Reasons Why We Should Impose Tariffs on Goods From China...?
Reasons why we should impose tariffs on goods from China...?
I really see no good so I will give you things to prepare for. 1.) Trade is good for everyone 2.) This would hurt US China relations when China is a rising powerhouse 3.) Prices for consumers would rise and quantity demanded would go down as demand shifts left
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Why don't we raise taxes and tariffs on outsourcing companies?
Tariffs and quotas create something that is called deadweight loss. It is a result of a misallocation of resources. In other words they create massive inefficiencies within the international trade system. Believe it or not, we are better off as a society to allow trade to flow freely between all countries we do business with. Outsourcing then becomes a situation of right vs right. For example, it pits doing what is right for the company against doing what is right for the individual. It's a hard pill to swallow, but those who have been replaced by overseas employees must retrain themselves into an industry that we are efficient in
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Since China is not paying the tariffs levied on its exports to the US, why is the tariffs affecting Chinau2019s economy?
Because the premise of the question is not true. Chinese exporters are paying the lionu2019s share of the cost of the tariffs, and that is pretty much undeniable at this point.Many media outlets and personalities have an axe to grind with Trump, and are perpetuating a lie that the tariffs arenu2019t affecting China, in order to make Trump look bad. Itu2019s all theater. However, like most good lies, thereu2019s a small kernel of truth to it in there somewhere.The importer (America) pays the tariff in full when the product arrives in the U.S., and that seems to be the kernel of truth that talking heads are latching on to. Unfortunately for the anti-Trump crowd, that is only part of the story. In order to keep the retail price down, the exporter (China) must lower itu2019s wholesale price, and thus itu2019s profit margin in order to remain competitive. In the end, the wholesale price, plus the importeru2019s mark up, plus the tariff, still has to be at an attractive price point for customers. The tariff cannot be budged. That means some combination of wholesale discounts (Chinese exporter), retail discounts (American importer), or higher prices (American consumer) must be sought.For example, say youu2019ve been buying Chinese bubble gum for 10 cents each, and re-selling them for 15 cents in American stores, netting you 5 cents in profit. Now a 5 cent tariff is applied. You know you canu2019t sell very much bubble gum at 20 cents when they are worth only 15. You talk to the Chinese supplier, and they can cut your price from 10 cents to 7 cents. Meanwhile, you, the middle-man, can cut your profit from 5 cents to 4 cents. So you receive gum from China at 7 cents a pop, apply your 4 cent mark-up, then pay the 5 cent tariff, and put the gum on the store shelf at 16 cents each. You think you can still sell a large enough quantity of gum at 16 cents versus 15 cents.The price for the consumer (American) went up only 1 penny, but the tariff is 5 pennies. The importeru2019s profit dropped by 1 penny. The manufactureru2019s profit dropped by 3 pennies. The consumer (American) is eating 20% of the tariff, the importer (American) is eating 20% of the tariff. The Chinese manufacturer is eating 60%, 3 pennies, of the tariff. The proof is in the pudding. American consumers and importers are eating about 25% of the cost of the tariffs, while Chinese exporters are eating about 75%. However, that is small potatoes compared to the amount of manufacturing that is fleeing China for a better environment. The migration of manufacturing out of China has been happening for a while now, but the imposition of tariffs accelerated the process greatly. Fortunately, Iu2019ve written about this topic several times, and references to the evidence supporting this 25/75 claim reside in the following posts.John Anderson's answer to How much have tariffs already cost Americans in higher prices and farm subsidies? Has there been any increase in sales of goods made in the U.S.? Why does Trump continue to insist that China, not American consumers, pays the tariffs?John Anderson's answer to A recent survey quoted an average income family are paying an extra $800 a year on Trumpu2019s tariffs. Do you think itu2019s a price worth paying?John Anderson's answer to Is the Trump administrations use of tariffs just a clever way to tax the middle class and poor because they basically pay for the tariffs in higher prices?Since China is not paying the tariffs levied on its exports to the US, why is the tariffs affecting Chinau2019s economy?
