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Any additional cost on top of the 'natural' costs involved with producing a result raises prices. Additional costs that direct resources to a government are a

Any additional cost on top of the 'natural' costs involved with producing a result raises prices. Additional costs that direct resources to a government are a form of a tax, this includes direct taxes at the point of sale, and it should also include taxes incurred for traversing an arbitrary interface (tariff or toll). Any form of tax on goods / services proportionately effects those who spend more of their income on those goods / services more. Tariffs on not-luxury goods are regressive taxes on the poor and middle class.

fire_lake 2y ago
This is too simple. Prices float somewhere between cost to produce and value to consumers. You can’t raise prices beyond value or no one will buy it. You can’t lower prices below costs (for too long) or you go out of business. Competition pushes prices down towards costs. Therefore businesses are always looking for markets with barriers so they can rise prices to value. Tariffs typically raise costs for all producers, but this only inevitably leads to price increases when competition has driven prices down to near costs. Unfortunately many staple grocery products fall into this category.
- Angostura 2y ago
  > You can’t raise prices beyond value or no one will buy it. Arguably, that's precisely the aim of some of these tariffs. Price the foreign imports out of the market
  - Jtsummers 2y ago
    Which could work if there were domestic alternatives or the capacity to produce domestic alternatives. The US lacks the apparel manufacturing capacity to takeover from the countries being hit with the current very high tariffs. We also lack the environmental factors to take over growing (ignoring the years needed to get started) coffee and vanilla and many other agricultural products.
- c22 2y ago
  But isn't value subject to drift (inflation) and couldn't we inevitably expect such drift while raising costs across the board?
  - Jtsummers 2y ago
    Value and price aren't the same thing. Inflation is a change in price, not necessarily a change in value of the things being purchased. This is why when you examine how much something has changed in price you should compare real versus nominal changes. If you bought your home for $100k in 2000 and sold it today for about $185k, you would be selling it for the same real amount despite the nominal change in price. Its value has not changed in real terms. If you sold the home for $300k, that would exceed the increase from inflation alone and indicate an increase in value (either improvements you've made, the local area has become more desirable, or reflecting scarcity of homes in general). Or look at your own salary. If your salary is just keeping up with inflation, your employer does not see any increase in value from you over the years. If your salary is dropping relative to inflation, you are, arguably, losing value. If your salary increases faster than inflation, you're increasing in value. (Of course there can also be a lag, the 8% inflation in 2022 may result in depressed salaries for 1-2 years before they catch up. Watch the trend over a longer period of time.)
    - c22 2y ago
      No, I disagree. I think that inflation (on mean) reflects real value that is accrued by an economy.
- xvedejas 2y ago
  The supply and demand curves are not straight lines. There is not one unit price that consumers value a good at, that's why the marginal price that a consumer will pay depends on the quantity produced. The first most eager buyers would pay a higher price than the rest of the buyers you can find at higher quantities produced (but a lower price). Tariffs eat into consumer surplus and producer surplus not just by raising prices, but also thereby reducing quantity. I think the only times you'd see no effect on consumer surplus via a tax are when the consumers are always going to pay a fixed amount regardless of quantity they can get (perhaps in some budget-constrained scenario), or if the amount of the thing that can be produced is fixed regardless of price; neither of these scenarios describes consumer goods.
