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US companies, consumers are paying for tariffs, not foreign firms
- aussieguy1234 1y agoThat this is surprising to a large group of Americans speaks to how uneducated a lot of them are. Not sure if it has something to do with the underfunded school system?
- le-mark 1y agoRed states are red states for a reason. Lowest income, lowest educational attainment, rural poverty and struggling schools. It’s a pernicious problem exacerbated by conservative media that’s 24 hour xenophobia and jingoism. It’s not just the US look to your countrymen dear reader!
- SauciestGNU 1y agoNot to mention a large portion of that cohort views education as a moral wrong.
- sremani 1y agoBirds did not read Ornithology to fly. Accumulation of knowledge is useful but real world experience and hard earned wisdom is more important. That is what you test-taking, credential hustlers do not understand.
- fragmede 1y agoBirds didn't read Ornithology in order to fly, sure. But you can be damn sure the engineers at Boeing cracked a textbook on the way to making the 747. Real-world experience teaches you how you survived. Education teaches you how others failed. You need both to avoid old mistakes and make new ones. It’s not about credential hustling, it’s about having more tools in the toolbox.
- nobody9999 1y ago>It’s not about credential hustling, it’s about having more tools in the toolbox. Yes. However, there's a strain of anti-intellectualism in the US that denigrates knowledge and learning, as Isaac Asimov observed: "Anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means 'my ignorance is just as good as your knowledge'"[0] This is discussed in greater detail in Tom Nichols 2017 book The Death of Expertise[1]. This is exacerbated of course, by the Dunning-Kruger effect[2]. I mean, heck, why should I go to a cardiologist for my heart condition? I'm a plumber and watched youtube videos about the cardiovascular system. Which is exactly the same as indoor plumbing, so I'm doing my triple bypass surgery myself. Fuck you, medical establishment. With your "school" and "residency" and other gatekeeping. It's all a scam! Anyone (and especially me!) can do all of this stuff without some "doctor"![3] [0] https://www.goodreads.com/quotes/84250-anti-intellectualism-has-been-a-constant-thread-winding-its-way-through https://www.goodreads.com/quotes/84250-anti-intellectualism-... [1] https://en.wikipedia.org/wiki/The_Death_of_Expertise https://en.wikipedia.org/wiki/The_Death_of_Expertise [2] https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect https://en.wikipedia.org/wiki/Dunning%E2%80%93Kruger_effect [3] Yes, that's hyperbole. But as we've seen in this discussion, similar ideas abound in other areas. And more's the pity.
- sremani 1y agoThe academic fraud in US is at its peak. Harvard President was caught red handed plagiarizing. Many scientific papers are not reproducible and more than 50% in some cases. Most academics are sophist. Most universities practice scientism instead of science. Erudition has been replaced with test taking and sophistry.
- SauciestGNU 1y agoThese are a lot of allegations to be making against the entire concept of higher education without citing any evidence.
- russdill 1y agoIt's very frustrating to city dwellers that so much of the "discourse" on the right is how immigrants are destroying cities, mass transit is a death trap, etc. And it's aimed squarely at rural voters.
- mensetmanusman 1y agoTariffs are just a mechanism to adjust the calculus of where something is made. Consumers getting Nd:YAG lasers from China below cost are also weakening the laser supply chain elsewhere. Tariffs are a type of response to these situations.
- boboboboboboo 1y ago[dead]
- SideburnsOfDoom 1y agoOn the topic of "where things are made": "If you look at page 1 of the tariff handbook, it says: Don't tariff inputs. It's the simplest way to make it harder—more expensive—for Americans to do business. Any factory around the world can get the steel, copper, and aluminum it needs without paying a 50% upcharge, except an American factory." https://bsky.app/profile/justinwolfers.bsky.social/post/3lud465yzss2e https://bsky.app/profile/justinwolfers.bsky.social/post/3lud...
- cyanydeez 1y agoyes, sure, except in many cases, where something is made has nothing to do with market forces and everything to do with geology. As such, the way in which they're used can easily be disguished between "hidden tax" and "design to affect production location". These tariffs are, as a whole, about adding a hidden tax.
