Economists warn that Trump's tariffs could cause tech prices to skyrocket

[nec209]

Economists warn that Trump's tariffs could cause tech prices to skyrocket

Study says laptop prices could increase up to 45%, monitors up to 50%, many other products affected

If Trump were to implement his proposed tariffs upon becoming president again, it would significantly reshape the landscape of consumer electronics in the US. Economic policy discussions can often seem abstract, but it's important to understand the real-world consequences these tariffs could bring.

https://www.techspot.com/news/105205-economists-warn-trump-tariffs-could-cause-tech-prices.html

Edited October 19 by nec209

[swansont]

!

Moderator Note

Yes, we saw price spikes during his administration from the tariffs he implemented.

Is there a discussion to be had here?

 

[nec209]

I thought Trump tariffs on China goods the Chinese government is supposed to pay the tariffs not the US consumers? So say the laptop or monitor is $500 dollars and plus $300 of tariffs the Chinese government is supposed pay $300

[swansont]

10 minutes ago, nec209 said:

I thought Trump tariffs on China goods the Chinese government is supposed to pay the tariffs not the US consumers? So say the laptop or monitor is $500 dollars and plus $300 of tariffs the Chinese government is supposed pay $300

How does the consumer avoid paying? If the monitor costs $500 and you slap a $300 tariff on it, they will raise the price to $800, or to whatever preserves their profit. They aren’t going to just eat the tariff and export at a loss.

”China will pay” is just Trump’s gross ignorance of how this works. Or another lie to sell to his marks (or a combination of the two)

[nec209]

18 minutes ago, swansont said:

How does the consumer avoid paying? If the monitor costs $500 and you slap a $300 tariff on it, they will raise the price to $800, or to whatever preserves their profit. They aren’t going to just eat the tariff and export at a loss.

 

I thought the company pays nothing? I thought the company making the monitor pays nothing or the consumer it is Chinese government that pays the tariff. And the consumer or company making the product pays nothing only the Chinese government?

[pzkpfw]

55 minutes ago, nec209 said:

I thought the company pays nothing? I thought the company making the monitor pays nothing or the consumer it is Chinese government that pays the tariff. And the consumer or company making the product pays nothing only the Chinese government?

 

Tariffs are applied as a kind of tax on the goods, not as a separate bill to the Government of the source nation.

(The fantasy is that the seller has to lower profits to keep the final cost the same *, making local industries competitive again.

The reality is that prices go up and the consumers pay more.)

((*  or maybe even leave the market altogether, which while it might leave local manufacturers standing, it decreases their competition and still raises costs for consumers.))

 

 

 

Edited October 19 by pzkpfw

[swansont]

46 minutes ago, nec209 said:

I thought the company pays nothing? I thought the company making the monitor pays nothing or the consumer it is Chinese government that pays the tariff. And the consumer or company making the product pays nothing only the Chinese government?

Even if that were the process, why wouldn’t the Chinese government charge the manufacturer? Do you think they would just fork over the money?

Why do you think the article talks about consumer prices going up? Why did prices actually go up when Trump did the before?

https://www.nbcnews.com/business/consumer/trump-s-washing-machine-tariffs-are-costing-americans-almost-100-n999461

“A little more than a year after President Donald Trump slapped a 20 percent tariff on imported washing machines, new research finds that American shoppers have been the ones to pay the price.

A study conducted by two researchers at the University of Chicago and a Federal Reserve Board Governor found that washers cost an average of 12 percent more after the imposition of the tariffs, or roughly $86 to $92 more per appliance.”

Domestic manufacturers took the opportunity to raise their own prices to pad their profits.

 

 

[nec209]

50 minutes ago, pzkpfw said:

 

Tariffs are applied as a kind of tax on the goods, not as a separate bill to the Government of the source nation.

(The fantasy is that the seller has to lower profits to keep the final cost the same *, making local industries competitive again.

The reality is that prices go up and the consumers pay more.)

((*  or maybe even leave the market altogether, which while it might leave local manufacturers standing, it decreases their competition and still raises costs for consumers.))

 

 

 

What do you mean by Tariffs are applied as a kind of tax on the good? Than who is suppose to pay the tax?

[iNow]

49 minutes ago, nec209 said:

Than who is suppose to pay the tax?

Us, the US consumers.

His proposed tariffs would (on average) result in a $4,500 annual tax hike on US consumers. 

Over the course of a single 4-year term, this means the average American family will be $18,000 poorer. 

[pzkpfw]

1 hour ago, nec209 said:

What do you mean by Tariffs are applied as a kind of tax on the good? Than who is suppose to pay the tax?

