I’m assuming that a person who is described as “Fox News loving” believes that all taxes are bad and the government never does anything useful. While simultaneously thinking that Ronald Reagan, George W. Bush, and Donald Trump are all great leaders and should be given all the money they ask for.
As for you other arguments, I see them as exceptions to the general rule. Yes, sometimes they occur. But overall, when prices for something go up, people buy less of that thing. When people spend more on one thing, they spend less on other things. If production costs remains steady and the price for your product goes up, you make more profit. You can make more profits by manufacturing a few things and selling them for a high profit than you can manufacturing a lot of things and selling them for a low profit. Companies spend fewer resources when they manufacture fewer products. You can find exceptions to all of these rules. But they’re all true most of the time.
Few, many, high and low are relative numbers. They mean nothing unless you define what they are relative to.
It remains a basic mathematical fact that when you have a profit per unit function that increases with the price of an item, which you have sensibly posited, and a total sales function that decreases with the price of an item, which you have also sensibly posited, there is a maximum profit point that is not infinity dollars.
You keep presenting “higher profits per unit is always better” in a way that makes you seem not to understand that is not true, or everything would be priced to sell just one unit, and I’m sure you understand that and that’s not the message you’re intending to convey, but when you keep responding to what I thought was just a nitpick by repeating “higher profits per unit is always better”, I start to doubt.
ETA: I have no idea what else you intended with your reply. Nothing else seemed relevant to my points.
There is nothing inherently wrong on trade deficits. You have a trade deficit with amazon and pretty much every other entity you deal with.
Tariffs are essentially a tax on your own people. Because of this, we, the American people, will pay more for quite a few things.
Due to inevitable retaliation, we’ll pay even more.
Tariffs hurt domestic companies. See Harley Davidson, farmers, etc. Trump wants welfare for the farmers to weather these tariffs.
I’d love it if the world were tariff-free, but that isn’t going to happen. Tariffs are pretty stupid. Trump sees trade as a very 1950’s zero-sum game type of deal.
My take is this:
Trump is doing this to virtue signal to the rustbelt that he’s trying to help them (even though he really isn’t).
Trump is deliberately trying to hurt the economy. I would really like to find this quote, but he definitely has said something to the effect that you want the economy to be good, but not “too good.”
The German government has $2000 more, but the German consumer has $2000 less. Maybe the government would spend the money more efficiently than the consumer, but maybe not. The point is that the government is going to spend the money on what the government wants.
As Little Nemo points out, the government is benefitting the domestic producers, not the domestic consumers.
I agree that it’s not a huge problem to have a trade deficit, but I don’t think it works the way you describe; it’s sort of like if you worked for Amazon, but bought more stuff from them than you got paid for.
And that’s the flaw in the thinking- a trade deficit with one nation or region doesn’t mean that we’re somehow getting ripped off or anything like that. One way to look at it is that not every purchase has to be offset with a corresponding sale in the other direction. It’s not a balance sheet in the accounting sense.
That seems to be where Trump’s fixation is- he sees a deficit and assumes we’re failing, or being fleeced or something like that, when it doesn’t work like that at all.
Its actually $3,000 and is only true for when Germans are buying American cars despite the tariff. If the tariff is effective in driving German consumers to buy German cars, then the government doesn’t get anything directly from the tariff. Although you are correct that they get some if they can tax the increased profits of the German car company.
Sheesh. Where was my head! Yeah, the German car producer has an additional $2000 (or the equivalent in euros more likely). But if that is a bad thing, we’re getting into “businesses should minimize their profits”-territory.
Somebody suggested in another thread that Trump is raising tariffs just because he can. Congress gave that power to the President. So Trump sees a button and he pushes it because it’s there. He gets in the news by doing something Presidential without any thought going in to whether or not what he’s doing is a good idea.
A couple of months back, Trump began issuing pardons for what was probably the same reason. Before that, he was issuing a bunch of executive orders. Or firing members of his staff. Next month, he may be renaming aircraft carriers.
We’re all trying to figure out what deep strategy Trump is signalling when all he’s really doing is fidgiting.
On NPR this morning, Peter Navarro made this same idiotic argument, using the same idiotic example (German cars and US cars) and the same figures. Did he go into a nuanced argument about the overall level of tariffs? No, just US cars and German cars.
I wonder whether the administration fed it to Fox News or did the feeding go the other way?
He also kept mentioning other non-tariff barriers, by which he probably means the VAT since he has brought up the VAT in multiple contexts as a barrier to trade. I guess that’s because he’s a terrible economist who doesn’t know what he’s doing.
Trump’s been talking, pretty much non-stop, for seventy years. So you can probably find support for him taking a position on any issue somewhere in his record. And you can probably find support for him taking the opposite position on the same issue, with equal vehemence, somewhere in his record.
And yet what he is now getting ready to call a victory in negotiating with the EU is pretty much what he cancelled TPP over, saying he’d done a great thing for the American workers.
And when announcing the first tariffs he wasn’t just presenting them as negotiation pressure, he also praised tariffs as a good thing in and of themselves:
Sorry. I meant “trade deficits are bad”. Tariffs are just a tool to eliminate that “problem”. This is one of the few things he’s been consistent on over the years.
I am sure that the domestic automakers will price their cars accordingly to their best position on the demand curve as they can to maximize their profit.
However, they will not, and should not take into consideration that their increased profit comes at a decrease in the purchaser buying power for other goods and services.
It is not the car company’s fault that the consumer has less purchasing power, it is the fault of the govt for engaging in protectionist practices.
