It’s actually quite shocking to leave the U.S. and experience the drastic fall in respect.
The U.S. has over a century’s worth of dominance and control built in, so it’s not gonna unravel anytime soon and countries will need to grovel along for a bit.
But the decoupling has begun, is almost certainly irreversible and is gonna hit Americans hard at most a decade from now.
We have no idea the the chain of motion that has already been set in. Trillions of dollars worth of goodwill and respect has been lost in months.
I'm not sure it's all that new. During the Bush Jr. years America was not highly thought of.
I'm an American traveling through Scandinavia and Northern continental Europe for the last three weeks, now in the UK.
I haven't experienced a bit of grief. Their opinion of our politics is generally separate from how they treat me personally, and I do the same for people of other nationalities.
American cultural dominance is everywhere. I can barely find a pub or restaurant not playing American music, for instance.
If anything, it would be nice if a few places were left that didn't have American cultural artifacts everywhere. My experience in the Middle East was often wondering if I were actually in either an American colony or else some place that had dedicated itself to being a kind of museum of American culture, movies, models, advertising, and so forth.
> Their opinion of our politics is generally separate from how they treat me personally, and I do the same for people of other nationalities.
That is such a sane thing to do. I was always astonished and sad how often strangers in foreign countries instantly link my origin to the actions of the people in power. As if this is completely under my control and with no doubt I support and approve whatever they do.
> I'm not sure it's all that new. During the Bush Jr. years America was not highly thought of.
Yes, but the decline is precipitous now. It's gone from "eh, we don't like Americans much, but they're a useful ally" to "wow these guys are fucking insane and we need to divest ASAP".
> It’s actually quite shocking to leave the U.S. and experience the drastic fall in respect.
My only vantage point is from inside the U.S., but I find the loss of prestige completely believable.
What amazed me was discovering that my own countrymen would vote in, and continue to support, someone like Trump.
My political views are pretty centrist, and I thought I understood the views of most liberals and conservatives.
But I never thought there would be so little resistance to the lies, corruption, authoritarianism, and the breakdown of the separation of powers. And the simple incompetence w.r.t. running the executive branch.
It's like my mental framework has no way to model whatever is going on here.
Well, we could be amazed although you seem to be jumping past another, more controversial yet still equally possible conclusion which is that our elections aren’t as pure as we’d all like to believe.
Certainly, I’m not here to spread conspiracy and I agree with you here, the results are the only evidence we have of the current situation. Given that, I think many of us were amazed.
Try on the "it's a cult" model. It explains pretty much everything. This has almost nothing to do with politics or policy or even economics.
It's a cult around Trump and then a group of a (quite diverse) set of politically/culturally/economically motivated opportunists surrounding him and trying to leverage the Donald's cult-building magic into whatever future United States they dream of.
The number 39 refers to the 39% tariff rate on Switzerland.
Kind of insane that the American President just made up a lie that tariffs are paid by foreign countries and rest of the administration just went along with it. It flies in the face of any common sense.
I don't know how this tariff stuff works, so for my own understanding, how come countries retaliate to US tariffs by imposing retaliatory tariffs? Are they punishing their own nationals?
In a sense you can think of it that way, as a Canadian we counter-tariff the US and that can be considered punishing us; however the US is only one country and it encouraged more free trade with every other one of our trading partners so in a game theory sense it's affecting Canadian trade negatively with one country and affecting US trade negatively with you know.. every country.
I wish there was simple three strike policy on any elected official. Three proven lies and they are remove from office for life. And these can be anything. And not knowing at time does not change it.
Only silence or absolute truth should be accepted.
"absolute truth" doesn't exist. I understand what you're saying, but the question of when a lie should then disqualify you from office must itself be a political question.
The consumer paying the tariff is merely an optimization over the exporter paying the tariff such that the tariff money passes through one less hand. Practically they seem pretty similar.
Let's imagine, hypothetically speaking, that demand is perfectly inelastic. The price of a good is $10, and buyers will absolutely refuse to pay more than $10 under any circumstances.
Before a tariff is imposed, the seller sells the good for $10 and keeps $10 in revenue.
If a tariff of $1 is imposed under these hypothetical circumstances, does the buyer pay more? Does the exporter get paid the same as before?
Clearly, it's neither guaranteed that the buyer will "pay more" nor that the export will "get paid the same as before". In reality because demand is neither 100% elastic nor 100% inelastic, what tends to happen is that the cost of the tariff is split in some ratio between the buyer and seller.
I find it mildly amusing that there are so many people claiming that it's 100% on one side or other, when it's trivially easy to see why that can't be GUARANTEED TO BE the case.
You can go into hypotheticals, but unfortunately for you the data exists.
And the data shows that American buyers are not paying their international supplies less for goods than they were before. In fact, if anything, they are paying slightly more, which maj be explained by general inflation and the fact that tariffs mean American buyers are placing smaller orders and therefore getting smaller percentage volume discounts.
That opens up greater margin for local production. Not everything is elastic, but as long as the producer side cheats in term of local subsidies, less regulation, slave labor etc, implementing tariffs seem a good choice.
you cannot just carbon tax everything locally and then let the other corner of the word produce at a fractional price polluting the same world, exploiting worker etc, without wrecking your internal labor market.
