Politics Tariffs/Trade Wars

[Telmar]

It's not a matter of belief.

How do you imagine it works?

The whole point of tariffs is to increase the price of imports to make local goods more competitive.

I think the Trump administration wanted tariffs to replace some domestic taxation.

 

[PEMM]

The manufacturer eats some of it, the importer eats some of it, the importer pressures the manufacturer to eat more of it. This is IF they want to still be competitive and sell their product in the US. The end US consumer barely sees any increase. The manufacturer continues to eat the increase or decides it's better to produce in the US to avoid the cost.

Keep dreaming. There isn't some 10-25% extra margin to eat in most things that have competition in the market. Companies are in business for profit, not for joy of exporting.

On goods that don't have American competition, there is no reason to not increase prices.

Prices will also increase on American products that use foreign parts.

American companies will also increase prices when their competitors become more expensive. For example if their product used to be 10% more expensive than foreign import, but there is now 20% tariff, they can quite comfortably increase the price and still be competitive.

 

[thelistener]

The manufacturer eats some of it, the importer eats some of it, the importer pressures the manufacturer to eat more of it. This is IF they want to still be competitive and sell their product in the US. The end US consumer barely sees any increase. The manufacturer continues to eat the increase or decides it's better to produce in the US to avoid the cost.

We are in luck so we dont have to guess. In the past the price has been passed to the consumer and more than that, US companies will raise their own prices higher to get even better profits since the competition has to deal with tariffs. Below the example from trump's first admin where prices rose 12% post tariff implementation


During the time the tariffs were in effect — February 2018 to February 2023 — the cost of laundry equipment rose by 34%, according to Bureau of Labor Statistics data. Overall inflation was just 21% during the same time frame. The price of appliances overall rose by 23%. So laundry equipment rose by at least 11% more than it probably would have otherwise without the tariffs.

The Production Relocation and Price Effects of US Trade Policy: The Case of Washing Machines - American Economic Association

The Production Relocation and Price Effects of US Trade Policy: The Case of Washing Machines by Aaron Flaaen, Ali Hortaçsu and Felix Tintelnot. Published in volume 110, issue 7, pages 2103-27 of American Economic Review, July 2020, Abstract: We estimate the price effect of US import restrictions...

www.aeaweb.org

It created around 1800-2000 jobs but:
The 2019 study found the net annual cost to consumers for each new job created by the tariffs was about $815,000. That’s extraordinarily high. The average cost per job for subsidies such as state or local tax breaks meant to lure businesses typically ranges from $50,000 to $100,000.

https://finance.yahoo.com/news/higher-prices-extra-jobs-lessons-from-trumps-washing-machine-tariffs-185047360.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAKwf4s_Bq7z0Vos3rRRcUtbpp_WuJd3SPQzD4RrIm9QZ0lhP-rxa6aep-JyG72cNPrxN9HTXxkqMs5bXPqH72D4B0olkZgJphsrMqObxaeT3sNFrQumvGnGKOS9e8C3N6TuiRhgbs28d1nQh5ZNkrBjgHxVklqRJiGhzdZ7xvqeb

 

[Junglejim]

Welp, the markets are down again... this is why I dont base the results on day to day highs and lows.

As for the tariffs, trust me its the consumers that eats it. No business would accept additional costs out of the goodness of their hearts. Also, that can only be countered if there is a local counterpart.

 

[Junglejim]

On the shipping news

https://www.yahoo.com/finance/news/asian-buyers-shun-us-farm-070855631.html

 

[skaw]

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[Chazman]

We are in luck so we dont have to guess. In the past the price has been passed to the consumer and more than that, US companies will raise their own prices higher to get even better profits since the competition has to deal with tariffs. Below the example from trump's first admin where prices rose 12% post tariff implementation


During the time the tariffs were in effect — February 2018 to February 2023 — the cost of laundry equipment rose by 34%, according to Bureau of Labor Statistics data. Overall inflation was just 21% during the same time frame. The price of appliances overall rose by 23%. So laundry equipment rose by at least 11% more than it probably would have otherwise without the tariffs.

The Production Relocation and Price Effects of US Trade Policy: The Case of Washing Machines - American Economic Association

The Production Relocation and Price Effects of US Trade Policy: The Case of Washing Machines by Aaron Flaaen, Ali Hortaçsu and Felix Tintelnot. Published in volume 110, issue 7, pages 2103-27 of American Economic Review, July 2020, Abstract: We estimate the price effect of US import restrictions...

www.aeaweb.org

It created around 1800-2000 jobs but:
The 2019 study found the net annual cost to consumers for each new job created by the tariffs was about $815,000. That’s extraordinarily high. The average cost per job for subsidies such as state or local tax breaks meant to lure businesses typically ranges from $50,000 to $100,000.

https://finance.yahoo.com/news/higher-prices-extra-jobs-lessons-from-trumps-washing-machine-tariffs-185047360.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAKwf4s_Bq7z0Vos3rRRcUtbpp_WuJd3SPQzD4RrIm9QZ0lhP-rxa6aep-JyG72cNPrxN9HTXxkqMs5bXPqH72D4B0olkZgJphsrMqObxaeT3sNFrQumvGnGKOS9e8C3N6TuiRhgbs28d1nQh5ZNkrBjgHxVklqRJiGhzdZ7xvqeb

View attachment 524656

Profiteering.

