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US Administration announces 34% tariffs on China, 20% on EU

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Re: US Administration announces 34% tariffs on China, 20% on EU

#191

Post by seanmcdirmid »

tnt128 wrote: post #50

I don’t buy the blanket statement that the consumer always pays the tariff. It depends on what alternative companies have. If a company can purchase the same clothing from Chinese, Vietnamese, or Mexican vendors, a tax on China only could make the Chinese vendors lower the price or risk losing the business. However, a blanket tax on every country, regardless of available alternatives, would leave businesses with fewe…

This is true, but the amount of production in China dwarfs everyone else, and definitely what America can bring up anytime soon, so two consequences:

A. Tariff for Chinese goods will be reflected in consumer prices pretty much directly.

B. Domestic suppliers if the same goods have very limited capacity, giving them the pricing power to raise their prices by the tariff amount, and take it as extra profit.

Take for example cars. We will see American cars go up by the same amount as imports as long as they are oversubscribed on capacity.

Re: US Administration announces 34% tariffs on China, 20% on EU

#192

Post by whatshisface »

There has been a lot of speculation about why this is being done, given that even a young child could understand that a grocery store is not taking advantage of you when you exchange your money for goods. Some say that it doesn't need an explanation, because the President has so much power that caprice and a little bad advice from a cabinet member is all it takes. That is not a complete picture, though, because power in the US is spread out enough that while only the President needs a reason to do something, many others must have a reason to allow it.

Here's one idea for a "why are his supporters allowing this," sort of explanation. In the US, educated professionals hold way more importance than the global average, due to the US's status as an exporter of services. They tend to vote for liberal (in the European sense) policies, whether Republican or Democrat.

If you wanted to destroy liberalism in the United States, you would have to drastically reduce the importance of higher education and professional labor. This can be done by placing very high taxes on the import of goods and base resources, so that young people who would have become engineers have to become miners, loggers and machinists instead. While I do not think this is true (blue-collar workers do not live up to the ultraright's "noble savage" sort of fantasy about their preferences and are actually just like anyone else... but if you're an elite you don't know that firsthand), it sounds plausible that enough of the people who are important for a season might believe it, and support it as a plan to remake American culture, not in their image, but in the image of a fantasy they share.

This works together with the strategic need to decouple from trade with a country before invading them, dramatically increasing the number of opportunities for self-aggrandizement through the threatening of war, high-stakes diplomacy, negotiations over individual prices... which also offer some respite for elected officials who would otherwise take an unending beating in the news over consumer data.

Re: US Administration announces 34% tariffs on China, 20% on EU

#193

Post by arlort »

olejorgenb wrote: post #72

Can someone explain if there's any logic at all to counting a countrys VAT as part of its tariffs? In my home country VAT is ultimately charged the end-customer and this happens regardless of the origin of the goods. How can this be a seen as a tariff? Besides, isn't the "Use tax" most(?) American states have more or less equivalent in function?

Others pointed out that the tariff rate they are pointing to is actually just calculated based on trade imbalance. So the logic is that they have a number they want to get to and are throwing around terms that their constituents don't understand to make it sound reasonable

VAT is not a tariff, no one reasonable thinks it's a tariff but the US doesn't use the term VAT so enough people won't second guess it if trump says it's an tax on american goods

Re: US Administration announces 34% tariffs on China, 20% on EU

#194

Post by csomar »

jenadine wrote: post #147

I'm a freelance selling software services. Some of my customers are in the US. Am I affected? These tariff don't impact software, right? Different countries have different tariff. Is there room for arbitration? In which a 3rd party business from a country with low tariff would buy a product in one of the countries with high tariff and export that to the US, taking a small cut.

Upon import you have to declare the country of origin of the good. That's what is being tariffed and makes your arbitrage idea essentially fraud.

Re: US Administration announces 34% tariffs on China, 20% on EU

#195

Post by palmotea »

gigatexal wrote: post #57

Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense. Devaluing the dollar and subsidizing production in the US makes far more sense. But I’m not an economist or anything.

> Americans have been hurt for 50 years … yes manufacturing going overseas was a huge change and many administrations didn’t do enough to help affected workers. Buuuuuut - placing tariffs on our allies that will likely lead to a recession makes no sense.

Yeah, some tariffs aren't a bad idea. But this plan? Just stupid, without any thought or strategy behind it.

The tariffs should be used more strategically to reorganize supply chains, not these blanket tariffs of low cost and high cost places. And probably ratchet them up slowly, to give time for production to move, instead of a big bang of putting them up everywhere.

So tariff China and Mexico, not Canada and Germany.

