Are tariffs a viable option for protection in todays global economy

[fredtoast]

Won't tariffs by us just lead to tariffs against us?

I don't see how this is going to work in today's global economy. Seems like if we artificially inflate the price of imports it will just inflate the prices of the same items being manufactured domestically.

[CKwi88]

(01-25-2018, 10:28 PM)fredtoast Wrote: Won't tariffs by us just lead to tariffs against us?

I don't see how this is going to work in today's global economy.  Seems like if we artificially inflate the price of imports it will just inflate the prices of the same items being manufactured domestically.

I'm no economist, but I imagine that tariffs pretty much just result in a higher price for consumers or the company taking there business elsewhere, providing less competition and allowing a company to charge more.

So yeah, the consumer is the one hurt most in the end I would think.

[Sociopathicsteelerfan]

(01-25-2018, 10:46 PM)CKwi88 Wrote: I'm no economist, but I imagine that tariffs pretty much just result in a higher price for consumers or the company taking there business elsewhere, providing less competition and allowing a company to charge more.

So yeah, the consumer is the one hurt most in the end I would think.

That is one possibility.  Another is that tariffs make imports from countries that pay their workers near slave wages comparable in price to products made by companies in this country , or others like it, that pay their employees a living wage.  What isn't disputable is that the exodus of manufacturing jobs to countries that pay minimal wages has had a profound impact on the working middle class in the United States.  As the middle class is the primary source of job creation, because they buy things that must be produced by others, this is a net loss for developed nations like the United States.

But hey, I'm no economist either.

[Benton]

(01-25-2018, 10:46 PM)CKwi88 Wrote: I'm no economist, but I imagine that tariffs pretty much just result in a higher price for consumers or the company taking there business elsewhere, providing less competition and allowing a company to charge more.

So yeah, the consumer is the one hurt most in the end I would think.

(01-26-2018, 01:33 AM)Sociopathicsteelerfan Wrote: That is one possibility.  Another is that tariffs make imports from countries that pay their workers near slave wages comparable in price to products made by companies in this country , or others like it, that pay their employees a living wage.  What isn't disputable is that the exodus of manufacturing jobs to countries that pay minimal wages has had a profound impact on the working middle class in the United States.  As the middle class is the primary source of job creation, because they buy things that must be produced by others, this is a net loss for developed nations like the United States.

But hey, I'm no economist either.

Companies in some industries are faced with a choice: manufacture in countries with low wages and the ability to import cheaply or manufacture in countries with higher wages and the ability to import cheaply. Tariffs can encourage them to manufacture in countries with higher wages, and presumably better working conditions.

[Dill]

(01-25-2018, 10:46 PM)CKwi88 Wrote: I'm no economist, but I imagine that tariffs pretty much just result in a higher price for consumers or the company taking there business elsewhere, providing less competition and allowing a company to charge more.

So yeah, the consumer is the one hurt most in the end I would think.

Some would agree with you.  

[treee]

You generally want to avoid tarriffs as much as you can, imo. However, if you're a group of industrialized nations that want to protect the value of their labor, you can collectively agree to tarriff countries that do not afford their citizens a proper standard of living.

[Au165]

It essentially amounts to a tax on your own people. They hurt low income citizens, which is counter intuitive to what they are supposed to be doing.

[Nebuchadnezzar]

Instead of tariffs, the US should go to a VAT system and tax everything coming into the United States like other countries do, many European countries and I'm sure well over 100 other countries around the world.

It's only fair, right?

[Belsnickel]

(01-26-2018, 06:53 AM)Dill Wrote: Some would agree with you.  

When taken in conjunction with some other similarities to pre-Depression economics, this is unfortunate.

[fredtoast]

(01-26-2018, 07:11 AM)treee Wrote: You generally want to avoid tarriffs as much as you can, imo. However, if you're a group of industrialized nations that want to protect the value of their labor, you can collectively agree to tarriff countries that do not afford their citizens a proper standard of living.

This gets to the point I was making.

I understand why tariffs are supposed to "level the field" but all I see happening is the other countries imposing tariffs on our products which will hurt our economy.

If it is done by a group then we would not have to worry as much about retaliation.

[Dill]

(01-26-2018, 07:11 AM)treee Wrote: You generally want to avoid tarriffs as much as you can, imo. However, if you're a group of industrialized nations that want to protect the value of their labor, you can collectively agree to tarriff countries that do not afford their citizens a proper standard of living.

That is a more nuanced approach, and would require diplomacy from a president who just told the world that US aid money is on the table to punish those who don't vote with us in the UN.

[Sociopathicsteelerfan]

(01-26-2018, 06:53 AM)Dill Wrote: Some would agree with you.  

Yes, the world is currently in the throes of the worst economic depression is modern history.  Excellent comparison.

[treee]

(01-26-2018, 01:12 PM)Sociopathicsteelerfan Wrote: Yes, the world is currently in the throes of the worst economic depression is modern history.  Excellent comparison.