- afavour 1y agoThey should be that. But a Tariff on avocado exports from Mexico doesn't mean more avocados get grown in the US, because it simply isn't possible. Tariffs need to be applied surgically and... they are not
- plorkyeran 1y agoIt would take many years for production to meaningfully ramp up, but there absolutely is a lot of land in California that could be used to grow avocados if it made economic sense.
- megabless123 1y ago[flagged]
- almosthere 1y ago[flagged]
- thaumasiotes 1y ago"Not Foreign Companies"? They can both pay. Taxes are negative-sum.
- gtowey 1y agoThey will not. Because the sellers can sell to another country without the tariff. American buyers have no alternative.
- pessimizer 1y agoAmerican buyers are the pretty girl, because they are in debt up to their ears and constantly taking out more. There's no secret alternative to the American market that everybody was ignoring until tariffs. Everybody else will be getting stuff cheap for a while because countries that are hit with tariffs will have too much production capacity, but those won't be profitable sales. American buyers, however, can buy their products from anyone in the world. They can choose to buy domestically, or to import from countries that have lower tariffs.
- thaumasiotes 1y agoIf selling to another country was just as profitable as selling to America (pre-tariff), they would have already been doing that. You're saying they are paying, but you're labeling paying as "not paying".
- Marsymars 1y agoA bit pedantic, but sin taxes, or taxes on products/services with negative externalities can be positive-sum.
- djoldman 1y agohttps://archive.ph/wbPDv https://archive.ph/wbPDv
- almosthere 1y ago[flagged]
- kazinator 1y agoThis only needs to be explained to Americans who are somehow still hanging on to Donald Trump's explanation of tariffs: that they are gonna make foreigners pay. Tariffs are taxes that locals pay on stuff imported from abroad.
- cosmicgadget 1y agoNot worth explaining, they exist in a different reality. One where thousands of sex trafficking victims had just two culprits, a bathroom full of classified documents was not a felony, and "find me votes" isn't a crime.
- throwawaylaptop 1y agoIf an American screw driver is $10, and a Chinese one was $5, I bought Chinese. If you tariff the Chinese one to $8, I will buy American. China knows this, so they change the price on their screw driver (that actually costs them 0.75) accordingly, so that it can still be sold for $5, because they know there's a ceiling on what people will pay. China doesn't have pure competition. The price of their goods isnt really related to cost by it more of what the buyer will pay.
- JumpCrisscross 1y ago> Tariffs are taxes that locals pay on stuff imported from abroad Importers pay the tariff. But where the tax burden falls is more complicated. Short answer is that right now, we don't have strong evidence for where the burden is falling. Given how volatile tariffs have been, and the variety of leverage positions of American importers across industries, it will probably be years before we can suss out a signal from the data.
- kazinator 1y agoYou are right. A tax removes money from the transaction. Broadly speaking, the burden will be felt by either party in inverse proportion to how much choice they have in selecting that transaction.
- drewcoo 1y agoTariffs are supposed to change consumer behavior. What's next? Is Bloomberg going to be telling us that fluoridation is preventing tooth demineralization and not actually helping the Communists?
- dragontamer 1y agoThe President and his followers think that Tariffs are something foreigners pay. And they still think that.
- HarHarVeryFunny 1y agoHis followers may believe that, but Trump himself is obviously aware of what a tariff is. He seems to think that he can bully importers such as Walmart into eating the cost of tariffs and not passing the cost onto the consumer, but I suspect he really doesn't care. It makes for better optics if he pretends to care about consumers, but ultimately Trump only cares about Trump, and wants to use tariffs as a way to bully other countries to make himself look good - the tough deal maker. Some of his tariff "deals", such as with UK, have been laughable, but he's happy to go along as long as he can claim victory and get good press out of it.
