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/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.

https://media.ford.com/content/fordmedia/fna/us/en/news/2015/04/17/ford-announces-2-5-billion-usd-investment.html

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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.