verslagen1 wrote on 03/04/19 at 16:11:31:Given, any tax is passed onto the consumer. But tariffs are meant to equalize the cost of imported goods to domestic and he proves it so what is his point? The rest is pure conjecture.
And where are you grammar natzies?
And I don't get how producing something domestically does harm? Let's layoff all those minorities that just found jobs. Pure BS.
Quote:Consider the following example: pre-tariff, the U.S. imports some good from China that costs $100. Then the Trump administration imposes a 25% tariff, raising the price to consumers to $125. If we just keep importing that good from China, consumers lose $25 per unit purchased – but the government raises an extra $25 in taxes, leaving overall national income unchanged.
Suppose, however, that importers shift to a more expensive source that isn’t subject to the tariff; suppose, for example, that they can buy the good from Vietnam for $115. Then consumers only lose $15 – but there is no tariff revenue, so that $15 is a loss for the nation as a whole.
But what if they turn to a domestic supplier – say, a U.S. company that will sell the product for $120. How does this change the story?
Here the crucial thing is that producing a good domestically has an opportunity cost. The U.S. is near full employment, so the $120 in resources used to produce that good could and would have been employed producing something else in the absence of the tariff. Diverting them into producing what we used to import means a net loss of $20, with no revenue offset.
Here's the problem Vers; in your example, you list a couple of possibilities, but certainly not all the possibilities. And tracking the positive and negative ramifications from an importer switching suppliers from a foreign one or perhaps sourcing a domestic one is difficult. I mentioned before economics is not an exact science for a lot of reasons and how different importers address changes in the marketplace is one reason for that.
From 40,000 feet, the economy is doing great. If the tariff has a negative impact, it seems to be tiny. What's not being discussed is its slow negative impact on China. That's good for the US. So perhaps you could say we are in a good position to take on China even if it harms us, apparently a tiny, tiny .01%.
But a good topic to discuss. I have to head out but worth exploring more.
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