I don’t see why, really. They could pass the 10% premium on to us customers and we’d still buy the crap and still think we were getting a good deal. Wal-Mart’s business model is to be a category-killer. When they came into towns, the small local mom-and-pop stores that couldn’t compete in categories like toys, housewares, and clothing ended up going out of business, and most of that demand was supplied by Wal-Mart. WHen they open a Supercenter with groceries, one or two local grocery stores close their doors. So now that they’d consolidated the market, Wal-Mart can pretty much charge whatever it wants to.
And it would be better for American towns to pay a little more because a tarriff is being charged on those imports that will ultimately make it more attractive to build those products in the US than to import them. Not in every case, but if we are able to reshore say 25 or 30% of the jobs that have been outsourced to Chinese companies, it would be a major uplift for thousands of US communities.
We’re not going to win ‘em all back but if we don’t start to fix this horrible trade imbalance, we’re not going to win any.
I’ve been mulling an idea. What if import licenses were restricted to only 20% of the market share for every item ?
Instead of charging a tariff, the Department of Trade would auction off licenses for xBillions of dollars of an item, say TVs, that was equal to 20% of the total TV market the previous year. Let Samsung, Sony, Vizio, Sharp, Panasonic, etc. bid against each other for the right to sell into the American market. But only up to 20% of the market. The remainder has to be manufactured in America. The same sort of auctions would be done for each type of component — from capacitors to resistors to diodes to microchips — that go into making a TV, so “manufactured” doesn’t mean just “assembled” from foreign components. It would require all the subsidiary industries that support an end product be rebuilt in America.
“Not in every case, but if we are able to reshore say 25 or 30% of the jobs that have been outsourced to Chinese companies, it would be a major uplift for thousands of US communities.”
And the other “plus” for us would be to put a serious economic hurt on China. Their economy is in the crapper, and it’s my bet that we are helping them stay afloat right now. When they have to worry about how to feed their populace, they will be less of a worry to us as a military power.