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To: rb22982
eg: cost of coffee skyrockets by 70%, margins fell from 70% to 50% even with a 10% price increase which resulted in a 25% demand decrease

Yes, a 70% tariff on coffee would be paid by US consumers and US businesses, not by outsiders.

See above - that isn't true

Ummmm....the consumer saw a 10% price increase and the retailer saw a drop in profit. Neither are outsiders.

If you charge a tariff on coffee, the demand for it drops and exporters would have to lower prices in order to drum up demand.

That's possible, but not guaranteed.

It's not exactly 1:1:1 but the loser would include the overseas producer as well.

Tariffs cause losses on all sides? You don't need to convince me of that.

All things being equal, I'd much rather do like we did for our first 150 years of our existence and live of import tariffs than tax our own citizens first

Except for the belief that tariffs don't tax our citizens.

20 posted on 09/18/2016 11:38:55 AM PDT by Toddsterpatriot ("Telling the government to lower trade barriers to zero...is government interference" central_va)
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To: Toddsterpatriot
Ummmm....the consumer saw a 10% price increase and the retailer saw a drop in profit. Neither are outsiders.

You missed the massive drop in demand/sold I mentioned? I don't understand why this is so hard for you. If the cost increase came from tariffs they would have been the ones hurt the most in terms of aggregate profit. If people don't buy coffee, they buy other beverages so the retailer (us in this case) didn't lose much, if any and consumers just shifted to other products (maybe not quite as much utility).

Here - I'll give you another example for Walmart (or pick your retailer) that is very realistic. Walmart buys widget toy X from China for $2.70 and it costs another $0.10 for distribution from their warehouses for a total cost of $2.70. The toy cost Chinese company $1.50 to make and deliver from China (total profit $1.20). The last time Walmart did a RFP, the cheapest US option for the same toy is $3.00. This toy retails for $5.99
Let's say the US implements a 15% tariff. That $2.70 with 15% tariff is now $3.10, a $0.40 increase. Would consumers see a $0.40 increase? No - Walmart can already buy for $3.00 from US production, which would make it a $0.30 increase. Additionally, The Chinese company has $1.20 in profit margin to play with rather than lose the entire business. The Chinese lower their sale price to $2.50 + tariff, now totaling $2.88 in aggregate to Walmart. Walmart is unlikely to raise the price above $5.99 so in this scenario consumers lost nothing, US taxpayers made $0.28 in tariffs, and Walmart lost $0.18, and the chinese company lost $0.20 compared to previous.

Except for the belief that tariffs don't tax our citizens.

It is a(n indirect) tax on citizens but again not all of that tax hits citizens, as my example above illustrates. It's still far preferably to a direct tax. For example in my scenario, the government could lower corporate taxes by $0.28 and thus you end up with US consumers with no change, walmart is net $0.10 cents (0.18 loss of GP + 0.28 gain on taxes) and the only loser is the Chinese firm.

21 posted on 09/18/2016 12:53:39 PM PDT by rb22982
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