Trumpled (Alternative Leading)

[DJC]

Maybe you need to talk to the folks who buy potato's and can't afford a new Cadi? Those who can't get a job?

The analyst I listened to made it very clear that imposing a 20% tax on a major trading partner would push up prices across the board, hence my avos and Cadis examples, but would have most impact on those least able to afford price increases - and who also eat a lot of guacamole  .  There's also the issue of job losses among up to 6M US residents involved directly or indirectly in businesses that rely on trade with Mexico.

[cookie2]

The analyst I listened to made it very clear that imposing a 20% tax on a major trading partner would push up prices across the board, hence my avos and Cadis examples, but would have most impact on those least able to afford price increases - and who also eat a lot of guacamole  .  There's also the issue of job losses among up to 6M US residents involved directly or indirectly in businesses that rely on trade with Mexico.

Which analyst is that then? 

[DJC]

Which analyst is that then? 

I have enough trouble remembering what they say, let alone their names 

[sydneybluesfan]

The huge off shoring of jobs especially in the US has resulted in working and middle class real wages stagnating over the past twenty five years at least and a huge loss in tax revenue. I'm not a fan of Trump but if you think current global trade liberalisation practices are designed for the net benefit of the average Joe well best of luck.

This is undoubtedly a pandora's box discussion - but there are always going to be winners and losers in any economic policy and depending on where you sit on that spectrum will inform your view. Under free trade high cost / low quality industries often struggle and will eventually close [eg the car industry here], but the flip side is that export markets for efficient or high quality goods or services open up and expand. If you work on line at Ford you probably think it sucks, but if you work on the line at Blackmores you are cheering.

But in both cases you can drive home in a cheap car and watch your LCD panel that you bought online from Kogan for $300.

I think in western societies we also tend to forget that trade liberalisation has significantly increased the economic wealth of 3rd world countries and pulled millions [billions] of people out of abject poverty over the last 50 years. And again your view on whether working for a $1 a day in a Bangladeshi sweat shop is better than a mud hut and a subsistence lifestyle depends on your world view.

The issue for me is that the 'problem' of high unemployment in certain sectors or regions [remembering that the overall rate is 4.9% - historically low] and real wages you mentioned will both be made worse under a high tariff regime because a/ prices for the $500b of stuff the US import will go up so consumers pay more but their wages will stay the same, and b/ existing export markets will be made more difficult to access due to the retaliation allowed by the WTO. So prices go up, and unemployment also goes up - how does this help the average Joe?? 

[DJC]

Which analyst is that then? 

Not the same bloke but a similar analysis:

Experts say a tariff would raise a mountain of concerns about U.S. jobs, the prices of products, and who actually pays for the wall.
"The notion that a 20% tariff is a way of forcing Mexico to pay for the wall, it's just a falsehood. It's a way of forcing American consumers to pay for the wall," says Edward Alden a trade expert at the Council on Foreign Relations.

Here's why.

First, about 6 million U.S. jobs depend on trade with Mexico, according to the U.S. Chamber of Commerce. Experts say those jobs would be jeopardized if Trump restricts trade with Mexico.

Americans will very likely face higher prices for many things -- from cars and computers to avocados and Corona. A litany of products imported from Mexico would be more expensive.

Companies from Ford (F) and GM (GM) to retailers like Walmart (WMT) and Best Buy (BBY) will likely be hit hard.

Taxing Mexican imports affects many U.S. companies that send parts south of the border to be assembled. About 40% of the parts in a typical Mexican import originate in the United States. For example, before a car arrives at a local dealership, its parts criss-cross the U.S, Mexican and Canadian borders. It's how supply chains are used today.

There are other less obvious ways a blunt tariff could come back to bite Americans. Higher prices on some products mean that Americans would have less money to spend on others.

That would end up costing jobs. That's what happened in 2009 after President Obama used tariffs on Chinese tires. It cost more jobs than it saved because prices for tires went up, one study found.

And a Trump tariff would apply to many more products, so the ripple effects would be a lot broader.

That brings us to who pays for the wall. When the U.S. government applies a tariff on Mexican goods shipped into the U.S., Mexican companies don't pay the tariff -- American companies pay it. Companies usually pass the increased cost of goods down to consumers, hence the higher price tag.
So yes, a 20% tariff would pay for the wall. But Mexico would not be paying for it. American consumers would ultimately pay the price. Literally.

The last point is interesting; US consumers would actually pay for the wall  )

[Lods]

https://dumbrunner.com/news-blog/2017/1/...-distances

;D

[cookie2]

Not the same bloke but a similar analysis:

The last point is interesting; US consumers would actually pay for the wall  )

You lost me after "Experts say". There are other "experts" who would not agree.

[cookie2]

This is undoubtedly a pandora's box discussion - but there are always going to be winners and losers in any economic policy and depending on where you sit on that spectrum will inform your view. Under free trade high cost / low quality industries often struggle and will eventually close [eg the car industry here], but the flip side is that export markets for efficient or high quality goods or services open up and expand. If you work on line at Ford you probably think it sucks, but if you work on the line at Blackmores you are cheering.

But in both cases you can drive home in a cheap car and watch your LCD panel that you bought online from Kogan for $300.

I think in western societies we also tend to forget that trade liberalisation has significantly increased the economic wealth of 3rd world countries and pulled millions [billions] of people out of abject poverty over the last 50 years. And again your view on whether working for a $1 a day in a Bangladeshi sweat shop is better than a mud hut and a subsistence lifestyle depends on your world view.

The issue for me is that the 'problem' of high unemployment in certain sectors or regions [remembering that the overall rate is 4.9% - historically low] and real wages you mentioned will both be made worse under a high tariff regime because a/ prices for the $500b of stuff the US import will go up so consumers pay more but their wages will stay the same, and b/ existing export markets will be made more difficult to access due to the retaliation allowed by the WTO. So prices go up, and unemployment also goes up - how does this help the average Joe??

All well and good, but be prepared for the inevitable backlash from the losers, as we've already witnessed with Brexit and Trump or is this merely to be seen as the winging of the deplorables. Also, check out type of "jobs" used to calculate the present unemployment number. Not many of us would want them for ourselves or our children.

[sydneybluesfan]

All well and good, but be prepared for the inevitable backlash from the losers, as we've already witnessed with Brexit and Trump or is this merely to be seen as the winging of the deplorables. Also, check out type of "jobs" used to calculate the present unemployment number. Not many of us would want them for ourselves or our children.

I agree with you - this all about the winners and the losers, and at the moment the losers are surely having there say.

The really interesting thing for me in all this is the 'inevitable backlash from the losers' when the strategy of protectionism which is being pursued ATM doesn't deliver any benefits to the domestic US citizens, most things cost more, the steel mills don't re-open, the stock market tanks and they are in a recession [depression] that they can't get out of because the rest of the world has closed their doors.

I fully agree that their are huge structural issues in the US [and UK] for those at the bottom end that need to be addressed, but starting a trade war is surely only going to make the situation worse for them - then who do they blame / turn too??

[LP]

Tariffs don't work anywhere, but neither does free trade, under the UN HSC Treaty countries are free to apply their own duties.

So when I export something to China or India they whack a 27% or 33% Import Duty on those items. While the very same countries can deliver stuff to local companies and Australia puts 10% GST on them!

Not so free trade!