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...

 

[schmalts]

Tariffs are also applied in order to combat the tariff that is applied against the USA exports. Example, do you think it is unfair to apply a tariff to products imported from India to the USA? India has been applying a 100% tariff to Harley-Davidson bikes for a long time. China, Thailand, and other Asia Pacific countries also apply a large tariff to H-D bikes. The reason H-D has been moving some production to Thailand is to get around the unfair Tariff. Brazil also has a large Tariff against H-D hence why there is a final assembly plant there as well. A lot of people are unaware of what tariffs are applied to US products.

 

[Sytes]

FACT SHEET: President Biden Takes Action to Protect American Workers and Businesses from China’s Unfair Trade Practices | The White House

President Biden’s economic plan is supporting investments and creating good jobs in key sectors that are vital for America’s economic future and national

www.whitehouse.gov

A simple example of government countering China's economic attempt to strangle America...

Politics... ok, no politics.

 

[SAJ-99]

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

I agree. It is also why we have cleaner air and water than a lot of other places. All about trade offs.

Interesting that a tariff on US good is “unfair” and tariffs US places on imports are justified. Perspective and location are everything.

 

[338win]

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

Not as much as the growth in income inequality post NAFTA, the erosion of wages vs inflation, outsourcing of industry, ect. Your view is myopic libertarian/naive position. Long term the US must incentivize US production otherwise we are going to fall behind china to a dangerous level.

 

[Bonasababy]

Inflation from 2020-2023 was a supply chain issue. Also, simple economics. Shipping companies went from charging ~$3500 to move a container from asia to the US on water to charging $20K+ per container

Example for this crowd:
Boots per container ~3000 freight per item went from $1 to $8. retail price changes about $30
Traeger grills per container ~50 freight per unit went from $70-$500. prices went crazy.

It goes both ways. If they (China) hit our pork and soybeans with added tariffs, Iowa, and Nebraska are gonna be in a bind.

You wanna go deeper? Who's the largest pork producer in the US? Smithfield Farms. You may wanna look up who owns that company.

Iowa and Nebraska and other Midwestern states depend HEAVILY on immigrant labor too. They pick our food, work large dairy operations, process our meat.

Tariffs combined with an active anti immigrant and deportation plan will be a double whammy for our economy.

Stagflation...new word of the day.

 

[Nick87]

Where have all you guys been?

 

[Sytes]

Tariffs combined with an active anti immigrant and deportation plan will be a double whammy for our economy.

That's cute. "anti immigrant" AKA "undocumented immigrant" versus the reality: illegal.

Maybe we should categorize a poacher as an, "undocumented hunter".

A "non-immigrant" may lawfully obtain an H2A Visa to work in the U.S. and take all their $ back to their home country.

Difference, one holds lawful regulations for workers - the other enhances abuse of illegal workers. If you prefer to pay cheaper prices to maintain your "immigrant" valuation away from deportation - that's for you to decide. I'll pay more to ensure lawful non immigrants are able to work with regulations able to better protect them from abuse.

 

[jryoung]

Until I can head to the local Toyota dealer and buy a Hilux this is all just smoke.

 

[SAJ-99]

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

If your comparison is income taxes, then there is a difference. Everyone who buys the product has to pay the tax while income taxes are scaled by income. I'm not opining on way or another, but this talk of replacing income taxes with tariffs is comically stupid. 40% of US households don't pay federal income tax, so the idea of thinking you will tax them through tariffs is missing some info, mostly that they will stop purchasing stuff because they can't afford it. And so we end up back at the inflation problem. All the points made here around the problems people see are valid. 1 in 3 Americans is over the age of 50 and I will be they are pretty focused on this price. The rest of the World is probably going to laugh when the richest country complains about they are treated unfairly. We may not make physical things as much anymore, but we still sell things to the rest of the world, mostly tech.

 

[ismith]

Not political. Most economist via tariffs as likely to increase inflation.

Most economists also agree that it won’t likely increase inflation as much as the drunken sailor approach to governing………

 

[ismith]

Where have all you guys been?

I was thinking the same thing after the calls for unity.

 

[Forkyfinder]

Not political. Most economist via tariffs as likely to increase inflation.

I remember the economists saying covid spending wouldnt cause inflation and after it came it was "transitory."

"Most" economists agreeing on something doesnt really give me the same sort of confidence that "most" physicists/scientists agreeing on something would.