 

[Chazman]

Welp, the markets are down again... this is why I dont base the results on day to day highs and lows.

As for the tariffs, trust me its the consumers that eats it. No business would accept additional costs out of the goodness of their hearts. Also, that can only be countered if there is a local counterpart.

There is a lot of margin on products from Asia. It would shock you. Every middleman takes a cut. No one is going to spend 125% more for a non critical item. The decision process is, we eat the tariff or abandon that market.

 

[Chazman]

Keep dreaming. There isn't some 10-25% extra margin to eat in most things that have competition in the market. Companies are in business for profit, not for joy of exporting.

On goods that don't have American competition, there is no reason to not increase prices.

Prices will also increase on American products that use foreign parts.

American companies will also increase prices when their competitors become more expensive. For example if their product used to be 10% more expensive than foreign import, but there is now 20% tariff, they can quite comfortably increase the price and still be competitive.

The margins for products coming from Asia are HUGE. Just from what I've seen. A brand name item that may cost $250 here, may have cost the original shipper $10.........................................per dozen.

 

[Chomiq]

Trump brags to NASCAR drivers that friend Charles Schwab made $2bn from stock market chaos

Video captured by the White House shows Donald Trump bragging that friend and investor Charles Schwab made two billion dollars from the current stock market chaos. In a video posted to X Wednesday (9 April), the president introduced NASCAR drivers to the founder and chairman of Charles Schwab...

www.yahoo.com

$2.5 billion

Trump reportedly suspends Nvidia H20 export ban plan after $1 million dinner with Jensen Huang

What about the whole AI diffusion rule?

www.tomshardware.com

 

[PEMM]

There is a lot of margin on products from Asia. It would shock you. Every middleman takes a cut. No one is going to spend 125% more for a non critical item. The decision process is, we eat the tariff or abandon that market.

When the prices are generally up in few months, remember what we talked about instead of blaming foreign grifters, greedy businesses, etc.

If prices do not increase, I promise to become a tariff advocate and demand a 30% blanket tariff for everything coming into EU.

Assuming tariffs actually are in effect.

 

[Chazman]

I had to look up what this means, but it’s really good economic news.

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[Chazman]

When the prices are generally up in few months, remember what we talked about instead of blaming foreign grifters, greedy businesses, etc.

If prices do not increase, I promise to become a tariff advocate and demand a 30% blanket tariff for everything coming into EU.

Assuming tariffs actually are in effect.

Deal!

 

[PEMM]

The margins for products coming from Asia are HUGE. Just from what I've seen. A brand name item that may cost $250 here, may have cost the original shipper $10.........................................per dozen.

I was rather thinking of the kind of stuff we export: cars, machinery, ships, appliances, chemicals etc. Not as much about some perfumes or design products.

Edit: Also with these very high Chinese tariffs, I expect most their stuff to be out of market. Not expecting 100+% increases on these.

 

[Fluff]

I already asked that but got no answer.

What percentage and how do you calculate that percentage of manufacturing must be done in the US?

Body works, developing, locally sourced subassemblies, supplied components, assembly?

You know how much enthusiasm engineers have to go that road?

Much will be impossible and lead to very long development circles.

Maybe even simplifying the product for the US market.

I think the usual USA standard is 70% of the value must be in USA. So you cant just ship a kit of parts from say EU, assemble it, and call it USA made.

I dont know how they differentiate an american company buying all the parts directly from say 10 chinese companies, and assembling it. I guess the tarriff still applies to the chinese components.

 

[Fluff]

The manufacturer eats some of it, the importer eats some of it, the importer pressures the manufacturer to eat more of it. This is IF they want to still be competitive and sell their product in the US. The end US consumer barely sees any increase. The manufacturer continues to eat the increase or decides it's better to produce in the US to avoid the cost.

All of these points are true, but another effect of say a tarriff of 30% is that the local producer, can put up their prices by 20% and still be cheaper than the imported product.

The problems come when you look at specific products.

If Im american, and want a BMW, and can afford it, then I dont want a ford whatever, as an alternative.

For corn flakes, sure I like x brand, from Canada, but they are now $5 a box, USA made are $3 a box. But I like X brand....

So in some circumstances the customer can and will choose the local item, so no tarriff is paid, or in others the tarriff is paid.

Who in USA makes Ipads?? Or phones? Or rolls Royces?

Boeing will be happy, airlines much less happy, as they wont be able to play boeing off against airbus.

It is very disruptive - but thats why everyone is crying, and why Trump did it.

He doesnt want to negotiate on dog collars, for 5 years. then tape measures for 4 years.

So I accept that the plan was to negotiate them away.

 

[Fluff]

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[Chazman]

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[Chazman]

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[Chazman]

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