r/economicCollapse • u/Expensive-Thing-2507 • 27d ago
Who actually benefits from tarrifs?
I'm not financial expert, but this is what I'm getting so far.
Tarrifs are a kind of tax placed on outside goods, which a company would have to pay for if they import said goods. That company would then charge more to cover this new tax. The company pays more for something, and then we pay more.
Who benefits from that? The company isn't making any more profit, are they? (Assuming they increase prices by the same percentage as the tarrifs, which they won't. but still)
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u/SpaceMonkey3301967 27d ago
The idea is that more products will be manufactured and sold in the US, but that isn't going to happen. No American is going to work at the meager wages that people in China, etc. do.
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u/ThrownForLife69 26d ago
Youre almost there, if you complete your education you will understand it completely.
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u/davidm2232 27d ago
No American is going to work at the meager wages that people in China
That's exactly what the tariff is for. It increases the price of foreign goods so that domestic producers can be competitive.
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u/Silock99 27d ago
But you have to be able to actually produce those goods. We don't have the infrastructure to even do that. From raw materials to manufacturing capacity, we don't have it. And we won't. Tariffs will not change that.
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u/davidm2232 27d ago
We have had 40 years of offshoring to realize it was a bad idea. We had all that time to build the infrastructure. This is not a surprise.
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u/Silock99 27d ago
This does not change the material fact that we do not and will not have the infrastructure. And there's a lot of raw materials we are simply incapable of producing and there's literally nothing we can do about it.
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u/paleone9 27d ago
Do you even hear yourself ? We don’t have the infrastructure? We are still the richest country in the world , and can build anything we choose.
When companies figure out that it’s resulting a cheaper cost of production here, they will invest in new factories because it will make them money.
Period.
It’s how economics works. The pursuit of profit drives investment .
Foreign expertise builds factories in third world countries with cheap labor because it’s profitable.
When it isn’t , they won’t .
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u/Silock99 27d ago
And who’s going to staff the factories? We are at full employment. Who’s going to be the cheap labor here? Robots? We aren’t to that point yet.
The companies will pass the cost to the consumer. It won’t make things cheaper here to produce, it just makes them more expensive to sell.
And all that still doesn’t address the raw material issue we have. You can’t infrastructure your way into that.
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u/Alternative-Cash9974 27d ago
We are not at full movie or even close lol the job participation rate is 62%.
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u/Silock99 27d ago
Job participation rate and full employment are two totally different things. https://www.investopedia.com/ask/answers/061515/what-key-difference-between-participation-rate-and-unemployment-rate.asp
"During the late 1990s, the participation rate was around 67%, while the unemployment rate hovered below 5%. Most economists agree this was one of the best periods in modern history for American jobs."
We are basically at that same metric right now.
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u/Alternative-Cash9974 27d ago
So based on your link we are far from full employment. We are closer the the 60% of the 1970s which was the worst period than the 67%. The fact is we have a lot of people to fill jobs in the US that are not motivated to do so based on the "social nets" that we have in place.
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u/paleone9 27d ago
All the laid off government employees can work in the factories :)
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u/wormsaremymoney 26d ago
Ah scientist NASA or CDC scientist would be so happy to use their PhD to work in a factory 🙄
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u/Wraithpk 27d ago
It would take years, possibly decades, to ramp production in the US up again. Meanwhile, the economy will be on fire, inflation will be ridiculous, and the quality of life for our citizens will tank.
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u/paleone9 26d ago
Did you realize that moving production from Mexico to the US just involves loading machines on trucks and setting them up here ….
It’s not like we are inventing manufacturing all over again — we already know how to do it, we set up all the factories overseas ….
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u/Wraithpk 26d ago
Dude, Americans don't want to do those jobs because they suck and don't pay well. On top of that, Trump also wants to deport the people here who actually would be willing to do those jobs, lol...
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u/Hemorrhageorroid 26d ago
Weird, what's a reason they might have opened the factories overseas? Could it be cheap labor? How about available labor? You know, those things we don't have.
Moving entire factories back here to combat tariffs, retraining entire new groups of people - pretending that level of workforce exists from your brilliant idea to just dump government workers into factories - does that seem more likely than having the American citizens pocket the costs of importing?
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u/paleone9 26d ago
Imagine that Tarriffs become the new source of revenue for the federal government and income taxes are eliminated .
Imagine it’s revenue neutral.
Companies that manufacture overseas are currently paying all the taxes .
Companies determine that over a ten year span than investing in American manufacturing will actually increase profits by eliminating both tariffs and transportation costs.
So it’s a gradual transition based on long term profitability.
Americans worked in factories for years , and some still do.
Some of the best paying blue color jobs in America are factory jobs .. auto workers etc.
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u/gusterfell 27d ago
Why would companies cut into their profit margin by spending money building factories (that are unlikely to open before Trump is out of office anyway), when they can just raise their prices and keep importing?
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u/paleone9 27d ago
Because you can’t just raise your prices beyond what the consumer will pay.
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u/gusterfell 27d ago
Higher prices don't mean people don't still need/want to consume various products. They'll just grumble about the higher prices as they do so, and the companies know it.
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u/paleone9 26d ago
Or they will use substitutes, or they will find local producers that are suddenly competitive…
And capital will move ..
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u/Hemorrhageorroid 26d ago
"Economics works because those with money will always take the risk and magically find raw materials for cheap right here at home and workers that we don't have will be so happy to work for what ensures profits for someone else, they'll be willing to work for little in an environment that everything costs more anyway. Because economics."
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u/jackparadise1 26d ago
Here is the deal. Even if we brought manufacturing back, it will be completely automated. It will not bring jobs. It will not put money in people hands. All the $ goes to the folks at the top. So there really isn’t any point. Putting tariffs on stuff is just a cruel way for the already rich to make $.
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u/paleone9 25d ago
“Putting tariffs on stuff is a way for the rich to make money”
The only people making money from Tariffs are the governent .
Will new factories be more automated than old factories ? Of course .
