01-04-2017, 08:26 AM
Very good point. I was not thinking of it as in relation to tariffs other countries put on our exports. I am still against it. Tariffs are still taxes that are ultimately paid by the consumer, so I consider it an inflationary tax.
When Ford uses more expensive US labor to avoid a 35% tariff, they do not eat those costs, they pass them to the consumer. Pre-tariff' Ford was competing with Kia in the small car market, lets say they both sold a similar car for $20,000. Post tariff, Kia must sell the same car for $27,000 to pay the tariff costs. Do we think Ford will still sell the US made car for $20,000? There are two reason they will not; 1) They need to recouped the higher labor costs 2) Market pricing forces still apply even when the government forces the increase of import prices. Ford/GM and Chrysler still have a profit motive and will take as much profit as the market will bear.
How about the products that are still cheaper to import after a 35% tariff, like most of the stuff in Wal-Mart and almost all textiles? US consumers ultimately pay that tax to the government. The only difference between this tariff and a 35% national sales taxes is that our money goes through an importer before it is handed to the US government.
Sure it is nice to hear how Trump is saving hundreds of jobs, but we need to think about what it is gong to cost.