Tariffs Catch-All

[p5mmr9]

Are there any positives to increasing tariffs? Any similarities between increasing taxes on corporations and increasing tariffs?

At best a tariff is a selective consumption tax. So, I suppose the benefit is more revenue to the federal government. Proponents also suggest tariffs incentivize domestic production, however it is really hard to see how tariffs against a poor country like say Bangladesh will incentivize an industry like garment production in the USA considering the vast wage disparity between the USA and Bangladesh.

 

[superrific]

Are there any positives to increasing tariffs? Any similarities between increasing taxes on corporations and increasing tariffs?

Not from these tariffs and no.

 

[Silence Dogood]

At best a tariff is a selective consumption tax. So, I suppose the benefit is more revenue to the federal government. Proponents also suggest tariffs incentivize domestic production, however it is really hard to see how tariffs against a poor country like say Bangladesh will incentivize an industry like garment production in the USA considering the vast wage disparity between the USA and Bangladesh.

Yes, more revenue, increases in domestic production, more jobs, lower taxes for individuals etc

 

[Duke Mu]

It doesn't matter, because Trump can and would veto the resolution.

I parked my retirement in money market (90%). Will ride it out.

 

[Silence Dogood]

Not from these tariffs and no.

What other tariffs? If increasing tariffs increases prices, why shouldn't we worry about price increases when corporate tax rates go up?

 

[p5mmr9]

Yes, more revenue, increases in domestic production, more jobs, lower taxes for individuals etc

It's unlikely we see a proportional increase in domestic production and even less likely we see an significant increase in employment opportunities.

 

[superrific]

Yes, more revenue, increases in domestic production, more jobs, lower taxes for individuals etc

Since when do you conservatives like the revenues from taxes? Here's an idea: don't raise taxes on consumers -- raise them on billionaires.

Tariffs are higher tariffs on individuals, not lower. They generally do not increase domestic production, and in this case they will not because we don't even have domestic production of lots of these goods.

Basically, here's what will happen with tariffs. The American trade deficits with other countries will decline. But that will not be because we sell any more; it will just be that we consume less. It will make us poorer, which is what the negative GDP growth coming down the pipe is going to show. The economy will shrink until the trade deficits level out.

But then there's the next problem, which is the budget deficit. The smaller economy is going to have dramatically lower tax collections, driving the federal deficit up even higher. But sovereign debt causes trade deficits, so we will enter a vicious cycle: the trade deficits will shrink our economy, which will increase the trade deficit, which will then decline by shrinking the economy some more, etc.

There is a non-zero chance of a Great Depression level collapse. It won't last as long as the Depression but the possibility of an economic collapse is positive. Hopefully not very high, but non-zero. It depends in large measure on Congress' budget gimmick.

If they push through the tax cuts pretending they don't cost anything -- when in reality they will cost $500B a year -- along with these tariffs and decreased tax enforcement, we could be seeing a debt spike like nothing we've ever seen.

 

[Duke Mu]

Yes, more revenue, increases in domestic production, more jobs, lower taxes for individuals etc

Smoot Hawley?

Tariffs tax Americans as a consumption tax, raising inflation while at the same time reducing consumption. The GDP sinks as spending and capital flow decreases. Reciprocal taxes from our (former) allies further reduce sales and our GDP triggering an inflation + recession = two mints in one!

Stock markets and investment capital collapse or are held on a tight grip. Capitalism does not function on a zero sum gain model. It has positive feedback loops that can expand or contract capital. Tonight I'm going to party like it's 1929.

 

[Silence Dogood]

It's unlikely we see a proportional increase in domestic production and even less likely we see an significant increase in employment opportunities.

Do you think their would be any employment opportunities if foreign companies manufactured in America?

 

[p5mmr9]

It can even be more catastrophic...as US trade deficits diminish - the incentive to utilize the US Dollar as the global reserve currency declines. This is the waning of American economic, military, and cultural power. It's hard to overstate how destructive our current path is.

 

[superrific]

What other tariffs? If increasing tariffs increases prices, why shouldn't we worry about price increases when corporate tax rates go up?

Not reciprocal tariffs. Targeted tariffs are, in my opinion, not helpful but they at least make some economic sense. This universal tariff is going to put American exporters at a tremendous disadvantage. Remember: all of our international trade is now going to be tariffed and probably in both directions. The rest of the world will have only a fraction of their imports taxed.

For instance, the stuff that Canada used to export to the US -- well, it will export it to Germany now. And the stuff that Germany exports here? They will export to Canada. The US won't be exporting because its products and only its products will be subject to high tariffs everywhere. And the production cannot shift to domestic markets that quickly. It will mean a drop in our standard of living.

The reason that we don't worry about price increases from corporate taxes is that corporate taxes do not make prices increase. If a company sells a product for $X, it's because $X is the highest profit price point. If the tax on profits goes up, $X is still the highest profit price point. The company will have a smaller bottom line but its prices will still be $X.

 

[superrific]

Do you think their would be any employment opportunities if foreign companies manufactured in America?

There would be more employment opportunities if aliens manufactured in America.

Foreign companies are not going to invest in manufacturing here because of a tariff. Quite the opposite. Trump is telling every country in the world, "we are an unreliable partner who can turn on a dime and punish foreigners for no reason." And the rest of the world will be telling Trump, "then we will do business elsewhere." Remember: the rest of the world will be trading tariff free.

