Tariffs and Potential Inflation

[jryoung]

You enjoy paying the tax for the incentive?

Ironically there's no way around "paying" to incentivise companies to return to the US. They won't do it for the betterment of the union, and the citizens won't reward them for doing so. So we're at a crossroads of tariffs, tax policy (increased deficit), or government grants to get US based companies to return here.

We let them go freely and now need to pay them to come back...... effectively a bailout, privatize the gains, socialize the losses.

 

[338win]

You enjoy paying the tax for the incentive?

You enjoy the destruction of middle class at the hands of globalization and unfair labor practices from our adversaries? Yes I’ll gladly pay a tax to ensure the US maintains a strong industrial base.

 

[brymoore]

You enjoy the destruction of middle class at the hands of globalization and unfair labor practices from our adversaries? Yes I’ll gladly pay a tax to ensure the US maintains a strong industrial base.

You don’t think the increased prices for everything doesn’t degrade the middle class?

 

[thebestusernamesaretaken]

No one is paying a tax on new tariffs that don’t yet exist. Maybe we just all slow down and see how the tariff negotiations work out before freaking out on what hasn’t happened.

Unfortunately, no one knows anything other than the political rhetoric from a newly elected person who has commonly displayed behavior of being unhinged, untruthful and unpredictable. Set aside how that makes the rest of world apprehensive of the consequences of that behavior and what they will do as a result; that leaves main street in uncertain territory. Capital investments may not be wise until they have confidence that whatever deal is to be made, would have already been made in their individual sectors before moving forward.

If companies were to make investments, they would likely do so in markets where they are more assured (same as other countries). Everyone is looking for the best transaction right now. Otherwise, corporations wouldn't want to leave the US market but may adopt a wait and see approach. That means that some investments in industry would be put on hold, hiring would be put on hold & projects stall out. I see signs that people (consumers), are already hoarding cash, lessening spending. Uncertainty creates chaos.

We may be welcoming in a new stagflation period.

 

[RemingtonRules]

Tariffs are complicated, but they certainly don't come close to paying for the government operations. What we know is that they make things cost more. This is undeniable. They also have a long history of not being very effective. Tariffs on steel didn't save the steel industry. Tariffs on lumber haven't helped lumber companies much. Maybe it slowed the decline? I remember a paper that concluded tariffs may have sped the decline of the steel industry. Nothing is clear in economics.

Our economy has benefitted from outsourcing to places with lower costs of production. It has made most goods here cheaper. Again, undeniable. We are now a service economy. This does create problems though. I wouldn't describe it as "economic starvation" at the hands of anyone. Regardless, Covid taught us to diversify the supply chain. I agree with @morley.tyler. They are not getting diversified back to the US, and do we really want to be a textile producer again? Trump already ran on this insourcing platform and had 4 years to fix it. We saw manufacturing continue to leave this country. The CHIPs act has been the only manufacturing policy produced in the last 40 years to try to incentivize US manufacturing.

Speaking of starvation, ironically, China imports a lot of agricultural products from us. So when we raise tariffs on their products they raise tariffs on US ag. This immediately drops the market price. What we saw last time, large buyers in Brazil would buy US soybeans then ship them to China as if they were Brazil beans, thereby avoiding the tariff. China got beans at lower prices than if they bought directly from US and the US farmer was the only real loser, but they didn't change their vote. Again, I don't think the question is if tariffs result in higher prices, I think it is will it matter?

Regulations from the EPA cost more than tariffs. That is why it went offshore.

 

[RemingtonRules]

Unfortunately, no one knows anything other than the political rhetoric from a newly elected person who has commonly displayed behavior of being unhinged, untruthful and unpredictable. Set aside how that makes the rest of world apprehensive of the consequences of that behavior and what they will do as a result; that leaves main street in uncertain territory where capital investments may not be wise until they have confidence that whatever deal is to be made, would have already been made in their individual sectors.

If companies were to spend aggressively they would likely do so in markets where they are more assured (same as other countries). Everyone is looking for the best transaction right now. Otherwise, corporations in general wouldn't want to leave the US market but may adopt a wait and see approach. That means that some investments in industry would be put on hold, hiring would be put on hold projects stall out.

Unfortunately, no one knows anything other than the political rhetoric from a newly elected person who has commonly displayed behavior of being unhinged, untruthful and unpredictable. Set aside how that makes the rest of world apprehensive of the consequences of that behavior and what they will do as a result; that leaves main street in uncertain territory where capital investments may not be wise until they have confidence that whatever deal is to be made, would have already been made in their individual sectors.

If companies were to spend aggressively they would likely do so in markets where they are more assured (same as other countries). Everyone is looking for the best transaction right now. Otherwise, corporations in general wouldn't want to leave the US market but may adopt a wait and see approach. That means that some investments in industry would be put on hold, hiring would be put on hold projects stall out.

How do you know what unhinged looks like? Asking for a friend.

 

[Sytes]

Reality check: tariffs are as involved in the price to the consumer as are taxes on the consumer...