Timmy has a competing lemonade stand with your kid, and he charges $1 for a glass and you charge $3 for a glass. Rather than lowering your prices, you place a $2.50 tariff on any lemonade from Timmy in your neighborhood. Now everyone pays $3.50 for his lemonade, and it only makes sense for your kid to charge $3.50 as well, because Timmy’s lemonade has to get to your neighborhood while yours is local, so why not pocket that 50 cents.
In this scenario, Timmy cannot sell his cheaper lemonade to your neighborhood at a cheaper price. Everyone in your neighborhood must pay the new inflated price. People in other neighborhoods will go to Timmy, so only your neighborhood buys your lemonade, although some people will try to circumvent the tariffs by buying Timmy’s same lemonade for $2 in a neighboring area.
Tarrifs means they add tax on specific things to discourage people from buying it. It’s used on foreign goods to make them more expensive than local stuff.
If Chinas EVs are cheaper than US one’s, american companies could go out of business and China could take control of the EV market. The US will basically add a tax to Chinese EVs so US one’s remain competitively priced in comparison
Thank you for the write up and I say this not against you but that is a pretty fucked up mindset.
A country putting tariffs on imports doesn’t necessarily mean it’s being anti-competitive, or anything nefarious.
In this example, the argument generally goes that China’s EV market is so cheap, compared to the US’s, because the Chinese government subsidizes it, I.E. gives EV makers free money so they can lower costs or expand infrastructure, which in turn leads to lower prices. Thus, a US tarrif is just attempting to re-level the playing field. How much truth there is to this, I don’t really know.
And this, in TURN, doesn’t necessarily mean that China is being anti-competitive either. There’s nothing wrong with them saying “Having a robust EV infrastructure is good for our country, and we think it’s going to be very important for our future, so we’re going to invest heavily into that.”
What happens when a Chinese person immigrates to the US and wants to bring their car with them?
Not at all. It’s necessary to protect your own industry.
If Canada didn’t impose tariffs on US dairy, Canadian dairy farmers couldn’t afford to compete against US subsidized Dairy. And it’s quite important for a nation to maintain its own food production.
Not at all. It’s necessary to protect your own industry.
But mostly the tariffs are there to protect the capitalist class. When globalism hurts workers and offshores our jobs our politicians do nothing, but when profits are threatened they act swiftly.
No. Mostly they’re put in place to protect the domestic industry from being run out of business from cheap exports.
Subsidies of local produced goods would work just a well, and not increase process to consumers as much.
International trade is complicated. I say US here but almost everyone put tarrifs on Chinese EVs. Germany’s economy for example heavily relies on the auto industry, and a collapse could mean a lot of problems.
You also don’t want a monopoly. If China are the only one’s selling cars, it won’t be long before they are no longer cheap. We speak of cars but it’s the same for food. You don’t want a foreign country to have an economic handle on your food.
It’s also worth noting that these other products are often cheaper because the people making them have a lower quality of life. We don’t want to end up in a race to the bottom.
Tariffs on something from China doesn’t get paid by China. It gets paid by the US consumer.
And I don’t mean that like “China pays the tariff so the end result is a higher price for the consumer”…I mean, literally, China doesn’t pay it. China sees no difference in the cost of importing things to us. Nothing changes for them.
In some cases if you don’t tariff it, the US consumer ends up paying for it in the long run. Artificially underpriced products are meant to drive domestic industries and other competitors out of business. You then end up with a monopoly that charges exorbitant prices at a later date and everyone domestically is out of a good paying job.
That already happens domestically with large players. See Amazon and basically every small business out there. And we don’t even get a bunch of jobs for it, because Amazon has mastered the use of robotics to minimize job production.
It is literally paid, first, by the company that imports the goods.
It is then paid again by the consumer in the higher price that they charge, and it it then paid again by the Chinese exporter in terms of reduced volume of exports.
Is there an exemption, say, if a Chinese person were immigrating to the US and they already owned an EV for several years and wanted to bring it with them? Or is there a massive import duty on things like that?
Generally, it’s free money for the government. The cost is put on the consumer not the country of export. It can favor domestic products by making the imports too expensive.
So, the BYD tariff was so high that pretty much no one will buy one.
But when they do it on steel, or something similar, and companies have to buy it anyway, that cost is just added to the final price.
Essentially, tariffs are a tax that disproportionately affect low to middle income people the most.
When you enter the United States, customs “inspects” all the stuff you’re bringing back. If it’s more than $850 worth of stuff, then you have to go to the cashier and pay a tax.
The tax is a percent of what the stuff is worth. The percent rate can depend on what type of goods it is, and what country it’s coming from. There are massive tables to look this stuff up.
The stuff you carried out of the country and are now bringing back with you doesn’t count toward the $850 limit.
If you’re shipping stuff in but not traveling with it, there is no exemption. Tax applies right away. You also have to hire a guy called a broker to help you with the CBP paperwork and to submit payment.
So let’s say somebody is importing sugar from the Caribbean, and there’s a tariff. They have to pay a percent to the feds every time they ship in some sugar. They raise the price they charge on the sugar to cover that. Then sugar from Louisiana looks more attractive on the store shelf because it’s cheaper.
Who pays? Whoever is shipping the goods in pays, but they make it up by charging more for the imported products.
Why do it? Usually, you want to make some domestic industry more attractive by raising the price of the foreign competition.
In the sugar example, sugar is more expensive to farm in Louisiana because people get paid more, and the equipment is more expensive. If there wasn’t a tariff, people might stop farming sugar in Louisiana entirely. That might make some people sad. On the other hand, all Americans would be able to pay less for sugar without the tariff.
Sugar is a great example. The American sugar (and select other ag industries) are deemed to be essential so the government is okay with allotments and price supports. This doubles our price domestically. Tariffs do not make anything cheaper absolutely only relatively.
When there’s enough competition, tariffs shouldn’t matter. For example, if refrigerators are made domestically and also imported from Europe, Japan, Canada, Mexico, and Korea — setting a tariff on say Chinese refrigerators shouldn’t do anything to the consumer. The problem is everyone has sold all their manufacturing to Chinese companies.
That’s like half the truth. In countries where they don’t treat workers like slaves, the labor costs are larger and the end product costs more.
If you treat your workers as a disposable commodity, it’s much cheaper to make stuff.
