Words of Advice:

"If Something Seems To Be Too Good To Be True, It's Best To Shoot It, Just In Case." -- Fiona Glenanne

"
Flying the Airplane is More Important than Radioing Your Plight to a Person on the Ground Who is Incapable of Understanding or Doing Anything About It." -- Unknown

"There seems to be almost no problem that Congress cannot, by diligent efforts and careful legislative drafting, make ten times worse." -- Me

"What the hell is an `Aluminum Falcon'?" -- Emperor Palpatine

"Eck!" -- George the Cat

Sunday, February 17, 2019

How Tariffs Work, or Proof That Trump is a Moron

This is an example:

I am in Country J, you are in country M. I make widgets, which I sell for a buck apiece, FOB the port of export. You want to buy a million widgets. Your company assesses a 25% tariff on widgets from Country J.

You buy a million widgets and pay me $1,000,000. I send a container of widgets to the port, where they are loaded onto a ship and sent to your port of import. At Customs, the tariff is assessed. So you have to pay $250,000 to Customs for them to release the widgets.

The gizmo that you make uses ten widgets apiece. Since the materials cost of ten widgets has gone up $2.50, you pass that cost to the wholesalers, who pass it along to the retailers, who then raise the price of the gizmo.

Who pays Customs the quarter-mil? Not me. Your import agent does, which means you do. Ultimately, the consumers in Country M, your end-use customers, pay it.

That's how tariffs work. So, with that basic lesson in mind, let's take a look at one of Trump's tweets:


Trump has no idea of how tariffs work, despite the dead-nuts certainty that members of his economic team have tried to explain it to him. He's got tariffs stuck in his mind and no explanation of the facts will dent his dementia-addled brain.

13 comments:

B said...

Nice.

You forgot the unfair trade practices.

And the fact that China makes it difficult to sell USA made products in their country. Subsidizes some manufacturing to keep people working, even selling below cost of materials.

And the fact that the tariffs also make the same widget, made in the US more competitive...and that makes for jobs in this country. But that doesn't matter to leftists, does it?

It's not a simple as you seem to think it is. But hey, Trump, so it must be bad...
If China would play fair, then there'd be no need for Tariffs. But they don't.

At least Trump is trying to keep jobs and manufacturing here in the US. Unlike others.

Comrade Misfit said...

You are missing the entire point of the post, B, which is this:

TRUMP DOES NOT KNOW HOW TARIFFS WORK.

Or he does, and he is deliberately lying to his base, because he believes they are really stupid.

I said nothing in the post as to whether tariffs are a bad policy or a good one. So your comment is pretty much a non-sequitur.

CenterPuke88 said...

Comrade, it’s simply “whataboutism” at its finest. Try to reframe the question and topic to avoid your candidates failures.

Eck! said...

B,

If you want to place a penalty in the product from a "bad" source
there are other means more effective like import restrictions so that
the bad source is impaired in the actual import and sale. You can
remove it from the market totally when required.


Tariffs are import fee (tax) added to make the consumer shy away from
the source more expensive. They rarely work as often its a sole
sourced item or the cost (or supply) of an alternate source is
restrictive. The source can further lower the price to gain advantage
at the expense of profit. So you and I get to pay an additional tax.

The problem of either stems from the fact we don't make much here any
more and whats made is often from imported materials. So the the import restrictions and tariffs you pay more for essential items and optional
ones.

Its not much to it really in the end the customer/consumer pays more
or does without.

Eck!


dinthebeast said...

But that is how he wishes tariffs worked, so he will act like they work that way.
His adoring fans will not care, as they are addicted to the lies they consume anyway, and it will just feel normal to them.
The world at large does not care about his delusions, though, and will continue eating his lunch, which would be more amusing if it were not our lunch as well.

-Doug in Oakland

B said...

Comrade:

Please explain further....Or was this just Trump bashing?

You made a statement. Apparently I am too stupid to understand it.

What makes you believe that Donnie doesn't understand Tariffs?

(Beside the childish writing...which is cute...)

bmq215 said...

B, it's pretty simple. You tried to argue with Comrade about the end effect (i.e. does it ultimately benefit US manufacturers and create jobs) but did not argue with her main point - that tariffs are passed on to the consumers in the form of increased prices. In fact, these increased prices seem to be at the core of your argument, that consumers may switch to products from other (US?) manufacturers where available because their prices will be more competitive.

Trump's tweet says "Billions of dollars are being paid to the US by China in the form of trade tariffs!".

Both you and Comrade seem to be in agreement that this is not true. Comrade's point is that the "billions of dollars" ultimately comes out of the pockets of Americans, yours is the same with the addendum that you believe the "billions" will decrease as American manufacturers spin up their operation.

So Trump's statement is at odds with your apparent understanding of tariffs (which I happen agree with as well). Therefore it's entirely fair to assert that "Donnie doesn't understand Tariffs" based on that tweeted statement.

Comrade Misfit said...

B,

What makes you believe that Donnie doesn't understand Tariffs?

Because he said "Billions of dollars are being paid to the United States by China in the form of trade tariffs." That is not true. So either Trump does not understand how tariffs work or he is saying a big lie to his supporters.

Which is it?

B said...

Ah, I see what you mean.

My bad. I missed your point.

Comrade Misfit said...

It’s all good, B. You’re a gentleman.

Comrade Misfit said...

By the way, the writing of Trump’s tweets is via an extension to Firefox and Chrome: Make Trump Tweet Eight Again.

B said...

Not sure I am a gentleman. Just treat people as I would like to be treated.

Doug T. said...

You'd make Dr. Mac proud.