The cost to move these industries to the U.S. exceeds the cost of these tariffs. The market will pass the cost of what are import taxes to the American consumer, resulting in inflation.
True, the shareholders will take a pay cut too, because something less than 100% of American consumers will just suck it up without changing their behavior. But in aggregate, we will all save less.
If inflation takes off again, maybe eventually there's some monestizing of debt. But in less than 4 years these tariffs will go away, which is why companies won't spent billions of dollars investing in state side manufacturing that'll take maybe 5 years to plan and build. Therefore I'm not sold on the montizing debt motivation yet.
Why in 4 years they will go away? Is that assuming the new administration will reverse course? It’s my understanding that generally country don’t lower tariffs voluntarily. They are usually bargaining chips.
We have tried this before about 100 years ago. Supply chains and economies were not nearly as interconnected as they are now. Read the history of the Smoot–Hawley Tariff Act.
Tariffs may not even last 4 months. Trump demanded Powell reduce interest rates, the FRB declined. The might be Trump's way of forcing the Fed to reduce interest rates, by inducing a recession with massive inflation. And then Trump takes the tariffs away once the Fed gives him what he wants.
FRB won't reduce interest rates if there's inflation alone. They'd only reduce interest rates if the economy also slows down into recession territory.
That's the short term view.
In the long term view, they are the biggest tax increase in the history of the country, therefore they are potentially the biggest tax decrease in the history of the country. Political fodder, even for a corpse.
It depends.. For some goods possible to just immediately raise prices, for others, business will try to compensate from another source.
As example, Daimler stated, they will cut cheapest models from export to US, so some segment will got less concurrent market, and probably prices will raise.
Probably, this is because Daimler have much higher profits on expensive models, so they could just lower profits on them. Other variant, also possible, expensive niches are more tolerant to price raise.
For small countries, tariff raise nearly guarantee prices rise, but US is big country, things are not so simple.
The cost to move these industries to the U.S. exceeds the cost of these tariffs. The market will pass the cost of what are import taxes to the American consumer, resulting in inflation.
True, the shareholders will take a pay cut too, because something less than 100% of American consumers will just suck it up without changing their behavior. But in aggregate, we will all save less.
If inflation takes off again, maybe eventually there's some monestizing of debt. But in less than 4 years these tariffs will go away, which is why companies won't spent billions of dollars investing in state side manufacturing that'll take maybe 5 years to plan and build. Therefore I'm not sold on the montizing debt motivation yet.
Why in 4 years they will go away? Is that assuming the new administration will reverse course? It’s my understanding that generally country don’t lower tariffs voluntarily. They are usually bargaining chips.
We have tried this before about 100 years ago. Supply chains and economies were not nearly as interconnected as they are now. Read the history of the Smoot–Hawley Tariff Act.
> It’s my understanding that generally country don’t lower tariffs voluntarily. They are usually bargaining chips.
Tariffs are a tax. Tax on us, the people buying goods.
It's a massive tax increase. People are slowly waking up to that fact.
Rolling back the tariffs is giving everyone a tax cut. Well, tax cut back to baseline of what everyone expected.
As people realize that they are the ones paying the tariffs, this is going to be very unpopular.
Tariffs may not even last 4 months. Trump demanded Powell reduce interest rates, the FRB declined. The might be Trump's way of forcing the Fed to reduce interest rates, by inducing a recession with massive inflation. And then Trump takes the tariffs away once the Fed gives him what he wants.
FRB won't reduce interest rates if there's inflation alone. They'd only reduce interest rates if the economy also slows down into recession territory.
That's the short term view.
In the long term view, they are the biggest tax increase in the history of the country, therefore they are potentially the biggest tax decrease in the history of the country. Political fodder, even for a corpse.
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It depends.. For some goods possible to just immediately raise prices, for others, business will try to compensate from another source.
As example, Daimler stated, they will cut cheapest models from export to US, so some segment will got less concurrent market, and probably prices will raise.
Probably, this is because Daimler have much higher profits on expensive models, so they could just lower profits on them. Other variant, also possible, expensive niches are more tolerant to price raise.
For small countries, tariff raise nearly guarantee prices rise, but US is big country, things are not so simple.
You mean there might be some niche product that:
1. has no US parts in the supply chain
2. has a importer that is willing to sacrifice itself for the greater good
A faint drop of hope in an intergalactic ocean of despair.
You are just asking things not matter. So you are not looking for truth but you are looking for create more despair.
Be calm, ask right questions and you will got truth.