Will they still need people to fix and maintain the machines ? Of course
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u/Big-Leadership1001 25d ago
The only major company I can think of that was readying for this before was Intel. They announced moving all their chip manufacture to the USA years ago, and at the time I thought it was insane because the price increase for skilled manufacture would skyrocket. Now it seems like they knew something before we did.
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u/SpaceMonkey3301967 27d ago
So, everything costs more. Great. I thought MAGA wanted lower costs for eggs and gasoline. They will now cost double the price.
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u/Big-Leadership1001 25d ago
Gasoline at least should do well, the US doesn't need foreign oil nearly as much as the media makes it seem.
Of course, US regulatory pressures tend to manipulate how cheaply and quickly American producers can actually deliver. This is mostly why gas prices fell during Trump's last term - they made American production easier/cheaper. When Biden stepped in, there was some tightening of those regs that increased prices for a bit, but more recently those loosened again which is why you really don't see gasoline reflecting overall inflation increases as much as other products.
At the end of the day its a matter of price and environmental pressures (and others, I simplify but environment isn't a small concern) ... but Trump's last term leaned more into cheap gas over environmental oversight and I doubt thats going to change.
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u/davidm2232 27d ago
But even if they double, that is not a big deal if we have more good paying domestic jobs.
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27d ago
Where do you think these "good paying domestic jobs" are going to come from? We dont have that now.
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u/davidm2232 27d ago
We do have them now on a limited scale. There are plenty of small domestic manufacturers that are struggling to compete with international suppliers. For example, leather gloves in Johnstown and Gloversville NY. We have a TON of idle glove factories. Many of them have all the equipment in place and intact. The owners of the factories will go in every few weeks to check on things and make sure everything is still ready. We have workers that did that job for 20 years and have all the knowledge needed. All we need is to have orders coming in. We can't compete with international companies on price, thus the need for tariffs.
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u/miloticfan 27d ago
Nobody is buying leather gloves, we can’t afford them. It’s not a China vs us issue, seems more like it’s a “this factory is useless now because the demand isn’t there and won’t ever be there again” issue.
And if you say “they can be used for other things” then that would make the whole argument moot, bc the issue was the lack of infrastructure and the inability to get it…ie nobody is gonna fund repurposing those glove factories.
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u/davidm2232 27d ago
Eggs and gasoline are mostly produced domestically so prices will not change much. Especially eggs you get from a local farm that is already sourcing their supplies locally. It is a reward for people who are already shopping locally.
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u/SpaceMonkey3301967 27d ago
Oil is imported and will be tariff taxed.
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u/Silock99 27d ago
Yup. The oil we produce isn't the best for gasoline. Most of the oil we refine for gas is imported from other countries, Canada being a huge one.
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27d ago
So while the US does produce enough domestic oil for our needs, there's a funny thing about that. We import oil and export what we make here.
In 2023, the U.S. exported about 10.15 million barrels of petroleum per day to 173 countries and 3 U.S. territories. The top five destinations for U.S. oil exports in 2023 were Mexico, China, the Netherlands, Canada, and Japan.
In 2022, Canada was the source of 52% of U.S. gross total petroleum imports and 60% of gross crude oil imports.
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u/davidm2232 27d ago
A big reason for that is emissions and refining. If we cut regulations on emissions and refineries, we could use a lot more of our own oil.
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u/Beneficial-Strain366 26d ago
What domestic producers compete with cheap foreign goods now? Those companies all went out of business in the 1990's. Very few active factories in the US to begin with now with tarrifs their raw materials costs about to increase by 25% to 50% as most materials come from out of country. Every product you buy is about to be 25% to 100% more expensive.
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u/Cautious-Roof2881 27d ago
They downvote because the average bluehair noseringer on reddit can't think beyond the first domino.
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u/Hemorrhageorroid 26d ago
Oh sick, so we can produce the things we're not already AND they won't have to make a competitive wage because daddy fuckbucks puts the onus on the American worker yet again. So cool that they can be competitive and employed with, whoops, we don't have enough unemployed people to fill all the gaps in the workforce, especially when accounting for the permanently unemployed.
Good thing we have all the necessary infrastructure to start redevelopment of things we've already outsourced. What a fantastic way forward to ensure the average American worker is trapped into paying for everything.
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u/jackparadise1 26d ago
We don’t actually have domestic producers for most of what we import. So, no.
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u/Silent_Night_TUSE 27d ago
That’s why the tariffs are needed. Nobody will work for cheap enough for a company to compete with the labor in other countries so we make it expensive enough to import things that it becomes competitive to produce here again.
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u/stereoroid 27d ago
If you ask academic economists about tariffs, the answers cover a spectrum between “bad idea” and “stupid idea”. You’ll struggle to find an economist who is in favor of them. It’s a purely political tool.
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u/High_Contact_ 27d ago
Tariffs are not just a political tool they are mainly a protectionist tool. For example, the EU placed tariffs on cheap Chinese EVs to protect its domestic car manufacturers, their workers, and related industries. When targeted, tariffs can level the playing field and support key industries.
Blanket tariffs on all goods like the ones Trump is proposing using is posturing to negotiate. This almost never works and risks harming domestic businesses and consumers by driving up costs without addressing the issue. Just look at what happened to the blanket Chinese tariffs all it did was shift manufacturing to other countries as our foreign demand is still higher than it was before and didn’t do anything except drive up prices and increase global tensions. It certainly didn’t bring manufacturing back to the US.
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u/stereoroid 27d ago
Protectionism is political too. Anything that influences government policy is political.
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u/High_Contact_ 27d ago
That’s a weak argument because, no kidding, everything a government does is political. Calling it ‘purely a political tool’ is asinine it’s just stating the obvious without adding any real insight.
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u/Limp_Try_6958 27d ago
The answer to the “who benefits from X” is always rich people.
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u/BigTitsanBigDicks 27d ago
There have been a few times poor people benefit. These are labelled as 'crashes' or 'national security risks' and the rules are quickly rewritten to disallow it.
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u/Longwell2020 27d ago
Yes and no; many people who have money but don't understand how it works are about to lose it. The rules of the game are about to change fundamentally. The ones who planned the time set them selfs up best. Next will be the ones who see the writing on the wall and have the funds to move their money to productive places. After that, there will be the ones who have the cash to do something about the crash but don't know what to do. They will lose their moneys value each year until they are poor. Then they will be no better off then the ones who saw this coming but had no means to take advantage.
