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I am not sure I understand the implications of these tariff. Basically it means that products are becoming more expensive for people in the US. How is that a go

I am not sure I understand the implications of these tariff. Basically it means that products are becoming more expensive for people in the US. How is that a good thing for them? I understand this can help some US company to sell more products in their country, but that seems to benefit only a very small amount of industries.

bux93 2y ago
Tariffs are just a tax. Similar to a sales tax, but it needs to be paid on import. To be clear, it's a tax on your own citizens, not foreign exports. If a product is cheaply produced in another country, and your domestic industry cannot match that price, your domestic industry might disappear. Suppose that other country is subsidizing their industry, then it's quite unfair, and it legitimizes supporting your own industry either by your own subsidies or retaliatory tariffs. As they say, to level the playing field. If the domestic industry is already dead, tariffs won't magically resurrect it. For example, building a chip industry can take billions of dollars in investments and years of development. All that time, those taxes are basically just costing consumers money. They need to be kept in place up until the new factories come online AND are paid off. This can take decades. Will those tariffs still be there? Will those other countries have ALSO invested? Those uncertainties make it hard to invest in a dead/dying industry, even with tariffs in place. One feature of tariffs is that it's a tax on consumption, so it's ultimately paid by consumers, and it's a regressive tax; the wealthiest will pay the smallest ratio of their income and/or wealth, while the working Joe will just see stuff getting more expensive - especially in the short term. Tariffs can work to retaliate against, and discourage, dumping. They can play a role in protecting vital industries. But arbitrarily imposing them for political points is a dangerous gambit.
- cudgy 2y ago
  “One feature of tariffs is that it's a tax on consumption, so it's ultimately paid by consumers, and it's a regressive tax; the wealthiest will pay the smallest ratio of their income and/or wealth, while the working Joe will just see stuff getting more expensive - especially in the short term.” I don’t think it’s this simple. The wealthy fat cats that are making money producing their stuff overseas or simply operating as middlemen for overseas manufacturers are going to have a reduction of income and profits. Furthermore, it depends on how the revenue from tariffs were used. If revenue from tariffs is used to lower taxes for lower income citizens, it would be effectively a progressive tax.
  - GlassOwAter 2y ago
    They won’t be using tariffs to lower taxes for lower income citizens. Tax cuts for the rich have already been proposed.
    - cudgy 2y ago
      Sure, but how is this any different than the income tax system where companies receive tax credits, reduced tax rates, accelerated depreciation, schedules, subsidies to build factories, and direct cushy (high margin and sometimes fraudulent) contracts from government divisions.
  - svnt 2y ago
    Middlemen for overseas manufacturers are not typically what comes to mind when I hear “wealthy fat cats.” If all the middlemen see the same increase in costs, they are not going to be the one to try to keep prices the same. They know everyone is taking the same hit so they can just pass it along together. The consumer decides to buy or not at that level. The innovation comes in avoiding the tariff. Often companies with sufficient scale of operations can pay additional lawyers and accountants to restructure and avoid tariffs. Tariffs can dramatically affect specific companies, but squishy middlemen (and multinationals) can often work around them.
  - scottbez1 2y ago