- eek2121 2y ago
  Your argument assumes there is meaningful competition to begin with. In the case of groceries, a few big companies ultimately control nearly all of it. They know you “need” groceries, so they will happily pass along the increased cost. What are you going to do, stop buying food?
  - rsynnott 2y ago
    Well, also, in the case of groceries, margins are typically very low, due to competition. Large supermarket chains tend to have profit margins in the low single digits; over 5% would be unusual. There’s just very little room to absorb cost increases without raising price.
chgs 2y ago
Obviously it’s a tax increase on working people to fund even more tax cuts for the already insanely wealthy, allowing them to buy up even more assets. Even if you have a $10m portfolio you’ll be next, once they’ve drained the $100k and $1m lot.
- jrs235 2y ago
  And folks who argue the situation harms the billionaires typically are thinking about it in dollar valuations as opposed to percentage of all wealth owned. If their portfolios shrink on paper to be only worth a tenth as much tomorrow (but everything dropped that same paper value amount) but their purchasing power goes up and are able to buy a larger percentage of all wealth, they are coming out ahead. As #47 said, only the weak (poor) will fail...
  - deleted 2y ago
    [deleted]
  - ItDoBeWimdyTho 2y ago
    Their wealth may increase as a percentage of all wealth in America. For a long time that basically meant the same thing, because the dollar was the foundation of the international financial system. But that was because of the stability of the US government. When other countries disengage their financial systems from ours in favor of the yuan, being a billionaire in American dollars will be about as impressive as being a billionaire in Zimbabwe dollars.
- deanmoriarty 2y ago
  > Even if you have a $10m portfolio you’ll be next, once they’ve drained the $100k and $1m lot. What does this mean, in practical examples? Just trying to understand your point.
fatherzine 2y ago
First, prices per se are irrelevant. The ratio of labor price to goods&services price is relevant. Second, the labor / goods&services price ratio itself is irrelevant, as measured in the short term. What is relevant is the long term outlook of this ratio. See eg the Dutch Disease. Third, even the long term labor / goods&services price ratio is irrelevant. Not everything in this world is, or should be, reducible to simplistic financial value. One way to approach the underlying intuition is in terms of homeostasis, at nation state level.
- wholinator2 2y ago
  I'm confused, are you asking we close our eyes and only operate on internal bias? Where does the world matter if no single metric is relevant? Regardless of number metrics, what do you think matters? I think a family that can no longer afford a laptop for their child's education matters. I think 10,000 or 100,000 such families matter a lot. How do we tell that story? What options have we but the numbers?
  - fatherzine 2y ago
    Long term median purchasing power, especially of essentials eg housing / food / energy / education, matters more to the health of a nation than the price of hitech on open global markets at a specific time instant. Furthermore, while the health and wealth of a nation are correlated, they are not the same. I wonder if there is a sensible way to prioritize health over wealth.
ethbr1 2y ago
You left out exchange rates and therefore purchasing power. Historically, tariffs have led to a widening of currency spread between the tariffed (weakens) and tariffing (strengthens) nation. Which generally acts in opposition to inflation, ceteris paribus. E.g. importers pay more in dollars to import goods from a tariffed country, but if the imposition of tariffs causes the dollar to strengthen and the foreign currency to weaken, some competitive exporter will say "You know, I can sell those to you for less, in dollar terms, because my costs are in my (devalued) currency."

