
Trump announces tariffs on all Mexico goods - benj111
https://www.bbc.co.uk/news/world-us-canada-48469408
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charlesism
Wouldn't impairing a foreign nation's economy _increase_ economic migration
from that nation? I'm no economist, so maybe I'm missing something.

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ddtaylor
"Democracy is two wolves and a lamb, voting on what to have for lunch."

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kevin_thibedeau
Why does he need emergency powers to set tarrifs? That is already under the
normal purview of the executive.

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chanwitkepha
I think it's political tactic for bypass congress.

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drilldrive
How would we be able to measure if the border crisis is alleviated? Five
percent per month seems extreme.

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benj111
Theres that, plus who could reasonably expect a nation to deal with a problem
like this in such a short timeframe. If the US can't stop illegal immigrants
after years of trying, how is Mexico going to do anything in a matter of
weeks?

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Steel_Phoenix
They only need to satisfy one man's opinion on whether they've done what they
should.

I see a very different picture of why he does what he does. In this case, I
think he's trying to pressure House Democrats into signing the USMCA, which
would remove the tariff and give Pelosi the ability to claim she stopped him.
If they don't, then he still meets his goals of renegotiating trade to reduce
deficits.

He also isn't negotiating this in a vacuum. It sends a message to China and
everyone else that deals will be renegotiated, whether they come to the table
or not. One of his primary skills is forcing people into situations where if
they try to ignore him, it hurts them greatly. He maintains his constant press
coverage by saying something terrible about an issue he thinks he can win. He
takes the hit and then fights his way up the resulting maelstrom.

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benj111
Perhaps, but on the other hand, would anyone actually have confidence in him
then sticking to what he says. Is there any actual point in negotiating with
him?

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Steel_Phoenix
Certainly. He's shown himself to be quite willing to listen. He postponed
major Chinese tariffs on multiple occasions, referencing their good faith
actions in negotiations. That was worth their time by itself. In the case of
Mexico, he negotiated and signed on to the USMCA, which if Pelosi would pass
it, would get them out of the current Tariff battle. By giving them collective
bargaining and minimum wage, he would reduce their ability to undercut the US.
He wants to be taken seriously as a negotiator. He'll gladly remove old
agreements that are no longer in our best interest, but he'd be loath to
remove his own accomplishments without strong reasons.

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chrisco255
Is Hacker News now political news?

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handsomechad
why was this flagged? i would be interested to hear the perspective of the HN
userbase on this event / issue?

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RappingBoomer
it will never be implemented

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W-Stool
I seriously have to assume that this is Trump's classic playbook to throw off
the news cycle from scrutiny of Robert Mueller's public statement and fire up
his base over those damn foreigners, even though we ultimately pay those
tariffs ourselves through higher prices on goods we buy.

Sad.

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stephenr
I give it a day before people start claiming (seriously) that this is how
he’ll make Mexico “pay for the wall”.

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burfog
You practically did, just now. My interpretation is that you recognize that
this is in fact Trump making Mexico pay for the wall, but it pains you to
admit that.

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stephenr
Tariffs are payed by the receiving party. This would be American consumers
paying for the wall.

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burfog
Tariffs are taxes on transactions. Like all other taxes on transactions (sales
tax, VAT, excise tax, etc.) they are paid by both parties to the transaction,
with the share being determined by price elasticity.

It doesn't matter which party hands over the cash for the tax. The price will
rise or fall as required to ensure that the tax is effectively paid according
to price elasticity.

You get to graph this out if you take an economics class or two. In case you
don't want to take a class, I'm pretty sure there is a Khan Academy video of
it.

For example, the Chinese have effectively been paying about 5/6 of the tariffs
imposed on them. Since the tariff is implemented by having the buyer pay, the
price of the goods goes down. (you might ask why the Chinese would reduce
their price, but they face lower demand and fixed operating costs, and also
consider why the previous price wasn't higher) If the tariff had been
implemented by having the seller pay, the price of the goods would go up, but
this would be smaller than the amount by which the price has gone down. In
other words, the US tariffs have forced a price cut which absorbs about 5/6 of
the costs.