What you see as customer paying more is cause by government letting this shit go on for too long, and now the correction is ugly. But it not like its not needed, and at some point needs to happen before it reaches the breaking point.
I'm not in favor of the current round of tariffs as used by current administration which seem a baseless negotiating tactic, but the effect of outsourcing to bad faith actors has pushed the working class out of balance, they simply have no way of competing internationally unless by accepting a step downgrade in working and living conditions
> That opens up greater margin for local production
My country mostly produce pine wood (and other soft wood). I like hardwood furniture, but its only imported stuff because we have very few producers. Putting a tariff on hardwood furniture could be a good idea to increase local production, as long as hardwood is not tariffed. If both hardwood and hardwood furniture get taxed, i will have to pay more, and local production will never have greater margin, as those will be hit by base material tariffs.
(To be clear: I live near on of the biggest hardwood harbour in Europe, and buy my wood directly out of the sawmill, but my point stands)
Yeah and thats where I was going with the last point about tariff needing to be integrated with the rest of the economic system as a tool and not arbitrarily as a tool for negotiation. Tariff are a damper to any economic system and reduce efficiency, they need to be proportional, predictable and non escalatory (well, as much as possible)
The exporter may sell less to the US, but typically they will then sell the difference into non-US markets, reducing the impost. This is exactly what happened in a lot of (not all) markets a few years ago, when China tried to intimidate Australia with trade restrictions [1]. When Chine dropped the restrictions, they found that they were now competing with more buyers and so paying higher prices.
> In reality because demand is neither 100% elastic nor 100% inelastic, what tends to happen is that the cost of the tariff is split in some ratio between the buyer and seller.
That is the argument of the Administration:
>> Kevin Hassett's theory of tariffs: "China has got to sell a lot of stuff to us to maintain political stability. And so if we put a tariff on their stuff, then they cut the price so that our consumer is basically still able to demand as much stuff as they need to sell to be politically stable."
> If he were right, the import price index (which measures pre-tariff prices) would have fallen by enough to offset the sharp tariff hike. It didn't.
Isn't your example actually perfectly elastic? It does not change the conclusion at all, of course.
One problem with this analysis is that I can't imagine Trump doing it, or even understanding it. Well, it's not a problem with the analysis, but with the overall situation.
Losing sales isn't the same as paying the tariff. The person importing the item pays the tariff. Their item won't be released from customs if they don't pay. They pay to the US government.
The correct thing to say is that the tariff has an effect on demand because of the impact of adding a tariff on top of the price.
Yeah we can literally see it happening in real time. If you have a product with competitors in the market and you are a foreign entity you will eat some of the cost to try to stay competitive in the market. Your only other option is to leave the market. A good example of this is Brasil who tariffs a ton of stuff.
>I find it mildly amusing that there are so many people claiming that it's 100% on one side or other, when it's trivially easy to see why that can't be GUARANTEED TO BE the case.
To be fair most people on one side think they know better than Adam Smith and the people on the other side usually never opened a book, so it's a tough bargain.
This isn’t actually how it works though. Who pays the tariff is the same as who pays a tax: it depends on the price elasticity of supply and demand.
If the demand curve is very price sensitive - like people might stop buying wool blankets if the price went up 50%, and buy cotton blankets instead - then the tariff will be paid by the suppliers, because they must lower their prices to make the final price the same.
And similarly, if the buyers are inelastic, they will pay the tariff. Like for baby formula, maybe parents are willing to stomach significant price hikes without changing how much they buy.
As with many things in economics the effect of a measure often depends on the timeframe one considers. Honestly, anything could be true if one just chooses the appropriate timeframe. However, the tariffs clearly introduce an inefficiency which - globally speaking - will be net negative. Locally speaking, though, who knows …
Tariffs existed before Trump, and existed by other countries against the US.
Did those not introduce inefficiency? Actually, it probably produced more inefficiency because most people were probably under thr impression most of the world was under free trade, hence the existence of the WTC.
Not knowing a tax is much more inefficient than knowing a tax.
Exporter pays: Consumer ends up paying price + tariff, then seller pays the tariff to the shipping company, which pays it to the government.
Importer pays: Consumer pays price, then later pays the tariff to the shipping company, which pays it to the government.
In both cases the consumer is paying price + tariff. A small difference is that some consumers could be psychologically tricked by the lower price tag in the importer pays model. Note that what I'm saying doesn't concern itself with changes in pricing due to this.
To simplify: if the exporter lowers their price, the consumer pays the same, the exporter gets less, and the consumer pays the tariff to the government.
If the exporter charges the same price, the consumer pays more, the exporter get the same as before, and the consumer pays the tariff to the government.
The consumer always pays the tariff. The exporter never pays the tariff.
> Note that what I'm saying doesn't concern itself with changes in pricing due to this.
That's the problem with your semantics then. If the manufacturer no longer makes the same income because they can't increase the final price, in effect the consumer didn't pay the tariff.
> In both cases the consumer is paying price + tariff.
Consumers pay all of the operating costs and taxes of a company. That's not the debate.