    I run a tiny (<$30k annual revenue and much much smaller profit, or negative if I paid myself an hourly wage) side business that relies on custom manufacturing of open source hardware products I've designed. So very much not a "wealthy fat cat" - here's my experience with manufacturing: For die-cut plastic cards (think custom-shaped gift cards or hotel door hangers), I reached out to several US manufacturers for quotes and most never even responded. The one that did respond basically laughed at me and said my design was impossible to cut. So I went on Alibaba and had tons of quotes instantly and found a manufacturer. Not one of the responses were concerned about the design's manufacturability. And the manufacturer I picked does an incredible job with what is admittedly a challenging die cut design. As a tiny business, most of my orders end up being under de minimis (which is actually great for helping small businesses avoid the overhead of dealing with tariffs and level the playing field against large players that can be much more efficient at handling regulatory overhead through high volume). But with the change to eliminate de minimis and increase tariffs another 10% essentially overnight, my COGS is going to increase ~30%, which means either I shut down my business due to losing nearly all of my margin, or I increase prices substantially. It just hurts consumers AND small businesses like mine in the US. There isn't a US manufacturer I can switch to (again, price wasn't the issue). And the US manufacturers in the space that WERE still selling products despite the international competition will just increase their prices now that competition is more expensive.
- mikewarot 2y ago
  > For example, building a chip industry can take billions of dollars in investments and years of development. Worse than that... you also need all the other things in the "ecosystem" that support them chips, such as discrete components, circuit board fabrication, assembly, etc.
  - geerlingguy 2y ago
    And the most important bit, people who can staff the plants and operate the machinery required.
    - ahoka 2y ago
      And divesting capital and workers from other industries that might benefit the country more.
  - marcosdumay 2y ago
    Yes, and if the tariffs are indiscriminate, all of those things will be more expensive, making a domestic industry less competitive, for no good reason.
- petre 2y ago
  Also tariffs are paid upfront when the goods leave the customs. Sales tax is paid only when the goods are sold to the final consumer.
tonetheman 2y ago
[dead]
ApolloFortyNine 2y ago
The tldr version imo of tariffs is to ask yourself if their should be tariffs on Chinese evs and work backwards from there to every other industry. The more detailed answer boils down to if you as a business can save 1% producing a product by buying a widget you need from overseas, that's what you'll do. So instead of a domestic company paying employees in your country all through it's supply chain, it all goes overseas. This costs you as a business 1%, but in theory has a large enough economic impact to benefit the country overall.
creer 2y ago
> this can help some US company These tariff threats are so broad. They are not aimed at encouraging this or that local industry. (And for the US you would need much more than a few percentage points of margin to encourage that.) It feels like they are (1) threats. very crude threats. to get entire countries to change their policies a little this way or that - favoring the US a little more in exchange for dropping the threat. and (2) a source of govt revenue that doesn't look to the voters like income or capital gains tax. Although obviously it is - in the US everything ends up there.
- Jgrubb 2y ago
  Or 3) forcing the dip, buying the dip, lifting the conditions that caused the dip and profiting like nobody in history. This is all very simple. There is no plan, there is no us, there is no future. There is only him, now, and a revolving list of people trying to ride his coattails to more power for themselves.
guywithahat 2y ago
I'm not defending it, but certainly if they then reduce income taxes (which is the plan), consumers would have more money to spend. A portion of that money would then go back into US manufacturing, further driving up wages
- Volundr 2y ago
  If you want to avoid increasing the deficit, you have to take in via tarrifs whatever you cut in income taxes. So no this doesn't mean households now have more disposable income. That money they were paying in income taxes they are now paying in higher prices due to tarrifs. You may also want to double check the plan. Yes there are income taxes cuts included to make the little guy feel like they got something, but as usual the bulk of the cuts will go to the top.
braiamp 2y ago
> I understand this can help some US company to sell more products in their country If they are even able to satisfy the needs of the customer, either in quality, price or supply.
