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And, importantly, tariffs are payed by the importing party. This means they affect the base price of the product and cannot be made progressive Yes. But that c

And, importantly, tariffs are payed by the importing party. This means they affect the base price of the product and cannot be made progressive Yes. But that cost can be absorbed across the board. The manufacturer can lower their margins. The importer / distributor / wholesaler can do the same. The B2B / B2C seller can do the same. It doesn’t all necessarily get directly passed to the buyer. Another question that few are asking is: what has the off shoring of so much manufacturing cost the USA? Looking at the resident of the WH, it appears to be quite a bit.

westmeal 1y ago
But why would the manufacturer or distributor lower their margins? Charity?
- Joeri 1y ago
  In the short term: fear of reprisals from Trump, as he clearly warned them not to raise prices. In the long term markets find a new equilibrium, as they always do when a new tax is imposed, and that is probably going to be a combination of lower margins, higher prices for the consumer and lower prices for foreign suppliers.
  - NekkoDroid 1y ago
    > fear of reprisals from Trump Realistically, what's he gonna do? Shut down the company, which he oh so desperatly wants in the US? Tax them more, driving their cost up more?
    - DrillShopper 1y ago
      He's already weaponized the IRS, DOJ, and FTC, so there are a lot of ways he can fuck you for not bending the knee.
    - ModernMech 1y ago
      For starters, he could do what he did with CBS: threaten a potential merger. Or he could do what he did with Musk: threaten to revoke citizenship of the CEO or anyone on the board if they're foreign. Or do what he did with Harvard and Columbia: threaten to pull grants and revoke foreign visas of workers. Or do what he did with big law firms: threaten to pull security clearances. Lots of options.
    - actionfromafar 1y ago
      Realistically, many companies are going to shut themselves down because their margins will be gone.
  - Paul_Clayton 1y ago
    "higher prices for the consumer" can include lower value at the same price. Size reduction seems a common method for certain commodities. This may result in reduced consumption (e.g., a consumer buying one package of ice cream every other week), as well as increase customer dissatisfaction when the change is noticed, and it can increase packaging cost per unit weight/volume. Other ways of reducing value are possible such as reducing quality control effort, reducing quality of inputs, and reducing manufacturing costs in ways that are known to reduce product quality. Pushing costs to effectively underregulated externalities can also avoid price increases. It is also sometimes possible to increase efficiency. Even a long term commodity can have potential for efficiency improvements that were considered not worth exploring under stable pricing pressures. (I suspect value reduction is easier and much faster than efficiency improvement.) Sadly, reducing value can have a disproportionate cost to consumers. Reducing manufacturing costs for a Watchman's boots by 20% may reduce the lifetime of such by 30% and reduce the quality of use by 50% (which may be related to Samuel Vimes' theory: https://en.m.wikipedia.org/wiki/Boots_theory https://en.m.wikipedia.org/wiki/Boots_theory ).
- potato3732842 1y ago
  They wouldn't on purpose but I can tell you from experience that what happens in practice is that you don't re-quote everything or instantly change your quoted pricing based on a small fluctuations in inputs. So most companies will eat a couple percent (gross) margin here and there. So when an input cost rises margins my go to X-1, and then X-2 as it it rises more, then someone notices and changes quoted pricing to say Y+1, 2 or 3 depending on whether you're trying to get ahead of future hikes, how bad you're being squeezed, how bad you want more work, etc. But no matter what the "area under the curve" of all this change is almost always going to be negative. Sure, there's the occasional winner but in total the entire industry and economy loses.
