Comment by hnthrowaway0328
2 months ago
When Trump ups everything from China by 100% I guess US would be able to make something with profit?
2 months ago
When Trump ups everything from China by 100% I guess US would be able to make something with profit?
I doubt it. It's much easier to either launder or manufacture the goods in a third country, that benefits from most of the same incentives that made Chinese manufacturing go through the roof.
Americans will be buying Chinese goods with "made in Vietnam" or "made in Mexico" stamped on it. The American profit will be in setting up those laundering schemes
If the Trump tariffs are based on country of final assembly, then yes, final assembly will just occur somewhere else, but it will take a couple of years to setup, and the inflation shock by that time will have done a lot of damage to the economy (recession likely, depression possible). It makes sense that it took Trump forever to find a treasury secretary willing to go along with this.
You can bribe officials in Vietnam/Mexico. So they'll be your country of "final assembly".
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Couple of years for a western enterprise maybe, but in the east, things move fast. Really fast.
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The last time he did tariffs against China, he put a tariff on raw materials but not stuff made with that raw material.
It was cheaper to build your excavator outside the country than pay the tariffs on importing the materials to build the excavator here.
It was an objective failure. It also resulted in very smartly targeted payback that caused serious financial distress to a bunch of blue collar American food producers who sell a lot to China because the American market is literally not big enough (my state sells millions of pounds of lobster to China, those lobstermen still vote for Trump).
This is because Trump is objectively a fucking moron, and if you tell him "No, your idea is wrong because you don't know what you are talking about", he gives you the same "You're fired" speech from his damn television show, replaces you with a sycophant, and then does the stupid thing.
Any prediction that starts with "Trump will do the Tariffs in the way that requires second order thinking" is doomed to failure.
The Trump tariffs will turn the entire world to China. America may no longer be interested in free trade and go full isolationism but many smaller countries can not. A painful truth is that for Europe the millions of containers with goods from Asia are a lifeline.
It doesn't matter much if your shitbox is made in US or made in China when it cost 50k and nobody has the money for it
Vietnam and Mexico will massively profit.
With what workers?
Basically everyone is already employed.
That is not remotely how tariffs work.
Doesn't a tariff drive up prices? (or at least intended for that)
Tariffs are a surcharge on imports added and demanded by the government, paid by the people or entities importing.
As an example, if an American buys a Chinese coffee maker priced at $100 and there is a 50% tariff, there is a $50 tariff that is paid by the importing American to the American government.
The total cost to the importing American is $150. Now, if this price is equal to or higher than an American coffee maker then the importing American is incentivized to purchase the American coffee maker instead.
As another example, if Tesla sells Model 3s for $50,000 and BYD comes in with a similar spec car priced at $25,000, then putting a 100% tariff on it will drive BYD's effective price up to $50,000 allowing Tesla to compete without undercutting or outright selling at a loss.
Essentially, tariffs are a way to ensure that the pricing floor of the domestic market is not driven down unreasonably by international markets at the cost of the importers.
EDIT: Fixed some math. :V
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