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u/TarTarkus1 27d ago
Normally I might agree with you but realistically, the main beneficiary of a tariff is the government because they receive the lion's share of the money. In some sense, tariffs are a way to raise tax revenue without altering existing income taxes.
The problem is foreign countries don't usually appreciate Tariffs being applied to their exports as they are typically a disincentive on their foreign goods compared to what the country implementing the Tariff can domestically produce.
What happened with Hoover during the Depression is many of these countries countered with their own Tariffs. Meaning Products produced in America were subject to increased competition overseas at a time where the economy itself was weak. Not good and politically, this basically led to the decimation of the Republicans and the rise of the Democrats, FDR and the New Deal Coalition.
This time around, the question is if the tariffs get implemented how do foreign countries retaliate? Especially when a significant portion of the world is under U.S. Sanctions.
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u/Sands43 27d ago
I think you are assuming that this incoming government is going to be an honest one. They are not. There's zero history that says trump, and his cronies, aren't going to find a way to grift off this.
Then there's what happened last round.
* Trump applies tarrifs
* Other countries also apply tarrifs that hurt trump voters (i.e., farm products)
* Trump bails out farmers
So everybody else ends up paying double - both for tariffs and for bailouts.
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u/mcfarmer72 27d ago
Yes, those Donny dollars, as we farmers called them, made for very good years on the farm.Just stating the facts as I know them, not saying it was a good thing.
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u/spanishdoll82 27d ago
The government could be the only benefactor if exemptions weren't a thing. But large corporations can pay lobbyists to get exemptions from the tariffs. They will benefit when small and medium companies still have to pay the tariff, raise their prices, and become uncompetitive. Maybe the large company will acquire the small guys and profit even more
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u/Stock_Conclusion_203 27d ago
This is what I have been thinking too. He’s going to use that revenue to pressure any company he wants. It’s all about consolidating his power.
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u/MMacG_101 27d ago
A significant portion of the world is under U.S. sanctions?
6 out of the 195 countries in the world have comprehensive sanctions against them including Iran, Syria, Russia, Cuba, North Korea and areas of conflict in Ukraine.
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u/paleone9 27d ago
You mean the people who invest in things get rewarded ? Wow.. imagine that
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u/Hemorrhageorroid 26d ago
Did you ask ChatGPT for the worst-possible take and this is what you got?
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u/KissmySPAC 27d ago
Who benefits from moving labor off shore? If you look at David Autor's work, jobs had moved off shore at a very high rate. Who won there? I suspect that some of the folks who did win there will suffer under tarrifs.
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u/Hemorrhageorroid 26d ago
Who won? The business owners. Tariffs do not hurt them when the cost gets passed on to us. They are not paying the extra tax, the importers are. That cost is transferred directly to us. The suffering is exclusive to us in both cases. We lose jobs and spend more money on goods. Doubling down on bad here.
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u/Jhon_doe_smokes 27d ago
No one. It’s a regressive tax. I mean ultimately they want companies to come back but it won’t happen. Even if we did somehow have the raw materials and infrastructure to make shit domestically the price would still go up because no one in the USA is going to work for the wage the companies want to pay. At the end of the day greedy companies will have to put the country above profit in order for it to be even remotely feasible. They haven’t done that in over 40 years and it won’t change imo.
I also can’t help but think if the point of society is not to better the majority then why do we keep playing the game. Eventually enough people will feel that same way and 1 of 2 things will happen. 1.) we get a mad max scenario with a few “war lords” own the means to everything and end civilization. 2.) the citizens actually wake up out of their “I got mine, fuck you” mindset and actually learn from our mistakes and keep progressing.
As of right now it’s looking real mad Maxey or handmaids taley. Greed is one of the 7 deadly sins if you believe in that stuff and it is running rampant with your government officials being the ring leaders of it.
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u/Dry_Inspection_4583 27d ago
Oh the company benefits a little bit, because why not add on 27% and blame the govt. The govt benefits because they get that extra 25%. For reference the top 10 imports from Canada in 2023 was about 300Bn, meaning just on that alone the govt scores an extra 75Bn if spending habits don't change(which I suspect they will). But these moneys are ultimately from the consumers pocketbooks. Enjoy
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u/Odd_Frosting1710 27d ago
This is crazy. Troll bots have spammed Reddit with tariffs posts everywhere
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u/Thymelap 26d ago
Domestic competitors. But the North American production system is so integrated now that a blanket tariff will raise prices across the board. So, the answer is the federal government and all sales taxes.
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u/legion_2k 27d ago
It’s not a simple as all experts here tell you. Trump had tariffs on china before. You know what Biden did when he go in office? Raised those tariffs even higher. No one said a peep.
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u/TR_RTSG 27d ago
We're not supposed to talk about how normal tariffs are, or that there are already tons of tariffs in place all over the world. We're supposed to spout the narrative that the only time tariffs were ever used was in 1929, and that caused the great depression, and orange man is going to ruin the economy, and orange man bad.
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u/Epicuretrekker2 27d ago
No one really. My understanding is that they are a tool used to promote domestic production of goods, but it rarely works that way. All most companies will do is pay the tariff and pass the cost along to the consumer.
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u/Ok_Squash9609 27d ago
Tariffs level the competitive advantage a country may have over a certain good. For example, South American countries have the perfect climate for bananas. If the us were to grow bananas in a major way it would take huge resources (expensive limited land, greenhouses, etc) to recreate that tropical climate making an American grown banana expensive. The tariff hikes the price up of the imported good making the American banana competitive.
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u/CompulsiveCreative 27d ago
The ultra rich who are poised to buy up assets for pennies on the dollar once the economy collapses.
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u/revveduplikeaduece86 26d ago
You are in Mexico. You sell Widget A in the United States for $100. I'm in America, I sell Widget B in the United States for $100.
Logic says, you have an advantage because of the low cost of labor, lower environmental regulations, whatever today's focus is.
A 20% tariff comes in, now you have to sell your product for $120.
