CDZ How to Use Tariffs as Weapons and Not Hurt Yourself...

[Olde Europe]

Although tariffs on Mexican products would be paid by US importers, this could be Mr Trump's attempt to follow through on the border wall ...

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A tariff is a tax on imported goods. Despite what the President says, it is almost always paid directly by the importer (usually a domestic firm), and never by the exporting country.

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Also a good read on the unintended side-effects.

 

[joaquinmiller]

The recent desperate tactic of putting Mexico on notice about controlling their border with threats of tariffs raises a lot of hackles.. Congress bleating on both sides of the aisle that it is a tax on consumers and hurts us more then them...

Well certainly tariffs hurts BOTH sides. And Mexico will pay a price for being slow or lazy to get on the problem.. But it does NOT NECESSARILY NEED to hurt American consumers... Just heard on top of the hour news that Congress is concerned about how much it will cost the average American.. Should they BE concerned? Or do they just not UNDERSTAND how tariffs work? Because CERTAINLY, every dollar of those tariffs that Mexico pays goes into the Treasury.. Mexico PAYS, The US Treasury POCKETS THE MONEY. And consumers have to foot the bill.

How is that FAIR when the Treasury will just flush the Mexican cash into the General Fund with the hopeless megaflood of other debt-ridden liabilities... And LET US pay the price increases..

We're pretty ignorant suckers to fall for that scam...

Why is it that CONGRESS can't figure out how to PROTECT American consumers in this case? It's obvious how that could be done.. All they have to do is EARMARK those tariffs with a goodly portion being REBATED to every working American family..

Something like 40% to the General Fund, 20% to border security and border infrastructure, and 40% REBATED to every working, tax filing American either by tax credits for the duration of the punitive tariff measure, OR a percentage DECREASE in the FICA taxes due.. For the latter, that would flow to both workers and their employers who would also take a hit.. The 40% to the General Fund completely offsets the cost of ANY 40% rebate to American workers..

Now I'm not a fan of tariffs for ECONOMIC reasons.. That's a lose-lose dead end strategy.. But tariffs to get the attention of recalcitrant or dishonest international partners is a quick and easy to emphasize --- "this is a priority"....

And I'm AMAZED that Congress results to just WHINING about the effects, when the money is THEIRS to ameliorate the damage to their constituents.... So many analysts and talking heads and politicos and NO ONE POINTS THIS OUT??????

"Protecting consumers" eliminates the process that drives down purchases from the exporting country. Why would consumers buy fewer products from Mexico if we're going to rebate the tariff (or a portion) to them?

We don't want Americans to buy less Mexican goods. We just want the damn tariff money until they take our diplomatic requests under IMMEDIATE consideration.. That's why...

The TARIFF is the punishment for not acting... Not looking to ruin a major trading partner.. Just want their inaction to COST them something...

The tariffs don't hurt Mexico unless they drive down purchases. You completely misapprehend the situation.

See post #38... You not thinking outside the box on this.. There's REAL MONEY available from the tariffs that could be used to reimburse the American consumer...

Perhaps you can see it if you approach it from a different direction - why did the Chinese reduce, or eliminate, their soybean purchases from America? Why are US taxpayers paying additional subsidies to America farmers, due to lost sales?

 

[flacaltenn]

Perhaps you can see it if you approach it from a different direction - why did the Chinese reduce, or eliminate, their soybean purchases from America?

That was sheer retribution made possible by Communist central control.. Had no "free market" component to it.. China targeted specifically the "the Trump constituency" -- which includes MidWest farmers.

What you're relying on is -- the way things are.. Whereas I'm telling you -- the way things COULD (should) be..

Because right now, the tariffs create real cash for treasury while consumers have to survive higher pricing or change (if possible) their suppliers. So America "eats it" -- while the US Treasury walks away with a pretty penny..

That doesn't have to happen in LIMITED duration tariff levies where the object is not ECONOMIC, but merely a "diplomatic prod"... Americans should be irate that Govt scores a big cash haul AND they have to endure the increased pricing..

If you want to use a temporary tariff as a weapon -- you should make it clear to the consumer that the govt is gonna help alleviate that pain with SHARING their "windfall" tariff profit...

 

[flacaltenn]

Although tariffs on Mexican products would be paid by US importers,

You keep asserting this, but technically you're wrong.. Tariffs are paid at the border by the SHIPPER of those goods... NOT by US importers...

You're still describing -- "the way things are" -- not what I'm proposing. Under the way things are, the Mexican supplier might raise prices by some fraction of the tariff (up to 100%) in order to keep the market in the U.S -- and US consumers would have to chose whether to PAY that difference. While the Treasury just slinks away with the REAL tariff cash.. Wouldn't be US importers, distributors and retailers that get the screws.. They'd pass along that price increase to the consumers.

So govt decides to put the screws to Mexico, walks out of it with MORE cash and US consumers take it in the shorts...

My proposal is to direct that cash BACK to consumers (and possibly employers) while this stand-off lasts.

Wouldn't work with Chinese goods for 2 reasons.. THOSE goods come in UNDERPRICED and the US importers, distributors, wholesalers get a huge bonanza.. While our trade with Mexico is more focused and they do not dominant so many markets -- flooding them with undervalued goods. Trade with Mexico is on far more slim margins than with China..

The 2nd reason is -- our beef with China is not temporary, nor is it a "fair market". Because consumers have very little choice in terms of alternatives now that we've lost so many critical domestic supply chains.. So the object of using tariffs temporarily with China is to get THEM to lower THEIR tariff and regulation barriers to US trade coming INTO China.. This also is NOT the problem with Mexico which is pretty fair about receiving US goods..

 

[joaquinmiller]

Perhaps you can see it if you approach it from a different direction - why did the Chinese reduce, or eliminate, their soybean purchases from America?

That was sheer retribution made possible by Communist central control.. Had no "free market" component to it.. China targeted specifically the "the Trump constituency" -- which includes MidWest farmers.

What you're relying on is -- the way things are.. Whereas I'm telling you -- the way things COULD (should) be..

Because right now, the tariffs create real cash for treasury while consumers have to survive higher pricing or change (if possible) their suppliers. So America "eats it" -- while the US Treasury walks away with a pretty penny..

That doesn't have to happen in LIMITED duration tariff levies where the object is not ECONOMIC, but merely a "diplomatic prod"... Americans should be irate that Govt scores a big cash haul AND they have to endure the increased pricing..

If you want to use a temporary tariff as a weapon -- you should make it clear to the consumer that the govt is gonna help alleviate that pain with SHARING their "windfall" tariff profit...

Get a grip. Retaliatory tariffs imposed by the Chinese reduced farm exports from America, as they were intended to do. You're talking gibberish - "So America "eats it" -- while the US Treasury walks away with a pretty penny." The US Treasury is America, and it's AmericanS who eat it.

 

[ABikerSailor]

Well, according to the news, Trump is already claiming that his tariff threats are working. However, I'm guessing that he's gonna claim victory (where there is none) because he doesn't want to piss off the GOP who are telling him that these tariffs are a bad idea.

And, while the companies (either export or import, but I'm guessing the tariffs are paid by the importing company) might end up paying the tariffs to the government initially, those additional costs incurred will simply be passed on to the consumer. There is no way in hell that companies are going to take the hit themselves.