With tariffs, the cost of an imported product becomes higher than a domestically produced product, making consumers purchase the domestically produced product. This is the purpose.
The long-term purpose is that foreign companies start making their products in your country to avoid tariffs and be able to compete.
The discussion about if the buyer or seller pays the tariffs or taxes is non-sensical and a distraction.
This would be more impactful if we could see the cost to US purchasers was actually 39% more. Sadly some manufacturers spread the cost across all consumers, which actually means non-US customers are actually paying some of the tariff costs too.
I imagine some manufacturers used tariffs as a reason to lower the price of their products that imported into the US while also raising the price outside of the US to balance that change, but that doesn't mean the manufacturer or their customers outside of the USA are paying anything towards tariffs. The entire tariff transaction is between the customer and the US government, and it's all transacted within the USA.
Tariffs are a tax, paid on the value of imported good, by US citizens who are buying things from outside of the USA. That's it. They are not paid by anyone outside of the US.
Let’s say I’m a widget seller in the US, and my widgets cost $100 to import from Switzerland before tariffs. I retail them at $150 USD in the US, but I sell internationally. In the UK for example, I retail them at £113 (simple conversion, obviously it doesn’t really work like this).
Now tariffs are imposed, my import cost per widget is $139. Not only do I have to jack up my US price to $189, I have to jack up my UK price to £142, meaning UK customers are also paying the tariff now.
Even if you’re a bit smarter about your logistics and use an FTZ or drawback against the import duties, imagine you sell two widgets, one where you don’t pay import duties (bound for the UK) and one where you do (remaining in the US). Your total cost to import is $239.
Instead of making your US customers eat all the cost of the tariff, you might instead adjust your retail prices to $170 and £128 respectively. Again, now your British customers are paying an increased price due to the tariffs.
It's very likely that for luxury items the price is what people are willing to pay. And it's adjusted for each country accordingly.
Thus, the change may simply be that profit margin for sales into the US drops (or rather than it skews that way).
But there are still many commodities where you're not pricing the product based on branding.
These commodities will likely still have the same price on the international market. And thus, consumers in the US will see the effects of tariffs in the price.
Such commodities could be finished goods, but also parts, machines or feedstock for industry in the US.
I'd also guess that if you look at what middle class people buy, these commodities make up a larger percentage of the expenditure -- than it does for wealthy people.
Making tariffs a very regressive tax.
Most people won't care about the price of luxury watch.
But most people will buy aluminum cans, etc.
That only works if you have no competition in the UK. Why would your customers there continue to buy from you when you are now more expensive than the competition?
Edit: for that matter, if you could raise your prices without losing any customers, why did you wait for the tarrifs? You should have already done it.
Your example has no connection to reality. You don't have to price your widget the same in every country. Almost no company does that.
> Not only do I have to jack up my US price to $189
If you could have sold your widget for $189 you would already have jacked up the price to $189 regardless of any tariffs. Businesses always sell for the highest price they can, that is the purpose of them existing in the first place.
Switzerland would sell the same widgets to the UK for much less, since they wouldn't be hit by the tariffs and also wouldn't be paying to ship Europe->America->Europe.
The manufacturer are subsidising the tariffs if they lower their price in the us to counteract part of the tariff. When they charge other markets more to make up for the cost, they are making those markets pay for the subsidy.
That might be a short term strategy to avoid losing market share in the states and it’s rational if you think the tariffs are temporary. For goods like iPhones which are truly global that might last. But It doesn’t look like a stable equilibrium in the long term for any food which can support multiple suppliers because manufacturers who don’t do this will be more competitive in non us markets.
The tariff is applied to the import value. For many products you'll get a significant markup on top within the US for distribution, which is not affected by the tariffs.
> Sadly some manufacturers spread the cost across all consumers
Of course not. They charge the highest price they possibly can in each market, regardless of other factors. They're not compensating this here or that there. Every company always charge as much as they can get away with, that is the core function of business.
This was a big worry initially when the tariffs were announced but it doesn’t actually seem to be happening. Most manufacturers are not adjusting their price structure because the effects are super hard to estimate (don’t forget that the US is still just 20% of worldwide demand)
This might have been true three months ago, but it isn't any more. Narrow margin business like independently owned coffee shops are already seeing consumables increase in price by up to 3x, which then leads them to have to add "tariff surcharges" that show up on their POS devices.
I think we agree?! I’m arguing that the tariff is being passed on to US prices and not distributed onto the worldwide customer base. A manufacturer that doesn't adjust their price structure is passing the price on because the tariff is applied by the government and not by the company selling the product.
Seems to have been the case with PS5 and Xbox consoles. The rest of the world was effectively subsidizing US gamers for a while, until prices there were jacked up even higher.
Aren't most subscriptions significantly cheaper outside the US? I don't know specifically about those, but YouTube's premium is pennies on the dollar in places like Ukraine, Turkey, etc.
Tangential. It is fun to note how in ads showing watches the time is usually 9 past 10 as shown in the image. This apparently gives the most pleasing balance of the watch dials for the eye, while not covering the time indicators below.
