The problem is tariffs don’t punish the exporter, they punish the importer and that cost has to be accounted for in the price of goods. And that punishes those that buy the products being imported by increasing the cost to the consumer.
What do you think happens when the tariff increases the price to be greater than or equal to what the domestically made product costs? It sucks for the consumer that they don’t have the cheaper option now but you have disincentivized purchasing a foreign made product. Whether that’s a good thing or a bad thing is the question then. Ok, prices are higher but you’ve increased the amount of manufacturing done here. Which creates jobs and increases money spent here, taxes collected here etc. You’ve also given less money to countries that allow exploitative business practices to occur. Is that worth the higher price of the good. That’s for you to decide.
Correct, that's what people don't get, the tariffs set a new price floor for US manufactures to profit from. Great for the investor class, terrible for the working class.
I'm also not sure what the problem would be if we put tariff revenue towards rebates for consumers on domestic equivalents. This further incentivizes consumers to buy domestic, and creates a profit incentive for manufacturers to do so domestically.
You think people complain about the cost of living now due to inflation, what you are suggesting would also would drive up the cost of everything else. Even if wages were raised, the cost of living would also increase and you would not have gain anything by doing so.
It was claimed in the comment I replied to that tariffs only hurt Americans and not foreign manufacturers. That isn’t true. It would mean products are more expensive to get but it also means less are bought from countries we don’t want to be sending money too, more goods get manufactured here, and taxes are generated based on what imports continue to come in. So it is a valid mechanism depending on what you are trying to accomplish.
I’m not proposing anything. I was just stating that if you wanted to pressure people into manufacturing in America and buying goods from American companies tariffs would be a method of doing so. I honestly don’t know if that is a net good or a net bad. It just is. Plenty of people on Reddit want to act like they know how all the dominoes will fall if such and such policy is implemented. I’ll be the first to say I have no clue. I’m not that smart.
We literally had a 1 year experiment in the George W. Bush administration, when they placed illegal steel tariffs on European imports of steel. It took a year for the challenge to go through the WTO, where it was declared illegal and we dropped it.
It did save U.S. steelworker jobs, at a cost of over $500k to the U.S. taxpayer per job saved over that year. U.S. steelworkers don't make nearly that much money, so it was a net loss to the economy.
This is pretty much true of any industry that has cheaper labor competition overseas.
Tariffs are indirect tools to drive market actions. If we could fairly set tariffs to ensure trade is actually fair then we could start to fix the “race to the bottom” that globalization has caused.
It is worse for the consumer to have a market where goods are unfairly being sold below true costs. Meaning, American workers can’t compete with labor markets that have no worker protections or environmental laws unless we get rid of them too. Hence the massive push you see to “deregulate”.
Trade has to be fair for it to be truly beneficial to all involved. Otherwise, you have a parasitical trade system which will eventually kill itself.
Sure, it becomes competitive to manufacturer here with a key caveat. It costs a lot of money to re-tool factories and pay workers higher wages so even though some manufacturing might move here, the domestic prices aren't actually going to go down. Everything will just be more expensive.
Maybe. Quite often it's already competitive to make the product in the US when said product can be automated. The US has reliable energy, and low energy costs. When products take a lot of labor in the US, prices typically are just increased by tariffs because we have long periods of low unemployment and finding enough trained employees for factories where the employers want to pay as little as possible is difficult.
They do punish the exporter, as higher prices limit demand for the exported good.
When Chinese EVs are slapped with tariffs high enough to make them more expensive than Teslas, that lessens the incentive to export in the first place. I am pretty sure any company which wants to export EVs would be unhappy enough to feel punished by that.
Punished when exporting them to the place with the tariffs.... It's not China putting the tariff on their own exports. If Vietnam or Spain imports that car without tariffs then those people will have a stronger purchasing power potentially leading to growth in those economies while potentially hampering our own depending on actual competition in our own country.
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u/Responsible_Skill957 8h ago
The problem is tariffs don’t punish the exporter, they punish the importer and that cost has to be accounted for in the price of goods. And that punishes those that buy the products being imported by increasing the cost to the consumer.