Posted on 06/05/2019 7:38:12 AM PDT by reaganaut1
Open borders are more of a threat.
Sure, but reducing savings to buy goods has nothing to do with tariffs.
Further, if I have to dip into savings to buy what I could have afforded yesterday without doing that how am I better off?
“Here’s my dumb question of the day:
If a 25% tariff raises the price of a $1,000 item produced in Mexico to $1,250 ... then how exactly does this negatively impact GDP?
1. If I buy the item at the higher price, the contribution of this sale to the nation’s GDP is actually 25% higher.
2. If I don’t buy the item, I have $1,000 to spend on something else — like an alternative item, concert tickets, etc. In this case, the contribution of this activity to the nation’s GDP is the same as it would have been if the imported item had cost $1,000.
What am I missing here?”
The cost of a tariff/tax depends on the price elasticity of demand for the affected consumer goods or productive inputs which, in turn, depends in part on the extent to which there are good substitutes for those goods. In your example, you assume that there are perfect substitutes for the goods hit with the tariff in which case there is no cost. However, in the case where there are only imperfect substitutes there will be some cost to individual consumers, producers, and to the economy as a whole.
Short answer is that he thought it improved our position.
Because of their proximity, both countries represent exceptional conditions in which we want things besides a trade balance and reasonable trading environment.
A statement that applies to many other countries and regions of the world.
If we want to stem the influence of China in Asia why not form a trading alliance with the non-China Eastern countries that could act as a check on Beijing?
Like TPP?
Bring ALL production home. All of it.
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