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Tariffs explained?

#18

(02-03-2025, 10:08 AM)americus 2.0 Wrote: Can someone explain to me in general terms how this tariff thing works and how it's going to help the US? 

Short version: They'll make imported products or products that incorporate imports more expensive. They won't help in any meaningful fashion.

Long version: The idea behind imports is that goods and products imported from another are taxed by a certain amount upon entry into the country by the people/firm purchasing the imports. You typically place tariffs on an import because you are trying to compete with foreign competitors by making their product more expensive, so that consumers are inclined to buy domestic products rather than foreign ones.

Two problems:

1. Your country may not have a domestic supply of said product either because it doesn't have the natural resources to do so, or is unable to produce them enough to meet domestic demand. An example of this in the United States is rare earth minerals; the US doesn't have them in abundance so a lot of them are imported.

2. Because of the cost of the tariff, firms have to find a way to recoup the cost. If the tariff is small or niche the firm may be able to simply eat it, but larger and more expansive tariffs will end up being passed onto the consumer because firms will have to raise prices to match their newly increased production/acquisition costs because of the tariff. The result may be that consumers have to spend more anyways even if the the domestic supply of the product is cheaper.

Let's say Atropia and Donovia both produce oranges, but Atropia can produce 5 times as more, and can do so cheaper than Donovia on a per unit basis, because Atropias' climate is better suited for growing oranges. Donovia imports Atropian oranges for $5 a pound, by comparison Donovia produces oranges that cost $10 per pound. But Donovia decides it wants to encourage its orange industry so it places a tariff on oranges from Atropia worth $10, increasing the cost of Atropian oranges to $15. Donovian oranges are now cheaper, but if Donovians want oranges they end up paying more anyways because Donovian oranges will always be more expensive and lower in supply than cheaper-to-produce Atropian oranges.

Additionally, there's little reason Donovia can't also artifically increase the cost of its' oranges to $13 per pound; it will still be cheaper than imported Atropian oranges. Now change oranges to something vital like gasoline or pharmaceuticals, something people really just can't brush off as an uncessary expense.

It may help the industry being affected make a profit, but its a downgrade for the consumer.
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Messages In This Thread
Tariffs explained? - by americus 2.0 - 02-03-2025, 10:08 AM
RE: Tariffs explained? - by Jag149 - 02-03-2025, 12:06 PM
RE: Tariffs explained? - by It's just me - 02-03-2025, 12:54 PM
RE: Tariffs explained? - by Jag149 - 02-03-2025, 01:26 PM
RE: Tariffs explained? - by It's just me - 02-03-2025, 01:35 PM
RE: Tariffs explained? - by It's just me - 02-03-2025, 01:41 PM
RE: Tariffs explained? - by Jag149 - 02-03-2025, 01:52 PM
RE: Tariffs explained? - by It's just me - 02-03-2025, 02:10 PM
RE: Tariffs explained? - by Jag149 - 02-03-2025, 02:21 PM
RE: Tariffs explained? - by It's just me - 02-03-2025, 02:42 PM
RE: Tariffs explained? - by mikesez - 02-03-2025, 10:30 PM
RE: Tariffs explained? - by It's just me - 02-03-2025, 11:33 PM
RE: Tariffs explained? - by americus 2.0 - 02-03-2025, 03:04 PM
RE: Tariffs explained? - by It's just me - 02-04-2025, 02:35 AM
RE: Tariffs explained? - by p_rushing - 02-03-2025, 04:47 PM
RE: Tariffs explained? - by TheSkipWillis - 02-03-2025, 06:55 PM
RE: Tariffs explained? - by americus 2.0 - 02-03-2025, 08:59 PM
RE: Tariffs explained? - by It's just me - 02-04-2025, 12:01 AM
RE: Tariffs explained? - by Jag149 - 02-04-2025, 12:30 AM
RE: Tariffs explained? - by It's just me - 02-04-2025, 02:18 AM
RE: Tariffs explained? - by Jag149 - 02-04-2025, 09:22 AM
RE: Tariffs explained? - by americus 2.0 - 02-04-2025, 03:56 PM



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