Math is hard.
Economics is harder. There is a multiplier effect.
It matters how you distribute that “trivial” amount of tariff tax. By the way I won’t call $135B a year trivial. Many businesses operate on razor thin margins. You raise price of a firm’s input costs and it may have no choice to at least pass on some of that by raising price. So Firm A raises prices and sells to Firm B. Firm B raises prices and sells to Firm C. On and on.
Just like you increase money supply to an economy by $X. The economy doesn’t grow by just $X. It grows by some multiples of $X. Similarly, taxing firms by $X doesn’t just hurt the economy by $X. It hurts by some multiples of $X.
There is also impact of investment sentiment. If a firm is wasting time and energy rejigging its supply chain, it has to put its other more economically beneficial projects on hold. Expansion? In such uncertain environments? Maybe not. Better wait and see what comes next.
Nobody puts a gun to business owners to import from China. They chose to because it’s an optimal solution. By definition the government is forcing them to choose something suboptimal.
Huh? Thought still choose optimal
Optimal under the scenario where Trump puts a gun on their heads.
You’re the exact irrational person the author is talking about. You argued tax cuts don’t help economic growth. Now you’re arguing a much smaller tax increase will hurt the economy. Both can’t be true.
Cuts on business income doesn’t help long term economic growth under full employment.
Actually tariff is not the same as income tax. It doesn’t tax profits. It taxes revenue.
Trade war will make construction material more expensive thus makes flipping more expensive.
I think tariff is bad news to flippers but it is a positive to home price.
It taxes cost of goods sold. Increasing that reduces profit, so it’s the same as a tax on profits.
Not the same. Raising tax rate on profit will never make it go to zero, unless you are talking about 100% tax rate.
Raising input costs can make a firm unprofitable if they can’t raise price.
Sub-optimal for that business maybe but not necessarily for the country. The business using cheap Chinese labor may not have to worry about theft of IT; that’s someone else’s problem. It’s just like employment of illegals. Optimal for the business employing them but many of the costs are socialized.
Costs are going up. Wether China caused or not retailers are using China as an excuse to raise prices. Empty wine bottles were $7/12
Now $9-15 /12. Apparently they are all made in China with our scrap.
Are you arguing for regulations? Never would have expected that from you.
But seriously, if companies themselves are not worried about potential theft of their own IP, why should the government care? Who owns the IP?
What makes you think companies are not worried about IT theft? Or knockoffs - even of things like medical implants?
No one here ever argued against regulations - or taxation - just excesses of both.
Companies worried about IP theft and still chose to operate in China means the benefits outweigh the potential risks.
I agree China needs to tighten its IP regulations but waging trade wars and raising tariffs is the wrong strategy. And having settled on that wrong strategy, constant bluffing and humiliating the opponents is the wrong tactics.
Not all the companies that have their IP stolen are doing business there.
As for strategies - what is yours? This has been going on through multiple administrations. There have been perennial complaints and no action.
Not true. Obama told Xi to stop the state-sponsored hacking of US businesses in 2015 and those hackings largely stopped. They came back after Trump came to power and started picking fights everywhere.
The most potent weapon US had was the TPP. It had strong IP protection language written in the deal and was designed to exclude China, unless China signed up for the same rules. All the hard negotiation work has already been done and Trump just casually killed it.
Diplomacy is not wrestling. You are not competing to be the loudest and most entertaining. Public bluffing and humiliation are counterproductive.
It wasn’t Trump that killed TPP. Hillary ran away from it was well even though her State Department has a role in negotiating it. Seems she didn’t think it was worth defending.
And do you have links to support those hacks stopping and then starting again?
As for bluffing and humiliation - would be like agreeing to a deal and then going back on everything you agreed to - as even NBC admits China did? What is YOUR appropriate response to such behavior?
We have Trump as president, not Hillary. Whether Hillary supported TPP is irrelevant. And Trump killing TPP is a fact.
Trump broke deals all the time. You are aware of that, right? Agreeing to pay people and skipping the bills? Well documented Trump behavior.
Related to trade, how about the deal his own cabinet reached with Beijing before he tore it up days later?
What’s worse than breaking a verbal agreement? Breaking signed ones, like Trump did with trade agreements with the rest of world signed by previous administrations. Trump wasn’t president at those times, but United States did sign those agreements, and Trump embodies the country as he’s the president.
None of those trade deals were ever ratified so no, Trump didn’t “break” anything.
And nothing to do with China in any case.
And where in your link is there anything about Trump “tearing up” any agreements? He said tariffs would be back on if China reneged, which they did.