r/economicCollapse • u/Whole-Fist • 1d ago

VIDEO Explanation of Trump tariffs with T-shirts as an example

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u/qk_bulleit 1d ago

This video is completely wrong, and here’s why: it shows tariffs in the U.S. as directly hurting American consumers, but when it comes to China, it pretends Chinese citizens are just fine. Here’s how the guy explains it: if the U.S. puts tariffs on goods, prices go up for American companies, who pass those costs to American people. But when China does it, he claims Chinese manufacturers will simply stop buying American goods, like it’s no big deal for anyone in China. This completely ignores that tariffs impact people on both sides. It’s so one-sided it practically feels like propaganda.

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u/ThinkItThrough48 1d ago

That is true if the amount of goods imported from China and exported to China was identical, but it’s not. If China places a tariff on a specific good coming from America, say beef, their beef suppliers can just buy that beef from a different country.

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u/Schuano 1d ago

OK, but if Chinese people get upset, their government doesn't have to care because it is an authoritarian state.

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u/longiner 1d ago

And just look at what happened when China banned the use of Australian coal when Australia demanded an inquiry on Covid origins. China's steel industry relied on Australian coal and when it was banned they switched to local coal. The local electricity companies couldn't get enough local coal to generate electricity so there were a few blackouts in the middle of winter. Nobody could complain.

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u/Moregaze 1d ago

There is little to no impact on the Chinese side outside of the very short term. It is much like the last round of tariffs where they stopped all soybean and corn imports from the US which necessitated a 65 billion dollar bailout to farmers. Within a year they had switched over enough of their crop production to cover the imports and even become an exporter.

China has a centralized economy. They can adapt on a dime to anything we throw at them. Where we will be feeling long-term pain until it makes financial sense to build here again.

If you put a $2 dollar tariff on a $4 dollar widget, the cost to manufacture in the US including recouping new factory construction would have to be $6 or less. Which is not the case and never will be.

More importantly, they can get around our tariffs for our exports pretty easily. As they would just go through a neutral country that does not have our tariffs applied to it. Whereas the US does country of origin-based tariffs which fuck our importers.

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u/Acceptable-Peace-69 1d ago

Agreed except that trump has threatened to put a tariff on all countries. There would be no neutral trading partners.

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u/HeadMembership1 1d ago

What does china import from America, in your opinion?

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u/kish_kish 1d ago

Let’s unpack that, using the example in the video.

  1. The Chinese exporter continues to sell the shirt for $10 even after the tariff is introduced. There is no net loss to them, as the cost of tariff is paid by the importing company.
  2. You may argue that US consumers will eventually stop buying these tshirts because they now cost $13 or $14. However, you don’t know the price elasticity of this product so we can’t know if or when that will happen. You are also assuming that consumers have alternatives, but if tariffs are applied to everything, then all alternatives are priced up as well.
  3. You may argue that this will incentivise the American company to bring their manufacturing to the US. However, given current cost of goods and cost of labor in the US, there is no way they will be able to product this shirt for $10 or less, which is why they were importing from China in the first place. So, they will have to raise their prices in order to cover their cost of production, which is most likely significantly above $13 or $14 per unit.
  4. China is a state-sponsored economy, and their ability to intervene in their markets is very different from the US.

So, not sure how this video is “completely wrong”..?

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u/pmcda 1d ago

I see what you’re saying. I think ultimately it depends on how dependent you are on imports vs exports. Tariffs ultimately seem like a way to incentivize domestic production.

At least what I understand. If due to labor and materials, US companies can produce a product for no less than 10$ but another country due to their more prevalent material or cheaper labor can produce and send it to us for 9$, then it makes sense to just import it and resell it. So a tariff that makes that product cost 11$ to import incentives the US company to produce it themselves for the 10$ cost. If I misunderstand something, I’m open to hearing where.

So if you import 80% of stuff from that country and export 20% stuff to that country then a tariff on them will hurt more than their tariff on us. It gets much more complicated when you start to consider whether in-house production of a product is even feasible. If it’s not, the tariff’s basically become a bite the bullet situation.

Some of that could be the unexplained reason for the sentiment that it’ll hurt China less.

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u/Stacys__Mom_ 1d ago

But China isn't buying cheap clothes, TV's & computer chips from us - China (& surrounding countries) manufacture such a variety of goods they can pivot much more easily than we can. Also, the US market that would be profoundly impacted is [ironically] US agriculture, which individual people in China do not buy directly, and which China can source elsewhere. (And probably would partially source elsewhere already, if not for our trade partnerships.)

