Posted on 04/14/2025 5:37:27 PM PDT by SeekAndFind
The tariff doomsday machine is roaring again. This time, it’s over talk of a 50% tariff on certain imports.
Predictably, the panic-peddlers are out in force, warning that such a tariff means retail prices will skyrocket 50%.
It’s an easy line to chant, but it’s wrong — flat wrong — and anyone with a basic grasp of economics should know better.
Let’s make one thing clear: a tariff applies to the transaction value, not the final retail price. The transaction value is what the importer pays the exporter, plus freight and insurance. That cost is just the first step in a long supply chain. By the time a product reaches the consumer, it’s been marked up to cover domestic shipping, warehousing, employee wages, utilities, sales tax, and profit margins for every hand it passes through. The tariff is just one input among many.
Take a simple example.
A retailer imports a widget with a $100 transaction value. Add a 50% tariff, and the cost to the importer becomes $150. That importer then sells it wholesale — perhaps at $200 — to a retailer, who marks it up again to $300 for sale. That $50 tariff is now 16.7% of the retail price. Even if every penny of the tariff is passed along, you’re not looking at a 50% increase in retail price — you’re looking at something closer to 17%.
But here’s the kicker: tariffs are not always fully passed on to the consumer. Importers and retailers know they can’t raise prices beyond what the market will bear. Sometimes they absorb part of the cost, cut expenses, renegotiate contracts, or shift suppliers. The market reacts; it doesn’t just lie down and take it.
Still not convinced? Look at the real-world data.
(Excerpt) Read more at americanthinker.com ...
Good points. Thank you for the information.
and what you state is different than what the article states.
And who cares? 10 to 20 percent is a lot!!
Silliest argue ever lol “ONLY 17 percent!!”
If it’s not a big deal on either side then why did Trump do it?
I’m for the tariff wars. We’ll win.
But posting nonsense to make people feel better is silly
RE: and what you state is different than what the article states.
What I state? It’s what the author states. It’s the authors title. I don’t change it.
My guess is that every day when President Trump wakes up, he ponders "So what can I do today?" - and he does it! The man simply doesn't stop, he's a man of a thousand ideas and wants to do every one of them. Now if only he would jail Hillary Clinton then that would be enough.
Good report. One thing that anyone can do is look at the price of imports on Alibaba (as in what China charges), and then look at the same items at Amazon or other retail sites (final cost to buyer). The final price is usually several times higher than the Alibaba price, due to the factors spelled out in this report.
I believe that the tariffs will ultimately work out well for the United States. The biggest issue right now is that the supply chain will soon be disrupted. This is nearly unavoidable. Specialized software is used by Customs, Customs Brokers, Underwriters, and Shippers. Everything is currently up in the air. Orders are not being placed because no one can currently make precise calculations to determine what the actual expenses will be. This problem needs to be addressed as soon as possible.
Sorry, math error, make my post a 15-30% price increase. Sorry about that.
Could this be the real play by Bessent?:
https://youtu.be/ZEcHe7fI1Zk?si=B4A5vNKHhnTjBCc3
“What do you say to small business owners or even big business owners who say they’re having difficulty making long-term business decisions”
The Chinese Widget Company shall endeavor to supply our company with enough widgets so we quite often have about 10,000 widgets on hand, but never more than 11,000 and never less than 3,000.
The price the Chinese Widget Company shall ultimately receive for each shipment of widgets shall be our net sales amount less $9 per widget.
Our sales price shall be set upon receipt of a shipment to recover a $10 markup on the widgets we have in hand but may be decreased enough to ensure fairly smooth sales and clearance of the widgets then in stock within 90 days.
If tariff revenue fails to meet Trump’s expectation, your Trump tax cut might shrink too.
With all the non-stop, breathless, exhaustive melodrama, you’d think DC was nuked. Trump is doing what needs to be done and it will all shake out in a few months. Meanwhile, do not liquidate your investments. Buy.
all true... when there is local competition, the tariff cannot be passed on in full. The supplier eats the difference.
all true... when there is local competition, the tariff cannot be passed on in full. The supplier eats the difference.
One of my best and oldest friends owns a Customs Brokerage business. Last week he attended the NCBFAA (National Customs Brokers Association) Annual Meeting and Board Meeting that lasted several days. The current events being discussed were not positive people in his business or their customers.
His brokerages lines are ringing, and he is getting lots of questions but none of his customers are placing any orders for him to broker. He described his normally lucrative business as being dead in the water.
I took a lot of heat here from some for repeating this yesterday. But his is not an isolated case. Every other customs broker is facing the same types of challenges. Lots of people who are not in that business are saying that this that or the other thing can be done while everything is up in the air. But this is simply not true in most cases.
As far as your suggestion... The Chinese Widget Company has already shut down its operations because orders from the USA stopped coming in last week. They have no storage facilities when the demand for their widgets stops and their assembly lines are running at full capacity. Their workers have no safety net, no unemployment insurance. They have only their meager savings which will be quickly depleted. No other companies are now hiring so they are moving out of their apartments and heading back to the places where their families reside and may or may not return when the company wants to start the line up.
Their fearless leader Xi Jinping announced to the world that his people were tough and would eat tree bark to survive if they had to... The state media immediately started showing propaganda flicks from the 1950s when millions of people died from starvation and those who complained were executed.
This is the reality of this situation... It will hurt China much worse than the USA, but many people here will also lose their jobs if Chinese leadership does not come to the table soon and agree to stop ripping off the United States.
ON the bright side Xi Jinping appears to have put his plans to invade Taiwan off for another year. Because he has finally realized that there is a new sheriff in town. The headlines this week would likely have been quite a bit different if Cackling Kamala was now President.
No matter how you spin it, tariffs effectively result in a transfer of consumer surplus to producer surplus (i.e., consumers lose, producers win), government wins by collecting tariff revenues, and inefficiencies/deadweight loss is created.
That's the theory.
Now, just like theory tells us countries devaluing their currency leads to demise, the reality of the Bank of England letting the British Pound float in 1992 and the resulting non- calamity is worth noting.
Trump has been pretty clear that the tariffs are a negotiating club. I don’t believe the intent is for these tariffs to become fixed. Once countries negotiate, there should be some return to equilibrium.
But American Thinker - my go-to authority for economics education (/s) - is being rather cheeky or stupid when it prints:
The National Bureau of Economic Research analyzed the 2018–2019 U.S. tariffs on Chinese goods. They found that for every 10% tariff, retail prices rose 1–2%. So even a 50% tariff, if applied, might cause retail prices to edge up 5–10% — not 50%. That’s a far cry from the alarmist headlines.
Yes, 50% isn’t 5-10%.
But 5-10% isn’t zero. Indeed, when inflation was between 5-10% under Biden, FR was in fire with anger. And rightly so…therefore, am I supposed to cheer for a possible return to Bidenflatiin?
I’d still rather have him vs Harris. Time will tell if Trump is an economic mad genius or a fool.
Keeps the money inside the USA. I approve this message.
BTW Schumer, Pilosi and all the MSM are all anti tariff. Hell of a gang you got there.
If Trump was for 8 glasses of water a day, Schumer and Pelosi and all the MSM would promote dehydration. Their “support” for tariffs is based on tribalism, not economics.
Autarky doesn’t work. It’s also frequently championed by communists. We could ask the inhabitants of Jonestown. Except they’re dead.
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