Do we still remember that Tariffs are supposed to raise the price of foreign goods and make domestic goods more reasonable for buyers? it targets buyers and this is how it works regardless of how it is presented to the public, I don't imagine lots of supporters if presented as it is.
At first I thought tariffs were just more inflation. Import prices increase, sales prices balance it out and people will buy anyway.
But no, it hurt import businesses in unforseen ways. I saw entire shipment crates get discarded because it was suddenly too expensive to get into the country overnight and too expensive to ship back. Just senseless, pointless waste.
Haha but seriously, Trump is just starting to ramp up full kleptocracy mode. Each tariff change is going to be associated with billions in trades made with foreknowledge of the move. His robber baron friends will fund him and his regime forever. They can do whatever they want now. We might as well tear down the White House and replace it with a Putin style gilded palace for Oligarchs. Oh wait.
It looks so terrible I thought the idea behind it was “this is what the US can manufacture without importing foreign materials”. But nah, it’s just an ugly watch with a pretty dumb marketing stunt that makes it less usable as a watch.
Swatch makes thousands of different watches in all kinds of styles, from 80s-inspired neon fever dreams to understated mechanical watches. What type of watch are you looking for that they don't make?
agree with your comment, but to be honest, I'm not sure there's any Swatch I would wear: which model would you choose if you wanted to dress business casual?
Ok, I can give you a Skin Irony, but then you would be paying +200 for a Quartz, why not buy an Orient Bambino or a Hamilton Khaki? much better bang for the buck.
Not to mention the clicking noise of a Swatch quartz. In silence, it drives me nuts.
The most understated watch they make is the Swatch Pay!. Super useful, never fails.
It depends on what you consider a Swatch. If it has to say "Swatch" on it, yeah, any Skin Irony is fine for business casual. Or a Swatch Essentials. I'd probably wear something like Boxengasse for business casual, but that's just me; I like complications. Maybe it's too much.
Whether the quartz movement bothers you depends on why you bought the watch. It doesn't bother me, but it's certainly true that you can get similar watches for much less money.
Like, seriously and not just Swatch. I wanted to buy myself a watch that would look good. Ended up with nothing because good looking watch dont seem to exist.
It’s actually quite shocking to leave the U.S. and experience the drastic fall in respect.
The U.S. has over a century’s worth of dominance and control built in, so it’s not gonna unravel anytime soon and countries will need to grovel along for a bit.
But the decoupling has begun, is almost certainly irreversible and is gonna hit Americans hard at most a decade from now.
We have no idea the the chain of motion that has already been set in. Trillions of dollars worth of goodwill and respect has been lost in months.
I'm not sure it's all that new. During the Bush Jr. years America was not highly thought of.
I'm an American traveling through Scandinavia and Northern continental Europe for the last three weeks, now in the UK.
I haven't experienced a bit of grief. Their opinion of our politics is generally separate from how they treat me personally, and I do the same for people of other nationalities.
American cultural dominance is everywhere. I can barely find a pub or restaurant not playing American music, for instance.
If anything, it would be nice if a few places were left that didn't have American cultural artifacts everywhere. My experience in the Middle East was often wondering if I were actually in either an American colony or else some place that had dedicated itself to being a kind of museum of American culture, movies, models, advertising, and so forth.
> Their opinion of our politics is generally separate from how they treat me personally, and I do the same for people of other nationalities.
That is such a sane thing to do. I was always astonished and sad how often strangers in foreign countries instantly link my origin to the actions of the people in power. As if this is completely under my control and with no doubt I support and approve whatever they do.
> I'm not sure it's all that new. During the Bush Jr. years America was not highly thought of.
Yes, but the decline is precipitous now. It's gone from "eh, we don't like Americans much, but they're a useful ally" to "wow these guys are fucking insane and we need to divest ASAP".
> It’s actually quite shocking to leave the U.S. and experience the drastic fall in respect.
My only vantage point is from inside the U.S., but I find the loss of prestige completely believable.
What amazed me was discovering that my own countrymen would vote in, and continue to support, someone like Trump.
My political views are pretty centrist, and I thought I understood the views of most liberals and conservatives.
But I never thought there would be so little resistance to the lies, corruption, authoritarianism, and the breakdown of the separation of powers. And the simple incompetence w.r.t. running the executive branch.
It's like my mental framework has no way to model whatever is going on here.
Well, we could be amazed although you seem to be jumping past another, more controversial yet still equally possible conclusion which is that our elections aren’t as pure as we’d all like to believe.
Certainly, I’m not here to spread conspiracy and I agree with you here, the results are the only evidence we have of the current situation. Given that, I think many of us were amazed.
Try on the "it's a cult" model. It explains pretty much everything. This has almost nothing to do with politics or policy or even economics.
It's a cult around Trump and then a group of a (quite diverse) set of politically/culturally/economically motivated opportunists surrounding him and trying to leverage the Donald's cult-building magic into whatever future United States they dream of.
The number 39 refers to the 39% tariff rate on Switzerland.
Kind of insane that the American President just made up a lie that tariffs are paid by foreign countries and rest of the administration just went along with it. It flies in the face of any common sense.
