The propaganda on tariffs is that foreign imports are bad and domestic manufacturing is good. And plenty of the conservative community accepts this, because they aren’t trying to buy direct from overseas. This guy is an outlier - a MAGA dude who is attempting to import a $2000 widget from Spain for whatever reason - and not representative of the average American voter.
Trump’s statements on tariffs aren’t even strictly false. Businesses can and do shave their margins, eating some percentage of the cost of tariffs, in order to keep their bulk exports competitive. You’re just not going to see that happen on a one-off specialty import, because the guy in Spain isn’t trying to be competitive at scale with a rival US industry.
We’re already seeing more high value manufacturing happening within the US to evade Trump’s tariffs. US tariffs on Japanese imports during the 1987 trade war brought electronics and auto manufacturing into the country in the same way. That’s why we’ve been building Toyota Cars in Kentucky for decades.
Now we’re seeing Samsung and LG planning plants in the US. We’re seeing the same from BMW and Volkswagon. Is this smart trade policy? Feel free to inject your own economic orthodoxy below. But to say its not working as intended… No. The US has enormous influence in global trade. What Trump’s doing has absolutely reversed the flow of manufacturer outsourcing.
When you can attract large foreign investments, the order matters less. You’ll experience more pain by imposing tariffs first and building out infrastructure second. But we’re governed by a party that seems to relish in the pain of their constituents. So this might be more of a feature than a bug.
Businesses can and do shave their margins, eating some percentage of the cost of tariffs, in order to keep their bulk exports competitive. You’re just not going to see that happen on a one-off specialty import,
Eh no. The simplification that the customer pays is for practical purposes basically correct. There is little will to shave margins when industries and nations are broadly effected, insufficient margins to absorb much, and little reason even bother to do so save to preserve future business with the expectation that tariffs will be dropped.
What you are seeing sometimes is markets operating on coyote time. Goods are already purchases/imported. Goods are purchased on contracts that don’t account for tariffs screwing the importer. Tariffs are applied then yanked before prices have to adjust. When they haven’t there is suspicion that they will soon be based on prior TACO behavior and future expectation is that much profit at prior margins will be lost if not carefully managed.
Long term you will absolutely see prices rise to cover 100% of the .
What Trump’s doing has absolutely reversed the flow of manufacturer outsourcing.
There is little will to shave margins when industries and nations are broadly effected, insufficient margins to absorb much, and little reason even bother to do so save to preserve future business with the expectation that tariffs will be dropped.
Our observed average price increases — at 5.4% for imported goods and 3% for domestic goods — are moderate relative to the size of announced tariff rates, particularly on Chinese products. We find that roughly 14 to 20 percent of the tariff changes were reflected in retail prices within six months. These rates are higher and materialize faster than those observed during the 2018–2019 U.S.–China trade war, but remain well below full pass-through, reflecting gradual transmission and continuing uncertainty about policy persistence.
When profit margins on a product are high, the retailer is more comfortable absorbing the tariff rate through lower marginal profit. Its on products with lower margins that we’re seeing the highest inflation rates.
What’s more, as imports rise in price they raise the clearing rate for all products, which encourages domestically produced products to rise in price to match. So you’re “paying the tariff” on goods that aren’t even being tariffed, because they’re chasing rising prices of low margin imports.
How much actual work vs future commitments again?
More actual work with each month these tariffs linger. There’s other factors, of course. The declining value of the dollar is inducing demand for US capital and real estate from overseas, as well as cheapening the cost of US labor. And with three more years of Trump in office (plus the real possibility that we get more MAGA Republicans in years to come) business leadership is inclined to believe a high-tariff / low-tax economy is the future for America.
This makes the US an ideal tax haven. We’ve been a popular safe-harbor for Chinese, Japanese, English, German, and French billionaires to shield their own wealth from their home countries. And if the EU commits to a uniform income or wealth tax policy, this trend will only continue.
His tariffs have short shelf lives, exceptions, and are constantly rolled back. An index of many goods many of which are not tariffed or haven’t been tariffed long enough for domestic supplies to have run out conflated with all other price fluctuations is going to make it hard to tease out individual factors.
You could pick a given item that was continually tariffed for a year and discover unit by unit what actual effect of tariffs was. You would presumably find that broad tariffs on everything as a source of revenue is ultimately 99./9% a tax on the population because whilst merchants are absolutely willing to stockpile domestically to ride out expected temporary hikes and manufacturers may find it important to protect future business. Losing a lot of your margin may be worthy to keep the business you when you expect it to be rolled back 90 days later it is not acceptable as the permanent state of affairs.
