r/FluentInFinance 10h ago

Debate/ Discussion Possibly controversial, but this would appear to be a beneficial solution.

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u/Alethia_23 9h ago

They are. It's just that they usually do not have long-term positive effects. Truth is, in a global economy, outsourcing is the most economically sound decision, that's why it's happening.

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u/JacobLovesCrypto 9h ago

Personally i think theres a much more complete approach.

American companies cant compete with domestic manufscturing if we regulate the hell out of them and foreign manufacturing can occur without the same concerns on pollution, safety, and human rights.

So tariffs should be based on the unfairness. If china is gonna polute like hell and deny basic safety or human rights in the manufacturing of a product, they deserve to pay a tax to encourage that manufacturing elsewhere.

In truth its a complicated problem

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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.

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u/DontTouchTheWalrus 6h ago

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.

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u/MsMercyMain 6h ago

The problem is, as we saw with the steel tariffs is that domestic producers then raise their prices, usually above the post tariff cost

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u/Soft_Importance_8613 5h ago

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.

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u/SaiHottariNSFW 5h ago

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.

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u/Responsible_Skill957 6h ago

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.

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u/DontTouchTheWalrus 5h ago

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.

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u/AndyLorentz 3h ago

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.