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>expected outcome is that those consumers get to enjoy cheaper imports from China That's eco101 expectation, but reality after initial tariff chaos settles is
by maxglute 9mo ago
>expected outcome is that those consumers get to enjoy cheaper imports from China
That's eco101 expectation, but reality after initial tariff chaos settles is cat-mouse of circumvention - PRC producers would price discriminately, i.e. sell to RoW slightly higher to make up for less sales in US / cover transhipment / diversion costs, arbitrage different tariff rates etc. PRC producers that still sells to US would also simply value engineer / despec more (lower quality), make US SKUs with stripped functionality etc to recoup on $ per value basis, and other shenanigans like value shifting - selling at "lower" cost but recoup via other bundled fees, i.e. buyers buy widgets low, but also have to buy "service" packages in arbitrage jurisdictions so PRC producers still ends up netting same. All these strategies are happening btw. The main issue is PRC producer advantage is so large and the tariff execution so leaky that they can still underprice and get products to US at profit to stunt US reindustrialization. Meanwhile PRC industrial index for manufacturing is increasing while producer index dropping because they have access to cheap renewables / discounted sanctioned fossils, so their input costs dropping vs RoW, allowing them to make more, by selling cheaper, which extends gap of how much tariff shenanigans/engineering they do to mitigate the goal of US tariffs in the first place. Hence PRC exporting record #s and US SME manufacturing index on 3rd quarter of contraction from tariff drama. Meanwhile, much of RoW without PRC god tier industrial chains, simply left with eating straight shit on US tariffs vs PRC who has much more tools to circumvent. It's like how regulations favor big incumbents with most headroom/resources to exploit loopholes. TLDR supply chain manipulation by the worlds largest supply chain skews expected market equilibrium.