re: tariffs: Can someone clarify to me some technical...

[ret5hd]

on-the-ground mechanics of how tariffs work?

my understanding:
1) govt declares a tariff on widget xxx
2) an importer buys xxx from foreign country
3) customs sees xxx on shipping paperwork
4) importer must pay tariff before xxx is released from customs
5) importer recoups tariffs when selling

in other words, essentially the foreign country is never involved…they (the foreign govt) don’t receive a bill in the mail saying “you owe us!!!”…which would promptly be trashed…

am i very far off???

for some reason i actually think dumbass thinks we send them a fuckin’ bill like a utility company… like he has absolutely no concept of how these things work.

but maybe i’m completely off-base also. fill me in.

[Walleye]

1. He thinks we sent NATO countries, a bill for being allies with us

[live love laugh]

2. Sounds about right with the consequence being inflation.

[IbogaProject]

36. That is part of the current inflation

Mr Turdslinger and his GOP Congress put tariffs on some Chinese imports. Here is a report from a conservative leaning source, https://taxfoundation.org/research/all/federal/trump-tariffs-biden-tariffs/

[sarisataka]

3. In basic terms, you got it.

It is not a bill to the originating country but a surcharge to the customer.

[Dan]

8. Ahhh....so many years ago...

Which results in higher prices on the importing country. Which may in fact lead to higher inflation. Plus, there is a very good chance that once you impost tariffs - other countries respond by imposing their own tariffs, artificially increasing costs. The worse case scenario is trade wars with significant tariffs on all parties potentially leading to still higher inflation.

There is a potential of the value of your currency decreasing relative to the currency used on the world market - which further impacts costs of goods. Sort of a huge death spiral.

But that from a long time ago…I hope that I got it right ?

[sarisataka]

14. Those are possibilities

the general idea is to force consumers towards home produced goods, or at least away from the products produced by the country the tariff has been placed on.

Economists have long debated how effective tariffs are. It can lead to tit for tat actions resulting in a trade war harming both parties. Domestic companies can seize the opportunity to raise their own prices a portion of the tariff amount, resulting in inflation.

The general consensus is tariffs are usually ineffective in achieving their stated goals and harm consumers.

[WarGamer]

31. It's part of the cost of goods sold.

The same as taxes, production costs, marketing costs and raw material/labor costs.

[harumph]

4. That is essentially what happens; consumers pay a relatively higher price for goods under tariffs.

This makes the foreign produced product less price competitive in relation to a similar domestically produced one.
For reasons too lengthy to go into here, tariffs often do not have the intended effect. But the take away is that consumers are
the ones paying the increased costs of the tariff.

[ret5hd]

10. i understand all that...i really do...but my question...

is (i guess) where/when does the tariff actually get collected…who specifically in the chain cuts the check with “Payee: USA Govt” and the memo line that says “tariff on 50000 xxx widgets”

[Mosby]

15. Tariffs are assessed and collected by the US Customs and Border Protection Service

Whether or not that tax is passed on to consumers depends on the elasticity of demand for the product(s) in question.

Eta - https://www.trade.gov/import-tariffs-fees-overview-and-resources#:~:text=The%20tariff%2C%20along%20with%20the,clearance%20in%20the%20foreign%20port.

[IbogaProject]

38. For small items you get a slip from your Post Office

Then you have to trudge down to the post office and pay the tariff. I had to do that once when I bought a carpet in Morocco and had it sent via their mail. It got held at my hometown post office. This was 25 years ago back in the last century, the process may be different now.

[sarisataka]

25. Tariffs are import taxes

the only time an exporter would pay a tariff is in they are also the importer.

[sarisataka]

22. The consignee who receives the goods upon arrival in the US

unless otherwise specifically designated in the law imposing the tariff.

[ret5hd]

24. TY

[malaise]

23. The importer/company

Then it is passed on to consumers

[OLDMDDEM]

5. Trump's comment about China paying Billions in tariffs is a full blown lie. The importer pays the tariff and passes it

along to the consumer. The consumer pays it when they buy the product at the store. Trump has no concept about Economics.

[wnylib]

27. But isn't he a financial genius who went to Wharton?

[OLDMDDEM]

29. Good point. I went to the University of Nebraska at Omaha. I know waaaay more than he does. I didn't buy

my grades, I earned them.

[wnylib]

34. I didn't take any finance or business courses in college, but

Last edited Wed Sep 11, 2024, 08:02 PM - Edit history (1)

I learned about tariffs in a junior high civics class.

