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Trump tariffs are coming, but some Chinese companies may already know how to avoid them
(www.theguardian.com)
this post was submitted on 20 Nov 2024
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This is a funny thing in that I actually like the idea of tariffs but using democracy, human rights, median income, and such for each country. Countries that pay to little and are non demorcratic and don't allow for various rights would have big tarriffs and ones with all those things would have like zero. So zero for europe and canada and such but very large ones for saudi arabia and such.
This only gets passed on to the consumer though, it needs to be some kind of tax incentive for companies.
If it becomes more expensive to buy products manufactured in certain countries then customers would naturally change their buying habits to other companies. The price to the customer ultimately acts as an incentive to companies.
This only works if there is enough supply from those other companies. This also assumes that the other companies have a supply chain that isn't affected by tariffs. Which means each step on the chain needs to produce enough to be a reasonable alternative to tariffed imports.
True, but even if there's only one supplier, there's still demand-side elasticity of price, which means that price increasing causes some customers to not buy the product. Thus, a company may or may not be able to increase a price 1:1 with the tarriff.
All this is fun economic theory, but I was specifically responding to the claim that tax incentives were better than a tarriff. They both translate into some increase in cost of the goods sold.