I don't know how this tariff stuff works, so for my own understanding, how come countries retaliate to US tariffs by imposing retaliatory tariffs? Are they punishing their own nationals?
In a sense you can think of it that way, as a Canadian we counter-tariff the US and that can be considered punishing us; however the US is only one country and it encouraged more free trade with every other one of our trading partners so in a game theory sense it's affecting Canadian trade negatively with one country and affecting US trade negatively with you know.. every country.
I see, so like saying "we'll make it less appetizing for our nationals to do business with you, so they'll go shopping elsewhere"?
it's thanks to the lying that he was elected in the first place, and no one around him dares to contradict him, what would be the incentives to stop?
I wish there was simple three strike policy on any elected official. Three proven lies and they are remove from office for life. And these can be anything. And not knowing at time does not change it.
Only silence or absolute truth should be accepted.
That way politicians would change every week. Probably not a bad thing :)
"absolute truth" doesn't exist. I understand what you're saying, but the question of when a lie should then disqualify you from office must itself be a political question.
And now that the U.S. has a tyrannical government, there’s no one left to stand in its way, the Second Amendment has proven to be a paper tiger.
Can you expand on what you mean exactly? I see these sentences like your littered throughout reddit, vague notions of violence/war?
>It flies in the face of any common sense.
The consumer paying the tariff is merely an optimization over the exporter paying the tariff such that the tariff money passes through one less hand. Practically they seem pretty similar.
The exporter gets paid the same as before. The buyer pays more. There's a subtle difference, can you spot it?
Let's imagine, hypothetically speaking, that demand is perfectly inelastic. The price of a good is $10, and buyers will absolutely refuse to pay more than $10 under any circumstances.
Before a tariff is imposed, the seller sells the good for $10 and keeps $10 in revenue.
If a tariff of $1 is imposed under these hypothetical circumstances, does the buyer pay more? Does the exporter get paid the same as before?
Clearly, it's neither guaranteed that the buyer will "pay more" nor that the export will "get paid the same as before". In reality because demand is neither 100% elastic nor 100% inelastic, what tends to happen is that the cost of the tariff is split in some ratio between the buyer and seller.
I find it mildly amusing that there are so many people claiming that it's 100% on one side or other, when it's trivially easy to see why that can't be GUARANTEED TO BE the case.
You can go into hypotheticals, but unfortunately for you the data exists.
And the data shows that American buyers are not paying their international supplies less for goods than they were before. In fact, if anything, they are paying slightly more, which maj be explained by general inflation and the fact that tariffs mean American buyers are placing smaller orders and therefore getting smaller percentage volume discounts.
That opens up greater margin for local production. Not everything is elastic, but as long as the producer side cheats in term of local subsidies, less regulation, slave labor etc, implementing tariffs seem a good choice.
you cannot just carbon tax everything locally and then let the other corner of the word produce at a fractional price polluting the same world, exploiting worker etc, without wrecking your internal labor market.
What you see as customer paying more is cause by government letting this shit go on for too long, and now the correction is ugly. But it not like its not needed, and at some point needs to happen before it reaches the breaking point.
I'm not in favor of the current round of tariffs as used by current administration which seem a baseless negotiating tactic, but the effect of outsourcing to bad faith actors has pushed the working class out of balance, they simply have no way of competing internationally unless by accepting a step downgrade in working and living conditions
> That opens up greater margin for local production
My country mostly produce pine wood (and other soft wood). I like hardwood furniture, but its only imported stuff because we have very few producers. Putting a tariff on hardwood furniture could be a good idea to increase local production, as long as hardwood is not tariffed. If both hardwood and hardwood furniture get taxed, i will have to pay more, and local production will never have greater margin, as those will be hit by base material tariffs.
(To be clear: I live near on of the biggest hardwood harbour in Europe, and buy my wood directly out of the sawmill, but my point stands)
Yeah and thats where I was going with the last point about tariff needing to be integrated with the rest of the economic system as a tool and not arbitrarily as a tool for negotiation. Tariff are a damper to any economic system and reduce efficiency, they need to be proportional, predictable and non escalatory (well, as much as possible)
The exporter may sell less to the US, but typically they will then sell the difference into non-US markets, reducing the impost. This is exactly what happened in a lot of (not all) markets a few years ago, when China tried to intimidate Australia with trade restrictions [1]. When Chine dropped the restrictions, they found that they were now competing with more buyers and so paying higher prices.
[1] https://www.ussc.edu.au/chinas-trade-restrictions-on-austral...
> In reality because demand is neither 100% elastic nor 100% inelastic, what tends to happen is that the cost of the tariff is split in some ratio between the buyer and seller.
That is the argument of the Administration:
>> Kevin Hassett's theory of tariffs: "China has got to sell a lot of stuff to us to maintain political stability. And so if we put a tariff on their stuff, then they cut the price so that our consumer is basically still able to demand as much stuff as they need to sell to be politically stable."
> If he were right, the import price index (which measures pre-tariff prices) would have fallen by enough to offset the sharp tariff hike. It didn't.
> [graph of said index]
* https://twitter.com/JustinWolfers/status/1981928861547041162...
Isn't your example actually perfectly elastic? It does not change the conclusion at all, of course.
