Patterico's Pontifications

8/2/2019

Trump’s China tariffs – Paid by U.S. importers, not by China

Filed under: Economics,Politics — DRJ @ 5:16 am



[Headline from DRJ]

Reuters’ Business News Explainer:

With U.S. President Donald Trump’s announcement on Thursday of tariffs on another $300 billion of Chinese imports, nearly all goods from China will be subject to import taxes, and Trump says they generate billions of dollars in revenues for the U.S. Treasury from China.

But that is not how tariffs work. China’s government and companies in China do not pay U.S. tariffs directly. Tariffs are a tax on imported products and are paid by U.S.-registered firms to U.S. customs when goods enter the United States.

Importers often pass the costs of tariffs on to customers – manufacturers and consumers in the United States – by raising their prices. U.S. business executives and economists say U.S. consumers foot much of the tariff bill.

Trump tariff threat pushes up chance for Fed rate cuts as recession risks rise:

President Donald Trump’s threats of a new round of tariffs on $300 billion in Chinese goods increases the chances the U.S. economy could head into recession, and also that the Fed would be more aggressive cutting interest rates in an effort to head it off.

The president’s tweet came a day after he expressed his dissatisfaction with the Fed’s quarter point rate cut, saying that Fed Chairman Jerome Powell “let us down.”

Are Trump’s latest tariffs about targeting China or the Fed, or just us?

— DRJ

47 Responses to “Trump’s China tariffs – Paid by U.S. importers, not by China”

  1. The tariffs on China are NOT for economic reasons.

    I don’t know why this is so hard to comprehend.

    bendover2 (076acf)

  2. So is it part of foreign policy or economic policy?

    DRJ (15874d)

  3. Or just “I do what I want” Trumpolicy?

    DRJ (15874d)

  4. I don’t know why this is so hard to comprehend.

    Maybe because the orange is an incoherent baboon who himself does not know why he is imposing the tariffs and relies on his supporters to come up with rationales for them?

    nk (dbc370)

  5. our president mr trump the great donald sticks it to the dirty chinesers by making us pay more for stuff because he loves us and he gave us a tax cut to make up for it anyway because he loves us twice as much

    Dave (1bb933)

  6. China threatens retaliation but if this is not about economics, I guess Trump won’t care. Anyone who buys goods that have China in its supply line will care.

    DRJ (15874d)

  7. But I have no major objection to the tariffs even if they do raise the price of Trump straws. And I doubt that they will.

    According to free market theory, the Chinese should be selling their shoddy wares to the American public for as much as the market will bear anyway, tariffs or no tariffs. The part of the price that is not tariffs would be profit going into the coffers of the People’s Liberation Army. American consumers would still be paying the same. With tariffs, our Treasury gets a little percentage too. It’s the Chinese’s profits which are reduced.

    nk (dbc370)

  8. I thought the Chinese were Communists? Since when did Communism give up its quest to destroy capitalism? I forgot, slave labor is very important in turning a profit.

    Mark (57ef87)

  9. They have stolen the largest part of our manufacturing and have high paid mouthpieces to rationalize it.

    Narciso (72d34b)

  10. Xi is old school Marxist not like Deng zhao ping, their economy is extraordinarily fragile.

    Narciso (72d34b)

  11. The only problem with Trump’s tariffs is that they only apply to China. We need a strongly protectionist trade policy against all countries so that our industrial base can be rebuilt and working class people can once again have jobs.

    Will this raise costs? Yes. But will the costs exceed those of welfare dependence and drug addiction that are the consequences of free trade and open borders? Unlikely. But if they don’t, that is the cost of a decent life for all Americans, not just the Ruling Class.

    You might note that the American Ruling Class exists, and it is largely hereditary. You might also note that they captured all the economic growth of the last 40 years and even clawed income away from the working class. Working class wages fell over that period, and middle class income stagnated.

    The end result of open borders and free trade is that all costs and wages everywhere are driven to the world average. Depending on how you calculate it, the world average wage is somewhere between $3,000 per yr per cap and $10,000. What is your wage? Can you live on $10,000 per year? Of course you can, but how would you live? What would you eat? What would you have?

    bob sykes (696a35)

  12. Tariffs are war by other means, as clausewitz would say,

    Narciso (72d34b)

  13. In addition, bob, not only can working class people have jobs but we can actually have a chance at using the legal system and the rule of law against manufacturers and business owners who cheat us when they are here in the US. They have stake in the game and agreed to play by our rules. Try and sue someone in China when they cheat you sometime.