This is especially true as rates are high.
This is a boring and tedious way to do it but being unwilling to do it means you probably don’t care about getting the correct answer.
His tariffs have short shelf lives, exceptions, and are constantly rolled back.
He loves to threaten triple digit tariffs, then ratchet them back down to double digits. The average rate on international imports right now is around 14%, compared to 1.5% under Biden. Trump is very seriously and deliberately attempting to pivot the US from an income tax based government revenue model to an import tax model that we haven’t seen since Coolidge (a paleocon celebrity since the Reagan years).
You could pick a given item that was continually tariffed for a year and discover unit by unit what actual effect of tariffs was. You would presumably find that broad tariffs on everything as a source of revenue is ultimately 99./9% a tax on the population
Real price increases haven’t kept up with the increased tariff rates. If you ever make it through B-school or drop into a few college economics classes, you’ll understand why. Retailers maximize profits at the “clearing rate” for their sales goods. That’s the retail price which maximizes gross revenues at an optimal marginal unit price.
You can’t pass on 99% of a tariff increase if it results in a drop in sales disproportionate to the rise in price. That is to say, if you sell 1000 units for $1 but only 500 unites for $1.15, you are losing $500 in revenue to avoid paying $150 in taxes. Depending on the profit margin by unit (let’s say you pocket 30% of the $1 in sales - or $300 on that $1000 gross expenditure) there may be no incentive to pass on the tax to the consumer for your business. In this example, you can either pay $150 on $300 in pre-tax profit or… $150 on $300 in pre-tax profit.
Losing a lot of your margin may be worthy to keep the business you when you expect it to be rolled back 90 days later it is not acceptable as the permanent state of affairs.
Rapidly changing prices has its own chilling effect on your client base. If consumers see the market price jump 15%, they won’t perfectly mathematically optimize their behaviors to match. They’ll just blindly cut back on consuming out of sticker shock. Or they’ll go hunting for lower rates elsewhere.
The savvier play is one we’ve already seen across the retail sector - shrinkflation. Reduce the volume of unit sold so the margins stay high but the consumer never suffers sticker shock. A bag of chips doesn’t become 15% more expensive, it just gets <insert math on cost of chips>% lighter.
the logic should be partner with your allies and find trade that is not economic but holistically beneficial, considering all scientific factors. It’s hard and inconvenient but long term deescalating.
The problem with people like this is NOT the fact that they were dumb enough to believe Trump’s lies about tariffs.
The real problem is them crying more about having to pay the tariffs themselves than about having been blatantly lied to.
They’ll find some way to blame Kamala for it, don’t worry
how could you not impose tariffs if Kamala did run, i mean it is logic
The propaganda on tariffs is that foreign imports are bad and domestic manufacturing is good. And plenty of the conservative community accepts this, because they aren’t trying to buy direct from overseas. This guy is an outlier - a MAGA dude who is attempting to import a $2000 widget from Spain for whatever reason - and not representative of the average American voter.
Trump’s statements on tariffs aren’t even strictly false. Businesses can and do shave their margins, eating some percentage of the cost of tariffs, in order to keep their bulk exports competitive. You’re just not going to see that happen on a one-off specialty import, because the guy in Spain isn’t trying to be competitive at scale with a rival US industry.
We’re already seeing more high value manufacturing happening within the US to evade Trump’s tariffs. US tariffs on Japanese imports during the 1987 trade war brought electronics and auto manufacturing into the country in the same way. That’s why we’ve been building Toyota Cars in Kentucky for decades.
Now we’re seeing Samsung and LG planning plants in the US. We’re seeing the same from BMW and Volkswagon. Is this smart trade policy? Feel free to inject your own economic orthodoxy below. But to say its not working as intended… No. The US has enormous influence in global trade. What Trump’s doing has absolutely reversed the flow of manufacturer outsourcing.
Right, but you put the tariffs in place after you have the domestic manufacturing capabilities, not before.
When you can attract large foreign investments, the order matters less. You’ll experience more pain by imposing tariffs first and building out infrastructure second. But we’re governed by a party that seems to relish in the pain of their constituents. So this might be more of a feature than a bug.
It’s interesting that you openly call it propaganda, and then go on to parrot it over and over.