Re: US Administration announces 34% tariffs on China, 20% on EU

#196

Post by mailund »

So now that the impacted countries will respond with tariffs, are there any chance they might include tariffs on digital services like AWS and Azure, or will they only target physical goods that cross the border?

I don't know how these things usually work in the best cases, and it seems like we're living in exceptionally stupid ones right now.

Re: US Administration announces 34% tariffs on China, 20% on EU

#197

Post by nabla9 »

vitorgrs wrote: post #118
ggm wrote: post #87

I think a lot of people assume the economic consequences like these have not been understood by the WH. Although I don't like this administration I beg to differ: they know what's going to happen, and they expect the coming storm because they seek what follows. They want to repudiate foreign held debt, or devalue it, by revaluation of the USD and they will wear what they think of as a one time economic shock to get t…

The weighted average of the new U.S. tariffs will be 29% it seems. Maybe they know the consequences, but to give you a idea... it was 1.5% before. The new ones will be equivalent to Brazilian tariffs in 1989 before opening the economy (31%, data from World Bank). Now, Brazilian tariffs, which have one if the most closed economies, by weighted average, is 7%. China, have 2.2%. The United States will be an autarchy, si…

It's called Import Substitution.

Import Substitution: A Tried and Tested Policy for Failure https://www.kspp.edu.in/blog/import-substitution-a-tried-and...

>Import substitution is a policy by which the state aims to increase the consumption of goods that are made domestically by levying high tariffs on foreign goods. This gives an advantage to the domestic manufacturers as their goods will be cheaper and preferable in the market compared to foreign products. India adopted this model post-independence, and it continued till the 1991 reforms. Due to import substitution, the domestic producers captured the entire Indian market, but there was slow progress in technological advancements, and the quality of Indian products was inferior to the foreign manufactured ones. But after the reforms, the Indian market was opened to everyone, and the consumer got the best value for the price he paid. The Make in India policy of the present government is reminiscent of the pre-1991 inward-looking Indian state.

In the US it will be even worse. The US is already high-tech economy outsourcing low value-adding manufacturing to foreign countries while industries move towards higher value-adding products. After the tariffs, US manufacturing sector will sift to lower value-added, lower complexity products.

Re: US Administration announces 34% tariffs on China, 20% on EU

#198

Post by atoav »

I guess we Europeans have to get our stuff from elsewhere than a nation hostile to the world with an insane unpredictable leader. China may also be authoritarian, but at least they are stable.

The coolest thing to read are american takes that are like "hey this might be benefiting us for that obscure reason", totally ignoring the fact that you betrayed your allies. Land of fhe free my ass. The only ideology the US has is nihilistic greed paired with hyperindividualsm and transactionalism to the point where Americans think if someone else is getting a thing you are hurting.

If the US was a kid it wouldn't invite others over because it wants to eat the birthday cake alone. And then it shits on all the cakes at the bakery because it wants to be the only kid eating cakes. If that is the American idea of how to lead a great life the rest of the world is better of without it.

Re: US Administration announces 34% tariffs on China, 20% on EU

#199

Post by Qworg »

rramadass wrote: post #119
mcoliver wrote: post #92

Here's a csv and google sheet of the data. Turns out they aren't tariffs countries charge us. They are trade imbalance percentages. Unreal: https://docs.google.com/spreadsheets/d/1xK0OQ5VGl8JHmDSIgbXh... https://gist.github.com/mcoliver/69fe48d03c12388e29cc0cd87eb...

I see how the tariff numbers may have been calculated. But why is it done that way? What is the rationale behind such a calculation? Is this a way to balance the existing trade deficits? How does it work? Would appreciate you (or anybody else) shed some light on the economics of the thing.

You can see the report here: https://ustr.gov/issue-areas/reciprocal-tariff-calculations

Given that both elasticities were set to cancel each other, that's why you get a flat trade deficit/imports calculation.

This is, sadly, the way a freshman econ student would calculate tariffs.

Re: US Administration announces 34% tariffs on China, 20% on EU

#200

Post by trhway »

ggm wrote: post #87

I think a lot of people assume the economic consequences like these have not been understood by the WH. Although I don't like this administration I beg to differ: they know what's going to happen, and they expect the coming storm because they seek what follows. They want to repudiate foreign held debt, or devalue it, by revaluation of the USD and they will wear what they think of as a one time economic shock to get t…

>What amazes me is the timing: the midterms will hit while the bottom is still chugging along. I would think it unlikely they can secure an updraft from this to keep the house. What's the plan for that?

tax cut financed by the tariffs? Will buy/mislead a lot of voters when those checks would get sent mid next year.

Especially those voters who couldn't notice that all those countries having tariffs (and VAT) are worse economically than US in major part because US didn't until now have much tariffs to speak of.

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