- trevi 1y ago
  Price elasticity of demand (=sensitivity to price changes). If the seller is afraid that higher prices will significantly impact sales (people won't buy the product or buy alternatives), it might accept a lower margin in order to maintain the volume. Also market competition can be a factor: if competitors are not raising prices (or by smaller amounts), you might lose market share.
  - closewith 1y ago
    The drop in demand for staples you're talking about is quite literally the poorest people eating less, using fewer basics, lowering their quality of life further.
    - somenameforme 1y ago
      As of 2016 (first search result) 90% of food/beverage is domestically produced = no tariffs. [1] The big goal with the tariffs, outside of gaining leverage on other countries, is to motivate domestic production and alternatives. Without tariffs it simply isn't realistically possible to compete in many industries because other countries have cheaper labor and less costly regulations. Of course the practical problem with this playing out in increased domestic production is that it's reasonably likely that in 2028 the tariffs will get rolled back, and any company that was depending on them to survive will die. That's a large amount of uncertainty for any industry where there's a significant income investment required to get going. [1] - https://www.ers.usda.gov/data-products/charts-of-note/chart-detail?chartId=88950 https://www.ers.usda.gov/data-products/charts-of-note/chart-...
      - closewith 1y ago
        Domestic food supply is still subject to tariffs because many of the inputs are. Agricultural machinery, parts, chemical feedstocks. Not to mention that tariffs on directly imported goods reduce the lowest earners' ability to pay for domestic products. If the goal was onshoring too benefit the population, it would be coupled with a strong wealth redistribution to the least wealthy to allow them to buy domestic goods. But that's not the goal.
wickedsight 1y ago
> Another question that few are asking is: what has the off shoring of so much manufacturing cost the USA? Looking at the resident of the WH, it appears to be quite a bit. A question that I see ignored by people who ask your question, is 'what has off-shoring brought the US?' The answer is massive economic growth and improvements in quality of live. Off-shoring allows you to make stuff cheaper by keeping the economic circumstances of the creator worse than your own. We can get cheap stuff from China because they work many more hours than people in the west do and they live in conditions that are much worse. Because we can get cheap stuff (like pocket computers, clothing, shoes, couches, cars and more) and off-shore most of the downsides (pollution, long working hours, dangerous workplaces), we improve our quality of life significantly. So unless you prefer working in mines or working 80 hours a week in a dirty, dangerous factory, I think you're probably better off with globalization than you would've been without.
- chiefalchemist 1y ago
  > The answer is massive economic growth and improvements in quality of live. Where? Here in the USA? Hint: No. The point is, those gains elsewhere have come at the cost of the US middle class. We don’t have who we have in the WH, we don’t have the federal debt we have because globalization has been good for the US. Full stop. p.s. We can get into USA citizens being down graded to consumers, some other time. But that’s not a positive either.
Tryk 1y ago
US != The World. This analysis fails to realise that there are simply other countries with which to trade with.

