Economic, taxes, and tariffs discussion

[Judge Jude]

that's awfully simplistic. do Phillies fans pay a tax because Bryce Harper got a zillion dollar contract?

"A business will, if it can, pass its higher after-tax costs on to consumers."

um, a business will, if it can, charge more to customers regardless of after-tax costs."

btw, not that I'm endorsing this Trump scheme, by any means. but consumers are not prisoners, and China doesn't have a worldwide monopoly on every consumer product (though there are specific sectors where this scheme becomes very shaky).

[frae]

that's awfully simplistic. do Phillies fans pay a tax because Bryce Harper got a zillion dollar contract?

"A business will, if it can, pass its higher after-tax costs on to consumers."

um, a business will, if it can, charge more to customers regardless of after-tax costs."

btw, not that I'm endorsing this Trump scheme, by any means. but consumers are not prisoners, and China doesn't have a worldwide monopoly on every consumer product (though there are specific sectors where this scheme becomes very shaky).

Ok are costs going to rise on products? This is a tax, the importers aren't just going to eat the cost for any sustained period of time.

https://www.cnbc.com/2019/05/31/costco-is-looking-at-alternative-sourcing-and-price-hikes-as-tariffs-loom.html

https://www.cbsnews.com/news/china-tariffs-dollar-tree-ceo-warns-next-round-of-china-tariffs-could-hurt-shoppers-in-investor-relations-earnings/

http://fortune.com/2019/05/16/walmart-price-increases-tariffs/

[Judge Jude]

"importers aren't just going to eat the cost for any sustained period of time."

they will if consumers refuse to pay the higher price.

that's why I compared it to baseball. too many people think if a team pays a high price for a player, they have to charge higher ticket prices and fans have to pay it. except they don't.

[frae]

"importers aren't just going to eat the cost for any sustained period of time."

they will if consumers refuse to pay the higher price.

Well some of the things on those lists we will need and some we won't get from other places and then we will just get a slower economy right? All though at this point I am out of my depth on how the economy slows and who blinks at what first, but if people refuse to pay the prices on product A that they don't need and the store loses money there wouldn't they just raise prices on things that we do need to balance the loss out even if they lower the price on product A? So in the end we still wind up paying for it?

[revo]

"importers aren't just going to eat the cost for any sustained period of time."

they will if consumers refuse to pay the higher price.

that's why I compared it to baseball. too many people think if a team pays a high price for a player, they have to charge higher ticket prices and fans have to pay it. except they don't.

And if companies eat the higher cost, what happens next?

[Judge Jude]

as the article suggests, they'll probably scramble around to find a way to obtain the product elsewhere.
in some cases, it might even lead to partnerships in production in countries outside of China. maybe even in the U.S.

again, I'm not endorsing this game of Russian roulette - just pushing back on the idea that any tariff completely becomes a sunk cost to the consumers. in most cases, they have options.

this is why economic impact studies touting construction of arenas and stadiums at taxpayer cost are so stupid.
there are a finite number of discretionary dollars for entertainment available to the typical consumer. if a new sports facility opens up - or the team moves away - the total remains roughly the same in most cases. if you can't spend thousands on season tickets for the basketball team anymore, you'll spend it elsewhere. and if a new team arrives, you'll cut back on spending elsewhere - without even thinking about it.

if you were thinking about spending $1,000 on a new refrigerator but the ones you like are now $1,300, you may put it off for a year - at which point, the tariff war's over. or maybe you wince and buy the shitty $750 one that now costs you that same $1,000 that you budgeted.

[revo]

as the article suggests, they'll probably scramble around to find a way to obtain the product elsewhere.
in some cases, it might even lead to partnerships in production in countries outside of China. maybe even in the U.S.

again, I'm not endorsing this game of Russian roulette - just pushing back on the idea that any tariff completely becomes a sunk cost to the consumers. in most cases, they have options.

this is why economic impact studies touting construction of arenas and stadiums at taxpayer cost are so stupid.
there are a finite number of discretionary dollars for entertainment available to the typical consumer. if a new sports facility opens up - or the team moves away - the total remains roughly the same in most cases. if you can't spend thousands on season tickets for the basketball team anymore, you'll spend it elsewhere. and if a new team arrives, you'll cut back on spending elsewhere - without even thinking about it.

if you were thinking about spending $1,000 on a new refrigerator but the ones you like are now $1,300, you may put it off for a year - at which point, the tariff war's over. or maybe you wince and buy the shitty $750 one that now costs you that same $1,000 that you budgeted.

Or the companies have a reduced profit, thus lowering their stock price (if public), and if many companies are affected the same, GDP. Or they lay off workers to make up for the loss of profit. Or they lose sales and pray for sanity.

These Mexican tariffs would have a devastating ripple effect on the entire world.

And those articles are just retailers who import finished goods. What about companies who source various parts for their unfinished product from China or Mexico? If the cost of a tchotchke costs $5.00 to make but now will cost $5.50 because of tariffs, you really believe that company will leave that profit on the table?

Using your example, what if you do put off buying that new refrigerator? What if many people do? And using your example of the Phillies, they 1) budgeted this amount for Harper and others, unlike businesses who didn't see these tariffs coming or lasting as long as they have; and 2) if the Phillies don't win and people don't come to the ballpark, then the Phillies lost profits. Obviously, the Phillies believe adding Harper + others will allow them to win and earn more revenues, otherwise they wouldn't have done it.