 

[Silence Dogood]

Since when do you conservatives like the revenues from taxes? Here's an idea: don't raise taxes on consumers -- raise them on billionaires.

Tariffs are higher tariffs on individuals, not lower. They generally do not increase domestic production, and in this case they will not because we don't even have domestic production of lots of these goods.

Basically, here's what will happen with tariffs. The American trade deficits with other countries will decline. But that will not be because we sell any more; it will just be that we consume less. It will make us poorer, which is what the negative GDP growth coming down the pipe is going to show. The economy will shrink until the trade deficits level out.

But then there's the next problem, which is the budget deficit. The smaller economy is going to have dramatically lower tax collections, driving the federal deficit up even higher. But sovereign debt causes trade deficits, so we will enter a vicious cycle: the trade deficits will shrink our economy, which will increase the trade deficit, which will then decline by shrinking the economy some more, etc.

There is a non-zero chance of a Great Depression level collapse. It won't last as long as the Depression but the possibility of an economic collapse is positive. Hopefully not very high, but non-zero. It depends in large measure on Congress' budget gimmick.

If they push through the tax cuts pretending they don't cost anything -- when in reality they will cost $500B a year -- along with these tariffs and decreased tax enforcement, we could be seeing a debt spike like nothing we've ever seen.

Why are other countries allowed to have higher tariffs on our goods than we do for theirs?

 

[Duke Mu]

 

[p5mmr9]

Do you think their would be any employment opportunities if foreign companies manufactured in America?

Unlikely, unless the cost structure became so warped that companies - foreign or otherwise - had no choice.

In this scenario, we would have a mix of reduced inventory, imported products at significantly higher prices, and some factories choosing to manufacture in the USA (mainly automated manufacturing). The actual impact on employment regardless will be low while the impact/drag on GDP will be significant. Ours is a consumer based economy and changing that would require a reduction of the poverty level mixed with an environment where our labor pool is more attractive to companies instead of a developing nation's labor pool...a really dreadful thought experiment.

 

[Duke Mu]

Why are other countries allowed to have higher tariffs on our goods than we do for theirs?

This accomplishes two important, overlooked objectives:
1. The Dollar remains the gold standard currency on the planet
2. Dollars leaving the US are a relief valve on inflation

Trade is our foreign aid making it generally unprofitable to commit war. The Ruble was crashing until Trump came to the rescue.

Not only do the tariffs potentially wreck the US economy, which had been finally on steady ground but it gives China and its formerly sagging economy a lifeline and a path toward world domination.

 

[Silence Dogood]

It can even be more catastrophic...as US trade deficits diminish - the incentive to utilize the US Dollar as the global reserve currency declines. This is the waning of American economic, military, and cultural power. It's hard to overstate how destructive our current path is.

Scare tactics! Hyundai motors is investing in a steel plant in Louisiana, Taiwanese chipmaker TSMC is set to invest $100 billion in a U.S.-based semiconductor plant. Israel announced the cancelation of all remaining tariffs, Vietnam has outlined plans to reduce tariffs on several US products , including liquefied natural gas (LNG), automobiles, and ethanol. The tariff on American LNG will decrease from 5% to 2%, on cars from a range of 45%-64% to 32%, and on ethanol from 10% to 5%. These measures aim to lower Vietnam’s trade surplus with the U.S. and avoid potential U.S. tariffs. India is considering cutting tariffs on over half of U.S. imports, valued at $23 billion, to protect its $66 billion in exports from impending U.S. reciprocal tariffs. Negotiations are underway, with India indicating a willingness to significantly lower or entirely remove tariffs on many U.S. goods, contingent on the U.S. providing relief from the reciprocal tariffs.

 

[p5mmr9]

Why are other countries allowed to have higher tariffs on our goods than we do for theirs?

Their citizens are harmed by these isolationist barriers.

Example - You can't buy the latest iPhone in Indonesia because their government has been haggling with Apple over investment in their country for the past year. Who benefits from this type of situation? Certainly not Indonesians. But that said - most Indonesians can't afford iPhones and the ones that can go to Singapore to buy them. So, instead of reaping sale tax on these iPhones - Indonesia gets nothing. Tariffs and trade barriers are harmful to all economies.

 

[Duke Mu]

Unlikely, unless the cost structure became so warped that companies - foreign or otherwise - had no choice.

In this scenario, we would have a mix of reduced inventory, imported products at significantly higher prices, and some factories choosing to manufacture in the USA (mainly automated manufacturing). The actual impact on employment regardless will be low while the impact/drag on GDP will be significant. Ours is a consumer based economy and changing that would require a reduction of the poverty level mixed with an environment where our labor pool is more attractive to companies instead of a developing nation's labor pool...a really dreadful thought experiment.

Automation will be enhanced and people will lose more jobs, in addition to the recession and tariff-related job losses.

 

[Silence Dogood]

Unlikely, unless the cost structure became so warped that companies - foreign or otherwise - had no choice.

In this scenario, we would have a mix of reduced inventory, imported products at significantly higher prices, and some factories choosing to manufacture in the USA (mainly automated manufacturing). The actual impact on employment regardless will be low while the impact/drag on GDP will be significant. Ours is a consumer based economy and changing that would require a reduction of the poverty level mixed with an environment where our labor pool is more attractive to companies instead of a developing nation's labor pool...a really dreadful thought experiment.

So whats the solution? Other countries continue ripping the US off?
We don't need other countries to flourish, they would have to lower their prices.