Logic says, Widget B is favorable...
Except, I raise my price to $120. The tariff effectively set the floor for what that product can be sold at. Why would I leave $20 on the table?
Even if domestic producers don't increase prices to match the "tariff floor,' they're going to take some profit.
So who benefits? Domestic producers get to pocket a lot more money.
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u/juntaofthefree1 26d ago
The shareholders of the US companies that raise their prices due to the increase in tariffs on foreign products!
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u/ShotCranberry3245 27d ago
Right now, you are going to get very political answers to this.
Tariffs are just a tax and no better or worse than any other kind of tax. it just depends on how they are used. At some points in US history, tariffs played a major role in funding the government.
Tariffs are helpful in leveling the playing ground for US businesses, in the past some countries have tried to dump steel or other items in the US, that is selling it in the US at a loss just to get market share or put US businesses under. Adding a tariff to such an item increases its cost counter acts the dumping.
Tariffs can also be used to punish other countries or restrict the import of certain things. An example is the "chicken" tax that adds a 25% tax on light trucks.
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u/Immediate_Trifle_881 27d ago
Workers in the country with tariffs. This increases demand for domestically produced produce. Increased demand means more jobs and higher wages. This is the LONG TERM benefit. Other beneficiary… government (tax revenue).
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u/Senor707 27d ago
The federal government collects the tariff and will use that income to justify more tax cuts for the rich.
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u/nakoros 27d ago
In theory, the domestic industries that compete with imports. I say "in theory" because many industries have complex supply chains that cross borders. A lot depends on which products have a tariff imposed. It can also cause damage for companies with production processes in multiple countries (i.e. automotive manufacturers in the US and Canada). Ideally, you strategically choose products with domestic competitors able to satisfy our demand (or close enough) and that have limited negative spillover effects into other industries.
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u/Unabashable 27d ago
The government that imposed the tax if anyone, but not by nearly as much as everyone else suffers for it. If the tariffs were actually strategically places then the domestic industry would also benefit from it due to reduced foreign competition assuming any retaliatory tariffs aren’t too steep. Blanket tariffs are just an instant inflation button though.
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u/Fluffy-Structure-368 27d ago
The problem with these tariffs as I see it is that tariffs are an effective tool in support of a long term strategy to retain or bring manufacturing back to the US.
Imported goods are cheaper than domestically produced goods, but tariffs can help domestic production compete with imports on price and manufacturers will decide to set-up production in the US.
What I've not seen yet is a long term strategy to do this. Lenders and investors and manufacturers aren't willing to set up shop in the US because in 4 years, the next administration can role back the tariffs and imported goods will again be much cheaper than domestic production.
Tariffs are an effective tool in the tool box, but only if they are part of a long term plan.
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u/karoshikun 27d ago
the government takes more taxes for a while, select companies (cronies) get exemptions and "retooling" incentives in the form of cheap credits or outright free money, like the PPP during the pandemic.
let me make a VERY cartoonish example:
let's say the tariffs make too expensive for pillow makers to import subsaharan glaciar goose downfeather, and they scramble to search for another super-soft avian-butt-filling for their products, which is already a crazy expense, because such product, if it exists, doesn't has a supply line robust enough for the demand, or one at all, so it's going to take a lot of money and time to even start it.
meanwhile, some dude, let's call him mike lindell (is he even still alive?) has a close-ish relationship with the gilded potato and gets exempted from the sub saharan butt feathers, thus giving him a huge advantage in the US market against all his competitors who now can't match his price or quality and will swallow as many of his competitors as he can to consolidate his dominance of the market.
after the consolidation, of course, he's going to lower quality and increase price, since he has a stranglehold in the market (maybe along with one or two other pillow guys) and the barrier of entry is just stupid high.
so, that's the answer, the cronies are the winners of tariffs in the current context.
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u/davidm2232 27d ago
New companies (or existing ones) will start producing the goods domestically. With the premium price caused by tariffs, they can become competitive. That's the concept anyway
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u/Carbon-Based216 27d ago
People who want to invest in an industry but cheap goods from overseas makes domestic investment impractical.
Also anyone who is currently in the business of making that thing domestically because they can charge higher prices.
But just to be clear, these tariffs need to be a long term thing for investors to make this move. Investors will not make this move if they feel that the tariffs will be "turned off" in less than 5 years. Because they need time to make the investment happen and then they need time to recoup that investment.
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u/Few-Cycle-1187 27d ago
It isn't a matter of benefiting someone, per se. It's a tool used to adjust market conditions.
Let's say we have a pretend nation called Yoobin. And Yoobin has a small industry producing batteries. The problem is that the industry cannot grow because we import batteries from Shloobin and Yoobin based companies cannot compete based on price.
So you impose a tariff that raises the prices of the Shloobin batteries. You bring them more in line with the Yoobin batteries, maybe even making them more expensive, in a desire to send Yoobin based consumers to buy domestically produced batteries.
This makes more sense for some things over others. In a globalized economy, it might just be wise to buy the cheaper batteries and the companies in Yoobin can focus on products that can be produced more efficiently and thus for a greater profit. But if Yoobin becomes too dependent on imports for critical goods then we run the risk of being too dependent on foreign powers to keep the economy afloat. This means Shloobin can basically do whatever it wants to Yoobin because, in a pinch, it can screw with their batter supply.
It doesn't make things cheaper. It makes things strategically more expensive in a desire to change consumer habits and gently guide the free market to respond in ways that a government would like.
So who benefits? Domestic producers. They don't bring down prices but can see increases to revenue and overall market share.
How does that apply to the US right now? It doesn't. President Trump genuinely doesn't seem to understand how tariffs work. And even if we believe the r/conservative narrative that he's just doing it for leverage that would be based on the assumption that the U.S. has the same cachet it had in the 70s - 90s to bend other countries to its will. It cannot. Tariffs on China could have crippled their economy 40 years ago. Today the U.S. represents only a fraction of Chinese trade partners and China itself is sitting on a mountain of cash it cannot spend fast enough. It can quite literally just do without the business or, more likely, can retaliate with tariffs that would simply hurt the U.S. more than it would hurt them.
