5 ms·

When Trump ups everything from China by 100% I guess US would be able to make something with profit?

by hnthrowaway0328 2y ago

greenthrow 2y ago
That is not remotely how tariffs work.
- hnthrowaway0328 2y ago
  Doesn't a tariff drive up prices? (or at least intended for that)
  - Dalewyn 2y ago
    Tariffs are a surcharge on imports added and demanded by the government, paid by the people or entities importing. As an example, if an American buys a Chinese coffee maker priced at $100 and there is a 50% tariff, there is a $50 tariff that is paid by the importing American to the American government. The total cost to the importing American is $150. Now, if this price is equal to or higher than an American coffee maker then the importing American is incentivized to purchase the American coffee maker instead. As another example, if Tesla sells Model 3s for $50,000 and BYD comes in with a similar spec car priced at $25,000, then putting a 100% tariff on it will drive BYD's effective price up to $50,000 allowing Tesla to compete without undercutting or outright selling at a loss. Essentially, tariffs are a way to ensure that the pricing floor of the domestic market is not driven down unreasonably by international markets at the cost of the importers. EDIT: Fixed some math. :V
    - zie 2y ago
      Right, the coffee maker company in China has some options: * Figures out how to make it even cheaper (unlikely) * Figure out how to avoid the tariff legally: Maybe move the manufacture or assembly to Mexico for the US market. * Claim the product is something else, just enough to avoid the tariff(i.e. claim it's a tea maker, not a coffee maker) * Stop selling in the US since they won't get any sales * etc. The middle options are the most likely: avoiding the tariff somehow. Companies do the middle two all the time to varying degrees to get around/avoid tariffs, import fees, etc, even US companies.
      - XorNot 2y ago
        Also the other issue: the first thing the American company does is ensure it sells coffee-makers for $149 and not a penny less. In fact depending on your tarriff regime, this can incentivize a bunch industries to actually raise prices if the new import cost is higher then they would currently sell at.
        Dalewyn 2y ago
        The incentive to raise prices is pressured down by customers' desire to not spend more money than they have to. If businesses can get away with raising prices that means the price was too low to begin with, tariffs or no tariffs.
        munificent 2y ago
        That's dependent on the market actually being efficient. If a consumer walks into a store and sees coffeemakers by ten different brands, but seven are all actually owned by one giant manufacturer and the other three by some American almost-as-giant manufacturer, then a tariff on the former will drive up the price of seven of them and the American manufacturer will almost certainly raise the prices on the remaining three. Otherwise, it's just bad business.
        munificent 2y ago
        Oops, in "actually owned by one giant manufacturer", I meant to say "actually owned by one giant Chinese manufacturer".
    - codedokode 2y ago
      > As another example, if Tesla sells Model 3s for $50,000 and BYD comes in with a similar spec car priced at $25,000, then putting a 100% tariff on it will drive BYD's effective price up to $50,000 allowing Tesla to compete without undercutting or outright selling at a loss. Doesn't that mean that American will have to pay $50 000 for a car that is worth $25 000? While people in other countries will be able to buy cars cheaper, buy more of them and maybe it somehow improves their life quality.
      - verzali 2y ago
        Yes. Tariffs are bad for consumers. The supposed benefit is to manufacturers, since in that scenario Tesla will be able to sell its cars at a higher price and profit.
      - p_j_w 2y ago
        It means exactly that. It also means the American company will feel less pressure to improve cost or quality.
      - flyingpenguin 2y ago
        The purpose is to prop up local companies. Which is not always a bad idea, having a local supply and innovation of something can be rather important, local money is less "Gone" than foreign money, think of how healthy small towns are when all of the shops are local vs when they are not. The problem comes when there is no realistic local competition. If you don't make something locally at all, an import tariff is just a stupid tax.
8note 2y ago
I doubt it. It's much easier to either launder or manufacture the goods in a third country, that benefits from most of the same incentives that made Chinese manufacturing go through the roof. Americans will be buying Chinese goods with "made in Vietnam" or "made in Mexico" stamped on it. The American profit will be in setting up those laundering schemes
- seanmcdirmid 2y ago
  If the Trump tariffs are based on country of final assembly, then yes, final assembly will just occur somewhere else, but it will take a couple of years to setup, and the inflation shock by that time will have done a lot of damage to the economy (recession likely, depression possible). It makes sense that it took Trump forever to find a treasury secretary willing to go along with this.
  - mrguyorama 2y ago
    The last time he did tariffs against China, he put a tariff on raw materials but not stuff made with that raw material. It was cheaper to build your excavator outside the country than pay the tariffs on importing the materials to build the excavator here. It was an objective failure. It also resulted in very smartly targeted payback that caused serious financial distress to a bunch of blue collar American food producers who sell a lot to China because the American market is literally not big enough (my state sells millions of pounds of lobster to China, those lobstermen still vote for Trump). This is because Trump is objectively a fucking moron, and if you tell him "No, your idea is wrong because you don't know what you are talking about", he gives you the same "You're fired" speech from his damn television show, replaces you with a sycophant, and then does the stupid thing. Any prediction that starts with "Trump will do the Tariffs in the way that requires second order thinking" is doomed to failure.
  - omeid2 2y ago
    Couple of years for a western enterprise maybe, but in the east, things move fast. Really fast.
    - 2y ago
csomar 2y ago
Vietnam and Mexico will massively profit.
lm28469 2y ago
It doesn't matter much if your shitbox is made in US or made in China when it cost 50k and nobody has the money for it
onlyrealcuzzo 2y ago
With what workers? Basically everyone is already employed.