- bediger4000 1y agoI feel like we can't impugn any kind of belief about what Trump thinks about tariffs. It appears to me that Trump sometimes uses the threat of tariffs to get him myself some emoluments. After that, many of his tariffs seem nonsensical
- legitster 1y agoA reminder, most tariffs will not be paid because consumers will just shift their spending habits to match or just buy less. Tariffs are a double edged sword because the hurt purchasing power of consumers without really generating much money for the government. The administration is going to focus on the fact that tariffs don't really drive inflation, but are going to miss the forest for the trees: prices won't go up because we all have become a little poorer.
- AnimalMuppet 1y agoI don't think that's quite right. Here's a thing with a punitive tariff on it. People won't buy it because the price went up too much. It is because prices went up that nobody buys it. (And we all become poorer because we can afford less, whether or not the price increase shows up in the inflation statistics.) Tariffs have their own Laffer Curve just like income taxes do. Sure, you can set them so that the government gets zero (or close) revenue. But you don't have to. You can set them so that the government gets quite a bit of money. (Note well: I am not claiming that Trump is setting them there.)
- legitster 1y agoI think that's correct to say it's not an on-off switch, but I am just saying that inflation should not be an expected outcome of tariffs.
- Spartan-S63 1y agoThe real double-edged sword is that tariffs can be both recessionary and inflationary. Consumers cutting spending habits will slow the economy and trigger layoffs, which in turn will continue slowing the economy. On the flip side, we still import most of our goods because we don't have an industrial base sizable enough–and likely won't for several decades—so those tariffs will drive prices up. It's a positive feedback loop that results in a halting economy. If the Trump admin was serious about rebuilding the industrial base, they'd be providing subsidies and federal grants, not tariffs. They'd also be sucking money out of the economy by increasing the number and top marginal rates on the income tax and patching loopholes in the corporate tax code. At the same time, they'd be cutting taxes for the bottom 80% of America and providing healthcare and childcare subsidies.
- hamuraijack 1y agoThe sky is blue
- dang 1y agoOk, but please don't post unsubstantive comments.
- pessimizer 1y agoAmerican tariffs are meant to be paid by Americans, and not usually meant to damage foreign companies. A rise in the price of imports is not an unforeseen consequence of tariffs, it's their entire purpose. This is basic knowledge that everybody at Bloomberg knows. You know the tariffs are targeted well enough because Bloomberg is against them; they wouldn't care at all if they felt that the costs could be passed onto the consumer. The consumer, when confronted with high prices due to tariffs, often buys something else that is not subject to tariffs. Grover Norquist is smiling from the grave right now, watching this bipartisan anti-tax push. More interesting to me is how Trump has managed to multiply the effects of tariffs by creating complete chaos (either on purpose or by accident.) The tariffs never turn out to be as high as they were marketed as. They are reapplied and dropped on alternate months. He makes the ending of tariffs contingent on actual concessions on other issues that the US is concerned about, but also makes them contingent on bullshit that no one would ever agree to. All of this is creating the stress that causes people to restructure their supply chains, manufacturing, and logistics, at first to get the flexibility to adjust when Trump veers, but they can always see the alternative of cutting out imports at all which would frees them from any of that. The drama ("uncertainty") around tariffs is in and of itself a tariff (that will be seen in prices) that isn't being collected by the government, it's going into efforts by businesses to onshore and/or diversify their vendors. That onshoring is also going to raise consumer prices until it lowers them again. That would be the price for demanding US labor standards be used in making US products, too. If we wanted to stop depending on foreign slave labor for cheap disposable shit, I don't know how we do that without tariffs. "Free trade" is an active enemy of labor rights.
- 0cf8612b2e1e 1y agoGrover Norquist is smiling from the grave right now, watching this bipartisan anti-tax push. Someone buried Grover Norquist alive?
- throttlebody 1y agoI don't think I have read anything so wrong about tariffs in quite a while. Tariffs either protect local manufacturing and/or slows consumption of said import. In both cases, it is inflationary.
- xnx 1y agoCrazy that one of the major policy initiatives of the all Republican/Maga government is to impose a huge consumer tax increase. Maybe calling these "import taxes" instead of "tarrifs" would help emphasize that to the average voter?