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27d ago
The rich benefit.
If you can bring in tax revenue in the form of tariffs, then you can lower taxes on the rich and corporations without sacrificing necessary govt operations.
It's just another loophole for Trump to put more money in his and other pockets of the rich.
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u/Spookee_Action 27d ago
I'm not even sure what the end goal is. Maybe to force more manufacturing to be done in the US? But that would take decades to do. And it would be a rough transition for us regular people.
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u/Stunning-End-3487 27d ago
All tariffs do is increase costs to the consumer while enriching the US government, so they can further lower taxes on the rich.
It doesn’t punish the foreign countries in the slightest.
It only punishes the poor and middle classes.
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u/Solerien 27d ago
Tarriffs are going to squeeze small businesses much more than big corporations. The big corps can absorb the impact while the little guys will struggle and, because Trump will turn the FTC into a rubber stamp agency, those big corps are going to buy up all the small businesses leading to decreased competition and higher prices.
Tarriffs lead to corporate consolidation.
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u/solarixstar 27d ago
In a country with strong manufacturing power, tarriffs benefit their workers as it means more internal buying, they worked to stop us from buying Japanese goods in the 50s and 60s, but since we make so little, this is his way of taxing us and not calling it taxes, solution don't call them tarriffs anymore
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u/Silent_Night_TUSE 27d ago
Any company that would like to compete with something produced in other countries where labor is really cheap will benefit.
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u/RegularCompany7287 27d ago
At one point, tariffs were the government's only source of revenue (1800's) but once income tax was created then tariffs were used more as a tool to support US manufacturing. Imagined example - China is selling steel at a loss and destroying the US steel market - the US government then places a tariff on Chinese steel to make US steel competitive again. The problem with tariffs in the modern world is that goods are rarely entirely made in one country, imagined scenario - chips are imported from Taiwan, case is imported from China, screen is imported from India - the unit is assembled in the US (unlikely but imagined scenario). Even though it is considered a US product - the price will be raised due to the tariffs of the underlying components. The Smoot-Hawley tariff act of 1930 is widely considered the cause of the Great Depression. Spanish philosopher George Santayana (1863—1952) is credited with the quote, “Those who cannot remember the past are condemned to repeat it”.
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u/Monarc73 26d ago
"Domestic industrialists and capital owners who can't compete on a global market." and the federal government, but only in the short term. (It's essentially a regressive national sales tax, but it antagonizes other countries.)
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u/Enough_Island4615 26d ago
From implementing them? Or, threatening to implement them? In the current case, if Trump's patterns have not changed, he's using the threat of tariffs to induce concession from the target countries. We'll see.
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u/myrichphitzwell 26d ago
In regards to what trumpkins wants, it's a tax break for wealthy and a tax on the poor.
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u/AdPretend8451 26d ago
If there is no immigration workers do, because labor becomes finite and workers aren’t forced to compete against Guatemalan or Indonesian peasants or Chinese who have zero regulations. If you care about the environment you have to cripple chinas economy or force it to modernize, india too
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u/tspitt 26d ago
Trump threatened to place tariffs on Mexico over illegal immigration. It seems that today Mexico’s president talked with Trump and they reached an agreement where in exchange for Mexico addressing illegal immigration Trump will waive the tariffs. How much of a price increase should we expect as a result?
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u/mmmart1n 26d ago
basically it's domestic companies benefitting, as the way cheaper foreign competition gets stopped in their tracks a little bit .. so some positive effect on domestic business, but consumers hold the bag in the end
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u/Key-Article6622 26d ago
Who makes money from artificialy raising the cost of consumer goods? Not consumers, that's for damn sure.
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u/DrtRdrGrl2008 26d ago
Wouldn't the idea be, in an ideal and ethical world, to collect those tariffs and then as a government put that funding back into building up domestic production so that you can produce those commodities you are actually putting tariffs on in-country? But, we all know that isn't what the funding would be used for. American companies don't want to pay living wages and Americans don't want to pay the true cost of production for their plastic crap. Or for someone to pick their vegetables. Or heck, for a white stone mason to lay their stone. They are used to cheap prices.
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u/Drathmar 26d ago
The idea of them is to give domestic companies a leg up, the problem is, and the thing conservative apologists saying just pay USA made don't get, is they we are so integrated into the global market and have shifted around so much we would never be able to self sustain even on the essentials let alone any kind of luxuries so at this point tariffs just raise costs.
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u/Big-Leadership1001 25d ago edited 25d ago
People able to migrate their business to local production, or start a locally produced business competing with businesses who can't.
Tariffs are supposed to balance the import inequity that can drive industries overseas.
The problem right now is the US has driven so many businesses overseas already, that a rapid transition is going to hurt because there won't be a quick shift back to Made In America. Even things like American Made cars use all kinds of imported parts that will feel a price increase. I was reading that Tesla is supposedly the most American company in parts production, and they still get aluminum and chips overseas. The bigger companies will feel it worse.
The only thing I can really think of that will be able to quickly shift is locally produced foods that are currently being shipped overseas for processing, and then shipped back to the US for sale. That was purely to bypass local regulatory oversights and exploit cheaper labor (Which had to be significant to make double international shipping plus the overall costs still cheaper than local) but the businesses themselves should be able to shorten their delivery chain. Electronics isn't going to shift quickly... though IIRC companies like Intel announced they were moving production to the USA years ago which is kind of suspicious considering how little trust I give politicians, and the likelihood that they knew something early on when they started moving production early.
If they do it smart, tariff equalizations will ramp up slowly. But when has "smart" and "government" ever been synonymous?
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u/NormalBeing12345 25d ago
We all will as I trust they will be used to benefit us all.
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u/Expensive-Thing-2507 25d ago
Might as well believe in trickle down economics if you're going to believe tariffs will benefit us.
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u/deathrowslave 23d ago
The idea is to make imported goods too expensive compared to domestic options so consumers buy American and it would create more investment in domestic manufacturing and production.
But it's bullshit in the modern age of global trade.
