Comment by hayst4ck
9 months ago
The greater context is tariffs. Tariffs make foreign products more expensive. If everyone is willing to pay 1% more for the benefit of their own economy, then a 1% tariff probably wouldn't be very unpopular, it might even be responsible, especially if that money is then immediately invested in helping the given industry grow.
It's a measurement of the pain of tariffs or a measurement of how many people would "willingly" pay a tariff.
Of course that assumes a low corruption government with informed and forward looking policy, rather than past looking policy. Tariffs as they are frequently exist so that our own companies don't have to compete as hard and are able to spend their money on stock buybacks rather than investing into R&D, or to choose winners and losers allowing a tariff wielding king to reward loyalty or punish dissent.
I am absolutely a layman though, and this is my layman understanding.
But that's tariffs on imported things, not actually manufacturing them in the USA, which is what this article is about.
If I am willing to pay 10% more for a locally made product, then a 10% tariff has no effect on me assuming that the local company has non colluding local competitors, likewise if I am not willing to pay an 85% tariff, then an 85% tariff, which is what it would take to be locally competitive according to this, would make a product I want to buy 85% more expensive or un-purchasable.
These tariffs are somewhat about consent/mandate, nationalism, and economic policy and this story aims to be a data point, although I'm not really clear what the author wants people to conclude.
>If I am willing to pay 10% more for a locally made product, then a 10% tariff has no effect on me assuming that the local company has non colluding local competitors,
That's the unfortunate, greedy part of it all. Even in the purest form, if tarriffs raise prices 10%, the domestic companies will still proceed to do a price hike instead of compete in the newly level playing field. They use the opportunity and raise prices more for hopes of a larger margin. Especially in such an inflationary economy.
The customer loses out in the end because domestic companies (in this pure scenario) can't help themselves.
The impure points are more common and simply show how stupid the policies are. If you have blanket tarriffs and don't have silicon mines to take advantage of, domestic companies don't have much choice in where to get silicon. We simply don't have that resource domestically to begin with. Coffee is another common example.