Tariffs

[Bob The Mercenary]

While I was making deliveries today I turned on Scarborough to hear him interviewing Pat Buchanan. To be perfectly honest, I've gone through every frequency on both bands of my radio looking for something other than conservative talk, just to spice things up and get the other side. Where I deliver I don't even pick up NPR, just WABC, WOR, and Bloomberg.

What they were talking about was how best to get back in competition with China and stop using them as a credit card. A plan they proposed involved placing a 5% tariff on all incoming commodities (not just from China) over the first six months, then increase to 10%, then 15%, and eventually end up at 30%. They said using income from this we could basically eliminate the capital gains tax and "rake it in" as companies move back to the U.S. And when someone called in saying how this would incite a trade war, they responded by asking what could a trade war do that free trade hasn't already done over the past decade.

I'm wondering how/if this would actually work, and if so, who would have the balls to try to pull it off.

[Tev]

I would have those balls. I need to get voted into public office.

[Professor Smarmiarty]

While I have issues with tariffs, I have more issuer with needing to "catch up" with China. Like I don't really understand the mindset or why it is important- seems like petty flag waving to me.

[Osterbaum]

Not to mention that now might be kinda of late for any catching up.

[bluestarultor]

On top of that, there are international organizations who'd throw a fit over that. Like the WTO (World Trade Organization). You can't just unilaterally hike tariffs up to 30% without getting utterly bitch slapped by the entire rest of the world, and they have the means to do some slapping. A plan like that would fall through before you could even say "America doesn't produce shit anymore."

[Geminex]

Indeed. There's really no justification for a tariff, not to mention that it'd screw over the economy significantly. And by "screw over" I mean "30% price increases all round".

[Bob The Mercenary]

I think the idea is to draw industry back here so we could move towards being self sufficient and drop prices that way after we eliminate the capital gains tax.

[Magus]

There are some commodities the U.S. can't produce, would they be exempt from this proposed tariff? Also how do tariffs fit into laissez-faire capitalism, which is what I'm sure was being extolled by the tariff proposer? For some reason most laissez-faire capitalists support it...until they have to compete with someone else, in this case people in other countries.

Also they talk about supporting our industry here but then vote against the farm bill every year. It's just so damn confusing.

I tire of this "have our cake and eat it too" mentality. Either be protectionist or don't be, don't half-ass it like this. Hell, why bother with a tariff, just don't even accept any foreign goods whatsoever, that'll really allow us to buy from our own...oh wait, we don't get money from that like we do with a tariff.

Competition is good, if foreign markets can compete with homegrown stuff and offer the American consumer a lower price they should be allowed to. Manufactured price floors via tariffs are just creeping socialism, after all! There, I said it, Pat Buchanan is a socialist!

[GrandMasterPlanetEater]

I'm a liberal, and I like the idea of tarrifs. They encourage sales of products made in our country to people in our country over international sales.

The WTO has our country by the balls, though. They'd never put up with it.

[Geminex]

Yes, but there's a reason people buy from overseas. That reason is price. If tariffs rise, that's going to increase the price of imports, decrease their quantity. Domestic consumers will gain market share, but how large's the market going to be? Prices all over the board will rise significantly, and a lot fewer people are going to be willing to shell out 30% more for a product. So basically, less stuff'll be sold at high prices, but it'll be ok, because it's us selling it. Right?

Well, that's just one thing that'll happen. Another question is that of what we'll be able to continue exporting

The US doesn't export much relative to what it consumes, but, still, it's quite a chunk of GDP. If the US starts raising tariffs, how do you think other countries are going to react? Because they can raise tariffs too, you know. And probably, they will. So the US'll start exporting less as well. There goes the increased production you got through increased domestic market share.

And another thing: If that occurs, if the US becomes more segregationist, then that's what the market will specialize in. Producers won't exploit economies of scale, they won't try to grow larger and more efficient, they'll have their market of 250 million, whom they'll be selling to, and that'll be it. No competitive pressure from overseas, no profit motive, because why grow larger if you can't export?
And if you ever want to become globally competitive again, have fun gradually readjusting the market.

Nah, tariffs aren't a good solution. I mean, yes, if the people you import from manage low prices through excessive subsidies, then, sure, tariffs can help. But not an (albeit gradual) 30% tariff on all products! That'd be utterly retarded.

But let me think about it again...