This stuff is googleable: https://www.cfr.org/backgrounder/what-are-tariffs#chapter-title-0-2

[swansont]

1 hour ago, iNow said:

Us, the US consumers.

His proposed tariffs would (on average) result in a $4,500 annual tax hike on US consumers. 

Over the course of a single 4-year term, this means the average American family will be $18,000 poorer. 

I think the question is who literally pays the tariff, i.e. how is it collected by the US. The consumer will pay more to the retailer, and the retailer pays more to the importer, who pays the tariff to customs.

“When the U.S. imposes tariffs on imports, U.S. businesses directly pay import taxes to the U.S. government on their purchases from abroad”

https://taxfoundation.org/blog/who-really-pays-tariffs/

“A tariff is a tax on imported goods. Despite what the President says, it is almost always paid directly by the importer (usually a domestic firm), and never by the exporting country. Thus, if the US imposes a tariff on Chinese televisions, the duty is paid to the US Customs and Border Protection Service at the border by a US broker representing a US importer, say, Costco.”

https://taxpolicycenter.org/taxvox/what-tariff-and-who-pays-it

 

Nobody is going to pay a tariff without adding it to the cost of goods. And I’m shocked, shocked to find out that Trump doesn’t know what he’s talking about, and lying about some foreign country paying for it.

 

[KJW]

1 hour ago, swansont said:

And I’m shocked, shocked to find out that Trump doesn’t know what he’s talking about, and lying about some foreign country paying for it.

Did Mexico pay for the border wall?

 

Edited October 20 by KJW

[iNow]

33 minutes ago, KJW said:

Did Mexico pay for the border wall?

What border wall?

[KJW]

5 minutes ago, iNow said:

What border wall?

Didn't Trump build a wall, or at least part of a wall? He said he was going to build a wall, and make Mexico pay for it.

 

[MigL]

A tariff IS a tax.
When you buy something, nec209, who pays the tax ?

Is your understanding of economics comparable to D Trump's ?

[swansont]

11 minutes ago, KJW said:

Didn't Trump build a wall, or at least part of a wall? He said he was going to build a wall, and make Mexico pay for it.

 

Yes, he said that, and no, of course they didn’t. 

[iNow]

22 minutes ago, KJW said:

Didn't Trump build a wall, or at least part of a wall?

The total length of the continental border is 1,954 miles.

Trump built 47 miles of new wall that wasn’t already there before he even took office. 

Even if we spot him 1900 miles, he STILL came up 7 miles short. 

[J.C.MacSwell]

19 hours ago, KJW said:

Didn't Trump build a wall, or at least part of a wall? He said he was going to build a wall, and make Mexico pay for it.

 

 

Trump built at least some of it and put a healthy markup on it, did he not? It's not his fault the current administration forgot to send Mexico the bill. Even if it had been included in the border bill he kiboshed he can hardly be blamed. Wasn't on his watch.

Everything was wonderful and best ever with him as POTUS.

If Trump says tariffs are good for the country who are these "economists" to question that?

Edited October 20 by J.C.MacSwell

[Trurl]

On 10/19/2024 at 7:35 PM, swansont said:

On 10/19/2024 at 6:07 PM, iNow said:

 

I think the question is who literally pays the tariff, i.e. how is it collected by the US. The consumer will pay more to the retailer, and the retailer pays more to the importer, who pays the tariff to customs.

“When the U.S. imposes tariffs on imports, U.S. businesses directly pay import taxes to the U.S. government on their purchases from abroad”

I see you logic: add a tariff raise the price. But is only valid if your goal is the lowest price. Couldn’t you also say if the price is raised then the China washer now costs as much as the U.S. washer and the labor is more balanced to support the U.S. manufacture?

The tariffs will lose money at first but in the long term help the workers.

J.D. Vance said in the debate that we listened to the experts and they shipped manufacturing overseas.

This didn’t work. It didn’t even help the people of the countries the manufacturing went to. They had slave labor.

Experts aren’t always right. Bruce Schneier would describe it as businesses hacking the laws for personal profit.

Also if you put tariffs on only China there products will cost more than say a Korean LG washer. So if they pass the tariffs off to the consumer the price of the Chinese washer will be less competitive.

But again the danger is not price. Instead it is “revenge” tariffs on U.S. goods sold in China.

i don’t know how to balance these things because I’m not an economist. You may boast one business and hurt many others.

[zapatos]

39 minutes ago, Trurl said:

The tariffs will lose money at first but in the long term help the workers.

 

Unless of course workers are also the people who buy things that have tariffs on them.

41 minutes ago, Trurl said:

But is only valid if your goal is the lowest price.

Presumably when you go to the store you are not looking to pay the highest price you can find.