In addition to the market effects, the collected tariff can replace other
taxes. The US was funded on tariffs during its rise in the 19th century. Our
government is now mostly funded from taxes on productivity, which of course
discourages productivity. We can return to the strategy that we used prior to
World War I. It worked. It has also worked for many other countries pulling
themselves out of poverty, including China.

Khan Academy's page about it with the graphs:

[https://www.khanacademy.org/economics-finance-
domain/microec...](https://www.khanacademy.org/economics-finance-
domain/microeconomics/elasticity-tutorial/price-elasticity-
tutorial/a/elasticity-and-tax-incidence)

Numerous videos, including one from Khan Academy:

[https://duckduckgo.com/?q=tax+elasticity&t=canonical&iax=vid...](https://duckduckgo.com/?q=tax+elasticity&t=canonical&iax=videos&ia=videos)

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stephenr
None of which actually backs up your claim of 83% being paid by reductions in
wholesale cost to the importer.

From [https://www.reuters.com/article/us-usa-trade-china-
tariffs-e...](https://www.reuters.com/article/us-usa-trade-china-tariffs-
explainer/who-pays-trumps-tariffs-china-or-u-s-customers-and-companies-
idUSKCN1SR1UI)

> A Congressional Research Service report in February found that the tariffs
> boosted washing machine prices by as much as 12%, compared to January 2018,
> before tariffs took effect.

> Steel and aluminum tariffs increased the price of steel products by nearly
> 9% last year,

So unless washing machines are somehow subject to a 72% tariff, and steel is
somehow subject to a 54% tariff, no, the Chinese are not paying "5/6ths" of
the costs.

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burfog
Not all products have the same price elasticity.

There will be cases where the cost is borne 99% by one party or the other.
Some products will go one way, and some will go the other way. Products also
change in price for unrelated reasons.

Somebody with an ax to grind will pick the most extreme examples to favor one
side. The reporter has not reported all examples.

Even with those examples though: 12% and 9% are a lot less than 25%. Clearly,
the US buyers are not paying the full cost of the tariffs. That was my point.
The portion will change constantly, and will be different for different
products. The portion I gave was a all-products average from soon after the
tariffs were imposed.

For consumers, the tariffs are frequently reduced further by the fact that the
consumer price is not only composed of the wholesale price. The consumer buys
from a provider with unchanged costs for advertising, labor, finance, and so
on. For example, when I get a new air conditioner installed for $10,000, much
of the price is local labor. It is only the importer that could possibly be
exposed to the full percentage.

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Steel_Phoenix
You seem to have a good grasp of this. Do you have any thoughts on the effects
this will have?

If China is discounting their goods, and consumers are paying for the tariff
as taxes, then there is additional strain on China's ability to compete, which
might bring back industry here, but more likely to Mexico, which is now
getting the same treatment.

US taxpayers are basically now paying a more efficient form of taxes, since
it's a tax on behavior we want to reduce, and it's largely offloaded from the
consumer by the Chinese price reduction.

On the other hand, I only like tariffs to offset anti-competitive tactics.
Given a little time, government will get hooked on the revenue source and US
manufacturers will get soft from having hobbled competition.

~~~
burfog
I think you see it pretty well. I share your concern about US industry getting
soft, but overall I think bringing back industry is a worthwhile endeavor. The
jobs are good. The ability to resist supply shocks (for example an embargo,
such as when China cuts rare earth access) is important for national
independence. The government will be hooked on one revenue source or another,
and this is probably one of the better choices.

The US has been in denial of anti-competitive tactics. This has been a problem
from day #1 with China. We always get promises of otherwise, and we always get
the same anti-competitive tactics, and until recently we do nothing about it.

Mexico is other problems. Getting Mexico to care about the problems has been
difficult. Perhaps this will get them to care.

