I can't imagine their margins are usually very high, the tariff rates are astronomical compared to their usual margins. Hopefully someone here has more information than me because to my naive mind this basically absolutely explodes the free cash reserves of importers from high volume high tariff countries creating a lottery winnings for a business sector of epic proportions rarely seen.
The best you could do is perhaps model the additional per household cost (which has been done) and issue them checks from the Treasury (stimulus check style), but who is going to pay for it? The taxpayer! There is no way to incur this economic cost on the people who incurred the harm (this administration). You could potentially get the funds back from companies through higher corp taxes. Is Congress going to pass that? Certainly not. Them the breaks of electing Tariff Man. Does exactly what it says on the tin.
> ....I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN 9:03 AM · Dec 4, 2018
https://x.com/realDonaldTrump/status/1069970500535902208 | https://archive.today/BBEmH
Historical lesson in governance failure. Can't change history, the outcome is regrettable, we can only try to do better in the future. Onward. Let the lesson not be for naught.
It's very much possible if money isn't (or only partially) returned to the companies and used for targeted investment benefiting the public. Of course this won't help much if government spending priories and legislative objectives aren't revised, but that's unlikely because there's nobody in government or academia with anything close to a good idea about it.
Otherwise it’s the same as just leaving the illegal tax in effect.
The SCOTUS didn't say that in their decision. No matter how you call it, the tariffs were found in breach with simple law passed by Congress - that is, the undoing of tariffs can be legislated by Congress and it can take any shape they like - it will be legal. Anyway, fine-tuning this is a waste of time, the big problems are elsewhere.
But we all know they are actually the party of unsustainable debt (with the political agenda of it blowing up the country as they lay out in their 40+ years of starve the beast policy). They then come to threads like this and talk about...the unsustainable debt that their 40+ years of policymaking has created and how government doesn't work (because of their 40+ years of policy making) and we need to get rid of it. 40+ years of destroying the country via starve the beast policy and placing the country in unsustainable financial peril all for a political agenda they can't reach any other way.
They should be well aware of what extortion is.
If Trump did it on his own that's one thing if not it's a conspiracy.
This story is often repeated, especially by businesses advocating against taxes, but transparently false if you think about it: Taxes and tariffs are costs for a business, no different than an increase in the cost of hops for Budweizer, or an increase wholesale cost of M&M's for the corner store.
When hops' cost increases, Budweizer doesn't just pass it along to consumers; the corner store also doesn't just raise the price of M&Ms. Everyone knows that if you raise the price, fewer people buy your beer/candy and your profits may drop overall, while your scarce assets (money) will be sunk in products sitting on the shelves when you need those assets elsewhere. They can't just raise prices arbitrarily: if Budweizer charged $20/can they'd have zero profit.
As we know well, some companies even sell products at a loss because that is the best outcome for their profits - e.g., car manufacturers, rather than have a hundred million in assets 'lost' indefinitely to unsold cars, and having no pricing that is more profitable, will sell at a loss to get what they can out of it. The clothing store puts last season's unsold clothes on sale around now.
In economics the tradeoff between price and quantity sold is called the demand curve. There's a theoretical point on the curve, hard to identify precisely in reality, which maximizes your profit.
So when costs increase, businesses still want to maximize profits: They decide how much of extra cost to pay directly out of their profits, and how much to raise the price and have consumers 'pay' for it. The consumers don't always go along with the plan: For products that are easy to forgo, such as M&Ms, consumers won't pay much more and businesses tend to eat cost increases. For products that are more unavoidable, such as gas for your car, consumers are compelled to pay more (until they buy more fuel efficient cars, or take a bus or ride a bicycle).
> [T]he net effect of tariffs is to raise U.S. consumer prices by the full portion of the cost of the tariffs borne domestically (95 percent)
This is a serious document written by a bunch of serious economists. You can find a list of them at the bottom of the page. That you have written their conclusion off as "transparently false" should give you pause.
I didn't say that. I said that the common argument that tax/tariff increases are always passed along 100% to consumers is transparently false. And contrary to your criticism, the cited paper agrees with my claim (in this case, while my claim is general):
"In CBO’s assessment, foreign exporters will absorb 5 percent of the cost of the tariffs, slightly offsetting the import price increases faced by U.S. importers. In the near term, CBO anticipates, U.S. businesses will absorb 30 percent of the import price increases by reducing their profit margins; the remaining 70 percent will be passed through to consumers by raising prices."
