Perhaps this is now an "outdated" subject because more people are catching on, but I wanted to discuss this with my new forum members. I have posted this elsewhere, so the words are my own. I will not link to the original since it comes from another forum.
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I’m not certain people who like the idea of all of the tariffs Trump is implementing know how tariffs actually work, and what they’ll mean in the long run.
Tariffs are pretty simple. They are taxes that are applied at the port of entry from a foreign country. That’s pretty much it. In theory, they will inflate the cost of a good or service for the buyer (domestic), and will make domestic alternatives more palatable as prices equalize or become less for the domestic offering.
For instance, a Canadian steel mill might sell a ton of hot roll to a US buyer for $600/ton. With a 25% tariff the steel will cost the US buyer $750/ton. Therefore, the US buyer might choose to find a domestic source that will cost them $650/ton. However, as US sources start to reach capacity in production, they might choose to raise prices (likely) and lead times will increase.
Now, this means that automatically, the cost for the buyer goes up by $50/ton.
Let’s say that the product the buyer is looking for is only made by a Canadian mill. The buyer will automatically have to pay 25% more because there is no alternative for them. Will a US mill then find a way to make the product? Not likely, as tariffs are seen to be temporary measures, and most smart companies will not make large investments based on temporary government measures.
If the product costs $1000/ton, then the US buyer pays $1250/ton for the product. $250 goes to the federal government, $1000 to the Canadian manufacturer, just as before.
Since the US buyer must pass on the cost, this can lead to lesser demand for anything involving the product if end use decreases. Or if demand is more static, it will simply mean higher prices, with only the federal government reaping the rewards.
So what is your understanding of how tariffs work?
What is working? I understand the argument that free trade makes everyone richer which I never believed was proven and it does not matter now because China is taking over and they dont believe in free trade.....they believe that everything that is good for China and its friends is the right thing to do...and we are going to have to live in that world.
Trump is trying to get America ready for the new reality, which is the smart thing to do.
This response is as vague as the cause of a blind pimple on the ass of a rhino.
Red:Explain what you know about tariffs, and why you think they’ll work
What is working? I understand the argument that free trade makes everyone richer which I never believed was proven and it does not matter now because China is taking over and they dont believe in free trade.....they believe that everything that is good for China and its friends is the right thing to do...and we are going to have to live in that world.
Trump is trying to get America ready for the new reality, which is the smart thing to do.
Red:
Though I suspect you and I may not concur on whether "this or that" works or will work, I absolutely agree with you that "work/works" is too vague a term to respond to any any precise manner. Insofar as this is not my thread, I'll be damned if I'm going to, for the OP-er, define what "works" means.
Seems we are grooving together here....and I made the executive decision that getting America ready for what is coming is the definition of success, so points go to Trump here for trying.
...no comment...
"Hey wait a minute!....If we are to have any hope of beating the Chinese we have to be able to make steel....right?"
Right.
Only if no alternative to steel comes to the fore.
Obviously, there isn't an immediate alternative to steel; however, that condition need not be unalterable. What might alter that condition? Any number of technologies across myriad industries. To wit, must car bodies be fabricated from steel? Not necessarily; carbon is viable alternative, though right now it's too dear to be a mass production alternative. That cost profile can change, either due to rising prices of steel's inputs or of other goods, decreasing availability of steel or its inputs, new technology that makes carbon car body more inexpensive. Those are but some examples. They're not at all only ones.
The Greeks had to submit to the EU ransom demands because in not very many years they had lost the ability to be self sufficient, even with a couple of years lead time to get ready.
Those who must submit have no bargaining power, and life then tends to suck.
American has lost a lot of time, we dont have much time left.
The New Chinese Empire is coming!
I've heard Trump say that it's always been a one-way street where all U.S. products are taxed going into other countries while countries like China and Canada imports to the U.S. tax-free. Part of becoming great again is getting out of the "bent-over" position and standing tall. This may not be good short term but in the long run not bending over will prove golden.Perhaps this is now an "outdated" subject because more people are catching on, but I wanted to discuss this with my new forum members. I have posted this elsewhere, so the words are my own. I will not link to the original since it comes from another forum.
======================================
I’m not certain people who like the idea of all of the tariffs Trump is implementing know how tariffs actually work, and what they’ll mean in the long run.
Tariffs are pretty simple. They are taxes that are applied at the port of entry from a foreign country. That’s pretty much it. In theory, they will inflate the cost of a good or service for the buyer (domestic), and will make domestic alternatives more palatable as prices equalize or become less for the domestic offering.