    Ingot9455 (d9d16a)

  14. Tariffs are war by other means, as clausewitz would say,

    Narciso (72d34b) — 8/2/2019 @ 6:31 am

    Precisely !!

    bendover2 (076acf)

  15. All tariffs are, ultimately, paid by the end consumer; that’s 8th grade social studies.

    Advocaat (f6357f)

  16. “EVERYTHING is ultimately paid by the end consumer.” — The 8th grader’s father helping him with his homework.

    nk (dbc370)

  17. Is that why they were the mainstay of fiscal policy for 150 years.

    Narciso (72d34b)

  18. $300 Billion at 10% = $30 billion. We have a $20,000 Billion economy. Look for prices to go up by 1/600. Assuming it all gets passed on. which it wont.

    rcocean (1a839e)

  19. Everything gets passed on the consumer. Really? So Apple’s I-pad price is based only on their costs and not on achieving maximum revenue? Must be news to them.

    rcocean (1a839e)

  20. Everything gets passed on the consumer. Really? So Apple’s I-pad price is based only on their costs and not on achieving maximum revenue? Must be news to them.

    rcocean (1a839e)

  21. Why is it that Trumpkins don’t know how to read?

    nk (dbc370)

  22. Patterico’s headline is based on a false dichotomy. A tariff is paid by some varying proportion by the exporter, importer, wholesaler, and customer. The proportion depends on supply/demand curves, and those are partly set by how many other countries are producing similar or substitute goods. Also, even if the importer is effectively paying all of the tariff (which is not the same question as whether it is he who cuts the check), he will be motivated to find a different country supplier.

    David Pittelli (7d543e)

  23. China is a tyranny and a racist apartheid regime, with a million people in “reeducation” prisons for practicing the wrong religion. The Chicoms are also creating new ways to control the population never seen outside of Orwell’s “1984” or a Dark Mirror episode (“Nosedive”). China steals intellectual property. It is also building and militarizing islands in preparation for taking over an open sea and invading Taiwan. In hindsight, it was a mistake to grant China ‘Most Favored Nation’ status and allow it to become a superpower. Given China’s size and economy, the West cannot afford to cut China off entirely, as is deserved, but a 10% to 25% tariff is both the least and the most we can do.

    David Pittelli (7d543e)

  24. 24. David Pittelli (7d543e) — 8/2/2019 @ 8:58 am

    China is a tyranny and a racist apartheid regime, with a million people in “reeducation” prisons for practicing the wrong religion. The Chicoms are also creating new ways to control the population never seen outside of Orwell’s “1984”

    In Mao’s time it was worse, and 1984 could have been taken as aan instruction manual, mins the TVs. That version of the system collapsed in April, 1976.

    The problem is, there is on;y a partial correlation between what everybody else finds wrong with China and what Donald Trump finds wrong China. But China is doing so much wrong everybdy is going to be against the government of China, anyway. If not for one thing, then for another thin/ And it has no sympathizers. (it did in Mao’s time)

    Sammy Finkelman (e806a6)

  25. 8. Mark (57ef87) — 8/2/2019 @ 5:52 am

    I thought the Chinese were Communists? Since when did Communism give up its quest to destroy capitalism?

    During the 1980sd.

    Sammy Finkelman (e806a6)

  26. The headline isn’t from Patterico, David Pitelli. It is my post but the headline is from Reuters.

    DRJ (15874d)

  27. To quote myself from the last time Trump made a “fourin ekunomik polisy”

    An Orange-utan now thinks he knows economics, then makes mouth noises, ooohh aaaahh aaaha, and flings his own poop…at himself, and his followers called him genius.

    Colonel Klink (Ret) (6e7a1c)

  28. Are Trump’s latest tariffs about targeting China or the Fed, or just us? </blockquote If it ti target the Fed that has to be kept very quiet.

    It may not be motivating Trump but it may be motivating some of his economic advisers not to fight it and it is certainly an argument Mnuchin and others can make to Jerome Powell. Mnuchin, though may be quite seriously worried and trying to stop Trump:

    https://www.bloomberg.com/news/articles/2019-08-01/trump-ruled-out-mnuchin-proposal-to-warn-china-of-new-tariffs

    I still haven't seen any U.S. currency with Mnuchin's name on it, by the way. Is cash going out of style so the're not printing any more of it?

    So if some Trump advisers are trying to argue the Fed to lower interest rates this way, it's not Mnuchin. Maybe Larry Kudlow. Of course the Fed also cut inerest rates to stay in line with Europe and keep exchange rates stable.

    Anyway, we'll gain more from the lower interest rates than we lose from the tariffs, which are, after all, only temporary.

    Sammy Finkelman (e806a6)

  29. How much tariffs cost us:

    “Tariffs are taxes paid by American businesses and consumers – not China,” Jonathan Gold, vice president for supply chain and customs policy for theNational Retail Federation, told CNBC Make It.

    A report from Tariffs Hurt the Heartland, a bipartisan campaign against the levies, found that increasing duties on Chinese goods to 25% would cost a U.S. family of four $767 annually and could lead to a loss of over 934,000 jobs.