One problem with this analysis is that I can't imagine Trump doing it, or even understanding it. Well, it's not a problem with the analysis, but with the overall situation.
Losing sales isn't the same as paying the tariff. The person importing the item pays the tariff. Their item won't be released from customs if they don't pay. They pay to the US government.
The correct thing to say is that the tariff has an effect on demand because of the impact of adding a tariff on top of the price.
It's not a person, it's a company. The company pays 100% of the tariffs, they are passing it to the consumer who is a person.
Yeah we can literally see it happening in real time. If you have a product with competitors in the market and you are a foreign entity you will eat some of the cost to try to stay competitive in the market. Your only other option is to leave the market. A good example of this is Brasil who tariffs a ton of stuff.
>I find it mildly amusing that there are so many people claiming that it's 100% on one side or other, when it's trivially easy to see why that can't be GUARANTEED TO BE the case.
To be fair most people on one side think they know better than Adam Smith and the people on the other side usually never opened a book, so it's a tough bargain.
One way 100% to get people to see your viewpoint is to insult them. Which side are you talking about?
If you read carefully you'll notice I did both sides.
This isn’t actually how it works though. Who pays the tariff is the same as who pays a tax: it depends on the price elasticity of supply and demand.
If the demand curve is very price sensitive - like people might stop buying wool blankets if the price went up 50%, and buy cotton blankets instead - then the tariff will be paid by the suppliers, because they must lower their prices to make the final price the same.
And similarly, if the buyers are inelastic, they will pay the tariff. Like for baby formula, maybe parents are willing to stomach significant price hikes without changing how much they buy.
As with many things in economics the effect of a measure often depends on the timeframe one considers. Honestly, anything could be true if one just chooses the appropriate timeframe. However, the tariffs clearly introduce an inefficiency which - globally speaking - will be net negative. Locally speaking, though, who knows …
Tariffs existed before Trump, and existed by other countries against the US.
Did those not introduce inefficiency? Actually, it probably produced more inefficiency because most people were probably under thr impression most of the world was under free trade, hence the existence of the WTC.
Not knowing a tax is much more inefficient than knowing a tax.
Yes, they were inefficient. No tariffs anywhere are the same combination of breadth and depth as the Trump ones.
> Not knowing a tax is much more inefficient than knowing a tax.
Why would this be true?
> However, the tariffs clearly introduce an inefficiency which - globally speaking - will be net negative.
Nobody can predict this. Tariffs are used by trump mostly as a negotiation and distraction tactic. In that sense they've been extremely effective.
> they've been extremely effective.
yes, as a pump and dump scheme. He and people in his administration have made a lot of money with tariffs!
Without knowing what the product and market structure is, you cannot tell if the cost of the tariff will be borne by the seller or the buyer.
I don't see it.
Exporter pays: Consumer ends up paying price + tariff, then seller pays the tariff to the shipping company, which pays it to the government.
Importer pays: Consumer pays price, then later pays the tariff to the shipping company, which pays it to the government.
In both cases the consumer is paying price + tariff. A small difference is that some consumers could be psychologically tricked by the lower price tag in the importer pays model. Note that what I'm saying doesn't concern itself with changes in pricing due to this.
To simplify: if the exporter lowers their price, the consumer pays the same, the exporter gets less, and the consumer pays the tariff to the government.
If the exporter charges the same price, the consumer pays more, the exporter get the same as before, and the consumer pays the tariff to the government.
The consumer always pays the tariff. The exporter never pays the tariff.
> Note that what I'm saying doesn't concern itself with changes in pricing due to this.
That's the problem with your semantics then. If the manufacturer no longer makes the same income because they can't increase the final price, in effect the consumer didn't pay the tariff.
> In both cases the consumer is paying price + tariff.
Consumers pay all of the operating costs and taxes of a company. That's not the debate.
With tariffs, the cost of an imported product becomes higher than a domestically produced product, making consumers purchase the domestically produced product. This is the purpose.
The long-term purpose is that foreign companies start making their products in your country to avoid tariffs and be able to compete.
The discussion about if the buyer or seller pays the tariffs or taxes is non-sensical and a distraction.
Depending on the circumstance, the burden of tax can fall more on consumers or on producers based on the elasticity of supply and demand.
Microeconomics 101: https://www.khanacademy.org/economics-finance-domain/microec...
It says Arabic numeral 3 and 9. I don't know why. Arabic 3 looks like this
٣
This would be more impactful if we could see the cost to US purchasers was actually 39% more. Sadly some manufacturers spread the cost across all consumers, which actually means non-US customers are actually paying some of the tariff costs too.
I imagine some manufacturers used tariffs as a reason to lower the price of their products that imported into the US while also raising the price outside of the US to balance that change, but that doesn't mean the manufacturer or their customers outside of the USA are paying anything towards tariffs. The entire tariff transaction is between the customer and the US government, and it's all transacted within the USA.
Tariffs are a tax, paid on the value of imported good, by US citizens who are buying things from outside of the USA. That's it. They are not paid by anyone outside of the US.
