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Non-political tariffs thread


DixonHur

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1 hour ago, Goredho said:

Without mentioning the T word, what are the goals of these tariff policies?  What are we trying to accomplish?  What is the argument that tit for tat tariffs with Canada and Mexico are in someone's best interest?

Without commentary.

Revenue generation.

Fix trade imbalances.

Potentially incentivize purchasing of US goods and increasing US manufacturing.  That will take a decade or more.

 

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1 hour ago, elfenix said:

This isn't true except in very limited circumstances. Here's what happens:

OCeWx.png.3694b17354160bfda1601f1622e78cff.pngin this chart the yellow portion is borne by consumers (they are paying p1), the purple portion is borne by producers (they are receiving p2), and the triangle to the right is the dead weight loss from sales that weren't made.

 

There's no may about it. Quantity demanded is reduced except, again, in very limited circumstances.

Why, might you ask, are those circumstances limited? That's because if an increase in price (either due to supplier choice of the imposition of a tax) didn't reduce the quantity demanded, the supplier absolutely wasn't pricing as high as they could have. Now, while I'm not naive enough to think suppliers have priced their products for perfectly maximum profits, I do think most are in the ballpark. 

Just think about it. If you have 100 widgets to sell, and you can sell every single one of them priced at $100, or you can sell every single one of them priced at $125, you're pricing at $125. That's the only circumstance where the entirety of a 25% tax could be passed on.

This is a graph of the incidence of tax, not the pass through.  It reflects a change in consumer and producer surplus, not who actually pays the tax.  In a competitive market, the pass through will be 100% to the consumer.

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9 minutes ago, TwiceHorn said:

Also one of the effects of more recent rounds of tariffs was to find alternative sources of goods/manufacturing.  Principally, apparently, Vietnam, where a lot of Asian manufacturing was headed anyway.

Sounds like it's time to adjust my international fund portfolio

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Tariffs will create job losses here. Higher prices will lower demand which so US employers won’t need as many workers. The 10 year treasury rate should spike and it really hasn’t dropped much anyway. It’s possible that if the economy collapses enough, the rates won’t raise too much.

the market reacted poorly to the news today but I assume they is still hope from the market that it won’t happen. Monday could be a bloodbath on wall st.

not to get political but the rumor is that the 3 countries are in the dark what they have to do in order to avoid tariffs tomorrow.

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5 hours ago, DixonHur said:

Please do not litter this thread with political garbage.  Whether you support Trump or not doesn't matter.  The fact is that he's the President and has just stated he's implementing 25% tariffs on Mexico and Canada starting tomorrow.

The purpose of this thread is to discuss the ramifications of these tariffs on the economy at large, inflation, and our individual wallets.

Not just from the tariffs the US is levying, but any retaliatory tariffs from the target countries.  A list that is likely to grow.

The most obvious impacts will be increased gas, automotive and produce prices (along with my beloved tequila).  But can the Surly economists walk me through the broader implications?

It is good to suck for everyone. Nothing good will come of it. 

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1 minute ago, Nice Guy Eddie said:

Tariffs will create job losses here. Higher prices will lower demand which so US employers won’t need as many workers. The 10 year treasury rate should spike and it really hasn’t dropped much anyway. It’s possible that if the economy collapses enough, the rates won’t raise too much.

the market reacted poorly to the news today but I assume they is still hope from the market that it won’t happen. Monday could be a bloodbath on wall st.

not to get political but the rumor is that the 3 countries are in the dark what they have to do in order to avoid tariffs tomorrow.

IMG_9690.thumb.png.97e20e87cf796f6ee570eb8ff244dc1c.png

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6 minutes ago, Bevo said:

These tariffs are going to be short lived so you can throw the textbooks out. They are for negotiating purposes.

Bullshit. No one is negotiating shit. Either they go into effect and we all suffer or they don't go into effect because someone is convinced this is an idiotic, self-destructive idea.  Pretending otherwise is fucking stupid. 

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1 hour ago, bolverk said:

From my understanding, they're ostensibly being imposed to curb illegal immigration and fentanyl smuggling. At least, that's one rationale I've read.

Our own war on drugs failed so we want both of our neighbors to have their own war on drugs and then we can see if it works.

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21 minutes ago, TwiceHorn said:

Without commentary.

Revenue generation.

Fix trade imbalances.

Potentially incentivize purchasing of US goods and increasing US manufacturing.  That will take a decade or more.

 

What, we're going to make more trees? 

Tariffs related to specialized, critical industries that we need to develop domestically make a bit of sense (e.g., semi-conductor manufacturing). Tariffs on fucking lumber are fucking stupid.  