Eh no. The simplification that the customer pays is for practical purposes basically correct. There is little will to shave margins when industries and nations are broadly effected, insufficient margins to absorb much, and little reason even bother to do so save to preserve future business with the expectation that tariffs will be dropped.
What you are seeing sometimes is markets operating on coyote time. Goods are already purchases/imported. Goods are purchased on contracts that don’t account for tariffs screwing the importer. Tariffs are applied then yanked before prices have to adjust. When they haven’t there is suspicion that they will soon be based on prior TACO behavior and future expectation is that much profit at prior margins will be lost if not carefully managed.
Long term you will absolutely see prices rise to cover 100% of the .
How much actual work vs future commitments again?
There’s plenty of will when a commodity is fungible and margins are high. We can see this in retail prices relative to tariff rates.
When profit margins on a product are high, the retailer is more comfortable absorbing the tariff rate through lower marginal profit. Its on products with lower margins that we’re seeing the highest inflation rates.
What’s more, as imports rise in price they raise the clearing rate for all products, which encourages domestically produced products to rise in price to match. So you’re “paying the tariff” on goods that aren’t even being tariffed, because they’re chasing rising prices of low margin imports.
More actual work with each month these tariffs linger. There’s other factors, of course. The declining value of the dollar is inducing demand for US capital and real estate from overseas, as well as cheapening the cost of US labor. And with three more years of Trump in office (plus the real possibility that we get more MAGA Republicans in years to come) business leadership is inclined to believe a high-tariff / low-tax economy is the future for America.
This makes the US an ideal tax haven. We’ve been a popular safe-harbor for Chinese, Japanese, English, German, and French billionaires to shield their own wealth from their home countries. And if the EU commits to a uniform income or wealth tax policy, this trend will only continue.
His tariffs have short shelf lives, exceptions, and are constantly rolled back. An index of many goods many of which are not tariffed or haven’t been tariffed long enough for domestic supplies to have run out conflated with all other price fluctuations is going to make it hard to tease out individual factors.
You could pick a given item that was continually tariffed for a year and discover unit by unit what actual effect of tariffs was. You would presumably find that broad tariffs on everything as a source of revenue is ultimately 99./9% a tax on the population because whilst merchants are absolutely willing to stockpile domestically to ride out expected temporary hikes and manufacturers may find it important to protect future business. Losing a lot of your margin may be worthy to keep the business you when you expect it to be rolled back 90 days later it is not acceptable as the permanent state of affairs.
This is especially true as rates are high.
This is a boring and tedious way to do it but being unwilling to do it means you probably don’t care about getting the correct answer.
He loves to threaten triple digit tariffs, then ratchet them back down to double digits. The average rate on international imports right now is around 14%, compared to 1.5% under Biden. Trump is very seriously and deliberately attempting to pivot the US from an income tax based government revenue model to an import tax model that we haven’t seen since Coolidge (a paleocon celebrity since the Reagan years).
Real price increases haven’t kept up with the increased tariff rates. If you ever make it through B-school or drop into a few college economics classes, you’ll understand why. Retailers maximize profits at the “clearing rate” for their sales goods. That’s the retail price which maximizes gross revenues at an optimal marginal unit price.
You can’t pass on 99% of a tariff increase if it results in a drop in sales disproportionate to the rise in price. That is to say, if you sell 1000 units for $1 but only 500 unites for $1.15, you are losing $500 in revenue to avoid paying $150 in taxes. Depending on the profit margin by unit (let’s say you pocket 30% of the $1 in sales - or $300 on that $1000 gross expenditure) there may be no incentive to pass on the tax to the consumer for your business. In this example, you can either pay $150 on $300 in pre-tax profit or… $150 on $300 in pre-tax profit.
Rapidly changing prices has its own chilling effect on your client base. If consumers see the market price jump 15%, they won’t perfectly mathematically optimize their behaviors to match. They’ll just blindly cut back on consuming out of sticker shock. Or they’ll go hunting for lower rates elsewhere.
The savvier play is one we’ve already seen across the retail sector - shrinkflation. Reduce the volume of unit sold so the margins stay high but the consumer never suffers sticker shock. A bag of chips doesn’t become 15% more expensive, it just gets <insert math on cost of chips>% lighter.
the logic should be partner with your allies and find trade that is not economic but holistically beneficial, considering all scientific factors. It’s hard and inconvenient but long term deescalating.
That’s a very materialist approach to international trade. Unfortunately, we don’t have a government run by people with a materialist mindset.