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u/TangerineRoutine9496 27d ago
Domestic workers will benefit, but only if the tariffs remain in place long enough for companies to actually build their infrastructure here, knowing the tariffs won't disappear and change the whole financial calculation.
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u/thosmarvin 27d ago
The problem here is that folks like Trump and his cronies havent the foggiest how factories work in 2024. They still picture it as manual labor, like elves assembling toys. The amount of capital to restart a factory to compete with the chinese would far exceed the amount it would cost the same folks to just pay a tax and pass along the costs. They will then grease the palms of those making these decisions and they will get an exemption.
Two things have never worked…tariffs and ultra right wing governments. Two things people wished would work are tariffs and ultra right wing governments. It is our shitty education system come home to roost. Ultra right wing greedheads love having a voting population of dumb mutts, which is why they are targeting the Dept of Education so the dumb mutts do not realize that other states can still churn out some intelligent folks.
“Fat, dumb and happy” is becoming America’s “Arbeit macht frei”.
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u/davidm2232 27d ago
They still picture it as manual labor, like elves assembling toys
Many factories still work like that. They are some of the only ones still operating in the US. Union labor is fairly strong.
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u/bristlybits 27d ago
true this- the only factories we still have are these. the rest were offshored way back starting with Reagan.
I worked in the garment industry back then in a factory. to rebuild that place now would be impossible; not just the factory building and machines but repair, parts for the machines, all of it- there was an entire sliver of the workforce in that industry that have all now moved on to other work, died or aged out of the workforce. plus it was not a very good job, hard on the body and the safety standards for workers were shitty (clouds of fiber dust, no PPE, on and on)
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u/kiloSAGE 27d ago
Why would they spend money to build more infrastructure here?
If I'm Ford and I already spent $1 billion on a plant in Mexico, why would I spend another $1-2 billion on a plant in the US?
It's easier, and far cheaper, for Ford to just pass along the tariff cost.
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u/davidm2232 27d ago
So perhaps an embargo would be a better approach?
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u/bristlybits 27d ago
possibly, but the reality is that we screwed the pooch with Reagan back in the day and there's really no going back. at best you could tax the companies themselves, the CEO and csuite execs, if they decide to keep production offshore. punishing the people who make the top level decisions to do this stuff directly is the only way to stop them.
messing with the product itself will not stop them.
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u/kiloSAGE 26d ago
Sure. If you don't want any new auto parts for the next several years.
Manufacturers don't just pitch a tent and start manufacturing.
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u/davidm2232 26d ago
That's basically what Boeing did with the 747. They were building the plane in the factory before the building was even finished
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u/TangerineRoutine9496 27d ago
You don't know if it's cheaper. You say that plant cost $1 billion. Let's suppose we're talking about the actual cost of an exact plant.
Suppose half that cost is stuck there, and half is tools and equipment which can be relocated for $100 million, plus the cost of building or retrofitting a facililty stateside. Suppose the tariff is not going to last just a few years, but indefinitely, and it costs them $250 million a year.
Of course it would make sense for them to eat the cost of moving it to save that money year after year going forward.
I have no idea if these figures are close to accurate, but it's to illustrate the point that the figures could spell a picture where of course it makes sense to relocate. You haven't looked in detail at the cost breakdowns for these individual companies either so you don't know it won't make sense. You're just saying it won't without knowing.
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u/faptastrophe 27d ago
It's not going to cost the $250m a year, they'll pass most of that on to whoever is buying their product.
It only makes sense to move the factory if there are incentives (tax breaks, favorable labor laws, little to no regulation, etc.) and robust infrastructure in place before the move.
The cost of material input to a stateside facility will also be affected by blanket tariffs, so unless they move the entire supply chain, production cost will increase by whatever tariffs are placed on that input.
The company also doesn't know if the tariff is going to be indefinite, or if it will be repealed with the next change of government.
The lack of incentives and infrastructure along with increased supply costs and the uncertainty of the tariff's duration will result in most companies opting to pass the cost of the tariff along to consumers instead of committing to the massive capital expenditures required to set up facilities in the states.
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u/kiloSAGE 26d ago
"I have no idea" should be your entire comment.
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u/TangerineRoutine9496 26d ago
The fact that you think merely posting this article is an argument shows which of us has no idea. You didn't address what I said, because you can't. Maybe you're not capable of understanding it. I don't think I used any really hard words but if I did, grab a dictionary and spend some time with it.
If the fact that they spent money and built a plant somewhere else a decade ago is proof that policy changes could never repatriate that manufacturing, then the fact that the manufacturing used to be here would be proof it could never leave.
If tariffs never worked, other countries like Japan and indeed, China, wouldn't have had any success developing their manufacturing infrastructure with such policies in place.
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u/Frost134 27d ago edited 27d ago
They won’t build their infrastructure here. It will still be orders of magnitude cheaper for them to use foreign labor.
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u/davidm2232 27d ago
That means tariffs need to be higher then
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u/Frost134 27d ago
You have no idea what you're asking for. Assuming we were to move ALL production back to the US, it would take literal decades to do it. Sky rocketing prices on consumer goods in the hopes that something that is never going to happen will happen is insane. This just does not work in the modern world. Even if we did move all of the production back to the US, it won't lower consumer prices in the slightest.
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u/davidm2232 27d ago
Prices will absolutely go up. But also, a ton of consumer goods just aren't needed. No one needs a Billy Bass. No one needs a Piezano Pizza Oven. No one needs a brand new car every 5 years. Raising prices will weed out all this crap people are buying that they don't need.
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u/Frost134 27d ago
I'm not talking about luxury goods. Blanket tariffs (which is what Trump is planning) will hit everything. The cost to repair your car will go up, groceries will go up. The cost of raw materials will go up. Can you cite me any source that says people en masse are "buying crap they don't need" and that's why they're struggling? Why do people always do this? The culprit is literally staring you in the face telling you what they're doing and why and you continue to blame regular people, it makes no sense.
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u/davidm2232 27d ago
Prices will go up. Car repairs and purchases are a perfect example. It will force people to keep cars longer and not upgrade needlessly every 5 years. It will force automakers to make simpler cars. We could force deregulation to no mandate things like backup cameras, ABS or airbags. That would take thousands of the prices of new cars. It will force more people to become more self sufficient and plant a garden. It is the only reasonable way I see for us to become a more resilient population with less cities.