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44 minutes ago, atomheartbevo said:

oxi-clean-but-wait-theres-more.gif

https://www.foxbusiness.com/politics/trump-reasserts-towering-100-tariff-threat-against-brics-countries

I don't know how much trade we do with Brazil, India, and China, but 100% tariffs seems like it might be a little painful.

Seems like the economic fallout of 100% tariff against those three countries might affect American consumers a little more than 25% on avocados from Mexico.

 

36 minutes ago, DixonHur said:

I don't understand the economics of it, but I'm assuming the US Dollar being the world's reserve currency is a big deal, so levying tariffs on BRICS countries in an effort to get them to back the dollar could make some sense.

But, putting tariffs on our close allies, and largest trading partners (Mexico and Canada) makes much less sense to me.

My bet is that putting a 100% tariff on a group of countries is the incentive for them to create their own currency to replace the Dollar.

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14 minutes ago, Nice Guy Eddie said:

not to get political but the rumor is that the 3 countries are in the dark what they have to do in order to avoid tariffs tomorrow.

I’ve got one idea but it involves a lot of butt kissing and public praising 

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7 minutes ago, TexasEd said:

 

My bet is that putting a 100% tariff on a group of countries is the incentive for them to create their own currency to replace the Dollar.

I mean, why would they even need to? If countries keep extra dollars around just to trade with us, why not spend those same dollars on each other?

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19 minutes ago, Nice Guy Eddie said:

not to get political but the rumor is that the 3 countries are in the dark what they have to do in order to avoid tariffs tomorrow

It’s abundantly clear what’s being demanded.  I’d agree proving it’s been accomplished in 12 hours is no small task.

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1 minute ago, Incredulity said:

It’s abundantly clear what’s being demanded.  I’d agree proving it’s been accomplished in 12 hours is no small task.

Can you let me know? What is the point of this? What is being demanded? I really don't understand it.

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1 minute ago, Incredulity said:

What has been reported is stopping fentanyl and illegal Immigration.

So the government of Canada is bringing fentanyl and illegals in to the country? For that matter, Mexico government is sponsoring it as well?

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3 minutes ago, Ted Lange said:

Canada should just say, "You win, we've decided to stop sending fentanyl and illegals across the border, well played Mr President."   And then just move on.  100% that would work.

“We turned off the Fentanyl faucets from the north”

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44 minutes ago, Guadaloopy said:

This is a graph of the incidence of tax, not the pass through.  It reflects a change in consumer and producer surplus, not who actually pays the tax.  In a competitive market, the pass through will be 100% to the consumer.

I don't believe that's correct.  The pass through is 100% only if you have a fully vertical demand curve (perfectly inelastic demand, IIRC).  

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2 hours ago, Goredho said:

Without mentioning the T word, what are the goals of these tariff policies?  What are we trying to accomplish?  What is the argument that tit for tat tariffs with Canada and Mexico are in someone's best interest?

 

2 hours ago, Bateshorn said:

that revenue is used to fund tax cuts for the wealthy, it's a straight up reverse wealth tax. 

 

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1 hour ago, Incredulity said:

It’s abundantly clear what’s being demanded.  I’d agree proving it’s been accomplished in 12 hours is no small task.

Making a condition proving a negative or absence of something is often a sign of a lack of critical thinking skills.

Prove to me no-one has hacked your computer system. Prove to me you didn’t intentionally put listeria in the Bluebell. Prove to me that his actions are not out of ignorance but malice. 

Edited by TexasEd
fucking spelling
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5 hours ago, DixonHur said:

Please do not litter this thread with political garbage.  Whether you support Trump or not doesn't matter.  The fact is that he's the President and has just stated he's implementing 25% tariffs on Mexico and Canada starting tomorrow.

The purpose of this thread is to discuss the ramifications of these tariffs on the economy at large, inflation, and our individual wallets.

Not just from the tariffs the US is levying, but any retaliatory tariffs from the target countries.  A list that is likely to grow.

The most obvious impacts will be increased gas, automotive and produce prices (along with my beloved tequila).  But can the Surly economists walk me through the broader implications?

Have you considered just not believing in tariffs? Maybe that way they will not do anything and you don't have to worry about it. 

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3 minutes ago, Beau Vine said:

I don't believe that's correct.  The pass through is 100% only if you have a fully vertical demand curve (perfectly inelastic demand, IIRC).  

True, but in the context of this discussion, it's a minor distinction.  The argument posed by the administration is that the foreign exporter will pay for these tariffs completely.  That is a theoretically and practically false claim.  It will be the domestic consumer paying the largest portion of this tariff.  

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3 minutes ago, HOOKEM4 said:

So make it make sense @Incredulity. We are levying a blanket tarriff on our partner to the north for what?

I get the mental gymnastics they go through to do so on Mexico, but Canada?

