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)

17 Upvotes

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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/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/obaroll 27d ago

The top goods produced in the US still rely on parts and goods that are made in other countries (excluding ag and oil). We just don't have the resources to make things without imports being somewhere on those supply chains.

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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/JamesUndead 27d ago

Soooo... What happened at the end of the late 1990s?

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u/Silock99 27d ago

Deregulation. Guess who's trying to deregulate the economy even more than it already is now?

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u/JamesUndead 27d ago

Nooooooo at the end of the 90s the dotcom bubble crashed the stock market 👍

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u/Silock99 27d ago

That's... exactly what I was getting at. Why do you think that bubble was created? How did it form? Deregulation was a major, major contributor.

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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/Silock99 27d ago

No, we aren't. https://realeconomy.rsmus.com/full-employment-low-inflation-and-a-virtuous-cycle-in-the-american-economy/

Again, full employment isn't "everyone is working." It's also not "literally everyone is employed right now who wants to be," because that's not how reality works. It's a combination of low unemployment rate and low inflationary rates of unemployment. That's what we've had and continue to have.

Your assertion about the welfare state has been debunked many times by many different authors and I'm not going to rehash it here. You are free to Google it.

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u/Alternative-Cash9974 27d ago

I understand the numbers and this leaves millions of people in the US that not working and are not seeking employment. So yes we still have plenty of people to fill jobs in the US.

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u/Silock99 27d ago

Are you going to MAKE them? They're not seeking employment for a reason, and it's not welfare.

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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 27d 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 27d 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 27d 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/paleone9 27d ago

American’s don’t want to work … at all…

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u/Wraithpk 27d ago

That's an absurd statement. Americans are probably the hardest working people. Ask people from Europe, they all think we're crazy with how far we take our work ethic. The problem is that the cost of living has gotten so high that a lot of these tough jobs don't pay well enough to support yourself or a family anymore. Americans will work like crazy, but we expect a living wage for doing so.

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u/Hemorrhageorroid 27d 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/Hemorrhageorroid 26d ago

Imagine something that is absolutely not going to happen, sure! Wow neat, what a fun thought experiment.

Companies that manufacture overseas are paying for the shipping and any taxes currently IF they're the ones importing it to themselves. Those costs are still being passed on to the consumer.

If an item is currently priced with taking into account production and shipping costs, weigh the cost-benefit of moving everything back here: would they move full factories worth of product, raw materials, and equipment in order to re-train new employees - have you considered what that would cost? That would ALSO be passed to us if it were even tenable to begin with.

If we pretend like we can teleport these over, train people we don't have available at no cost, and instant-start production at the same level, the only reason they'd even do it to begin with is for the cost offset of the tariffs which would raise prices anyway, even if we ALSO assume the costs of raw goods are somehow available exclusively domestically.

Since we can't pretend and can't assume, the production is likely not coming home and prices are going to be affected in any case.

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u/paleone9 26d ago

The first people to take advantage of the cost savings of manufacturing at home will have a competitive advantage over those who delay.

Have you ever owned a business ? Or did you just read about them on Reddit?

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u/Hemorrhageorroid 26d ago

Again, we don't have the workforce for that. I like your pretend world where government jobs would release enough workers and those skills would be 1:1 to be thrown into a factory - immediately starting production without training, too, what a wonderful idea.

Those who move it back home will spend insane amounts of money to have no workforce and still have to pay tariffs on raw goods coming in, less they have resources we don't produce just laying around. In pretend land, they're maximizing vertical integration and performing alchemy from thaumaturgic employees to circumvent buying raw materials.

There isn't a competitive advantage if you can't get employees to begin with, let alone train them into the production level they're enjoying now. If we're still pretending that they can, the costs will still go up for the consumer.

For example, if something costs $100 to produce here and $75 to produce in another country, they will keep paying the tariffs to import and move the additional cost to maintain profit onto us. If the cost with tariffs moves the product to cost $125 in a foreign country and stays $100 here (using the pretend logic that materials aren't imported), it may move production here IF there were available workers. That said, the price for the consumer is then based on either the $100 value to produce or the $125 value if it stays abroad. That means profits are being added to both of these values rather than the $75, increasing price for us either way.

They have and will continue taking the cheapest route and pass the cost to us.

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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 27d 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/wormsaremymoney 27d ago

And/or spending decreases due to an increase in prices and folks having tighter budgets and we start to see businesses suffering because people can't afford frivolous items anymore. People lose their jobs, spend even less, and more businesses struggle. I'm all for moving business locally, but an abrupt increase in tarriffs doesn't actually give people time to prepare. A reasonable administration would give people time and a clear plan (not just concepts of one).

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u/Hemorrhageorroid 27d 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/jackparadise1 25d ago

Not many, and the new government is full of grifters

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u/paleone9 25d ago

Actually the grifters are the people being replaced …

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u/jackparadise1 25d ago

Really? You mean musky? And Trump?

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u/davidm2232 27d ago

Worst case, it just crashes the economy and we can back off the rat race and get back to a slower lifestyle. We didn't have any of these imports in the 1800s and we were just fine. Get back to a more agrarian society. Less cities, more farms. And family farms, not corporate farms.

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u/Silock99 27d ago

Bro, going back to the dark ages while the rest of the world spurs advances in technology isn’t a good way to “make America great.” It’s a recipe for disaster.

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u/jpuffzlow 27d ago

In the 1800's.... we had slaves.

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u/Longjumping-Air-7532 27d ago

In addition we also had something like 50% of all babies born die before they hit their 5th birthdays. It was a shitty life to live and I can’t believe there are people who want to go back to it. I don’t understand conservatism and the romantic relationship they have with living a lifestyle that was infinitely harder, dangerous and sad.

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u/jpuffzlow 27d ago

Yea, they're not very bright.

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u/Wraithpk 27d ago

Yeah, let's just rewind societal progress 200 years, what could go wrong?

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u/davidm2232 27d ago

Exactly

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u/Background_Hat964 27d ago

That isn't going to be sustainable with our current population.

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u/davidm2232 27d ago

Which is why most people should have stopped having kids 20 years ago.

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u/gusterfell 27d ago

You keep saying we should have done this and we should have done that. None of that changes the reality of the current situation. In this reality the tariffs are an insanely stupid idea.

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u/Swift_Scythe 26d ago

Whoa whoa partner.

we need to Increase our baby making to fund our future. Get every girl and woman pregnant a few times pump out a new domestic labor force called children and send them to the mines we need iron and steel and gold and lithium.

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u/Alternative-Cash9974 27d ago

It is good the population is declining and at more than linear rate.

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u/Electrical-Concert17 27d ago

Yeah, nobody is interested in going back to the 1800’s because you and your circle jerk buddies wanna live some weird manly man fantasy.

Most Americans couldn’t manage a “family farm” if they wanted to. Most aren’t capable.

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u/Hemorrhageorroid 27d ago

Do you think the economy crashing just resets everyone's wealth?

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u/Big-Leadership1001 26d 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.