For instance, a Canadian steel mill might sell a ton of hot roll to a US buyer for $600/ton. With a 25% tariff the steel will cost the US buyer $750/ton. Therefore, the US buyer might choose to find a domestic source that will cost them $650/ton. However, as US sources start to reach capacity in production, they might choose to raise prices (likely) and lead times will increase.
Now, this means that automatically, the cost for the buyer goes up by $50/ton.
Let’s say that the product the buyer is looking for is only made by a Canadian mill. The buyer will automatically have to pay 25% more because there is no alternative for them. Will a US mill then find a way to make the product? Not likely, as tariffs are seen to be temporary measures, and most smart companies will not make large investments based on temporary government measures.
If the product costs $1000/ton, then the US buyer pays $1250/ton for the product. $250 goes to the federal government, $1000 to the Canadian manufacturer, just as before.
Since the US buyer must pass on the cost, this can lead to lesser demand for anything involving the product if end use decreases. Or if demand is more static, it will simply mean higher prices, with only the federal government reaping the rewards.
So what is your understanding of how tariffs work?
"Hey wait a minute!....If we are to have any hope of beating the Chinese we have to be able to make steel....right?"
Right.
My issue is that steel is a base product that is used by other manufacturers so while it is a boon for the steel industry it hurts other industries. I agree on tariffs on finished products such as cars (admittedly bias as I work for a car manufacturer) as that makes American made cars more competitive without hurting other industries, sadly the victim of those tariffs are the end consumer as essentially they are subsidizing whatever market the tariffs are put in place no differently than taxes placed on domestic businesses. It is weird to me seeing those on the left being so against tariffs when they love other tax imaginable, but at least they have come around on free trade just need them to understand that same logic applies to domestic products as well.
Which means that I am working in hierarchies that you cant access.
Red:
Though I suspect you and I may not concur on whether "this or that" works or will work, I absolutely agree with you that "work/works" is too vague a term to respond to any any precise manner. Insofar as this is not my thread, I'll be damned if I'm going to, for the OP-er, define what "works" means.
My issue is that steel is a base product that is used by other manufacturers so while it is a boon for the steel industry it hurts other industries. I agree on tariffs on finished products such as cars (admittedly bias as I work for a car manufacturer) as that makes American made cars more competitive without hurting other industries, sadly the victim of those tariffs are the end consumer as essentially they are subsidizing whatever market the tariffs are put in place no differently than taxes placed on domestic businesses. It is weird to me seeing those on the left being so against tariffs when they love other tax imaginable, but at least they have come around on free trade just need them to understand that same logic applies to domestic products as well.
The WW2 War Effort Managers were not wrong....If we want to win we need to be able to make steel.
What do you mean by "works"? If you mean help with labour transitions, brain drains as well as assisting in negotiating trade deals as I believe Trump intends. I know a fair bit and probably but it's certainly has economic risks and must be done strategically.
Does a tariff policy of politically motivated tariffs work? Never - see Trudeau action to fight back on Trumps steel move.
Perhaps this is now an "outdated" subject because more people are catching on, but I wanted to discuss this with my new forum members. I have posted this elsewhere, so the words are my own. I will not link to the original since it comes from another forum.
======================================
I’m not certain people who like the idea of all of the tariffs Trump is implementing know how tariffs actually work, and what they’ll mean in the long run.
Tariffs are pretty simple. They are taxes that are applied at the port of entry from a foreign country. That’s pretty much it. In theory, they will inflate the cost of a good or service for the buyer (domestic), and will make domestic alternatives more palatable as prices equalize or become less for the domestic offering.
For instance, a Canadian steel mill might sell a ton of hot roll to a US buyer for $600/ton. With a 25% tariff the steel will cost the US buyer $750/ton. Therefore, the US buyer might choose to find a domestic source that will cost them $650/ton. However, as US sources start to reach capacity in production, they might choose to raise prices (likely) and lead times will increase.
Now, this means that automatically, the cost for the buyer goes up by $50/ton.
Let’s say that the product the buyer is looking for is only made by a Canadian mill. The buyer will automatically have to pay 25% more because there is no alternative for them. Will a US mill then find a way to make the product? Not likely, as tariffs are seen to be temporary measures, and most smart companies will not make large investments based on temporary government measures.
If the product costs $1000/ton, then the US buyer pays $1250/ton for the product. $250 goes to the federal government, $1000 to the Canadian manufacturer, just as before.
Since the US buyer must pass on the cost, this can lead to lesser demand for anything involving the product if end use decreases. Or if demand is more static, it will simply mean higher prices, with only the federal government reaping the rewards.
So what is your understanding of how tariffs work?
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