- from-nibly 2y ago
  They wont be at first for sure. The vain hope is that it will settle out and eventually people will build manufacturing.
  - dghlsakjg 2y ago
    People don’t want to make capital investments whose success is based on a loose plan that seems to change weekly. Add in that you are then almost certainly limited to a domestic market since your goods are only affordable when the competition has to pay a whacking great penalty.
Gibbon1 2y ago
As someone that sells products that are assembled from components that are sold and manufactured globally. My customers pay me for product. Some of that pays employees. The assembly house. And for parts are are imported. The tariffs basically means I have to pay extra to the government so they can give it to bunch of wealthy financial parasites.
- Joel_Mckay 2y ago
  Unless people relocate automated manufacturing lines for export products outside US soil. Thus, they save the US 25% + 10% tariff off, and whatever symmetric 25% response trading partners inflict on the US exports. i.e. one would save 60% off, avoid an economically hostile customs process, and may shop around for better tax systems. If the US market is isolated from a multi-origin product, than just collect the 35% markup on all products before shipping into the US like the new programs already require. Best of luck, I don't think people have really thought about this very much... =3
  - dpkirchner 2y ago
    That sort of manufacturing could take longer than 4 years to build much less profit from. Smarter to just wait it out and increase the domestic price to just below the foreign price+tariff.
    - Joel_Mckay 2y ago
      Perhaps, but most light-industry will likely open secondary factory locations in 8 months or hire contract manufacturing firms in a few days. Then turn around and drop demand deficient labor in the hostile markets. People respond to actions rather than posturing, and business people view the political process very differently. We'd be fooling ourselves to think it is about anything other than profit. Many people are likely about to lose their jobs, and there is nothing funny about that... Best regards =3
exceptione 2y ago
> but that seems to benefit only a very small amount of industries. Entirely logical response from a normal person used to think and act in a normal, decent way. Criminals break into a museum. There is an artwork there, 4000(!) years old. The thieves wreck the artwork and smelt the gold that is inside it for a €225 profit. There is a phenomenon of "The Cult of Wealth". Most people here cannot imagine how people with unlimited wealth, unlimited options, almost unlimited power think like. Have you seen the kids of the president ridicule the dying people in Ukraine? We are inclined to think that if you inherit almost the whole earth, you would be very grateful, kind and compassionate. Instead, they see the world in terms of just a handful of peers with the rest as resources to be extracted. We live in a world where we are brainwashed to think it is normal for corporate to call human beings "Human Resources". --------------------------- As soon as people learn to see what hides behind Trump and Doge, the networks that finance and selects people, they will lose the war. The theater is there to distract you, media will pick it up as bait but will not do the investigation of what it is. And so we are paralyzed by the news of the day. What society needs to do is to not accept abnormal and egregious behavior as normal. We all know what is decent human interaction, and the few can only take power over the mass, if the people consent to it -- be it actively or passively.
- deleted 2y ago
  [deleted]
- from-nibly 2y ago
  > We are inclined to think that if you inherit almost the whole earth, you would be very grateful, kind and compassionate. Why would you be inclined to think that? Absolute power corrupts absolutely. Being greatful is not manufactured by having stuff. Being kind has nothing to do wtih what you have. I'm inclined to think that if someone inherit the whole earth you are 1. A person who sought after that, which is bad 2. Even if you were magically a good person before, will be ruined by it at a minimum the way winning the lottery ruins a person. 3. Even if you survive 1-2 you will become famous and will have to cope with that insanity.
  - XorNot 2y ago

