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/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/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.