[Judge Jude]

if any company raises its prices to match effects of a tariff and doesn't meet significant consumer resistance, that its top executives should be replaced immediately by people with a much better understanding of their consumer base - because it means they pissed away added profits for who knows how many years.

[revo]

if any company raises its prices to match effects of a tariff and doesn't meet significant consumer resistance, that its top executives should be replaced immediately by people with a much better understanding of their consumer base - because it means they pissed away added profits for who knows how many years.

See, now if that happens, then that's a rise of CPI. So all told, you're naming countless reasons why tariffs are disastrous. Thanks. And here's another one, from Deutsche Bank today:

“While other factors also arguably played a role, the trade war has been key in preventing a recovery in global growth and keeping U.S. equities range bound. Foregone U.S. equity returns from price appreciation for 17 months are worth $5 trillion,” wrote Binky Chadha, the bank’s chief strategist, in a Friday note, based on an price appreciation at an annual rate 12.5%."

FIVE TRILLION in lost market equity. My god. #thanksdopey


More dopiness on the Mexican tariffs, from Politico:
"Around two-thirds of U.S. imports from Mexico, which totaled $371.9 billion last year, were “related-party” trade, meaning companies bringing in parts and products as part of their supply chain, according to data compiled by Deutsche Bank. The U.S. imported $124 billion in auto products from Mexico in 2018, which includes new and used passenger vehicles; medium, heavy and other trucks; and auto parts, according to the International Trade Administration.

Some auto parts cross the border as many as eight or nine times before becoming finished products, potentially opening up auto giants including GM, Ford and Fiat Chrysler to tariffs exponentially higher than the headline number.

Deutsche Bank estimated the Mexico tariffs could raise the cost of vehicles sold in the U.S. by about $1,300."

Whew, good thing I bought my new truck a few months before this dopiness continued. Sucks for Trumpy America, though. Eh, no it doesn't. Shame on them.

[Bernie Brewer]

See, now if that happens, then that's a rise of CPI. So all told, you're naming countless reasons why tariffs are disastrous. Thanks. And here's another one, from Deutsche Bank today:

“While other factors also arguably played a role, the trade war has been key in preventing a recovery in global growth and keeping U.S. equities range bound. Foregone U.S. equity returns from price appreciation for 17 months are worth $5 trillion,” wrote Binky Chadha, the bank’s chief strategist, in a Friday note, based on an price appreciation at an annual rate 12.5%."

FIVE TRILLION in lost market equity. My god. #thanksdopey


More dopiness on the Mexican tariffs, from Politico:
"Around two-thirds of U.S. imports from Mexico, which totaled $371.9 billion last year, were “related-party” trade, meaning companies bringing in parts and products as part of their supply chain, according to data compiled by Deutsche Bank. The U.S. imported $124 billion in auto products from Mexico in 2018, which includes new and used passenger vehicles; medium, heavy and other trucks; and auto parts, according to the International Trade Administration.

Some auto parts cross the border as many as eight or nine times before becoming finished products, potentially opening up auto giants including GM, Ford and Fiat Chrysler to tariffs exponentially higher than the headline number."

I know I've become a contrarian pain in the ass, but you just provided a quote from a guy named Binky. That made me laugh, for some unknown reason.

[revo]

I know I've become a contrarian pain in the ass, but you just provided a quote from a guy named Binky.

LOL. He used to be one of the Teletubbies, right? He must be all grown up now!

[Judge Jude]

"you're naming countless reasons why tariffs are disastrous."

I don't support this tariff scheme. but the wall-to-wall "will cost each consumer $850 extra per year" or whatever is so ubiquitous in the media and so, well, dopey that I'm pushing back on it. there are lots of problems with the tariffs, but the idea of helpless consumers being forced to continue to buy exactly the same products at exactly the same rate of consumption is ridiculous.

if you really like movies, and you spend $500 per year for 25 tickets but then the price of a ticket goes from $20 to $100, how many people are going to spend $2,000 on movie tickets the following year? almost everyone would simply attend fewer movies (and almost all of the rest would cut back on other discretionary spending if they are that addicted to movies).

[nots]

If tariffs are passed on to the consumer, do higher US government business taxes also get passed onto the consumer? You folks seem to be making a strong argument for lower business taxes in order to save consumers money. I applaud this.

[revo]

If tariffs are passed on to the consumer, do higher US government business taxes also get passed onto the consumer? You folks seem to be making a strong argument for lower business taxes in order to save consumers money. I applaud this.

I'll say no because of writeoffs. Donald Trump's companies never paid any taxes, correct?

I don't support this tariff scheme. but the wall-to-wall "will cost each consumer $850 extra per year" or whatever is so ubiquitous in the media and so, well, dopey that I'm pushing back on it. there are lots of problems with the tariffs, but the idea of helpless consumers being forced to continue to buy exactly the same products at exactly the same rate of consumption is ridiculous.

So according to this logic, consumers should now look to Hyundai or Nissan for their autos, instead of Ford/Chevy/GMC/etc.? After all, these car companies will get walloped with the new Mexican tariffs, but Nissan and Hyundai should emerge unscathed.

[nots]

Government applies tariffs, businesses pass tariffs onto consumers.
Government raises business tax rate, businesses absorb increases.