- linotype 1y agoThat’s the point. It’s not crazy. Tariffs are regressive taxes. Rich people buy more stuff, sure, but as a percentage of their income they net out as beneficiaries of shifting taxes from income to spending. It’s totally rational if you want to increase taxes on the bottom 80% to subsidize the top 20% (and especially top 5%).
- water9 1y ago[flagged]
- vaidhy 1y agoA tariff across the board is same as a sales tax (rather a value added tax, as it is dependent on the value of goods). I would love to understand why you think it is punitive for the ultra rich.
- fsckboy 1y agosales taxes are based on the value of the goods. value added taxes are paid on the profit made on the good, and are paid by the seller (because the buyer doesn't know what the profit is). value added taxes are basically corporate income taxes
- ndsipa_pomu 1y agoHere in the UK, the value added tax (VAT) is calculated from the sales price to the customer. Companies can claim back VAT that they pay for parts etc so that VAT is pretty much only paid by the customer
- toomuchtodo 1y ago[flagged]
- xnx 1y agoForeign labor seems to be one of the few things not covered by these import taxes.
- daft_pink 1y agohonestly, it’s a little of everything. foreign companies will eat the tariffs to some extent, consumers will shift to less tariffed goods and consumers will pay the tariffs. however, paying the tariffs is essentially paying taxes and the government needs money and there’s nothing wrong with that. this one has the extra sword of helping our other Americans find work and increasing the likelihood that foreign goods will be purchased from allied nations and not totalitarian dictatorships with goals that might end in ww3 with the usa, while not completely cratering our economic system with full and immediate decoupling.
- drdec 1y ago> helping our other Americans find work In the same way that laws against pumping your own gas help other Americans find work. It makes everyone else poorer instead of naturally created jobs which provide goods and services people want. > increasing the likelihood that foreign goods will be purchased from allied nations and not totalitarian dictatorships Citation needed, this round of tariffs have also fallen on our allies
- swordsmith 1y agoEveryone focusing on consumer prices. But tariffs also function to incentivize domestic reindustrialization, which has huge national security implications. You see this clearly in the venture space as increased investment interest in hardtech and manufacturing. It's great that the federal government is looking long term again.
- jauntywundrkind 1y agoWith the planet-smashing asteroid sized caveat that all these businesses are way harder to start when trying to procure machines and materials and other CapEx is all faces massive tariffs. Maybe those folks can be competitive within the US given the absurd tariffs. But will they be competitive on any global scale, with those additional headwinds? And if TACO or years pass and tariffs get rescinded, having that massive extra overhead on CapEx is not a good position to be in.
- supertrope 1y agoAn N95 mask made in China costs $0.30. One made in the USA costs $1.00. A 25% tariff was enacted by executive fiat. The made in China mask is still cheaper than the USA made one. Few hospitals buy American. PPE manufacturers in Malaysia win.
- fsckboy 1y agoand China is therefore punished in the context of treating US imports to China in an unfair way; this was one of the goals, so you're saying "policy win"?
- DangitBobby 1y agoVery telling that you think "punishing" China is a win for us. We are mostly just fucking ourselves, proving that we can't be trusted as a global trading partner, and driving other countries straight into China's arms.
- JumpCrisscross 1y ago> China is therefore punished If we only tariffed China, yes. They would be. Because while their 37.5¢ mask remains 63% cheaper than the American one, it might be 20% more expensive than one made in Mexico or India or Vietnam. But we didn't do that. We raised the prices for everyone. So those orders are, more likely than not, still going to go to China. There will just be some middle men taking a cut along the way.
- tuatoru 1y agoIn my trade economics textbook years ago it was stated that the cleared customs cost of an imported good is no more than 30% of its final consumer price, and more typically 10%. The rest is inland logistics, retail costs, and marketing. Further to that, 80% of the economy is services or otherwise has nothing to do with imports. Tariffs are not affecting haircuts or yoga classes or bank fees. Seems to me like tariffs are being used as a convenient excuse.
