Posted on 06/19/2018 5:20:46 AM PDT by reaganaut1
In recent weeks, several major rounds of tariffs have moved from proposals to realities, and major new tariffs have been threatened—shifting the stakes for President Donald Trump’s trade actions on the U.S. economy.
Tariffs raise the price of imported goods, increasing costs to consumers, and making domestic producers (who don’t face the tariff) more competitive.
Examples of how new tariffs might ripple through the economy have already been provided by earlier, smaller rounds of tariffs. These earlier examples also show why broad effects from tariffs, on the otherwise booming U.S. economy, might be hard to detect.
One of the first to go into effect under Mr. Trump came in January, with the imposition of 20% tariffs on washing machines.
While tariffs are formally paid by whomever imports the goods, the importers can pass their costs along to consumers. In the case of washing machines, that happened quickly: The index for laundry equipment in the Labor Department’s consumer-price Index, the nation’s main gauge of inflation, shot up by about 17% over the past three months.
...
Mr. Trump’s steel and aluminum tariffs were announced March 1. For some countries they went into effect quickly. The European Union, Canada and Mexico were given more time to negotiate, but those extensions expired at the beginning of this month.
Prices for different types of steel and aluminum began to climb almost immediately, posting the biggest three-month price increase that has been recorded in years. While clearly inflationary and unwelcome for metal consumers, the jump in prices isn’t that much larger than typical volatility in the metals. And only a small portion of the metals ends up in consumer goods.
(Excerpt) Read more at wsj.com ...
Since I understand that there is no such thing as free trade, I have no prob with using tariffs. And I have no prob with the tariffs used so far.
That said, intent does matter. And the WSJ’s is nuttin’ but bad.
>> How about bringing good manufacturing back <<
Actually, it’s still here. Manufacturing as a percentage of total national income has stayed about the same over many years.
Now to be sure, the labor force in manufacturing is way down. But that’s mainly because of automation.
In the meantime, unemployment is at record lows and still falling.
>> we import crap that may be cheaper but you have to replace or repair 5x as often <<
Not my experience. My Toyota van has run for years and years w/o anything other than routine maintenace. But my old Dodge van was in the shop for serious repairs more than 30 times over a 15-year period. Needed an engine rebuild at only 60K miles.
And ditto for my several Sony TV sets. Good for years and years, whereas my old USA-made Zenith and Magnavox TV’s had to go into the shop about once per year each.
(Yes, I’m old enough to remember when TV’s were made in the USA!)
>> So do other countries’ tariffs hurt their consumers? <<
At your home, did the Sun rise in the East this morning?
Such a snide little person.
>> You have no clue about what you speak <<
What else is new?
>> Trump’s tariffs are negotiating tactics <<
That’s what Larry Kudlow was stressing very strongly weekend before last. Maybe he was correct.
But then he had a heart attack (from too much stressing?) and now, Peter Navarro is the main guy who has Pres. Trump’s ear on these matters.
IMO, Navarro doesn’t want the negotiating tactics. I think he just wants to shut down trade with China, period — regardless of the domestic cost.
Yep.
We’ll see just how fickle the voters are now.
>> An 800 billion$ trade deficit with the world is insanely bad for America <<
Actually, when you count our exports of services, the trade deficit is closer to 500 billion.
That means we have an investment surplus of about 500 billion, because the trade deficit is the mirror image of the investment surplus. It’s a matter of ironclad logic, which flows from the way national income statistics are conceptualized and compiled.
Regardless of the President's intent, his tariff increases have been followed be retaliatory tariff increases on the part of China. If he continues to escalate the matter to more and more imports then China will continue to retaliate. That's a trade war.
The end result may be what Trump wants - fairer competition. But getting there will take time. And in the mean time people and businesses will suffer.
>> they are like a tax increase...
on the Chinese and Europeans <<
No, tariffs imposed by the US gov’t are a tax on you, me and other Americans. Foreigners never pay our tariffs. No proposition in all of economics could be more basic.
Here is the bottom line. It all comes down to dollars and cents.
The 40% reduction in the corporate tax rate allows domestic mfg be competitive with the foreign manufacturers. The price of an item in the marketplace is determined by it’s cost to build and that cost includes income taxes to be paid.
You seem to believe wholesale suppliers won’t absorb any of the increases brought by higher tariffs because they sell to a captive audience of retailers. That is not so. As a former businessman in retail I had several avenues I could pursue to by my products. Not every wholesaler is run the same or has the same expenses and it is the wholesalers overhead which determines his markup to detail sellers.
As for whether domestic mfg can meet foreign mfg on cost to build, that is the idea of the tariffs. Foreign gov often subsidize their manufacturers in order to make their products more attractive in foreign markets. This is called dumping and China has a long history of doing this. Tariffs will level the playing field in this area.
DJ TRUMP had the best so?union though when he said drop all tariffs.
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Why do you always buy into the barf-bag talking points?
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>> Repeating a stupid question just makes it twice as stupid <<
Brilliant! I gotta remember that one!
Specifically?
>> Such a snide little person <<
Welcome to FR!
>> The end result may be what Trump wants - fairer competition <<
When, in the history of the world, has a trade war ever brought that result?
That's debatable.
You seem to believe wholesale suppliers won’t absorb any of the increases brought by higher tariffs because they sell to a captive audience of retailers. That is not so. As a former businessman in retail I had several avenues I could pursue to by my products. Not every wholesaler is run the same or has the same expenses and it is the wholesalers overhead which determines his markup to detail sellers.
But if all are importing their goods and paying the same tariff then they are not at a disadvantage if they pass it on to the customer, as their competition is doing. You just explained that taxes are part of the cost of an item. If manufacturers pass the cost of income tax on to the consumer then there is no reason to believe that they won't do the same with other taxes like tariffs.
As for whether domestic mfg can meet foreign mfg on cost to build, that is the idea of the tariffs. Foreign gov often subsidize their manufacturers in order to make their products more attractive in foreign markets. This is called dumping and China has a long history of doing this. Tariffs will level the playing field in this area.
Sure. The point of tariffs is to force the price of imports up so that domestic manufacturers can compete with them. No argument there. And the claim is that tariffs will give domestic manufacturers the incentive to produce here rather than buy there. But looking at it from a manufacturers standpoint, if the only thing making your business profitable is the artificially high prices that a tariff allows then why would you invest billions in building plants that could be rendered unprofitable by the stroke of a presidential pen or an act of Congress?
And when in modern history have we had zero tariffs? I think the President is being wildly optimistic in suggesting that is a possibility.
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Specifically the post to which I replied.
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Ah well I don't see anything remotely barf-bagish in any of that. Just common sense and seeing what is already going on.
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