bux93 2y ago

Tariffs are just a tax. Similar to a sales tax, but it needs to be paid on import. To be clear, it's a tax on your own citizens, not foreign exports. If a product is cheaply produced in another country, and your domestic industry cannot match that price, your domestic industry might disappear. Suppose that other country is subsidizing their industry, then it's quite unfair, and it legitimizes supporting your own industry either by your own subsidies or retaliatory tariffs. As they say, to level the playing field. If the domestic industry is already dead, tariffs won't magically resurrect it. For example, building a chip industry can take billions of dollars in investments and years of development. All that time, those taxes are basically just costing consumers money. They need to be kept in place up until the new factories come online AND are paid off. This can take decades. Will those tariffs still be there? Will those other countries have ALSO invested? Those uncertainties make it hard to invest in a dead/dying industry, even with tariffs in place. One feature of tariffs is that it's a tax on consumption, so it's ultimately paid by consumers, and it's a regressive tax; the wealthiest will pay the smallest ratio of their income and/or wealth, while the working Joe will just see stuff getting more expensive - especially in the short term. Tariffs can work to retaliate against, and discourage, dumping. They can play a role in protecting vital industries. But arbitrarily imposing them for political points is a dangerous gambit.

cudgy 2y ago
“One feature of tariffs is that it's a tax on consumption, so it's ultimately paid by consumers, and it's a regressive tax; the wealthiest will pay the smallest ratio of their income and/or wealth, while the working Joe will just see stuff getting more expensive - especially in the short term.” I don’t think it’s this simple. The wealthy fat cats that are making money producing their stuff overseas or simply operating as middlemen for overseas manufacturers are going to have a reduction of income and profits. Furthermore, it depends on how the revenue from tariffs were used. If revenue from tariffs is used to lower taxes for lower income citizens, it would be effectively a progressive tax.
- GlassOwAter 2y ago
  They won’t be using tariffs to lower taxes for lower income citizens. Tax cuts for the rich have already been proposed.
  - cudgy 2y ago
    Sure, but how is this any different than the income tax system where companies receive tax credits, reduced tax rates, accelerated depreciation, schedules, subsidies to build factories, and direct cushy (high margin and sometimes fraudulent) contracts from government divisions.
- svnt 2y ago
  Middlemen for overseas manufacturers are not typically what comes to mind when I hear “wealthy fat cats.” If all the middlemen see the same increase in costs, they are not going to be the one to try to keep prices the same. They know everyone is taking the same hit so they can just pass it along together. The consumer decides to buy or not at that level. The innovation comes in avoiding the tariff. Often companies with sufficient scale of operations can pay additional lawyers and accountants to restructure and avoid tariffs. Tariffs can dramatically affect specific companies, but squishy middlemen (and multinationals) can often work around them.
- scottbez1 2y ago
  I run a tiny (<$30k annual revenue and much much smaller profit, or negative if I paid myself an hourly wage) side business that relies on custom manufacturing of open source hardware products I've designed. So very much not a "wealthy fat cat" - here's my experience with manufacturing: For die-cut plastic cards (think custom-shaped gift cards or hotel door hangers), I reached out to several US manufacturers for quotes and most never even responded. The one that did respond basically laughed at me and said my design was impossible to cut. So I went on Alibaba and had tons of quotes instantly and found a manufacturer. Not one of the responses were concerned about the design's manufacturability. And the manufacturer I picked does an incredible job with what is admittedly a challenging die cut design. As a tiny business, most of my orders end up being under de minimis (which is actually great for helping small businesses avoid the overhead of dealing with tariffs and level the playing field against large players that can be much more efficient at handling regulatory overhead through high volume). But with the change to eliminate de minimis and increase tariffs another 10% essentially overnight, my COGS is going to increase ~30%, which means either I shut down my business due to losing nearly all of my margin, or I increase prices substantially. It just hurts consumers AND small businesses like mine in the US. There isn't a US manufacturer I can switch to (again, price wasn't the issue). And the US manufacturers in the space that WERE still selling products despite the international competition will just increase their prices now that competition is more expensive.
mikewarot 2y ago
> For example, building a chip industry can take billions of dollars in investments and years of development. Worse than that... you also need all the other things in the "ecosystem" that support them chips, such as discrete components, circuit board fabrication, assembly, etc.
- geerlingguy 2y ago
  And the most important bit, people who can staff the plants and operate the machinery required.
  - ahoka 2y ago
    And divesting capital and workers from other industries that might benefit the country more.
- marcosdumay 2y ago
  Yes, and if the tariffs are indiscriminate, all of those things will be more expensive, making a domestic industry less competitive, for no good reason.
petre 2y ago
Also tariffs are paid upfront when the goods leave the customs. Sales tax is paid only when the goods are sold to the final consumer.

tonetheman 2y ago

[dead]

ApolloFortyNine 2y ago

The tldr version imo of tariffs is to ask yourself if their should be tariffs on Chinese evs and work backwards from there to every other industry. The more detailed answer boils down to if you as a business can save 1% producing a product by buying a widget you need from overseas, that's what you'll do. So instead of a domestic company paying employees in your country all through it's supply chain, it all goes overseas. This costs you as a business 1%, but in theory has a large enough economic impact to benefit the country overall.

creer 2y ago

> this can help some US company These tariff threats are so broad. They are not aimed at encouraging this or that local industry. (And for the US you would need much more than a few percentage points of margin to encourage that.) It feels like they are (1) threats. very crude threats. to get entire countries to change their policies a little this way or that - favoring the US a little more in exchange for dropping the threat. and (2) a source of govt revenue that doesn't look to the voters like income or capital gains tax. Although obviously it is - in the US everything ends up there.