I am hoping that some of the people who fell for the image of Trump as a financial genius are able to see through the fraud when they realize that he does not comprehend tariffs, which they learned about in school.

I know that many of his followers don't comprehend it any better than TSF. But it is such a basic fact that there be some people who, like me, learned about tariffs in secondary schools.

[Mossfern]

35. Hey!

I was a Fine Arts major and know way more than he does!

[OLDMDDEM]

37. I believe you. Trump showed his true self last night.

[Klarkashton]

53. As I recall he attended a special program for

Real estate management or something like that. It wasn't economics.

[wnylib]

55. Even so, a "business genius" with international business dealings

who was also president of the USA for 4 years should know something as basic as what a tariff is.

[Klarkashton]

56. He is willfully ignorant.

[Disaffected]

41. I do wish Harris or the moderators

had emphasized that point as it is an absurdity and easily refuted.

As for Trump not understanding this and many other things, it is almost impossible IMO to tell if he actually believes it or is lying (or maybe some of both).

[LiberalFighter]

54. No concept about economics or business?

[surfered]

6. The purpose of the tariff is to make imported goods more expensive, so American consumers will buy American goods...

...because they're cheaper. The American consumer can still buy the more expensive foreign good, but it's the consumer and not the foreign manufacturer or government that pays the tariff. The tariff is, in effect, a sales tax and revenue to the US Treasury.

[ret5hd]

11. see my post number 10 please

[nolabear]

17. I only know a personal story.

My late mother in law, who bore NOBODY’S shit, once imported a group of ceramics that were art. The gov’t wanted to impose a tariff as though they were dishes, a much higher rate. After she died we found months’ worth of letters where she started out as reasonable and ended up in gfy territory. She’d have had to pay before receiving them. She won. I think it works the same overall.

[Justice matters.]

40. If they're kept cheaper. We all see what happened after the pandemic...

Nothing says they will remain cheaper. Those prices will increase (while remaining cheaper by one or two dollars), but corporate greed will rise their prices if they see the competition is higher.

[ProfessorGAC]

42. While Accurate, Conceptually...

...the twist is that goods are imported rather than domestically obtained, because they're typically cheaper.
The tariffs may have to be quite severe even to get to parity. At that point, there is no motivation for the domestic producer to hold the line on prices.
The lower margins needed to hold market share are no longer necessary so, as companies are wont to do, they raise prices to increase margins even as market share goes up.
The tariffs may have a desired shift toward domestic production, but doesn't positively effect cost to the consumer.
Also, since companies generally don't hold idle assets for extended periods, there may not be sufficient capacity to accommodate the new demand. Hence, overall demand rises, but supply can't meet it. Prices the go up because of the market demand. If companies invest capital to increase capacity, prices go up to create a return on that invested capital. Either way, cost to the consumer goes up.
This is why so many professional economists question whether tariffs ever actually work.

[Turbineguy]

7. BTW Across the board tariffs are a tax.

Tariffs are more like social engineering. Taxes can be also. For example: in Italy car registration was based on engine displacement. That led the Italians to develop small but powerful engines.

https://dclcorp.com/blog/supply-chain/duties-taxes-tariffs-explained/#:~:text=In%20general%2C%20customs%20duties%20are,product%20imported%20into%20the%20country.

[ret5hd]

12. see my post number 10 please

[dawg]

9. And even if the economy is able to survive the higher prices passed through to consumers ...

a second wave of misery is unleased when the other countries start imposing tarriffs of their own.

This is how worldwide depressions are made.

[ret5hd]

13. see my post number 10 please

[dawg]

16. The importer!

I fucking hate it when people spam "See my post #10" on a message board.

[ret5hd]

20. well, nobody really answered my question...

admittedly maybe because it was ill-phrased…but the answer “the consumer pays it” didn’t really answer the question i was asking.

i am ever so humbly sorry for wasting your time.

[SeanHG]

28. See post #15

It was clearly answered with an explanatory link.

[ret5hd]

32. 15 GT 10

[Thunderbeast]

18. So... When the cost and price of a Toyota is raised by 10%

Ford and GM have no incentive to keep prices lower to compete.

So, not only is the Toyota more expensive to cover the tariff, but the Chevy and Ford in the showroom has a higher price as well...

[dawg]

19. Not to mention all their imported components.

They factor in as well.

