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RE: There Are Only LOSERS In A Trade War

in #trade2 years ago (edited)

Hey Michael, I know I could get lost down a Google rabbithole... but what happens with a tariff exactly?

If your peanut butter would normally sell for $5, and it was sitting on the shelves in China for $10... where does that 100% markup go? Does the supermarket in China send $5 to you, and $5 to the Chinese government? Are they effectively making money off your products?

I don't think consumers are ever for tariffs... I think the only people who benefit from a tariff is the exact industry that is protected... who then doesn't need to improve their products or efficiencies because they have an unfair advantage.

In the US the Steel industry is protected by tariffs... but every other company that uses steel in the US is hit by the price increases (either they have to buy expensive US steel, or now pay more for China steel). I think Ford said it cost them an extra billion dollars to make the same number of products... and the protection that the steel industry enjoys now costs other industries (ie, farmers in the Midwest) who then cop tariffs on the goods they send to China.

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Hey Aussieninja, how ya goin?

So when I tried to bring the PB into China, I would need to pay the import department of the Chinese government 3 separate taxes. They would get the money first and I would need to make it back on retail sales, by charging the customer $10 in this example. Good question, but pretty simple actually. They lock up the goods in the port until you pay.

I wrote this article with a Chinese audience in mind (and had it translated). At the moment, they're being programmed by the TeeVee to feel "OUTRAGED! UNFAIR! HORRIBLE" at the American tariffs when they do the same thing.

My point is not to say one side is right, it's to say that both sides are economically ignant morons :-)

Ahhhhh, of course, that makes total sense. I'm sure I would have worked that out if I really thought about it. I guess it makes it all the more risky though... if you don't sell all your stock, you're pretty much operating at a loss. I guess though, it means that bigger companies can eat the tariffs themselves if they don't want to lose market share.

Hahaha, anyone that uses tariffs doesn't understand economics..... but I think in these cases it's not at all about economics, it's a superpower boxing match. Looks like the overall global economy might take a huge hit in this battle though.

Glad it made sense.

It sure will. It's the world putting itself under embargo. We'll be poorer as a result. And yes, bigger companies can operate at a loss while it makes it much harder for startups.

If more people understood these things, they would not be cheering for them (right now segments of the Chinese and American populace are cheering them on). They think it's horrible when tariffs are placed on them, but oh so necessary and a "good thing" to do them to others.