3 ms·

Reminds me of this. There's a whole industry around reverse engineering tariff classifications to find ways to minimize all-in manufacturing cost. For example

by mattas 4mo ago

Reminds me of this. There's a whole industry around reverse engineering tariff classifications to find ways to minimize all-in manufacturing cost. For example, let's say you sell air purifiers. Option 1 is to import an air purifier and pay the 25% tariff (or whatever the actual duty rate is) on air purifiers. Option 2 is to import a widget that gets classified as a fan (with 5% duty) and import a widget that gets classified as an air filter (with 10% duty), then put them in the same box somewhere in the US. Both are sold to consumers as an air purifier. But one of the options minimizes total cost to the manufacturer.

mopsi 4mo ago
To add to this, sneakers with a barely visible fuzzy fabric bottom are one of the best examples of tariff engineering: https://www.gazetc.com/blog/2010/08/sneaking-through-us-customs-with-converse-allstar-invention.html https://www.gazetc.com/blog/2010/08/sneaking-through-us-cust...
ifwinterco 4mo ago
The solution is to tax the capital account instead (tobin tax) or at the very least put the same tariff on everything. But politicians can never resist exceptions and carve outs and then the game starts again
- AnthonyMouse 4mo ago
  > The solution is to tax the capital account instead (tobin tax) Isn't that just going to further advantage multinational corporations that don't have to move currency in order to move resources because they're all within the same corporation?
  - ifwinterco 4mo ago
    I think you could only avoid it indefinitely if your operations are balanced, i.e. you make some stuff in China and sell it in the US, but also make something in the US and sell it in China. Otherwise if you make everything in China and sell it in the US you'll eventually have to transfer USD from your US operation to your Chinese operation to pay suppliers, labour, taxes etc.
    - AnthonyMouse 4mo ago
      You wouldn't have to make it in the US, or even make it at all, you would only have to pay for it there. You also wouldn't have to deliver it to the place you want the money to end up, only to the location of someone willing to pay you there. You could be paying US dollars at a bank in New York to a company based in Australia to have them deliver iron ore to a company in India willing to pay you for it in China.
      - ifwinterco 4mo ago
        I think actually Tobin tax is the wrong word sorry. I don't mean just taxing FX transactions, I mean taxing all cross-border capital flows. So yes you can do everything in dollars (and a lot of the time the dollars never need to leave New York) But eventually you do have to pay the workers and taxes in China in yuan, and ultimately that money comes from the US consumer, making some kind of US capital account transaction inevitable? Maybe I'm missing something but I think it does work because ultimately a current account deficit mathematicaly has to be exactly balanced with a capital account surplus. You can attack the current account side with tariffs, but it's actually more elegant to attack the capital account surplus instead
        AnthonyMouse 4mo ago
        > But eventually you do have to pay the workers and taxes in China in yuan, and ultimately that money comes from the US consumer, making some kind of US capital account transaction inevitable? The thing you're missing is that money never actually has to cross the border when both parties to a transaction are on both sides of it. Corporation A gets money from the US consumer and pays it to Corporation B. The money is still in the US. It now belongs to Corporation B who invests it in US stocks etc. In exchange Corporation B provides <something> to Corporation A outside the US, which Corporation A can then convert into yuan outside the US. It's equivalent to how money laundering works and why AML laws are a burdensome farce with a ~0% effectiveness rate.
        ifwinterco 4mo ago
3eb7988a1663 4mo ago
Radiolab[0] had a story about this involving "toys" vs "dolls". "Dolls," which represent human beings, are taxed at almost twice the rate of "toys," which represent something not human - such as robots, monsters, or demons. As soon as they read that, Sherry and Indie saw dollar signs. it just so happened that one of their clients, Marvel Comics, was importing its action figures as dolls. And one set of action figures really piqued Sherry and Indie's interest: The XMEN, normal humans who, at around puberty, start to change in ways that give them strange powers. So Sherry and Indie went down to the customs office with a bag of XMEN action figures to convince the US government that these mutants are NOT human. That argument eventually became a court case that went on for years. [0] https://radiolab.org/podcast/177199-mutant-rights https://radiolab.org/podcast/177199-mutant-rights
netfortius 4mo ago
Putting the parts in the same box, in the US, may cost more than the tariff for the whole thing being built in China or India.
shepherdjerred 4mo ago
My favorite is the smoke detector as a musical instrument https://www.youtube.com/watch?v=n6BNE62xGqE https://www.youtube.com/watch?v=n6BNE62xGqE