- avidiax 1y agoRight, but if you double the cleared customs cost with a 100% tariff, many of those additional costs are levied as a constant margin, which tends toward doubling the retail price. You might argue that the retail channel can eat the difference, but it doesn't make sense to make the same absolute margin on goods that are subject to volatile tariff policies. It makes it hard to predict how many units will sell, how much stock to maintain, and creates a big risk that any units on shelves will suddenly be devalued when these tariffs are rescinded.
- fsckboy 1y agoyou can't actually argue that the retail channel will eat the difference. that would be arguing that the financial market would eat the difference, and that's exactly what financial markets will not do. nor do you want them to, since the money in financial markets is your pension. lay people have a broken view of what goes into a price and a profit, thinking that a "fair" profit should be some "reasonable" percentage. It's just not how it works, it works on multiplied rates. the financial markets exist to give large companies working capital. if the companies need double the working capital, the shareholders/bankers want double the returns. the alternative would be you getting a letter saying "hey, the returns on your retirement account are going to be halved, think of it like your retirement account is now half the size"
- BrenBarn 1y agoIt would be fine for the overall increase in markets to be much less, if you just take the gains away from, say, the top 10% and give them to everyone else.
- throwawaymaths 1y agothere are so many second order effects here who knows. for example (and im not saying this will always be the case) if a tariff pushes a foreign company's good out of the us marketplace and the customer is "forced" to pay 2x for something domestically manufactured that lasts 4x as long, did the american "pay for it"? how would this look in bulk economic data (spoiler it would look bad because consumption went down)
- binarymax 1y ago[flagged]
- rekenaut 1y agoThis isn’t remotely true, the United States is the second largest manufacturing nation by value [1]. And manufacturing is still the dominant industry in many regions of the US. We might not be great at making consumer goods, but consumer goods is only a small subset of all manufacturing. 1. https://en.wikipedia.org/wiki/Manufacturing https://en.wikipedia.org/wiki/Manufacturing
- throwawaymaths 1y agothat's really not true. for example, i stopped buying shit underwear and bought made in the usa underwear and it's been great.
- zetazzed 1y agoManufacturing output has more than doubled in the US since 1980: https://fred.stlouisfed.org/series/IPMAN# https://fred.stlouisfed.org/series/IPMAN#
- throwawaymaths 1y ago2x was being generous. many us made things are outpriced on say amazon by 1.25 or 1.5 even but get far fewer clicks because of the sort algorithm.
- znkynz 1y agoWhere did the raw materials for this 'american' product come from?
- hereme888 1y agoTry asking ChatGPT what are the intended effects of these tariffs. It's to benefit ALL Americans. Also, obvious political bias.
- 486sx33 1y agoAs much as Bloomberg used to be a great business resource, it seems a bit bias now and the paywall is super annoying. However I’d still consider it a legitimate source. I can say from my supply chain experience, which I can’t really disclose, other than to say it’s substantial in my world, I directly negotiate purchases from Asia (various regions) of between $25 million to $75 million per year. If those statements are in conflict with my various NDAs then it was a typo. Moving on, since the tariffs have hit, the deals I’ve negotiated have had substantial pre tariff discounts. For example, a widget that used to cost me $219k before tariff now costs me $159k plus tariff. My takeaway is yes, consumers are going to pay more as the post tariff price is higher than the pre tariff price. BUT the suppliers are taking haircuts, and they are getting more aggressive with eachother. The Chinese government doesn’t want to directly say they are going to further subsidize production costs in China due to American tariffs, but some of this is happening and may accelerate as demand further drops. Just my humble opinion.
- boojums 1y agoNot sure why this comment was dead when it contains an interesting perspective.
- csomar 1y agoIt all comes down to who has leverage. The difference is being squeezed by the US government to collect revenue. But I’d suspect not all items will have the same dynamics. We have to see how this will play out. It is a real war albeit no rockets are flying around, for now.
- wetpaws 1y ago[dead]
- rob_c 1y agoGiven the desire to weaken the dollar... Isn't that kind of the expected goal?
- msgodel 1y agoEveryone keeps talking about "taxing the rich." Then Trump decides to tax luxury consumption and they all wig out.
