The Truth About Tariffs

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  1. GA Anderson profile image92
    GA Andersonposted 9 months ago

    Pres. Trump tweeted:

    "For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars....

    — Donald J. Trump (@realDonaldTrump) May 5, 2019"


    The fact is that China, (nor any other nation), pay the tariff fees.

    The U.S. Importers pay the tariff fees. They may, (and usually do), pass those tariff costs onto consumers in the form of higher prices, but it is almost never the tariffed country that pays the fees.

    Tariff fees take money directly from the U.S. economy and gives it to the government.

    I have held some misinformed tariff opinions before, but I don't think I am wrong about this one.

    There is one line of thought that the tariffs are being used as leverage to force China to the negotiating table. Whether that is a legitimate effort, or not, it does not alter the error of the tweet. China has not been paying tariffs - U.S. consumers have.

    GA

    1. wilderness profile image95
      wildernessposted 9 months agoin reply to this

      As near as I can tell, you are correct.  In fact, at least one seller notes that if the buyer fails to pay the tariff they will not refund the purchase price.

      So yes, it takes from the economy and gives it to the government...just as taxes do.  It is nothing more than another tax, then, although an argument can (and will) be made that taxes are then spent (or given away and subsequently spent), helping the economy.  A zero sum game, then, as far as I can see when it comes to the economy as a whole.

      1. GA Anderson profile image92
        GA Andersonposted 9 months agoin reply to this

        Relative to it being a "zero-sum" outcome, I think the productivity of those dollars would be much greater and more beneficial to our economy in private hands rather than the government's hands.

        GA

        1. wilderness profile image95
          wildernessposted 9 months agoin reply to this

          My point was that it ends up in private hands somewhere down the line anyway.  Unless it becomes foreign aid or something like that, anyway.  Somewhere the govt. either gives it out in welfare, whereupon it is in private hands, or gives it to companies or employees, whereupon it is in private hands again.

    2. Miebakagh57 profile image43
      Miebakagh57posted 9 months agoin reply to this

      Gus, why does Trump had to say such foolish statements? Does he think he is the only one that knows more on the US economy? His advisers are equally to be blamed by keeping silence.

      1. GA Anderson profile image92
        GA Andersonposted 9 months agoin reply to this

        Different folks will probably offer a lot of different reasons why he would say that Miebakagh57. I can only guess, but I think he says stuff like that because it makes him sound good to a segment of our voting population.

        GA

    3. Ken Burgess profile image91
      Ken Burgessposted 9 months agoin reply to this

      Hi GA,

      Now here is a topic more up my ally, I believe I have written an article or two on this matter.

      So, short term the tariffs may impact the economy in the negative in the form of higher costs for those products.  The offset as you mentioned, is that the government can collect more money via those tariffs.

      But what happens LONG TERM is that companies can no longer produce these technologies in China cheaper than they could here in America, so they will invest into facilities and jobs here in America where they can now make them cheaper than it would cost them to be made in China and shipped here.

      This also works for the Steel Industry, and any other industry, which in turn aids the economy by putting Americans to work making those products here, rather than in China.

      So potentially products could be more expensive, but the end result is a positive for America, the people who can afford to spend $75k on a new truck are going to spend it, whether the steel comes from China or America.  People who can afford to buy the new $1k Iphone, are going to buy it whether its made in America or China.

      The people who never were going to buy that $75k truck or that $1k phone still aren't.  But now chances are better that they have a job that pays them decently and affords them that $100 phone or that $15k car.

      These corporations are International, be they Apple or GM, and if they can get away with building in China to make a buck they will do so, even if it means Americans lose their jobs.

      Its nice that we have a President that is trying to force these International Corporations into employing Americans, if they are going to sell their products here.

      1. wilderness profile image95
        wildernessposted 9 months agoin reply to this

        I would add that when those jobs vanish overseas, we are left supporting the ex-workers, that used to produce steel, cars and refrigerators, via the tax base and welfare programs.

      2. GA Anderson profile image92
        GA Andersonposted 9 months agoin reply to this

        At this point Ken, I am treading tentatively as I educate myself about tariffs.

        The only point I feel confident to state is that China is not paying billions in tariffs. U.S. consumers are. And that was the point of the OP.

        If that point is true then a following point would be that tariffs are a tax on consumers. So now the important question is whether that tax benefits those consumers? Do tariffs accomplish their intended purpose?