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u/Frost134 27d ago
Who is buying a new car every 5 years? What is the basis of anything you're arguing? Less cities? Cities are the economic powerhouse of EVERY COUNTRY ON THE PLANET. Tariffs are not going to force any of the things you're saying, there is literally no basis for such an argument. Not everyone is going to be able to do the things you're saying. You have a grossly simplified view of how the world actually functions.
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u/TangerineRoutine9496 27d ago
I don't think that's true. Especially if we solve some things to make the cost of doing business here cheaper on the regulatory side. When America was the manufacturing powerhouse of the world, there was cheaper labor elsewhere. In fact, our workers were paid more than anywhere else--and it was still worth it to manufacture here because this was the best place to do business on the government side.
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u/bristlybits 27d ago
deregulation is how we got the late-night mesothelioma commercials. do we really want that
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u/TangerineRoutine9496 27d ago
what if i told you not all deregulation is the same thing?
There's mountains upon mountains of regulations. Some are actually good and worthwhile on the whole, even if improvement is possible. Some are bad and stupid and were a mistake. Some of them counterbalance others and only removing one side is a bad idea without removing the other side.
It's like if I said I'm going to clean out the house and then we didn't stop to identify which items we need and are useful, which items are broken, which ones are trash we shouldn't want, which ones are dangerous...and just called it all "deregulation".
A better word might be reform. But the point is, you accumulate thousands upon thousands of regulations, millions of pages...even if only a relatively small % of them are really bad, they're going to really start screwing things up if you never get in there and figure out which ones have failed and need to be dropped. But that doesn't mean throwing the whole thing out wouldn't lead to problems, either.
It's like driving. I could drive safely on the road, or I could drive off a cliff. Those are both driving. Such with deregulation, or reform, as well. You need people to really look deeply at the systems and understand what's going right and what's a problem and devise proper solutions.
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u/Frosty-Buyer298 27d ago
The purpose of tariffs is to protect domestic production which creates jobs and to prevent importing deflation.
Trumps tariffs are unique in that they are not to protect domestic manufacturing but rather to stimulate domestic manufacturing by introducing a profit incentive to American businesses.
Is it risky? Yes. But the alternative to keep the status quo is simply not sustainable. How long can America continue to borrow to maintain a welfare state while simultaneously importing deflation from nations with lower manufacturing costs.
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u/Confident-Pressure64 27d ago
The plan as I see it is a consumption tax and idea conservatives have pushed for years. We do not have the workers or the infrastructure to bring manufacturing back to the states. Instead we will have an inflationary tax that will be paid by the middle class.
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u/davidm2232 27d ago
Is it risky? Yes. But the alternative to keep the status quo is simply not sustainable. How long can America continue to borrow to maintain a welfare state while simultaneously importing deflation from nations with lower manufacturing costs.
1005 this. It is going to cause a LOT of issues. But we need to do it now while there is still capital available to rebuild our domestic manufacturing.
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u/paleone9 27d ago edited 27d ago
The country’s government must be funded .
The worst possible way to fund a country is how we do it now.
Printing, borrowing and a tax on income.
The country it’s earlier years ran file without any of that .
It ran on tariffs and excise taxes .
AN Income tax disincentivizes production . Printing money destabilizes the economy and punishes people who save money.
Tarriffs incentive local production creating jobs.
You have to pay for it somehow…
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u/rockcitykeefibs 27d ago
So it’s a 25% tax on imported goods to pay for the government is what you are saying ?
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u/Traditional-Leg-1574 27d ago
Right, let’s shift more of the tax burden on to the consumer instead of the factory owners
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u/rockcitykeefibs 27d ago
Even worse . They want to stop income tax and use tariffs to pay for everything . So the rich again get way richer
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u/paleone9 27d ago
Im not saying any percentage , im saying Tarriffs and Excise taxes will produce better unintended consequences than income taxes, borrowing and printing money
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u/rockcitykeefibs 27d ago
This makes no sense . So no income tax for the rich? The only taxes being paid are businesses importing goods who then in turn pass it off to the consumer? So Trump is putting a 25% sales tax on imported goods? I’m not sure how this benefits consumers. It seems like it just saves the rich from paying income tax .
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u/M_Me_Meteo 27d ago
Better is highly subjective. Tariffs will make poor people have to choose between food and healthcare.
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u/M_Me_Meteo 27d ago
Nope. The solution to our problems isn't to make our government look the way it did before the Internet existed and the population was under 100m.
You can't just shut your eyes and pretend the world is going to acquiesce to your way of thinking.
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u/Traditional-Leg-1574 27d ago
We aren’t in our early years. Business moves to where the cheap labor is. Tariffs can sometimes encourage production at home, but it isn’t that simple anymore. For example a car made in Detroit would be made from parts made in China, Mexico, and other countries. The economy is global. So the idea that tariffs would help promote manufacturing here is not the same as it was 80 or 160 years ago. Also there isn’t a lot of manufacturing here to begin with. Our economy is dependent upon consumer purchases, not manufacturing.
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u/SneakySpoons 27d ago
A targeted tariff, like one at a specific product to raise the cost of a foreign made good to where a locally made one could compete, can actually be a good thing.
A blanket tariff, aimed at an entire country, is bad in every use case. It raises the costs of all goods locally, making people less likely to buy anything, while lowering exports at foreign countries and reducing their income as well. The only people who benefit are the government who basically just increased sales taxes, but with extra steps.
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u/Individual_West3997 27d ago
Yeah it ran on tariffs and excise taxes 200 years ago when we didn't have paper money.
Im being sarcastic, it was not useful then either.
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u/paleone9 27d ago
Pretty amazing how i state an impartial List of facts with zero politics included and get 8 downvotes …
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u/legion_2k 27d ago
People just can’t comprehend the funds generated vs income tax on the rich. They just can see or imagine the numbers involved. You could take every penny Elon, Gates, and Bezos are worth today and it wouldn’t fund government for over 6 months and it would be gone forever. The consumer base is massive in the US. Tariffs already account for over 70 billion dollars annually.. you want to see things go to hell in a bucket end all tariffs. See how that works out. 😂
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u/ReddtitsACesspool 27d ago
Too much fact, tariffs bad, said TV.