When Trump ups everything from China by 100% I guess US would be able to make something with profit?

greenthrow 2y ago

That is not remotely how tariffs work.

hnthrowaway0328 2y ago
Doesn't a tariff drive up prices? (or at least intended for that)
- Dalewyn 2y ago
  Tariffs are a surcharge on imports added and demanded by the government, paid by the people or entities importing. As an example, if an American buys a Chinese coffee maker priced at $100 and there is a 50% tariff, there is a $50 tariff that is paid by the importing American to the American government. The total cost to the importing American is $150. Now, if this price is equal to or higher than an American coffee maker then the importing American is incentivized to purchase the American coffee maker instead. As another example, if Tesla sells Model 3s for $50,000 and BYD comes in with a similar spec car priced at $25,000, then putting a 100% tariff on it will drive BYD's effective price up to $50,000 allowing Tesla to compete without undercutting or outright selling at a loss. Essentially, tariffs are a way to ensure that the pricing floor of the domestic market is not driven down unreasonably by international markets at the cost of the importers. EDIT: Fixed some math. :V
  - zie 2y ago
    Right, the coffee maker company in China has some options: * Figures out how to make it even cheaper (unlikely) * Figure out how to avoid the tariff legally: Maybe move the manufacture or assembly to Mexico for the US market. * Claim the product is something else, just enough to avoid the tariff(i.e. claim it's a tea maker, not a coffee maker) * Stop selling in the US since they won't get any sales * etc. The middle options are the most likely: avoiding the tariff somehow. Companies do the middle two all the time to varying degrees to get around/avoid tariffs, import fees, etc, even US companies.
    - XorNot 2y ago
      Also the other issue: the first thing the American company does is ensure it sells coffee-makers for $149 and not a penny less. In fact depending on your tarriff regime, this can incentivize a bunch industries to actually raise prices if the new import cost is higher then they would currently sell at.
      - Dalewyn 2y ago
        The incentive to raise prices is pressured down by customers' desire to not spend more money than they have to. If businesses can get away with raising prices that means the price was too low to begin with, tariffs or no tariffs.
        munificent 2y ago
        That's dependent on the market actually being efficient. If a consumer walks into a store and sees coffeemakers by ten different brands, but seven are all actually owned by one giant manufacturer and the other three by some American almost-as-giant manufacturer, then a tariff on the former will drive up the price of seven of them and the American manufacturer will almost certainly raise the prices on the remaining three. Otherwise, it's just bad business.
        munificent 2y ago
        Oops, in "actually owned by one giant manufacturer", I meant to say "actually owned by one giant Chinese manufacturer".
  - codedokode 2y ago
    > As another example, if Tesla sells Model 3s for $50,000 and BYD comes in with a similar spec car priced at $25,000, then putting a 100% tariff on it will drive BYD's effective price up to $50,000 allowing Tesla to compete without undercutting or outright selling at a loss. Doesn't that mean that American will have to pay $50 000 for a car that is worth $25 000? While people in other countries will be able to buy cars cheaper, buy more of them and maybe it somehow improves their life quality.
    - verzali 2y ago
      Yes. Tariffs are bad for consumers. The supposed benefit is to manufacturers, since in that scenario Tesla will be able to sell its cars at a higher price and profit.
    - p_j_w 2y ago
      It means exactly that. It also means the American company will feel less pressure to improve cost or quality.
    - flyingpenguin 2y ago
      The purpose is to prop up local companies. Which is not always a bad idea, having a local supply and innovation of something can be rather important, local money is less "Gone" than foreign money, think of how healthy small towns are when all of the shops are local vs when they are not. The problem comes when there is no realistic local competition. If you don't make something locally at all, an import tariff is just a stupid tax.

8note 2y ago

I doubt it. It's much easier to either launder or manufacture the goods in a third country, that benefits from most of the same incentives that made Chinese manufacturing go through the roof. Americans will be buying Chinese goods with "made in Vietnam" or "made in Mexico" stamped on it. The American profit will be in setting up those laundering schemes

seanmcdirmid 2y ago
If the Trump tariffs are based on country of final assembly, then yes, final assembly will just occur somewhere else, but it will take a couple of years to setup, and the inflation shock by that time will have done a lot of damage to the economy (recession likely, depression possible). It makes sense that it took Trump forever to find a treasury secretary willing to go along with this.
- mrguyorama 2y ago
  The last time he did tariffs against China, he put a tariff on raw materials but not stuff made with that raw material. It was cheaper to build your excavator outside the country than pay the tariffs on importing the materials to build the excavator here. It was an objective failure. It also resulted in very smartly targeted payback that caused serious financial distress to a bunch of blue collar American food producers who sell a lot to China because the American market is literally not big enough (my state sells millions of pounds of lobster to China, those lobstermen still vote for Trump). This is because Trump is objectively a fucking moron, and if you tell him "No, your idea is wrong because you don't know what you are talking about", he gives you the same "You're fired" speech from his damn television show, replaces you with a sycophant, and then does the stupid thing. Any prediction that starts with "Trump will do the Tariffs in the way that requires second order thinking" is doomed to failure.
- omeid2 2y ago
  Couple of years for a western enterprise maybe, but in the east, things move fast. Really fast.
  - 2y ago

csomar 2y ago

Vietnam and Mexico will massively profit.

lm28469 2y ago

It doesn't matter much if your shitbox is made in US or made in China when it cost 50k and nobody has the money for it

onlyrealcuzzo 2y ago

With what workers? Basically everyone is already employed.