- Aug 6, 2012
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There is alot of fear from Americans about price increases with either Mexico or China, I don't buy it, and here is why.
In general, yes taxes from say Mexico at the border would increase prices, all things being equal and stagnant, but they aren't, the environment is changing. Americans aren't considering that Trump is going to decrease taxes and regulations to such a degree that businesses are going to save money, this will offset the tax coming into the country and it means they don't have to alter prices, if they do so it is solely out of greed, and it will backfire. My next point explains why.
With lower taxes and regulations there will be far more competition and businesses entering the market. Maybe a company importing goods made in Mexico couldn't do so before because the regulations were too costly and cumbersome to comply with, they can now. This increased competition will put downward pressure on prices and also create an environment in which businesses will have to either innovate and find better workers, or, accept smaller profit margins. Price increases, if needed, will be at a minimal.
In the end, prices might go up for citizens, but let's consider what happens when jobs were sent to Mexico to decrease costs, did the prices of vehicles go down for Americans? No. So, the theory of cost savings being passed onto the consumer didn't occur, because the entry price for vehicle production is so high and there are fewer companies to compete with.
In the end, you won't see much difference in prices. Those who don't adapt to the new environment will lose market share to competition which should be more fierce. We are seeing it already with large companies choosing to invest in America again.
God Bless America.
In general, yes taxes from say Mexico at the border would increase prices, all things being equal and stagnant, but they aren't, the environment is changing. Americans aren't considering that Trump is going to decrease taxes and regulations to such a degree that businesses are going to save money, this will offset the tax coming into the country and it means they don't have to alter prices, if they do so it is solely out of greed, and it will backfire. My next point explains why.
With lower taxes and regulations there will be far more competition and businesses entering the market. Maybe a company importing goods made in Mexico couldn't do so before because the regulations were too costly and cumbersome to comply with, they can now. This increased competition will put downward pressure on prices and also create an environment in which businesses will have to either innovate and find better workers, or, accept smaller profit margins. Price increases, if needed, will be at a minimal.
In the end, prices might go up for citizens, but let's consider what happens when jobs were sent to Mexico to decrease costs, did the prices of vehicles go down for Americans? No. So, the theory of cost savings being passed onto the consumer didn't occur, because the entry price for vehicle production is so high and there are fewer companies to compete with.
In the end, you won't see much difference in prices. Those who don't adapt to the new environment will lose market share to competition which should be more fierce. We are seeing it already with large companies choosing to invest in America again.
God Bless America.
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