I can’t.  His words are fentanyl and illegal immigration.  Do those things come in through the Canadian border?  I really don’t know nor do I have any idea how they would go about proving they fixed it if it is true.  So it does appear the things that they can do is convince Trump they are seriously trying, do nothing or retaliate with their own set of tariffs.  
 

The academic economists consensus on tariffs is they don’t work.  We are going to find out it appears.

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26 minutes ago, Dahobbs said:

Have you considered just not believing in tariffs? Maybe that way they will not do anything and you don't have to worry about it. 

Have you considered going back to your cesspool CR?

The adults are talking

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5 minutes ago, Auto Driller said:

If you were a member of government at ANY other country on earth, would you be seeking to strengthen ties with the US right now? What are we offering besides constant threats and harassment.

That's the issue. Relative US stability through the post war 20th century through shifts in political power was a key part of the US becoming the world's economic backbone for the 20th century. 

Right now the US looks like a bipolar kid on speedballs. One admin and it's business as usual. Next admin and it's chaos and random tariffs out of nowhere. Terrible timing as China is rising to the economic equal of the US and gaining way more influence by the year. The US going full isolationist right now will just turbo charge the takeover. 

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1 hour ago, Nice Guy Eddie said:

Tariffs will create job losses here. Higher prices will lower demand which so US employers won’t need as many workers. The 10 year treasury rate should spike and it really hasn’t dropped much anyway. It’s possible that if the economy collapses enough, the rates won’t raise too much.

the market reacted poorly to the news today but I assume they is still hope from the market that it won’t happen. Monday could be a bloodbath on wall st.

not to get political but the rumor is that the 3 countries are in the dark what they have to do in order to avoid tariffs tomorrow.

Just buy OJ and pork bellies. Gotta get the GI Joe with the kung fu grip.

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1 hour ago, Bevo said:

These tariffs are going to be short lived so you can throw the textbooks out. They are for negotiating purposes.

4-20 Weed GIF
 

I would like to believe you, but for reasons best put in another forum, I can’t.  These are not for negotiating purposes.

The question now is how bad things will be and how we dig ourselves out of it.

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3 hours ago, elfenix said:

This isn't true except in very limited circumstances. Here's what happens:

OCeWx.png.3694b17354160bfda1601f1622e78cff.pngin this chart the yellow portion is borne by consumers (they are paying p1), the purple portion is borne by producers (they are receiving p2), and the triangle to the right is the dead weight loss from sales that weren't made.

 

There's no may about it. Quantity demanded is reduced except, again, in very limited circumstances.

Why, might you ask, are those circumstances limited? That's because if an increase in price (either due to supplier choice of the imposition of a tax) didn't reduce the quantity demanded, the supplier absolutely wasn't pricing as high as they could have. Now, while I'm not naive enough to think suppliers have priced their products for perfectly maximum profits, I do think most are in the ballpark. 

Just think about it. If you have 100 widgets to sell, and you can sell every single one of them priced at $100, or you can sell every single one of them priced at $125, you're pricing at $125. That's the only circumstance where the entirety of a 25% tax could be passed on.

The key part that is left out here is when you have a mix of domestic (non-taxed) and foreign (taxed) suppliers that the demand goes up on the domestic sourced goods.  This puts upward price pressure on the domestic goods without the tax revenue increase.  The domestic goods are going to find an equilibrium price with the imports.

So your American made tires, California Avocados, US Timber are all going to go up too because those manufacturers will not be able to meet the market supply demands. 

Add on top of that the tariff goes into the baseline price and then you have sales tax on top of it so you end up with 25% increase in price with another 2% sales tax (.25*.08) your 25% tarrif is really a 27% increase in consumer price.

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2 minutes ago, TexasEd said:

So your American made tires, California Avocados, US Timber are all going to go up too because those manufacturers will not be able to meet the market supply demands. 

People do not understand that we can’t just ramp up food production, and a lot of stuff that is assembled from various suppliers has finely tuned supply chains that will have serious ripple effects.

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5 hours ago, immamac said:

talk tariffs without fucking politics

IsSuchAThingEvenPossible.gif

 

do you know who imposes tariffs?

 

I’m actually pro tariff as a way to capture the environmental costs of near slave labor and zero regulation on environmental pollution 

 

But that’s not what is happening here

Edited by Sawbonz
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5 minutes ago, atomheartbevo said:

People do not understand that we can’t just ramp up food production, and a lot of stuff that is assembled from various suppliers has finely tuned supply chains that will have serious ripple effects.

And when disrupted they take time to bring back on line.

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1 hour ago, Ted Lange said:

Canada should just say, "You win, we've decided to stop sending fentanyl and illegals across the border, well played Mr President."   And then just move on.  100% that would work.

Pretty accurate, I think.  "We'll do our best to stop those danged immigrants and that nasty ol' fentanyl." And someone will declare a huge victory.

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