        Timidly speaking, what I read so far says that history shows them not to work as intended. Specifically, the Smoot–Hawley Tariff Act of 1930 is used as an example of the failure of tariff policies. But ... that is only a mention, not a position.

        I will give your articles a shot Ken, then maybe we can dive deeper.

        GA

  2. Castlepaloma profile image74
    Castlepalomaposted 9 months ago

    President Donald Trump has tweeted that “trade wars are good, and easy to win.” But many economists have disagreed that raising tariffs sharply can improve the economy. In particular, experts have pointed to the failure of the Smoot-Hawley Tariff Act, passed in June 1930, to protect U.S. industries with tariff increases.

    The great tariffs for the Great depression is another lesson to be relearned.

    1. Miebakagh57 profile image43
      Miebakagh57posted 9 months agoin reply to this

      But did the United States got rich during the Great Depression? Where did she get the money to finance world awar11? Build the atomic bomb and so on?

      It seems during a state of depression, some economies get a boom. Throughout out WW 2, the US is the richest nation on the earth. I hope this is correct, or you may correct me where Ifallof tangent.

    2. GA Anderson profile image92
      GA Andersonposted 9 months agoin reply to this

      As you noted Castlepaloma, historical examples, and a majority of economists say that tariffs and trade wars usually hurt more than they help.

      GA

      1. wilderness profile image95
        wildernessposted 9 months agoin reply to this

        I'm sure they do hurt...in the short term.  But how much of our trade imbalance, and the loss of our manufacturing base, is due to unequal trade and labor practices?

        1. GA Anderson profile image92
          GA Andersonposted 9 months agoin reply to this

          Those are good points Wilderness, and ones I am trying to find answers to.

          Your point about the loss of manufacturing jobs due to unequal, (or unfair), trade or labor practices is an easy starting point because it was/is a thought I also held/hold.

          First, it should be noted that we do have laws and remedies for anti-dumping protection, and unfair government subsidy practices that are separate from tariffs and their intended purposes. The more important question is whether they work. I don't yet know that answer.

          One example might be our steel industry. I believe that industry can be viewed as one that is in our national security interests to protect.

          Here are a couple of blurbs from an interesting NPR article

          "But the industry faltered in the 1970s. U.S. steel companies failed to invest in modern equipment, while foreign competitors rebuilt with the latest technology. The U.S. lost its technological lead and lower-cost imported steel captured nearly a quarter of the domestic market.

          Outdated U.S. plants were shuttered and more than 100,000 steelworkers lost their jobs, devastating their communities."
          ...
          "One thing about competition and technological change," Irwin says, "it's always forcing firms to become more efficient."

          "He says the steel industry has responded "and as a result, the number of worker hours it takes to produce a ton of steel has really plummeted in the United States."

          "In 1980, it took 10 worker hours to produce a ton of steel. Today, Irwin says, it takes only two hours and employment in steelmaking has declined by 80 percent from its peak six decades ago. The Trump tariffs won't reverse that trend, he says."


          It is a work-in-progress, I will get back to you on your questions.

          ps. I offered a solar panels tariff example to Live to Learn

          GA

  3. Live to Learn profile image79
    Live to Learnposted 9 months ago

    I'm probably naive but it wouldn't matter who paid the initial fee, the result would be higher consumer prices on those products. Which would effectively lower a gap between the price of a similar product made in the USA and the cost of something made with slave and/or low wage workers, elsewhere.

    Tariffs attempt to level a playing field which was thrown off kilter by unfair practices. Right or wrong, good or bad, the consumer pays the final cost, not anyone else. So, I don't really see your point.

    1. Castlepaloma profile image74
      Castlepalomaposted 9 months agoin reply to this

      I take very little stake in politics anymore, I create my own economic safety net, so no skin off my nose. If you wonder why places like India and China triple or four times their emcomic growth over the US each year. Then wonder What Trump and his greedy friends, military complex and mafia lawyers are doing with this extra money. I sure it is not to help the poor, to educate and do anything to help the greatest threats to mankind, the natural environment. My bubble dome will protect me.

      1. Live to Learn profile image79
        Live to Learnposted 9 months agoin reply to this

        Good for you. I'd say that 'bubble dome' is more fantasy than reality.

        1. Castlepaloma profile image74
          Castlepalomaposted 9 months agoin reply to this

          You know very little about me. You don't know how many eco villages and healthy plants have been destoried by the greedy synthetic to get to this happy point in my life.