Let’s say I’m a widget seller in the US, and my widgets cost $100 to import from Switzerland before tariffs. I retail them at $150 USD in the US, but I sell internationally. In the UK for example, I retail them at £113 (simple conversion, obviously it doesn’t really work like this).
Now tariffs are imposed, my import cost per widget is $139. Not only do I have to jack up my US price to $189, I have to jack up my UK price to £142, meaning UK customers are also paying the tariff now.
Even if you’re a bit smarter about your logistics and use an FTZ or drawback against the import duties, imagine you sell two widgets, one where you don’t pay import duties (bound for the UK) and one where you do (remaining in the US). Your total cost to import is $239.
Instead of making your US customers eat all the cost of the tariff, you might instead adjust your retail prices to $170 and £128 respectively. Again, now your British customers are paying an increased price due to the tariffs.
It's very likely that for luxury items the price is what people are willing to pay. And it's adjusted for each country accordingly.
Thus, the change may simply be that profit margin for sales into the US drops (or rather than it skews that way).
But there are still many commodities where you're not pricing the product based on branding.
These commodities will likely still have the same price on the international market. And thus, consumers in the US will see the effects of tariffs in the price.
Such commodities could be finished goods, but also parts, machines or feedstock for industry in the US.
I'd also guess that if you look at what middle class people buy, these commodities make up a larger percentage of the expenditure -- than it does for wealthy people. Making tariffs a very regressive tax.
Most people won't care about the price of luxury watch. But most people will buy aluminum cans, etc.
That only works if you have no competition in the UK. Why would your customers there continue to buy from you when you are now more expensive than the competition?
Edit: for that matter, if you could raise your prices without losing any customers, why did you wait for the tarrifs? You should have already done it.
Your example has no connection to reality. You don't have to price your widget the same in every country. Almost no company does that.
> Not only do I have to jack up my US price to $189
If you could have sold your widget for $189 you would already have jacked up the price to $189 regardless of any tariffs. Businesses always sell for the highest price they can, that is the purpose of them existing in the first place.
Switzerland would sell the same widgets to the UK for much less, since they wouldn't be hit by the tariffs and also wouldn't be paying to ship Europe->America->Europe.
The manufacturer are subsidising the tariffs if they lower their price in the us to counteract part of the tariff. When they charge other markets more to make up for the cost, they are making those markets pay for the subsidy.
That might be a short term strategy to avoid losing market share in the states and it’s rational if you think the tariffs are temporary. For goods like iPhones which are truly global that might last. But It doesn’t look like a stable equilibrium in the long term for any food which can support multiple suppliers because manufacturers who don’t do this will be more competitive in non us markets.
Afaik it was distributors not manufacturers who sacrificed margin.
The tariff is applied to the import value. For many products you'll get a significant markup on top within the US for distribution, which is not affected by the tariffs.
> Sadly some manufacturers spread the cost across all consumers
Of course not. They charge the highest price they possibly can in each market, regardless of other factors. They're not compensating this here or that there. Every company always charge as much as they can get away with, that is the core function of business.
This was a big worry initially when the tariffs were announced but it doesn’t actually seem to be happening. Most manufacturers are not adjusting their price structure because the effects are super hard to estimate (don’t forget that the US is still just 20% of worldwide demand)
This might have been true three months ago, but it isn't any more. Narrow margin business like independently owned coffee shops are already seeing consumables increase in price by up to 3x, which then leads them to have to add "tariff surcharges" that show up on their POS devices.
I think we agree?! I’m arguing that the tariff is being passed on to US prices and not distributed onto the worldwide customer base. A manufacturer that doesn't adjust their price structure is passing the price on because the tariff is applied by the government and not by the company selling the product.
Settlement in RMB, pay the producer not the middleman.
Would you trust statistics coming from this administration?
> spread the cost across all consumers
Did they lower the US import price before the tariff is applied in the US?
Seems to have been the case with PS5 and Xbox consoles. The rest of the world was effectively subsidizing US gamers for a while, until prices there were jacked up even higher.
Aren't most subscriptions significantly cheaper outside the US? I don't know specifically about those, but YouTube's premium is pennies on the dollar in places like Ukraine, Turkey, etc.
I'm talking about console prices specifically.
So... they swapped 3 and 9 numerals. Does it run counter clockwise then, as a horological commentary on our present age of backwardness?
That you can find around southern South America
https://www.bbc.com/news/world-latin-america-28013157
https://en.wikipedia.org/wiki/Am%C3%A9rica_Invertida
Fascinating, thanks
no, it's a regular quartz movement.
Gotta be careful making fun of trump and the tariff situation lest you get another 10% added, which will make this watch irrelevant.
He would actually be working against his interest: he has been seen wearing multiple Swiss watches - Patek's, Rolex, Vacheron, etc,
You don't think they're gifts for services rendered and therefore tarriff free?
Nobody should be careful making fun of him. Everybody should confront him and then dial back. TACO 2.0.
Tangential. It is fun to note how in ads showing watches the time is usually 9 past 10 as shown in the image. This apparently gives the most pleasing balance of the watch dials for the eye, while not covering the time indicators below.
10:09:30 is probably the closest to 120 degree equal separation.
It makes the watch face look like it's smiling.
