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US businesses and consumers pay 90% of tariff costs, New York Fed says
61–70 of 339 posts
Re: US businesses and consumers pay 90% of tariff costs, New York Fed says
#62Earlier quoted context omitted.
Sure, they work via changing domestic behavior. But the purpose of that change is what's important. They can be used to gently (as compared to sanctions) shift demand away from a particular country, or alternatively to apply pressure to a sector to bring it on shore.
> They can be used to gently (as compared to sanctions) shift demand away from a particular country That works when those countries are selectively tariffed while others are let off. Blindly applying tariffs to whatever satisfies the mood is not the way. > or alternatively to apply pressure to a sector to bring it on shore. For this to work, the cost of onshore production must be lower than the tariffed price. The in…
Agreed. I wasn't meaning to imply anything one way or the other about the current US tariff regime.
> The inputs must be made cheaper and not tariffed.
Not necessarily. It's presumably not as efficient, but you'd still expect the entire chain to head in the desired direction eventually.
Re: US businesses and consumers pay 90% of tariff costs, New York Fed says
#63Everyone has been getting sold that these tariffs are on "China" or fill-in-the-blank on what country we're "getting" with them. The reality is that's a fundamental misunderstanding of what a tariff is. There is a reason you will find tariffs drop off after the great depression. They make everything more expensive for businesses and in turn, the end consumer. https://en.wikipedia.org/wiki/History_of_tariffs_in_the_Un…
A tariff can only cost as much to the consumer as an embargo.
Re: US businesses and consumers pay 90% of tariff costs, New York Fed says
#64The public needs to understand that tariffs aren't meant to punish other countries (which is what is being sold) - they are meant to change domestic behavior.
That's the real intent of tariffs "in general". Trump's tariffs in particular, though, are specifically meant to punish / shake down other countries.
And the industry leaders in our own country.
Re: US businesses and consumers pay 90% of tariff costs, New York Fed says
#65[dead]
Re: US businesses and consumers pay 90% of tariff costs, New York Fed says
#66Everyone has been getting sold that these tariffs are on "China" or fill-in-the-blank on what country we're "getting" with them. The reality is that's a fundamental misunderstanding of what a tariff is. There is a reason you will find tariffs drop off after the great depression. They make everything more expensive for businesses and in turn, the end consumer. https://en.wikipedia.org/wiki/History_of_tariffs_in_the_Un…
I think the misunderstanding is in a combination of wording + practical application. Tariffs in the legal sense are technically paid by the importer who sells a product. It's their responsibility to pay it... always. The importer could technically eat that cost, and the consumer wouldn't see a difference on their price tag. But what happens in practice, the vast majority of the time, is the importer passes that extra…
Tariffs can be paid by the seller/exporter. If a very significant part of a company's business is done in the US, and the tariff is sufficiently high, they will lose market share if the customer eats the entire cost of the tariff (which is the whole point of the exercise in the first place). So they may decide to socialize this cost a little bit, by increasing prices in all countries, by a lot less than the tariff, and making customers in other markets in effect subsidize the Americans. Everyone except Americans .pays a bit more, prices don't rise as much for Americans.
It's interesting to see how little of that is going on, empirically, by looking at these kinds of quantitative studies.
Re: US businesses and consumers pay 90% of tariff costs, New York Fed says
#67Yes. This is what a tariff is.
Exactly. You make it more attractive to do business with someone domestically by increasing the cost of doing business with nations that subsidize their exports or undercut your companies with slave labour or lax environmental regulations. Over the long term, domestic capacity either grows or emerges to take advantage of business models that were unprofitable due to impossibly cheap imports before.
Re: US businesses and consumers pay 90% of tariff costs, New York Fed says
#68Earlier quoted context omitted.
> What's astonishing is, whether you like him or not, the Orange man actually got the American public to accept what is defacto the largest tax increase in decades. What does it mean "got the public to accept it?" The public had no say and these are probably illegal. On top of that, he probably literally does not know that these are effectively taxes on consumers (i.e. he believe his own bullshit). No credit is due h…
This was a huge part of the platform that the US overwhelmingly voted for in the last election. People wanted this. Yes, I'm sure he believes his own bullshit, but ironically, its bullshit that the US actually needed to pull (tax increases). Modern democracy has proven totally incapable of not stealing the future from its children.
> its bullshit that the US actually needed to pull (tax increases).
Did you forget that the Big Beautiful Bill included a massive tax cut?
Re: US businesses and consumers pay 90% of tariff costs, New York Fed says
#69Everyone has been getting sold that these tariffs are on "China" or fill-in-the-blank on what country we're "getting" with them. The reality is that's a fundamental misunderstanding of what a tariff is. There is a reason you will find tariffs drop off after the great depression. They make everything more expensive for businesses and in turn, the end consumer. https://en.wikipedia.org/wiki/History_of_tariffs_in_the_Un…
The fighting part isn't just us tariffing China, it's bullying other countries to do the same.
That's how the US won the first trade war under trump 1 (and continued by Biden). Now Trump 2 tried to ramp it up and this time its backfired because other countries have refused to go along. Many have even been pushed to collaborate more closely with China. China's exports have only grown to record highs
Re: US businesses and consumers pay 90% of tariff costs, New York Fed says
#70I think blanket tariffs are dumb don't get me wrong. But tariffs have been used in the car industry for decades. If you got rid of them completely within 5 years the American car companies would be closing plants. The whole reason Japanese auto manufacturers build plants in the US was to avoid tariffs. Shipping costs are actually incredibly minimal for a vehicle. So in my opinion, we've seen where they can work. If y…
> It does get hard to math out when you have to weigh the money the average consumer would save over the 10 million auto jobs in the US.
Not that hard to math out, the deadweight loss of tariffs is always non-zero. IIRC there was a pretty good paper that mathed out the impact of Obamas tire tariffs and concluded that it cost the economy significantly more jobs than it saved.