    2. GA Anderson profile image92
      GA Andersonposted 9 months agoin reply to this

      My initial point, Live to Learn, is that the statement in the tweet; that China has paid all those billions in tariff taxes, is a lie. The U.S. consumer, (both wholesale and retail), is who has paid the tariff costs.

      There is a secondary point of the negative impact of tariffs--beyond the increased prices--on an economy. This point seems to be reasonably supported by economic fact, but is still, possibly, (I think a slim possibility), an arguable point.

      GA

  4. Miebakagh57 profile image43
    Miebakagh57posted 9 months ago

    Hi, Castlepaloma, I am noting you. Well, whatever you mean. The environment is my friend.

    1. Castlepaloma profile image74
      Castlepalomaposted 9 months agoin reply to this

      More people will learn to live healthier by urban farming and off the fat of the land. This can be done anywhere in the world and the internet (after sorting out the junk) can be one of your greatest teachers. Most of the food in Canada comes from 1500 km. away.  Trump wants to charge extra tariffs for Mexicans fruit and vegetables, so he can build his great beautiful wall. Wonder what walls taste like?, no matter you can make a $5 latter to get over that problem.

  5. JAKE Earthshine profile image79
    JAKE Earthshineposted 9 months ago

    Hey, here's a TRUTH about Donald Trump's INSANE Tariff Taxes on America: Farmers are getting CRUSHED and are filing BANKRUPTCIES at an ALARMING Rate: But hey, nationalists wouldn't be concerned with minor details like farmers losing everything and some farmers might have even considered voting for this ignorant fool again in 2020 if he Escapes JUSTICE, they've never been known as the "Brightest Bulbs" on the Christmas Tree:

    1. Castlepaloma profile image74
      Castlepalomaposted 9 months agoin reply to this

      At least Trump is fat like Satan Clause. Get it... Clause.....

  6. GA Anderson profile image92
    GA Andersonposted 9 months ago

    I came back for a second shot Live to Learn.

    I am still trying to inform myself about tariffs, but, and I am shooting from the hip here, it seems that your thoughts about tariffs "leveling the playing field" and "consumers pay the final costs," (relative to tariff costs only), are a common perception that doesn't look at the whole picture, and in most cases may be completely wrong.

    Job loss seems to be a major component of the economic argument against tariffs. Here is one blurb that uses a solar panels market example:

    "President Trump approved new tariffs on solar imports… Manufacturing of solar panels is only one component of the solar industry, which employs between 260,000 and 374,000 workers. Out of this group, only 38,000 work in manufacturing. Even this oversells the number of people whose work would be insulated from competition from imports, as Solar Energy Industries Association estimates that only 2,000 of these solar manufacturing workers make the products covered by the tariffs.  Significantly more people work in installation. Their jobs would be at risk from higher solar panel prices that would reduce demand for installations, with one estimate that the tariffs would cost 23,000 U.S. jobs in the first year. [my emphasis]
    Source: International Liberty *there are a lot of pertinent and informative sub-links in this source article

    I still have a lot of reading to do, but I am coming to understand that my previously held views, (the commonly held ones such as yours), as logically as they sound - are wrong.

    GA

  7. Miebakagh57 profile image43
    Miebakagh57posted 9 months ago

    I can hardly understand all these.

    1. Castlepaloma profile image74
      Castlepalomaposted 9 months agoin reply to this

      It is generally an extremely high tax Trump is putting on import products. So high it makes living cost and inflation difficult for the American people. The risk can unbalance reaction to be similar to the great depression.

      1. Miebakagh57 profile image43
        Miebakagh57posted 9 months agoin reply to this

        Thank you. I am noting well.

      2. wilderness profile image95
        wildernessposted 9 months agoin reply to this

        What will continued loss of industry and jobs do?  When the trade unbalance is so great that there are no jobs left in the country, what will happen?  What will happen when borrowing continues unabated because the country no longer makes what it consumes?

        A depression?

        1. Miebakagh57 profile image43
          Miebakagh57posted 9 months agoin reply to this

          Likely?

        2. Castlepaloma profile image74
          Castlepalomaposted 9 months agoin reply to this

          Must be dam lucky, I can make most things I consume. Just another alternative options.

          1. Miebakagh57 profile image43
            Miebakagh57posted 9 months agoin reply to this

            Good to know. Go ahead, Castlepaloma. And good luck.

 
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