Jgrubb 2y ago
Or 3) forcing the dip, buying the dip, lifting the conditions that caused the dip and profiting like nobody in history. This is all very simple. There is no plan, there is no us, there is no future. There is only him, now, and a revolving list of people trying to ride his coattails to more power for themselves.

guywithahat 2y ago

I'm not defending it, but certainly if they then reduce income taxes (which is the plan), consumers would have more money to spend. A portion of that money would then go back into US manufacturing, further driving up wages

Volundr 2y ago
If you want to avoid increasing the deficit, you have to take in via tarrifs whatever you cut in income taxes. So no this doesn't mean households now have more disposable income. That money they were paying in income taxes they are now paying in higher prices due to tarrifs. You may also want to double check the plan. Yes there are income taxes cuts included to make the little guy feel like they got something, but as usual the bulk of the cuts will go to the top.

braiamp 2y ago

> I understand this can help some US company to sell more products in their country If they are even able to satisfy the needs of the customer, either in quality, price or supply.

from-nibly 2y ago
They wont be at first for sure. The vain hope is that it will settle out and eventually people will build manufacturing.
- dghlsakjg 2y ago
  People don’t want to make capital investments whose success is based on a loose plan that seems to change weekly. Add in that you are then almost certainly limited to a domestic market since your goods are only affordable when the competition has to pay a whacking great penalty.

Gibbon1 2y ago

As someone that sells products that are assembled from components that are sold and manufactured globally. My customers pay me for product. Some of that pays employees. The assembly house. And for parts are are imported. The tariffs basically means I have to pay extra to the government so they can give it to bunch of wealthy financial parasites.

Joel_Mckay 2y ago
Unless people relocate automated manufacturing lines for export products outside US soil. Thus, they save the US 25% + 10% tariff off, and whatever symmetric 25% response trading partners inflict on the US exports. i.e. one would save 60% off, avoid an economically hostile customs process, and may shop around for better tax systems. If the US market is isolated from a multi-origin product, than just collect the 35% markup on all products before shipping into the US like the new programs already require. Best of luck, I don't think people have really thought about this very much... =3
- dpkirchner 2y ago
  That sort of manufacturing could take longer than 4 years to build much less profit from. Smarter to just wait it out and increase the domestic price to just below the foreign price+tariff.
  - Joel_Mckay 2y ago
    Perhaps, but most light-industry will likely open secondary factory locations in 8 months or hire contract manufacturing firms in a few days. Then turn around and drop demand deficient labor in the hostile markets. People respond to actions rather than posturing, and business people view the political process very differently. We'd be fooling ourselves to think it is about anything other than profit. Many people are likely about to lose their jobs, and there is nothing funny about that... Best regards =3

exceptione 2y ago

> but that seems to benefit only a very small amount of industries. Entirely logical response from a normal person used to think and act in a normal, decent way. Criminals break into a museum. There is an artwork there, 4000(!) years old. The thieves wreck the artwork and smelt the gold that is inside it for a €225 profit. There is a phenomenon of "The Cult of Wealth". Most people here cannot imagine how people with unlimited wealth, unlimited options, almost unlimited power think like. Have you seen the kids of the president ridicule the dying people in Ukraine? We are inclined to think that if you inherit almost the whole earth, you would be very grateful, kind and compassionate. Instead, they see the world in terms of just a handful of peers with the rest as resources to be extracted. We live in a world where we are brainwashed to think it is normal for corporate to call human beings "Human Resources". --------------------------- As soon as people learn to see what hides behind Trump and Doge, the networks that finance and selects people, they will lose the war. The theater is there to distract you, media will pick it up as bait but will not do the investigation of what it is. And so we are paralyzed by the news of the day. What society needs to do is to not accept abnormal and egregious behavior as normal. We all know what is decent human interaction, and the few can only take power over the mass, if the people consent to it -- be it actively or passively.

deleted 2y ago
[deleted]
from-nibly 2y ago
> We are inclined to think that if you inherit almost the whole earth, you would be very grateful, kind and compassionate. Why would you be inclined to think that? Absolute power corrupts absolutely. Being greatful is not manufactured by having stuff. Being kind has nothing to do wtih what you have. I'm inclined to think that if someone inherit the whole earth you are 1. A person who sought after that, which is bad 2. Even if you were magically a good person before, will be ruined by it at a minimum the way winning the lottery ruins a person. 3. Even if you survive 1-2 you will become famous and will have to cope with that insanity.
- XorNot 2y ago