I thought about this last night..
Are these tariffs just a ways for the US to strongarm other countries to turn their money printers on first?
Like, if the MX and CA have to pay 25% more to export the same items, wouldn’t it be safe to say that either country will have no choice but to turn on their local money printers and devalue their money first?
Also GM!
Mexico and Canada don't have to pay anything. People living in the US have to pay the extra 25%. Which means lots of stuff will be more expensive so people probably won't buy as much, which will mean Mexico and Canada can't sell as much. So Trump puts pressure on other countries by hurting US citizens.
Totally understand that, however This seems more like the symptom than the cause.
In reality before people from the United States can purchase the imported good it must be paid for by the country importing it.
Sure, the trickle down effect will be to raise the price of the item in the US economy. But the very first payment to import the goods must initially be paid by the company from the country that is importing it. if the price is too high for them to import it, either the import will not occur, making the price increase impossible because the imported good is not able to come into the states, or the argument I pose, is that CA & MX governments will just subsidize the duty.
Just food for thought
Yes, you're completely right. I think it's near term pain that Trump can use for bargaining.
Can you explain what you mean by MX and CA having to pay 25% more? A tariff is an import tax paid by the company doing the importing. So American companies that were importing those goods will now have to pay a 25% fee on top of what it previously cost to import them, which means that they will in turn raise the prices of their products to account for this new loss that they unexpectedly started incurring. The end result of that is that by raising their prices, us normal American citizens will have to pay more for those goods.
Foreign countries don't pay tariff costs. We have no way to enforce that, nor does it make sense for them to do so.
What I meant by that was the companies in those countries would have to pay the duty to import their own goods into the US.
I did not consider American companies also having to pay this import tax, because the current administration did not communicate that. I assumed that the tariff was only on companies in those jurisdictions, and that countries would have to subsidize that expense
It did not appear clear to me that companies in the United States doing any importing would be subject to the same expense.
Yeah, unfortunately we pay the cost, it's a tax America is imposing on itself. I believe the new administration is doing a massive disservice to American citizens by allowing Trump to make it sound like foreign countries will be paying these tariff costs. Most people (myself included) never really had a need to learn what tariffs were, but if you look into it a better name for it is just "import tax".
A tariff definitely can be an economic tool to foster growth and competition of American companies against foreign producers, but the way Trump is wielding them so heavyhandedly across the board is not the right way to do it. They should be applied strategically in certain industries where it makes sense, but he's using them like a threat/bargaining tool to try to force other countries to do something. I hope Lyn will make some comments on this because I'm just a random person who studies this stuff for my own curiosity, but I think using them that way is the wrong way to go. All that does is further intensify trade wars which are really not good for anyone in such an interconnected global economy.
I’m enjoy the conversation!
I could be completely wrong with all of this, I actually have no idea what I’m talking about and I’m just adding my food for thought that popped into my brain this morning while I was having my first coffee. ☕️ GM