Lower prices by one manufacturer force competitors to control costs or improve products to stay competitive. That is considered a good thing.

[swansont]

8 hours ago, Trurl said:

I see you logic: add a tariff raise the price. But is only valid if your goal is the lowest price. Couldn’t you also say if the price is raised then the China washer now costs as much as the U.S. washer and the labor is more balanced to support the U.S. manufacture?

That only works if the tariff is the amount of the price difference. And we have actual data from when this happened, with a smaller tariff: prices went up.

That helps the owner of the US business, since they can raise prices and increase profits. The workers are hurt because they are paying more for the products.

 

8 hours ago, Trurl said:

Experts aren’t always right.

Again: we have actual data from when this happened before.

”experts aren’t always right” is a pretty lame argument. Experts tell you not to jump off a cliff because you will die. They aren’t always right, but that’s not a reason to jump off a cliff.

8 hours ago, Trurl said:

Also if you put tariffs on only China there products will cost more than say a Korean LG washer. So if they pass the tariffs off to the consumer the price of the Chinese washer will be less competitive.

Again: actual data.

8 hours ago, Trurl said:

But again the danger is not price. Instead it is “revenge” tariffs on U.S. goods sold in China.

That’s another danger.

[CharonY]

And yet another danger is that Trump aims to replace at least some taxes with tariffs. Simple calculations show that even ignoring the downsides, such as price increases, this is not feasible. I.e. either more debts have to made or the government's operating budget will decrease (based on how much is cut in taxes). Other issues are nicely summarized here https://www.piie.com/blogs/realtime-economics/2024/can-trump-replace-income-taxes-tariffs.

I think economics universally agree that this is not a great policy. However, the one reason why it might be implemented after all is because it actually provide benefits to rich folks (somewhere around the 5th top quintile) at the cost of lower income.

And luckily we learned that those are so much easier to fool.

 

[Ken Fabian]

I didn't expect good understanding of tariffs (a lot of don't know) but I didn't know there was such widespread misunderstanding (what people "know" being wrong) - not knowing what tariffs are for or who pays them.

It was always about raising the prices of imported goods so people have no choice but to pay more for higher priced local goods - and in theory give protection and opportunity for local businesses. Ideally gaining time to invest in improvements that will make their goods competitive. Short term - some businesses and jobs are saved but prices go up. But if the necessary productivity improvements don't happen they stay high.

In some ways it is the very inverse of free market capitalism - probably why, historically, free market ideologues opposed tariffs (but usually only in theory). I suspect in reality the businesses that most support  tariff-free markets like that are in positions more like the Chinese are now - already low cost and very competitive and wanting other nations to take tariffs away. ie that is to their short term advantage, without much commitment to ideology.

Like with carbon pricing... if it is well designed and works like it should then it can't be an ongoing source of government revenues that can replace other taxation; if it works the revenues should decline to zero as people turn to local goods instead of buying the (undesirable) imported goods and paying tariffs. Anyone claiming raising tariffs is an alternative to other taxes or even more wrong, that the other nation pays the tariff (seriously?) is trying to scam you. It hurts them economically - reduced exports, reduced profitability - as a consequence, but they aren't paying the tariffs.

Of course what politicians say before and what they do after can be very different and US Congress may not agree to do all Trump says - some of that being contradictory.

And of course affected nations put retaliatory tariffs on goods they import from the anti-competitive, anti-free market nation. Without the sustained commitment to raising productivity for domestic businesses - as protection for uncompetitive businesses - tariffs are inflationary - raising prices to no good effect.

[Trurl]

Sometimes I wonder if China is a real place.

We lose manufacturing jobs: China did it.

Covid started where else China.

I don’t think we’d have so many products from China if American businesses weren’t profiting.

My question is how do we get a realistic view of China? I don’t know about you but I wonder how all these companies actually operate.

[CharonY]

By ignoring those claims you mentioned and instead and collect data?

The loss of manufacturing jobs is an almost certain trend given increased automation, as well as increases in salary. Ultimately, manufacturing has become more capital than labor intensive. The data also shows that China is not likely to blame, data from the US bureau of labor statistics has shown decline in manufacturing employment in sectors with as well as without competition with China, and a rough reading of journal papers suggest at most a contribution of 25% of the decline in manufacturing was affected by China. Essentially the labor market has changed and entry level jobs are fewer than the used to be and there is increasingly a requirement for higher education.

https://www.nber.org/papers/w24468

The underlying issue is that finding real information takes work. Work that few folks are willing to do, unfortunately. That is why blaming has always been such an effective tool. Some elements of blame have, for a short period of time, become sufficiently distasteful that it has retreated (just a little bit) in modern politics. Over the last decade or so, it has become the de facto strategy for major parties.