Do the hands tick counter clockwise? I am assuming so to make 3/9 swap work, but it’s not mentioned.
Boring answer: no, because that would require modifications to the movement and would make the watch much too expensive.
The whole idea of Swatch is based on simplicity, reduction of parts count and automated manufacturability.
It can't not be clockwise.
It could be clockunwise.
It ticks, therefore it is
Locally clockwise
Whoever said tariffs were bad for business? There's a whole industry springing up of people taking the piss out of the POTUS.
Only available in Switzerland
Here’s a link to the Swiss store which has more details, like price: https://www.swatch.com/en-ch/what-if-tariffs-so34z106/SO34Z1...
I like the "Hopefully, just a limited edition." line too :)
Do we still remember that Tariffs are supposed to raise the price of foreign goods and make domestic goods more reasonable for buyers? it targets buyers and this is how it works regardless of how it is presented to the public, I don't imagine lots of supporters if presented as it is.
Interesting: does that mean the watch runs in reverse as well to account for the 3 and 9 markers being flipped? That would be kind of neat.
absolutely brilliant, one of the greatest things i have ever seen. shame its only available in switzerland.
True that
how is a watch with 3 and 9 swapped brilliant in any way at all?
Reminds me of the Orange Alternative movement in communist-era Poland. A group would wear t-shirts, each with a letter, spelling an innocent phrase.
When one turned away, the message would instantly become different, like changing "Down with the heat" to "Down with the cops" - https://sztukapubliczna.pl/pl/precz-z-u-palami-pomaranczowa-...
https://en.wikipedia.org/wiki/Orange_Alternative
the whole world is a work of art, so even a single policeman standing in the street is a work of art
Right? I don’t want to work from 3am to 9pm. ;)
Missed opportunity to initiate a global switch to clocks that go positive direction
Maybe next time 39 becomes relevant for any reason
I like that it's priced at 139
For a "statement" piece and limited edition with otherwise no notable features I'm surprised how cheap it is.
It's a Swatch, their prices don't go much higher.
If it were a Rolex or a Patek Philippe that did the same, I'm sure there'd be another zero at the end.
For full effect, it should be priced 100 in Switzerland and 139 in the US
139 CHF is 174$, you have the punishment right there.
With the tariff it should be $242.
At first I thought tariffs were just more inflation. Import prices increase, sales prices balance it out and people will buy anyway.
But no, it hurt import businesses in unforseen ways. I saw entire shipment crates get discarded because it was suddenly too expensive to get into the country overnight and too expensive to ship back. Just senseless, pointless waste.
It hurt import businesses in foreseen, expected and one must assume desired ways
Ironic that it can't be tariff'd
Haha but seriously, Trump is just starting to ramp up full kleptocracy mode. Each tariff change is going to be associated with billions in trades made with foreknowledge of the move. His robber baron friends will fund him and his regime forever. They can do whatever they want now. We might as well tear down the White House and replace it with a Putin style gilded palace for Oligarchs. Oh wait.
Large order in from Venezuela
It looks so terrible I thought the idea behind it was “this is what the US can manufacture without importing foreign materials”. But nah, it’s just an ugly watch with a pretty dumb marketing stunt that makes it less usable as a watch.
It’s a part of a collection: “WHAT IF?”
https://www.swatch.com/en-ch/bioceramic-what-if.html
Should be called "WATCH IF?".
De gustibus non est disputandum - I actually like the design, but then again, I don't wear watches.
Swatch watches are all ugly tbf (imho, of course). But let’s face it, this is more of a statement than a product
Swatch makes thousands of different watches in all kinds of styles, from 80s-inspired neon fever dreams to understated mechanical watches. What type of watch are you looking for that they don't make?
agree with your comment, but to be honest, I'm not sure there's any Swatch I would wear: which model would you choose if you wanted to dress business casual?
Ok, I can give you a Skin Irony, but then you would be paying +200 for a Quartz, why not buy an Orient Bambino or a Hamilton Khaki? much better bang for the buck.
Not to mention the clicking noise of a Swatch quartz. In silence, it drives me nuts.
The most understated watch they make is the Swatch Pay!. Super useful, never fails.
It depends on what you consider a Swatch. If it has to say "Swatch" on it, yeah, any Skin Irony is fine for business casual. Or a Swatch Essentials. I'd probably wear something like Boxengasse for business casual, but that's just me; I like complications. Maybe it's too much.
Whether the quartz movement bothers you depends on why you bought the watch. It doesn't bother me, but it's certainly true that you can get similar watches for much less money.
> What type of watch are you looking for that they don't make?
I’ll stick with my Patek Philippe Nautilus 5811 [1], thanks ;)
Also Swiss btw.
[1] https://www.patek.com/en/collection/nautilus/5811-1g-001
It's like comparing a Fiat to a Ferrari
I guess beauty truly is in the eye of the beholder :-)
Like, seriously and not just Swatch. I wanted to buy myself a watch that would look good. Ended up with nothing because good looking watch dont seem to exist.
taste is subjective. Are you sure you know what you're looking for?
I find the Tissot Seastar pretty. I wish it came with a spring drive. My Seastar has terrible accuracy.