    Price increases:

    Here are some examples of products whose prices you can expect to go up, according to the NRF:

    Air conditioners
    Appliances including refrigerators
    Auto parts
    Batteries
    Bicycles
    Clothing
    Cosmetics
    Crafts
    Electronics
    Food including produce, seafood, beans, nuts, etc.
    Furniture including cribs and outdoor furniture
    Handbags
    Home improvement items including carpeting and flooring
    Luggage
    Mattresses and bedding
    Personal care products
    Sporting goods
    Toilet paper
    Tools and hardware
    TVs
    Vacuum cleaners

    Tariffs on furniture and travel goods from China alone would cost Americans $6 billion a year, an NRF analysis found. Gold says it could take weeks or months for consumers to feel the full impact of the increased costs, though some increases will be immediate.

    DRJ (15874d)

  30. I notice that some things I buy have gone up.

    DRJ (15874d)

  31. If competition or the possibility of competition already sets the price of an item, then cinsumers pay the tariff. Apple may be an exception. (but even monopolists have a best price)

    Sammy Finkelman (e806a6)

  32. What? We don’t even make our own toilet paper!

    nk (dbc370)

  33. Why is it that Trumpkins don’t know how to read?

    It brings them closer to their illiterate orange ape-god.

    Dave (1bb933)

  34. I bought a huge box of Charmin toilet paper at Walmart.com and I think it came from China, nk.

    DRJ (15874d)

  35. I bought a huge box of Charmin toilet paper at Walmart.com and I think it came from China, nk.

    Why do you hate America?

    Dave (1bb933)

  36. I’m a frugal American.

    DRJ (15874d)

  37. Eric Boehm at Reason always offers the best analysis.

    https://reason.com/2019/08/01/the-trade-war-truce-is-over-more-tariffs-coming-in-september-trump-tweets/

    This stupid trade war is disrupting global supply chains, costing businesses and consumers billions. Whatever benefit middle-and-lower income workers received from the so-called “tax cut” is consumed by higher prices on just about everything. Nobody wins in trade wars.

    Historically, isolationism and protectionism always result in conflict and often war. China will respond, because it has the upper hand. China has its own trade deal with numerous countries along the Pacific rim, including Japan, Australia, Bolivia, Mexico, and Canada, which are not subject to retaliatory tariffs. That’s about half the world’s population and 70% of global trade. China also owns the market on rare earth minerals, which are essential for technology–everything from cell phones to fighter jets and satellites–and holds one-third of US Treasury debt.

    Meanwhile, American farmers are forced into bankruptcy. American manufacturers are closing plants and laying off workers. Export markets have been lost, and the costs of production have become too high.

    There are several ways this can play out, none of which benefits the US. One, China could shut down exports of rare earth minerals. Two, China could dump all its Treasury debt. Either or would cripple the US economy. Trump, or Navarro, is playing a losing hand here. China is an ascending power, while the US is a descending power.

    All because of nonsensical tariffs and trade wars, which might lead to real wars. None of us want that, but that’s where we’re headed under the stupidity that is Trump. Practically every investor who bought his licensing name brand went bankrupt and out of business. So it will be with the GOP.

    We are talking about the survival of not just a political party but the country as a whole as well. Trump must be excised, because he and his followers are leading us into a losing battle.

    Gawain's Ghost (b25cd1)

  38. Shameful we don’t make more products at home.

    mg (8cbc69)

  39. Oh, and by the way, do any of you want to know where I’m going to for dinner tonight? That would be the . . . House of China! Yeah, I know the owner. His family immigrated to Texas decades ago, and he’s always said the last thing he ever wanted to do was to open a Chinese restaurant. Yet, there it is, after he realized the profit potential. Great food, a wide variety, and the all-you-can eat buffet is a working man’s lunch-time dream. So many delicious choices to name, all for about $10. The House of China is always crowded.

    Gawain's Ghost (b25cd1)

  40. We can’t make more products at home, mg. Everything is interconnected. Certain areas are able to produce products that in other areas are necessary for manufacturing. Cooperation, not competition, is what drives the market. Diversity makes us rich, but unity keeps us strong.

    Gawain's Ghost (b25cd1)

  41. All tariffs are, ultimately, paid by the end consumer; that’s 8th grade social studies.

    That Libertarians and liberals. Smart Conservatives don’t get their economics from 8th grade Social Studies teachers. We go to college. And take real Economic classes. And then we observe the real world when we graduate. And read even more economics.

    rcocean (1a839e)

  42. Reading the comments, I can summarize for everyone. Conformists Conform. No independent thought necessary. And “Orange Man Bad”.

    rcocean (1a839e)

  43. Plus: Math is really hard.

    rcocean (1a839e)

  44. if we don’t make anything, that’s the recipe for an endless welfare state, now there is a danger in teasing the dragon too much, as I pointed out from the south morning post, china is really hurting under these tariffs and the yuan is screaming,

    narciso (d1f714)

  45. What? We don’t even make our own toilet paper!

    You have to know where to shop.

    Dave (1bb933)

  46. More proof that Trump’s idiotic trade war is doing more harm than good:

    https://reason.com/2019/08/02/the-trade-deficit-keeps-growing-and-heres-three-other-data-points-showing-trump-is-losing-his-trade-war/

    Gawain's Ghost (b25cd1)


Powered by WordPress.

Page loaded in: 0.2904 secs.