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> At the same time, higher prices of garlic — they soared 53% — actually illustrate tariffs working as intended. > China had been the biggest exporter of garli
by defertoreptar 7y ago
> At the same time, higher prices of garlic — they soared 53% — actually illustrate tariffs working as intended.
> China had been the biggest exporter of garlic to the U.S. and domestic garlic growers have long argued they were being undercut by cheaper Chinese competition. Now that Chinese garlic faces higher tariffs, domestic companies can charge higher prices.
Domestic companies being able to charge higher prices was not the goal of tariffs. Labor is cheaper in other Asian countries, and that also results in their being able to undercut America producers. However, the trade war is against China and not low labor cost countries like Vietnam and Malaysia.
- blisterpeanuts 7y agoWhy would garlic prices rise 53% if the tariffs are only 30%? Are there really no other factors at play?
- defertoreptar 7y ago> Are there really no other factors at play? What factors do you have in mind, and how do they relate to the goal of the trade wars?
- wolco 7y agoCost might be a % of costs + percentage of profit which increases based on the cost and has a multiplier.
- rubber_duck 7y ago>Why would garlic prices rise 53% if the tariffs are only 30%? One purely theoretical explanation is demand elasticity - if you can sell 20 items at 3$ now your costs increase to 5$ - you can sell 10 items at 5$ but 8 at 10$ it makes sense to sell at 10$ - not saying that's the case with garlic - but it explains how a 30% cost increase could cause higher price increase.
- logfromblammo 7y agoPercentage-based taxes stretch the supply curve upward along the price axis. Adding a 30% tax means that if you draw a line down from the new equilibrium point to zero price, that line will cross the original supply curve at 30% of the way down. But the new equilibrium point may also be at a different (likely lower) quantity, where the demand curve could have a different slope. For a perfect commodity, where the supply curve is nearly flat, the percentage tax has the effect of raising that flat line higher. A 30% tax raises prices 30% higher. The shape of the demand curve only determines the reduction in trade volume. For a fixed-supply good, where the supply curve is completely vertical, the price remains exactly the same, and the tax is paid entirely by the supplier. The shape of the demand curve isn't very relevant. If the demand curve is perfectly vertical, consumers pay all the tax, and quantity remains the same. In order for an x% tax to produce an x+y% increase in price, there has to be some other effect in play. The demand curve has a positive slope, as with a Veblen good. The demand curve shifts upward or rightward, as though the tax serves as advertising. A 30% tariff on similar goods or general inflation produced a substitution effect that drove more people to demand garlic. Pure demand elasticity can't account for it all.
- RonaldSchleifer 7y agoI am quite certain the tariffs went from 10% to 25%, so only actually a 15% in crease. The real reason for the remaining increases are probably a combination of domestic Chinese pressures and the inflation machine Obama started and Trump has only continued both starting to grip and people are starting to notice as articles like this point out things that have been going on for a decade now.
- hylaride 7y agoLess competition or local producers not being able to make the desired quantities (at least right away) means prices can be higher.
- elhudy 7y agoWhat is 55% higher though - from $0.50 to $0.76 per bulb? Garlic doesn't seem like an elastic enough good where $0.25 would make a difference. It's a staple food in almost every American household. With that being said it's sad to hear that so many people purchase Chinese produce.
- ahmedalsudani 7y agoWhy is it sad?
- grenoire 7y agoShipping foreign produce is not good for the environment at all. Easy to harvest and low maintenance produce such as garlic should not need to be imported. The margins over garlic may be low, but local producers can still benefit from being able to sell without too many intermediaries.
- corodra 7y agoIt's sad that food has to travel long distances to be purchased at reasonable prices when it's grown relatively nearby. To put the shoe on a different foot. The Dominican Republic produces a lot of tomatoes. But they lack a lot of the infrastructure and machinery that both the US and Mexico have. Shops there sell Mexico and US tomatoes when there's a tomato field ten or twenty miles away. Those fields truly can't compete on a serious level without specialty importers in the USA. That's the sad part. The bad part, environmentally, think of all the excess CO2 produced in transport that in reality, doesn't truly need to happen.