It goes on to say that other businesses, whose costs haven't increased, will raise prices - which is not at all 'passing along costs to consumers' but a different dynamic - and that the combined two dynamics yield the overall consumer impact equal to 95% of tariff costs:
"In addition, U.S. businesses that produce goods that compete with foreign imports will, in CBO’s assessment, increase their prices because of the decline in competition from abroad and the increased demand for tariff-free domestic goods. Those price increases are estimated to fully offset the 30 percent of price increases absorbed by U.S. businesses that import goods, so the net effect of tariffs is to raise U.S. consumer prices by the full portion of the cost of the tariffs borne domestically (95 percent)."
I think the tariffs are a big mistake but the argument I was addressing - if you tax businesses then consumers effectively pay the tax - is widespread disinformation.
Thus both of you are really right. The tariff is paid 100% by consumer receipts if you track the flow of money, but this might also still be reflected in reduced profits. The actual flow of money might be $X revenue from customers, out of the $X paid from customers $Y is taken out for tariffs. $Y comes from the dollars received from customers but still reflects lowered potential profit if $X rose by less than $Y after tariffs started.
Tariffs do not necessarily increase prices for consumers, especially not at a dollar-for-dollar rate.
You were the one that presented the dichotomy of receipts from customers and diversions of profits. Then when I used your own framing, by using the exact same two variables, you switched the game and object to not including the investors. This is absolutely hilarious, as you're objecting to the very foundation you outlaid.
>Tariffs do not necessarily increase prices for consumers, especially not at a dollar-for-dollar rate.
The 'question' was twofold. Whether consumers pay it. And whether tariffs increase price for consumers. It can be true that the consumer pays ~100% of the tariff, yet the price doesn't rise as much as tariffs. It's still the consumers paying, they're just paying more to tariffs and less to profit. So you're both right, and your failure to acknowledge that is why your comment got grayed out. Had you acknowledged that, it would have been a very easy 'win' for you and close out of a decent argument.
That's why it taxed the economy much worse than a legitimate President would do.
Once again, count on hn for the downvotes. Yep, those shall not speak of downvotes, or taxation.
One that goes through all three branches of government, the way it's been since we decided "no taxation without representation" is how such things should be collectively implemented.
If a citizen's stance is there is no such thing as a legitimate tax, perhaps there should be a legal process for banishing them from all public services, including roads, electricity, telephone, fire and rescue services, etc. and make consuming them a crime. But I guess even that would be a problem because we need to pay for the justice system that would prosecute such a sovereign citizen that breaks the rules...
Basically an "opt-out" of modern life almost in its entirety. I think most people that subscribe to "no legitimate taxes" might be surprised how isolating that would be if they actually think it through.
To be clear, I don't think this is a good idea, it's simply a thought exercise.
I lean quite heavily myself.
In more ways than one though ;)
The most legitimate tax I see is one that citizens would cheerfully pay willingly under any economic conditions.
Citizens still need to come to some consensus.
One key feature I didn't emphasize was the requirement for the tax rate to never rise to a significant enough level to be a burden on the wage-earning taxpayer.
Otherwise it's just a sinkhole which brings down the prosperity ceiling with it.
But that’s irrelevant - excise taxes are the classic example of taxes people pay willingly.
excise taxes are hidden taxes, so I wouldn't agree with "willingly"
When Donald Trump didn't run his tariffs through Congress he blatantly violated separation of powers. In normal times this would be 9-0 ruling from the Supreme Court for being so open and shut and it would not have taken over a year for the decision, but those times have passed.
For instance complaining about downvotes always draws more as does collectively insulting the community you are participating in.
As to the original question the problem is that it suggests confusion on a basic topic that was decided here centuries ago and taught in elementary school. If someone said what even is addition in an adult forum would you teach them addition or would you assume that they actually know addition and are arguing in bad faith because they feel math really ought to work differently?
Also when you can divide a particular topic into clearly delineated camps appearing to disagree or question the basic premises that one camp holds is oft taken for disagreement and alignment with the opposing camp even when you are just debating a side issue and may in fact be mostly or entirely aligned with the people who feel like you are opposed to them. This shortcut as far as identifying motive and perspective can misfire but it's often correct and "just asking questions" is often underhanded opposition.
Lastly a legitimate tax is one that is passed by Congress in the normal fashion and not overturned by the courts.
As for talking about what shall not be talked about, how else shall we talk about it? Once I hit -4, it doesn't matter anyway so a few drops on what I have is not really a big deal. In reality, I'm not counting the numbers, I'm counting the people who have fundamentally lost the cognitive ability to reason about deeper meaning in a more philosophical sense and just click click click.
Legitimate from a cultural / legal sense, but not from a philosophical one.
That's means its not a legitimate tax