fire_lake 2y ago

This is too simple. Prices float somewhere between cost to produce and value to consumers. You can’t raise prices beyond value or no one will buy it. You can’t lower prices below costs (for too long) or you go out of business. Competition pushes prices down towards costs. Therefore businesses are always looking for markets with barriers so they can rise prices to value. Tariffs typically raise costs for all producers, but this only inevitably leads to price increases when competition has driven prices down to near costs. Unfortunately many staple grocery products fall into this category.

Angostura 2y ago
> You can’t raise prices beyond value or no one will buy it. Arguably, that's precisely the aim of some of these tariffs. Price the foreign imports out of the market
- Jtsummers 2y ago
  Which could work if there were domestic alternatives or the capacity to produce domestic alternatives. The US lacks the apparel manufacturing capacity to takeover from the countries being hit with the current very high tariffs. We also lack the environmental factors to take over growing (ignoring the years needed to get started) coffee and vanilla and many other agricultural products.
c22 2y ago
But isn't value subject to drift (inflation) and couldn't we inevitably expect such drift while raising costs across the board?
- Jtsummers 2y ago
  Value and price aren't the same thing. Inflation is a change in price, not necessarily a change in value of the things being purchased. This is why when you examine how much something has changed in price you should compare real versus nominal changes. If you bought your home for $100k in 2000 and sold it today for about $185k, you would be selling it for the same real amount despite the nominal change in price. Its value has not changed in real terms. If you sold the home for $300k, that would exceed the increase from inflation alone and indicate an increase in value (either improvements you've made, the local area has become more desirable, or reflecting scarcity of homes in general). Or look at your own salary. If your salary is just keeping up with inflation, your employer does not see any increase in value from you over the years. If your salary is dropping relative to inflation, you are, arguably, losing value. If your salary increases faster than inflation, you're increasing in value. (Of course there can also be a lag, the 8% inflation in 2022 may result in depressed salaries for 1-2 years before they catch up. Watch the trend over a longer period of time.)
  - c22 2y ago
    No, I disagree. I think that inflation (on mean) reflects real value that is accrued by an economy.
xvedejas 2y ago
The supply and demand curves are not straight lines. There is not one unit price that consumers value a good at, that's why the marginal price that a consumer will pay depends on the quantity produced. The first most eager buyers would pay a higher price than the rest of the buyers you can find at higher quantities produced (but a lower price). Tariffs eat into consumer surplus and producer surplus not just by raising prices, but also thereby reducing quantity. I think the only times you'd see no effect on consumer surplus via a tax are when the consumers are always going to pay a fixed amount regardless of quantity they can get (perhaps in some budget-constrained scenario), or if the amount of the thing that can be produced is fixed regardless of price; neither of these scenarios describes consumer goods.
eek2121 2y ago
Your argument assumes there is meaningful competition to begin with. In the case of groceries, a few big companies ultimately control nearly all of it. They know you “need” groceries, so they will happily pass along the increased cost. What are you going to do, stop buying food?
- rsynnott 2y ago
  Well, also, in the case of groceries, margins are typically very low, due to competition. Large supermarket chains tend to have profit margins in the low single digits; over 5% would be unusual. There’s just very little room to absorb cost increases without raising price.

chgs 2y ago

Obviously it’s a tax increase on working people to fund even more tax cuts for the already insanely wealthy, allowing them to buy up even more assets. Even if you have a $10m portfolio you’ll be next, once they’ve drained the $100k and $1m lot.

jrs235 2y ago
And folks who argue the situation harms the billionaires typically are thinking about it in dollar valuations as opposed to percentage of all wealth owned. If their portfolios shrink on paper to be only worth a tenth as much tomorrow (but everything dropped that same paper value amount) but their purchasing power goes up and are able to buy a larger percentage of all wealth, they are coming out ahead. As #47 said, only the weak (poor) will fail...
- deleted 2y ago
  [deleted]
- ItDoBeWimdyTho 2y ago
  Their wealth may increase as a percentage of all wealth in America. For a long time that basically meant the same thing, because the dollar was the foundation of the international financial system. But that was because of the stability of the US government. When other countries disengage their financial systems from ours in favor of the yuan, being a billionaire in American dollars will be about as impressive as being a billionaire in Zimbabwe dollars.
deanmoriarty 2y ago
> Even if you have a $10m portfolio you’ll be next, once they’ve drained the $100k and $1m lot. What does this mean, in practical examples? Just trying to understand your point.

fatherzine 2y ago

First, prices per se are irrelevant. The ratio of labor price to goods&services price is relevant. Second, the labor / goods&services price ratio itself is irrelevant, as measured in the short term. What is relevant is the long term outlook of this ratio. See eg the Dutch Disease. Third, even the long term labor / goods&services price ratio is irrelevant. Not everything in this world is, or should be, reducible to simplistic financial value. One way to approach the underlying intuition is in terms of homeostasis, at nation state level.

wholinator2 2y ago
I'm confused, are you asking we close our eyes and only operate on internal bias? Where does the world matter if no single metric is relevant? Regardless of number metrics, what do you think matters? I think a family that can no longer afford a laptop for their child's education matters. I think 10,000 or 100,000 such families matter a lot. How do we tell that story? What options have we but the numbers?
- fatherzine 2y ago
  Long term median purchasing power, especially of essentials eg housing / food / energy / education, matters more to the health of a nation than the price of hitech on open global markets at a specific time instant. Furthermore, while the health and wealth of a nation are correlated, they are not the same. I wonder if there is a sensible way to prioritize health over wealth.

ethbr1 2y ago

You left out exchange rates and therefore purchasing power. Historically, tariffs have led to a widening of currency spread between the tariffed (weakens) and tariffing (strengthens) nation. Which generally acts in opposition to inflation, ceteris paribus. E.g. importers pay more in dollars to import goods from a tariffed country, but if the imposition of tariffs causes the dollar to strengthen and the foreign currency to weaken, some competitive exporter will say "You know, I can sell those to you for less, in dollar terms, because my costs are in my (devalued) currency."