[NowISeetheLight]

26. Tariffs Screwed Farmers

Remember his tariffs screwed the farmers so bad the government ended up having to bail them out.

https://www.forbes.com/sites/stuartanderson/2020/01/21/trump-tariff-aid-to-farmers-cost-more-than-us-nuclear-forces/

Trump Tariff Aid To Farmers Cost More Than U.S. Nuclear Forces

The Trump administration gave more taxpayer dollars to farmers harmed by the administration’s trade policies than the federal government spends each year building ships for the Navy or maintaining America’s nuclear arsenal, according to a new report.......

[Old Crank]

30. One thing not mentioned usually about tariffs

Is what happens to the prices of the homegrown widgets. I'm barely making a profit at ten dollars a widget. Now imported ones go up to 11 bucks because of the tariif, I can now gain both market share and profit selling at 10.50..

[GoodRaisin]

43. Which is why tariffs are inflationary.

[LetMyPeopleVote]

33. TFG and Vance are lying about how Tariffs work

Link to tweet

Link to tweet

Former President Donald Trump and Republican vice presidential nominee Sen. JD Vance continue to falsely describe how one of their major policy proposals, across-the-board tariffs, would work.

Trump has falsely, and repeatedly, claimed that China – not US importers – pay the tariff.

At a rally in Arizona in mid-August, he claimed that Vice President Kamala Harris, his Democratic opponent, is lying when she refers to his tariff plan as a “Trump tax.”.....

Here’s how tariffs work: When the US puts a tariff on an imported good, the cost of the tariff comes directly out of the bank account of an American buyer.

“It’s fair to call a tariff a tax because that’s exactly what it is,” said Erica York, a senior economist at the right-leaning Tax Foundation.

“There’s no way around it. It is a tax on people who buy things from foreign businesses,” she added.

Trump has said that if elected, he would impose tariffs of up to 20% on every foreign import coming into the US, as well as another tariff upward of 60% on all Chinese imports. He also said he would impose a “100% tariff” on countries that shift away from using the US dollar......

Study after study, including one from the federal government’s bipartisan US International Trade Commission, have found that Americans have borne almost the entire cost of Trump’s tariffs on Chinese products.

To date, Americans have paid more than $242 billion to the US Treasury for tariffs that Trump imposed on imported solar panels, steel and aluminum, and Chinese-made goods, according to US Customs and Border Protection.

[former9thward]

48. Except you ignore the Biden tariffs on steel and other Chinese products.

Why do Democrats support tariffs?

[LexVegas]

39. The problem for many businesses is that you can't always recoup the full tariff cost when selling.

Many customers, especially large companies, simply will not accept a price increase because of tariffs. They demand year over year cost savings, and will go elsewhere when a supplier cannot deliver.

I manage a facility that assembles components that are sourced both domestically and internationally based on availability and cost. We have not been able to recoup that cost of tariffs on imported goods. The best you can hope for in many cases is flat pricing year over year with customers, but that will not float for long. Large companies want cost reduction.

[GoodRaisin]

44. Not right away, no. But eventually they will recover it as part of a periodic

price increase unless the buyer has somewhere else to go, which is not always the case.

[LexVegas]

45. All the industrial clients I have had experience with expect 5-7% cost down year over year. The alt is off-shoring. nt

[GoodRaisin]

46. My experience was the same. Annual cost reduction with similar goals are

a necessary part of the balance of maintaining margins. But the tarriff costs don’t just go away, they have to go somewhere in the supply chain and eventually will factor into supplier costs whether passed on to the next customer or not. If you can resource the product for a lower price then okay, it gives you leverage over a supplier trying to pass on a tarriff cost. But, it isn’t always the case depending on the product and industry you compete in. In an industry with many sources and capacity it may work for a while. Definitely it was not the case in my industry in which I worked for 33 years, where we had to develop sources to maintain a competitively priced product and market share.

[former9thward]

47. You are very far off.

Which is why Biden has kept the Trump tariffs on China. Tariffs act to discourage competition with American made products. Tariffs cause a foreign made product to cost more when sold in the U.S. This means consumers are more likely to buy a U.S. made product. This is why the Steelworkers Union has encouraged tariffs on Chinese steel which competes with American mills. Trump, Biden and Harris have favored those type of tariffs and others.

[ret5hd]

49. That doesn't answer my question at all.

[Emile]

50. Pretty simple, it's a tax on consumers.

[ret5hd]

51. Not an answer to the question asked.

[surfered]

52. It is paid to US Customs at the border by the importer.

Unless the importer is willing to sell the product at a loss, the tariff is passed along to the ultimate buyer, the American customer.