- HeavyStorm 1y agoWell duh
- Dig1t 1y agoIt is a tax on businesses who import things right? Basically exactly the same as corporate income tax, which Trump cut in his first term. Now the tax is being raised on companies who import goods made overseas, but companies who make their product in the US don’t have to pay the tax. If you are usually the type of person that supports taxing the rich and taxing large businesses, shouldn’t tariffs be something that you generally are in favor of?
- mrheosuper 1y agoonly if the rich do not pass the cost down to the bottom 80%
- Dig1t 1y agoRight but isn’t that then a case against all taxes on corporations? You could say that corporate income taxes are also bad because they will be passed on to the consumer in the exact same way a tariff is. A tariff is just a normal tax which only applies to imported goods. All taxes on businesses will be passed on to the consumer in the same way any expense is.
- DangitBobby 1y agoIt's not as simple as "companies who make their product in the US don't have to pay the tax". Companies that import to assemble here or import raw materials to manufacture here also pay tariffs. And no, thinking "tax the rich" is a good idea is not the same thing as thinking it's a good idea to add taxes that are passed directly to consumers. You're doing this narrative slight of hand where you are placing taxes that would successfully target the wealthy in the same bucket as ones that are easily passed on to consumers. Don't do that if you want a constructive conversation.
- Dig1t 1y agoRight but my question is basically how is this different than any other type of corporate tax? What is the difference between “taxes that are passed directly to consumers” and normal taxes? Don’t ALL taxes get passed to consumers? What is different about tariffs that makes them more likely to be passed to consumers vs normal income taxes?
- jacknews 1y agoThe point of tariffs is to make foreign goods (including parts) more expensive, and therefore spur a shift in production. Not to somehow make foreign firms pay more or whatever, how would that work?
- arunabha 1y agoThe irony of the situation is that tariffs can work to make domestic industry more competitive, if they are applied strategically and backed by focused industrial policy. China's dominance of the EV market is a recent case in point. China went from having approximately zero percent of the EV market in 2008 to completely dominating by the end of 2024 with an end to end vertically integrated EV manufacturing capability and a definite technological edge in some of the most critical areas. It took a decade plus of stringent protection for the fledgling EV industry and a couple of hundred billion dollars in subsidies, but they have ensured their dominance of the EV industry for a generation at the very least. The US on the other hard, applied tariffs in an indiscriminate, chaotic manner(no one sane is going to invest anything when US policy depends on the whim of the president) and applied it even to raw materials which our remaining industries desperately need. Also, instead of creating sound industrial policy, we seem to be hell bent on destroying the very foundations of US dominance in many industries by actively attacking science and technology in the country, from gutting scientifically focused agencies to waging a vicious war on universities and foreign students. All of this for what? To add 5 trillion to our debt by passing a tax cut that predominantly benefits corporations and billionaires? To make the MAGA base feel good about making life miserable for 'the others'? This truly feels like the beginning of the end for the American empire or even the American experiment. You can never count out the American capability for reinvention, but at some point, patches and refactorings stop working and you need a rewrite.
- elevation 1y agoSupply side economics, which aims to stimulate growth by reducing costs for industry, is jeered today as “trickle down economics”; it’s considered regressive because the benefits are concentrated for suppliers while the benefits to consumers never materialise. This policy has “failed every time it’s tried!” Tariffs are the antithesis of supply side strategy. Yet tariffs, which increase costs for suppliers like any other tax, are derided by the same people as “regressive” as if they will always be born 100% by the consumer. Supposedly, tariffs cannot possibly benefit the working class on any time scale. At least one of these positions must be at least partly wrong. Which is it?
- memonkey 1y agoDoes partly wrong imply they can both be partly right? Regardless, within the current system (which is not based on theory and based on reality), we combine these elements, and neither seem to directly benefit certain industries depending on who you're looking at. If it does, these policies may not benefit everyone.
- ath92 1y agoBoth of these can be true. Compare the US to countries like China for example, which has had success growing its economy with more state led companies and financing through state owned banks. It’s not perfect, but compared to western countries, less of the profits go to the private sector, and it allows the government to more directly chase long term strategic goals.