The worst economic downturn in 80+ years warrants some comparisons, I'd say. What do you think a gilded age looks like?

[Sociopathicsteelerfan]

(01-26-2018, 01:34 PM)treee Wrote: The worst economic downturn in 80+ years warrants some comparisons, I'd say.

To the Great Depression?  No, absolutely not.

Quote: What do you think a gilded age looks like?

Nothing like today's world, unless you live in China or India or another country producing cheap consumer goods on the back of a borderline slave labor force.  As I argued above, tariffs could address this issue.

[treee]

(01-26-2018, 01:48 PM)Sociopathicsteelerfan Wrote: To the Great Depression?  No, absolutely not.


Nothing like today's world, unless you live in China or India or another country producing cheap consumer goods on the back of a borderline slave labor force.  As I argued above, tariffs could address this issue.

So the greatest recession, since the depression, warrants no comparisons? Okay.

And tariffs make sense on a grander scale, but not on a country by country basis. For example, if NATO decided to tariff metals coming China, that would make sense. In a world market, economic powers cooperating makes sense. Trying to go solo with economic isolationism is just asking to be left in the dust, though.

[StLucieBengal]

(01-26-2018, 10:28 AM)Nebuchadnezzar Wrote: Instead of tariffs, the US should go to a VAT system and tax everything coming into the United States like other countries do, many European countries and I'm sure well over 100 other countries around the world.

It's only fair, right?

This was the founders original plan. They would need abolish the income tax however.

[Sociopathicsteelerfan]

(01-26-2018, 01:50 PM)treee Wrote: So the greatest recession, since the depression, warrants no comparisons? Okay.

It's rather a moot point since we're no longer in that recession.

Quote:And tariffs make sense on a grander scale, but not on a country by country basis. For example, if NATO decided to tariff metals coming China, that would make sense. In a world market, economic powers cooperating makes sense. Trying to go solo with economic isolationism is just asking to be left in the dust, though.

A fair point, but one with less validity when talking about the United States.  Personally, I think it would be in our best interests to attempt autarky.  The global market is far too dependent on global actors who game the system in their favor (China), are too volatile to be relied upon (middle East oil) or are willing to use their people as borderline slaves (India and China).

[fredtoast]

(01-26-2018, 01:48 PM)Sociopathicsteelerfan Wrote: Nothing like today's world, unless you live in China or India or another country producing cheap consumer goods on the back of a borderline slave labor force.  As I argued above, tariffs could address this issue.

Yep.  These companies will have to lower the wages even more in order to pay the tariffs.

[CKwi88]

(01-26-2018, 06:53 AM)Dill Wrote: Some would agree with you.  

I doubt you'd even have to go that far back to see a case of tariffs backfiring. 

Obama tried to get tough with China over car tires and decided to slap Chinese tire imports with a 35% tariff. It was able to save about 1200 tire manufacturing jobs, but tire prices (Chinese and American made) increased, we simply imported more tires from countries other than China, and China naturally retaliated by slapping tariffs on American poultry, hurting American production. 

But of course, that was Obama. Trump is the master dealmaker, or something like that.

Tariffs make for good political grandstanding. Trump gets to say it's all about "Murica First" and the people that eat it up will talk about combating slave wages. It'll save a few jobs, but consumers will see higher prices, and we'll have to see if there are any responses to the tariffs. The tariffs he imposed are hardly the end of the world. They're just nothing to get excited about either. A nothingburger. 

[Dill]

(01-26-2018, 04:40 PM)CKwi88 Wrote: I doubt you'd even have to go that far back to see a case of tariffs backfiring. 

Obama tried to get tough with China over car tires and decided to slap Chinese tire imports with a 35% tariff. It was able to save about 1200 tire manufacturing jobs, but tire prices (Chinese and American made) increased, we simply imported more tires from countries other than China, and China naturally retaliated by slapping tariffs on American poultry, hurting American production. 

But of course, that was Obama. Trump is the master dealmaker, or something like that.

Tariffs make for good political grandstanding. Trump gets to say it's all about "Murica First" and the people that eat it up will talk about combating slave wages. It'll save a few jobs, but consumers will see higher prices, and we'll have to see if there are any responses to the tariffs. The tariffs he imposed are hardly the end of the world. They're just nothing to get excited about either. A nothingburger. 

My reference to Smoot Hawley is only point or baseline for discussing the issue of tariffs, something people need to consider whenever discussing tariffs, not a definitive absolute closure on tariff considerations.  It's passage appears to have gone against the best economic advice available at the time, in part because it presented a simple (or simplistic) solution of the sort which tend to be politically effective (e.g., the "political grandstanding" you reference above).

I tend to agree with Treee, that concerted tariff policies with US allies might have a positive effect, though that would require diplomacy. And I find your caution sensible as well.  The US acting alone in tariff matters or otherwise "going rogue" would likely increase rather than decrease stability in world wide markets, not to mention expose the US to retaliation.