westmeal 1y ago

But why would the manufacturer or distributor lower their margins? Charity?

Joeri 1y ago
In the short term: fear of reprisals from Trump, as he clearly warned them not to raise prices. In the long term markets find a new equilibrium, as they always do when a new tax is imposed, and that is probably going to be a combination of lower margins, higher prices for the consumer and lower prices for foreign suppliers.
- NekkoDroid 1y ago
  > fear of reprisals from Trump Realistically, what's he gonna do? Shut down the company, which he oh so desperatly wants in the US? Tax them more, driving their cost up more?
  - DrillShopper 1y ago
    He's already weaponized the IRS, DOJ, and FTC, so there are a lot of ways he can fuck you for not bending the knee.
  - ModernMech 1y ago
    For starters, he could do what he did with CBS: threaten a potential merger. Or he could do what he did with Musk: threaten to revoke citizenship of the CEO or anyone on the board if they're foreign. Or do what he did with Harvard and Columbia: threaten to pull grants and revoke foreign visas of workers. Or do what he did with big law firms: threaten to pull security clearances. Lots of options.
  - actionfromafar 1y ago
    Realistically, many companies are going to shut themselves down because their margins will be gone.
- Paul_Clayton 1y ago
  "higher prices for the consumer" can include lower value at the same price. Size reduction seems a common method for certain commodities. This may result in reduced consumption (e.g., a consumer buying one package of ice cream every other week), as well as increase customer dissatisfaction when the change is noticed, and it can increase packaging cost per unit weight/volume. Other ways of reducing value are possible such as reducing quality control effort, reducing quality of inputs, and reducing manufacturing costs in ways that are known to reduce product quality. Pushing costs to effectively underregulated externalities can also avoid price increases. It is also sometimes possible to increase efficiency. Even a long term commodity can have potential for efficiency improvements that were considered not worth exploring under stable pricing pressures. (I suspect value reduction is easier and much faster than efficiency improvement.) Sadly, reducing value can have a disproportionate cost to consumers. Reducing manufacturing costs for a Watchman's boots by 20% may reduce the lifetime of such by 30% and reduce the quality of use by 50% (which may be related to Samuel Vimes' theory: https://en.m.wikipedia.org/wiki/Boots_theory https://en.m.wikipedia.org/wiki/Boots_theory ).
potato3732842 1y ago
They wouldn't on purpose but I can tell you from experience that what happens in practice is that you don't re-quote everything or instantly change your quoted pricing based on a small fluctuations in inputs. So most companies will eat a couple percent (gross) margin here and there. So when an input cost rises margins my go to X-1, and then X-2 as it it rises more, then someone notices and changes quoted pricing to say Y+1, 2 or 3 depending on whether you're trying to get ahead of future hikes, how bad you're being squeezed, how bad you want more work, etc. But no matter what the "area under the curve" of all this change is almost always going to be negative. Sure, there's the occasional winner but in total the entire industry and economy loses.
trevi 1y ago
Price elasticity of demand (=sensitivity to price changes). If the seller is afraid that higher prices will significantly impact sales (people won't buy the product or buy alternatives), it might accept a lower margin in order to maintain the volume. Also market competition can be a factor: if competitors are not raising prices (or by smaller amounts), you might lose market share.
- closewith 1y ago
  The drop in demand for staples you're talking about is quite literally the poorest people eating less, using fewer basics, lowering their quality of life further.
  - somenameforme 1y ago
    As of 2016 (first search result) 90% of food/beverage is domestically produced = no tariffs. [1] The big goal with the tariffs, outside of gaining leverage on other countries, is to motivate domestic production and alternatives. Without tariffs it simply isn't realistically possible to compete in many industries because other countries have cheaper labor and less costly regulations. Of course the practical problem with this playing out in increased domestic production is that it's reasonably likely that in 2028 the tariffs will get rolled back, and any company that was depending on them to survive will die. That's a large amount of uncertainty for any industry where there's a significant income investment required to get going. [1] - https://www.ers.usda.gov/data-products/charts-of-note/chart-detail?chartId=88950 https://www.ers.usda.gov/data-products/charts-of-note/chart-...
    - closewith 1y ago
      Domestic food supply is still subject to tariffs because many of the inputs are. Agricultural machinery, parts, chemical feedstocks. Not to mention that tariffs on directly imported goods reduce the lowest earners' ability to pay for domestic products. If the goal was onshoring too benefit the population, it would be coupled with a strong wealth redistribution to the least wealthy to allow them to buy domestic goods. But that's not the goal.

wickedsight 1y ago

> Another question that few are asking is: what has the off shoring of so much manufacturing cost the USA? Looking at the resident of the WH, it appears to be quite a bit. A question that I see ignored by people who ask your question, is 'what has off-shoring brought the US?' The answer is massive economic growth and improvements in quality of live. Off-shoring allows you to make stuff cheaper by keeping the economic circumstances of the creator worse than your own. We can get cheap stuff from China because they work many more hours than people in the west do and they live in conditions that are much worse. Because we can get cheap stuff (like pocket computers, clothing, shoes, couches, cars and more) and off-shore most of the downsides (pollution, long working hours, dangerous workplaces), we improve our quality of life significantly. So unless you prefer working in mines or working 80 hours a week in a dirty, dangerous factory, I think you're probably better off with globalization than you would've been without.

chiefalchemist 1y ago
> The answer is massive economic growth and improvements in quality of live. Where? Here in the USA? Hint: No. The point is, those gains elsewhere have come at the cost of the US middle class. We don’t have who we have in the WH, we don’t have the federal debt we have because globalization has been good for the US. Full stop. p.s. We can get into USA citizens being down graded to consumers, some other time. But that’s not a positive either.

Tryk 1y ago

US != The World. This analysis fails to realise that there are simply other countries with which to trade with.