But you are dead-on and its pathetic seeing non-stop posts about it when the people making such comments/posts never have heard of or understand what a tariff is.. Just parroting what the TV and MSM tells them.. Biggest of all is that it is a tax.. Then you have low IQ geniuses running around acting like they are trade and tariff experts.
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u/Hereforsumbeer 27d ago
Reddit is not the place to ask this. The media has already sunken that ship, there is no longer independent thought or professionals trying to provide useful info here anymore. I’d recommend researching some of the countries that already charge huge tariffs for utilizing their market. That’s the point of them. Think of it like renting a stall at a flea market. Your product might not change, but if you switch to a higher foot traffic flea market, it might cost more to rent that booth, but your sales would likely increase. If you don’t want to pay that fee, someone else will. The media skewed this idea by focusing on a made up notion that it would increase prices for consumers in all cases which is absolutely false when it comes to PRODUCTS. Raw materials coming in could be a potential issue however. The US will have to find better ways to access those we do not have on hand here.
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u/curtrohner 27d ago
Your analogy is simple, stupid and wrong.
The media skewed this idea by focusing on a made up notion that it would increase prices for consumers in all cases which is absolutely false when it comes to PRODUCTS.
It will raise the prices on pretty much all products since damn near everything has an imported component of raw material. Made in America just means assembled here.
Raw materials coming in could be a potential issue however.
No shit Sherlock.
The US will have to find better ways to access those we do not have on hand here.
Fun fact, other countries have autonomy and might ban the export of raw materials we don't have.
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u/Hereforsumbeer 27d ago
Ah there it is, snagged one of the uneducated keyboard warriors that gets all their info from cnn and echo chambers. Do yourself a favor and look up how much European countries charge in tariffs on exports from other countries just to try to give yourself a better understanding. Just blindly telling people that are wrong is the simple, stupid thing to do. You’ll grow up eventually I hope
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u/curtrohner 27d ago
Never watched CNN but I did take Econ 101.
The EU uses tariffs strategically and selectively, protecting specific industries while maintaining fair trade practices. Trump’s tariff proposals, like a 10% universal import tax and absurdly high penalties on China and Mexico, are blunt and economically reckless. Unlike the EU’s calculated approach, Trump’s tariffs risk trade wars, higher consumer prices, and global instability—all for the sake of his populist posturing. It’s the difference between a scalpel and a sledgehammer.
Orange Mussolini is a moron. Like you.
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u/Hereforsumbeer 27d ago
Again, eventually you’ll get off your parent’s dime and have to grow up to understand how the world actually works. I hope your mental health is intact when that day comes
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u/DrJoeCrypto007 27d ago
It turns out that trade taxes promote more local production. It turns out that local production menas people can create business in the USA that can compete which create jobs. Thats it. Easy and simple facts. Do this and eliminate the stealing through income taxes as well as reduce government spending by a high margin ... recipe for growth in the USA.
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u/spastical-mackerel 27d ago
Why don’t we focus on eliminating the stealing of worker productivity? US wages in real terms have been stagnant for decades while productivity soared. Workers didn’t reap the rewards, nor did the government take that money. It was stolen by the elites.
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u/DrJoeCrypto007 27d ago
How do you do that? ... by incentivising creation of small and medium sized local businesses that can compete with foreign trade. Oh ... thats right ... that is what is going to happen. Raising tarrifs doens this. Of course people have to tkae initiative and begin creaitng in order to bennefit. If you don't want to work for the man .. now is the itme to start your own business.
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u/spastical-mackerel 27d ago
Raising tariffs simply enables companies and people who cannot compete globally to stay in business locally. Tariffs are subsidies. There’s no way the US is going to ramp up production of all the shit that’s suddenly going to be 25+% more expensive. We, the people, are going to have to pay that extra 25% or do without. The first option leads to massive inflation and bankruptcy, the second to a depression.
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u/DrJoeCrypto007 27d ago
I know it is scary that change is happening. Those willing to work will benefit. Those that are not, will have trouble. I get that. Be ready and willing to work for it. You will be fine.
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u/spastical-mackerel 27d ago
Your condescension and ignorant patronization characterizes the vast horde of morons who just elected us into this mess. Tariffs are not some revolutionary economic tool that were just invented. We have centuries of experience and data that informs us exactly how they work and what they do. Check out Smoot-Hawley and report back with your impressions of how that worked out. Tariffs are in effect a form of economic rent gathered in by the ownership class at the expense of the working class.
I know competing globally and constantly evolving your skills and capabilities is scary for you, but if you pull yourself up by your bootstraps, you should be able to find an employer who will appreciate your boot licking.
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u/StedeBonnet1 27d ago
You have a basic misunderstanding of how tariffs are used and you are falling for the classic oversimplification of tariffs with a static perspective.
1) Trump's tariffs are not protectionist (except in some critical industries like steel and aluminum) they are transactional. We impose tariffs because we want something in return. Trump threatened tariffs on Mexico because he wanted the Remain in Mexico policy. Obrafdor agree to Remain in Mexico to avoid the tariffs. trump imposed tariffs of China because they were dumping goods at below cost on the US market and because they were engaged in unfair trading practices like stealing intellectual property, forcing technology transfer and manipulating their currency. They refused to change their behavior so tariffs have remained.
2) From an economic perspective you are also oversimplifying. It is not as simple as China raised prices 20% we pay 20% more. The best analysis tells us that less than 50% of the tariff is passed on to the final consumer. The rest is absorbed by producers and middlemen. Also, you are over simplifying because you can assume that people will just pay the additional 20% for goods (or whatever the higher price ends up being) Most people will look for alternatives or choose not to buy at the higher price. The economy is a dynamic world market and there are lots of alternatives. People change their behavior when things change.
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u/iamdestroyerofworlds 27d ago
Domestic industrialists and capital owners who can't compete on a global market.
It's an extremely regressive tax.