Tariffs Start to Ripple Their Way Through the U.S. Economy -- Effects are like a tax increase

Wall Street Journal ^ | June 19, 2018 | Josh Zumbrun

[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.

[Hawthorn]

>> What exactly do you know about running a business? I ran and owned one myself, did you? <<

Logic is totally independent of whether I’ve ever run a business.

That being said, if you think tariffs are somehow OK when they allow one American firm to put another American firm out of business, then all I can say is that it’s a free country, and you have a right to your opinion.

And by the way, I’ve run two businesses, one a “so-so” case and the other very profitable.

[Hawthorn]

>> Workers love Tariffs and HATE Income Tax <<

Most “workers” pay very little income tax. What amounts they pay to the Feds are predominately the FICA tax.

But sure. Let’s put huge tariffs on all imports, so that when the “workers” go to Walmart for shoes, clothing, electronics and home furnishings, they will have the privilege of paying much higher prices. That’ll make ‘em real happy.