by mattas 4mo ago

mopsi 4mo ago

To add to this, sneakers with a barely visible fuzzy fabric bottom are one of the best examples of tariff engineering: https://www.gazetc.com/blog/2010/08/sneaking-through-us-customs-with-converse-allstar-invention.html https://www.gazetc.com/blog/2010/08/sneaking-through-us-cust...

ifwinterco 4mo ago

The solution is to tax the capital account instead (tobin tax) or at the very least put the same tariff on everything. But politicians can never resist exceptions and carve outs and then the game starts again

AnthonyMouse 4mo ago
> The solution is to tax the capital account instead (tobin tax) Isn't that just going to further advantage multinational corporations that don't have to move currency in order to move resources because they're all within the same corporation?
- ifwinterco 4mo ago
  I think you could only avoid it indefinitely if your operations are balanced, i.e. you make some stuff in China and sell it in the US, but also make something in the US and sell it in China. Otherwise if you make everything in China and sell it in the US you'll eventually have to transfer USD from your US operation to your Chinese operation to pay suppliers, labour, taxes etc.
  - AnthonyMouse 4mo ago
    You wouldn't have to make it in the US, or even make it at all, you would only have to pay for it there. You also wouldn't have to deliver it to the place you want the money to end up, only to the location of someone willing to pay you there. You could be paying US dollars at a bank in New York to a company based in Australia to have them deliver iron ore to a company in India willing to pay you for it in China.
    - ifwinterco 4mo ago
      I think actually Tobin tax is the wrong word sorry. I don't mean just taxing FX transactions, I mean taxing all cross-border capital flows. So yes you can do everything in dollars (and a lot of the time the dollars never need to leave New York) But eventually you do have to pay the workers and taxes in China in yuan, and ultimately that money comes from the US consumer, making some kind of US capital account transaction inevitable? Maybe I'm missing something but I think it does work because ultimately a current account deficit mathematicaly has to be exactly balanced with a capital account surplus. You can attack the current account side with tariffs, but it's actually more elegant to attack the capital account surplus instead
      - AnthonyMouse 4mo ago
        > But eventually you do have to pay the workers and taxes in China in yuan, and ultimately that money comes from the US consumer, making some kind of US capital account transaction inevitable? The thing you're missing is that money never actually has to cross the border when both parties to a transaction are on both sides of it. Corporation A gets money from the US consumer and pays it to Corporation B. The money is still in the US. It now belongs to Corporation B who invests it in US stocks etc. In exchange Corporation B provides <something> to Corporation A outside the US, which Corporation A can then convert into yuan outside the US. It's equivalent to how money laundering works and why AML laws are a burdensome farce with a ~0% effectiveness rate.
        ifwinterco 4mo ago

3eb7988a1663 4mo ago

Radiolab[0] had a story about this involving "toys" vs "dolls". "Dolls," which represent human beings, are taxed at almost twice the rate of "toys," which represent something not human - such as robots, monsters, or demons. As soon as they read that, Sherry and Indie saw dollar signs. it just so happened that one of their clients, Marvel Comics, was importing its action figures as dolls. And one set of action figures really piqued Sherry and Indie's interest: The XMEN, normal humans who, at around puberty, start to change in ways that give them strange powers. So Sherry and Indie went down to the customs office with a bag of XMEN action figures to convince the US government that these mutants are NOT human. That argument eventually became a court case that went on for years. [0] https://radiolab.org/podcast/177199-mutant-rights https://radiolab.org/podcast/177199-mutant-rights

netfortius 4mo ago

Putting the parts in the same box, in the US, may cost more than the tariff for the whole thing being built in China or India.

shepherdjerred 4mo ago

My favorite is the smoke detector as a musical instrument https://www.youtube.com/watch?v=n6BNE62xGqE https://www.youtube.com/watch?v=n6BNE62xGqE