by China. That money is coming from American businesses that buy from China. The tariffs just force those companies to look for cheaper alternatives. 2) The devaluation now makes China that cheaper alternative again even with the tariffs because now the USD goes further. End result now is it makes the tariffs more useless and China continues to disallow American imports.

nostromo 7y ago
Before the devaluing the US consumer was paying the tariffs. But they devalued to compensate for the tariffs. In effect, the tax is now being covered by China’s central bank.
- cromwellian 7y ago
  US exports are also down 12%, the Chinese government embargoed all purchases of US Agricultural goods by State owned Enterprises (SOEs), which constitute about 1/3rd of China's GDP. Thus, the US trade deficit has been made worse, the US will continue to import from China. China's central bank owns a huge chunk of US debt, so in effect, this is being covered by the US government over the long term, i.e. see the _Twin Deficits Hypothesis_ that federal deficits and trade deficits are related. Also, the central bank in China didn't do anything to devalue the yuan, it was propping it up. A tariff decreases demand, ergo, it decreases demand for RMB vs USD, ergo, exchange rates drop and the yuan becomes cheaper from lower demand. There's a "symmetry theorem" in economics that predicts this outcome to restore equilibrium (trade deficits offset by currency adjustment). So let's stop trying to cook up more excuses for Trump's trade policy. His own economic advisers disagree with it, and the fiction that "mexico" or "china" will pay for these tariff actions he's taking is a straight up lie to the citizens of the country.

wavefunction 7y ago

Where's this nutty notion coming from that tariffs yield revenue to the government?

pwinnski 7y ago
Tariffs do result in money to the government... from US importers. My mother, for example, sells products on Amazon that are manufactured for her in China. She must now pay tariffs to the government when she has more products made for her, and has had to stop selling several products as a result, since the tariffs made them unprofitable.
barbecue_sauce 7y ago
The definition of a tariff?

belltaco 7y ago

What? You couldn't be more wrong. Tariffs essentially boil down to a tax on the American people, just like any other tax. Americans are paying more for the same products, and that money is going to the government which is using it in part to pay big US farmers.