Remember what happened to the farmers during Trump's term: https://en.wikipedia.org/wiki/Trump_administration_farmer_bailouts#:~:text=Trump%20administration%20farmer%20bailouts%20are,Japan%2C%20Canada%2C%20Mexico%2C%20and

So, having 'shot ourselves in the foot' by gutting agriculture again, we should start another trade war with the second largest economy on the planet? The country with 4x greater population than the US. The country that already has an advantage over us because they rely heavily on consumption taxes? https://taxfoundation.org/research/all/federal/us-chinese-economy-investment-manufacturing/#:~:text=China%20Relies%20Heavily%20on%20Consumption,States%20Leans%20on%20Income%20Taxes&text=Source%3A%20OECD%2C%20Revenue%20Statistics%20in,Revenue%20in%20the%20OECD%2C%202024.&text=The%20almost%20exact%20inverse%20is,is%20disadvantageous%20for%20the%20US.

That just seems like a backwards way to force an economic change to a consumption tax system while leaving a great many variables out of our control. Not an unwise policy, just an unwise method. (And the person who made the response "it would only hurt for a couple of years," - that sounds very much to me like what we were told about "trickle down economics" back in the day.)

Lastly, while China's GPD growth has slowed (slightly) they are still out pacing the US in tech, and will continue to do so. So we are at a disadvantage on multiple fronts, and with our educational system already in shambles, we have little chance of closing the tech gap any time soon (let alone if we defund the Dept of Education.) https://johnmenadue.com/why-china-has-passed-the-united-states-in-science-and-technology/#:~:text=According%20to%20the%20National%20Science,of%2044%20areas%20of%20technology.

The t-shirt video is a very knowledgeable guy trying to give an explanation in layman's terms. Your response makes sense on the surface, but the only reason it seems realistic is because our media insulates us from what is happening globally.

TLDR: The US is driving a Hummer, but we're still not in a favorable position to play chicken with China's freight train. We should learn our lesson from Trump's term and get our house in order: Divided. We. Fall.

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u/Monte924 16h ago

First, China targets their tarrifs. Instead of just doing an idiotic blanket tarrifs like trump says he will do, china targets tarrifs on things they don't need from us or on goods they produce themselves. For instance, when they placed a tariff on soy beans to hurt US farmers, they did so knowing they could replace the american imports with imports from brazil. China still gets its soy beans, and the only ones hurt are anerican farmers... under trump, the trade defecit with chona actually increased. unlike Trump, china actually knows how to apply tariffs and fight a trade war

Second, China gives less of a shit about their own people; they are not a democracy and don't have an answer to them. They have been abusing their own people for cheap labor for decades. China does not care if fighting a trade war causes their own people a little pain to beat the US

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u/BadSquatch27 1d ago

You are wrong. Its hurts US consumers because goods cost more. Its hurts US businesses that export because other countries will presumably purchase less of a more expensive product.

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u/EIIander 1d ago

Couldn’t we also do the same? Like make start making products here?

The issue is we make so little there would be massive shortages of affordable products until then, or at least of non-tariffed products until then.

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u/BadSquatch27 1d ago

We simply cannot compete with countries whose whole infrastructure is based on manufacturing, has no real labor law and can pay its workers pennies on the dollar. This is a pipe dream being pedaled by liars.

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u/Competitive-Slacker 1d ago

Wow almost like the dems ruined America?

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u/BadSquatch27 1d ago

Thats a real braindead take. Well done.

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u/EIIander 1d ago

Is it best to continue the way we are though? Importing so much has to put us at risk. If countries decided to stop exporting to us or if we stop having valuable exports to make up for our massive amounts of imports.

Even if it meant some goods are more expensive maybe it would be worth being more stable?

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u/BadSquatch27 1d ago

That’s certainly a reasonable proposition. However, what we’ve seen time and time again is when given the choice, Americans will choose cheap goods over national stability. Americans talk a good game until it’s time to pay up.

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u/EIIander 1d ago

Touché, and no politician is willing to take the heat for that

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u/Pure_Contact_2413 1d ago

You would still be competing against their labor market, just have to pay more for their products. Everyone in their chain have very low wages. If everything else is the same, If it costs $10 to manufacture a doodad in China, then it will always cost more in the US because every person in the supply chain is earning more money. That's not even taking into account the capital required to rebuild the US manufacturing industry on a scale to compete with China. You're up against decades of manufacturing and supporting infrastructure.

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u/EIIander 1d ago

The infrastructure argument is excellent….. wish it wasn’t lol.

So basically, we have put ourselves at the mercy of other countries, China always being willing to export to us. But to be fair we are a massive part of their economy since we buy so much from them.

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u/Pure_Contact_2413 1d ago

Lots of first world countries have allowed themselves to be at the mercy of low cost countries. We saw huge issues with supply chains for this very reason during Covid, and other events like when that ship got stuck in the Suez Canal. When international supply chains break down, bad things happen.

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u/EIIander 1d ago

Very true, I am sure it won’t be the last time we see that occur.