Trump Does his Awesome New Tariffs. Winning!!

Targeted tariffs may not have a big effect on inflation overall. They may only raise prices on the targeted items. Take washers and dryers during Trump's first term. Prices rose by about 10%, but how often do people buy W/D's?

Blanket tariffs are different. They are indiscriminate and there are products that will be more expensive and we will not be able to bring production in house. Take avocados, for example. More than half of the avocados we eat is imported from Mexico. The US simply doesn't have enough land in proper climate zones to grow the amount of avocados we consume.

Auto parts can be manufactured anywhere. But the infrastructure for parts already in place in Mexico and Canada. And just about every car today contains parts from both countries. We could bring all this production domestically, but that comes with a significant investment to build factories here in the US that already exist elsewhere. Costs that will passed along to the consumer.

This article explains what items we will see get more expensive. Some items, like Mexican beers will see their demand go down and less sales. Other items like tequila? There's no domestic alternative.

 

Correct. It's 10% additional. Thanks

 

Illegal drugs the number one reason for tariffs? What happened to personal responsibility? If there is no market, they will go away.

Illegal crossing? How about securing the boarder and going after businesses which benefit from them. Reduce subsidies for non citizens? Your know allow the market to correct itself.

Nah, always someone elses fault.

 

They’ll blame Biden. It seems that’s all Trump has done so far—finger point blame at the MAGA boogeymen as an excuse to do what he is doing.

 

Nobody talks about this, and I don’t understand why.

 

Huh. Don’t remember dems bitching about tariffs the last 4 years

 

According to a friend of mine whom we had dinner with last night, and who has extensive business contacts in China, China is celebrating the 10% tariff. They view it as a big nothing-burger.

 

Why would China care that US consumers now have 10% higher prices? It's like we are imposing sanctions on ourself. Unreal

 

WSJ has at least 3 pieces slamming the tariffs. Whouda thought that Trump being a Leftist tough guy would be such a turn on for the Pubs.

https://www.wsj.com/opinion/donald-...nada-trade-economy-84476fb2?mod=hp_opin_pos_0

Leaving China aside, Mr. Trump’s justification for this economic assault on the neighbors makes no sense. White House press secretary Karoline Leavitt says they’ve “enabled illegal drugs to pour into America.” But drugs have flowed into the U.S. for decades, and will continue to do so as long as Americans keep using them. Neither country can stop it.

Drugs may be an excuse since Mr. Trump has made clear he likes tariffs for their own sake. “We don’t need the products that they have,” Mr. Trump said on Thursday. “We have all the oil you need. We have all the trees you need, meaning the lumber.”

Mr. Trump sometimes sounds as if the U.S. shouldn’t import anything at all, that America can be a perfectly closed economy making everything at home. This is called autarky, and it isn’t the world we live in, or one that we should want to live in, as Mr. Trump may soon find out.

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Take the U.S. auto industry, which is really a North American industry because supply chains in the three countries are highly integrated. In 2024 Canada supplied almost 13% of U.S. imports of auto parts and Mexico nearly 42%. Industry experts say a vehicle made on the continent goes back and forth across borders a half dozen times or more, as companies source components and add value in the most cost-effective ways.

 

Of course. Tariffs are paid by importers, not exporters. The tarriffs themselves don’t hurt China at all… only way it hurts China is if some other country makes the same product and demand shifts away, and if that country can ramp up production to meet the new demand at the same lower price… those are all BIG IFs… the reality is, the other countries will probably raise their prices 10% because that is the new market value. And then China can just sell their products to fill the void left by the other countries shifting sales to the US…. Tarriffs will only hurt Americans.

 

Good strategy....maybe

https://www.wsj.com/economy/trade/c...pain-of-tariffs-too-f8119ccd?mod=hp_lead_pos1

Both Mexico and Canada are likely to focus on what experts call precision strikes against U.S. exports from Republican strongholds and industry groups with political leverage in Washington. A trade war between the U.S. and its two largest trading partners would hit U.S. income, hurt employment and increase inflation, said the Peterson Institute for International Economics.

 

Even if a recession starts and prices jump, MAGA will defend it as "worth it". In fact all this is doing is trying to justify the tax deceases for the rich which are right around the corner. "Flat tax" believers are as smart as "Flat earth" believers.

 

that is incorrect. they will hurt both countries. I think the only way your second sentence could be true is if demand was perfectly inelastic, there was no domestic production of the good & China was the only supplier.

 

I can guarantee you a 10% price increase is not going to lead to having American substitutes on nearly all goods. It does nothing but increase prices for the American consumers and add tax income for the federal government.

 

that is not true. It will also reduce foreign supply & the equil Q will be reduced. demand curves are downward sloping. higher prices = lower quantity demanded

 

The premium to domestically manufacture most items is a lot higher than 10%. It will still not be profitable to manufacture here. Plus, that is something that takes years to change (changing supply chain). Corporations know this won't last, so they are not going to act with capex. Next round of earning calls will be fascinating.

 

you seem to have changed the subject & you seem to be arguing against pts I have not made. I was responding to this:"It does nothing but increase prices for the American consumers and add tax income for the federal government."


Two welfare loss areas in the diagram. They both represent loss in consumer surplus that is not transferred either to the government as tariff revenue, or to producers as producer surplus. Specifically:

• The right hand triangle is loss due to reduced consumption because of higher prices caused by the tariff. As the quantity demanded falls, these lost units are not facing tariffs and nor can the producers gain revenue from these units. In other words, the consumer surplus loss here is not replaced by producer surplus gain or government revenue gain.
• The left hand triangle is loss due to a switch to a less efficient producer. Previously, without the tariff, these units were produced by foreign producers and imported into the country. However with the tariff, the domestic producer produces these units instead. But at this point, the domestic producer has higher costs compared to the foreign producer, which get passed on to the consumers in higher prices. So the consumer loses out in terms of higher prices.

 

Again, you are talking about elastic goods. go back to chat gpt where you pulled that from and ask it what happens in a trade war when domestic manufacturing is 100% more expensive.