Tariffs that REPLACE other taxes have a zero net effect on taxation. Our nation was funded on tariffs for much of its history prior to the 20th century.
You speak in terms of countries and governments as if they dictate all trade transactions and "getting mad". That, in my opinion, is a bit misleading. Governments only impede trade between the individuals they govern. The Smoot-Hawley Tariff was devastating to the US economy because it artificially raised prices on an economy that was already trying to correct and effectually raised the tax rate and increased tax revenue to the government from the consumers in the US (the tariffs collected by the US government and are paid by the consumer via higher prices). Other countries did pass similar laws which further burdened their own already failing economies, reducing trade, and in effect slowing down the world's economy. Less world trade equals a lower standard of living for everyone. Not a good way to recover from an economic correction. When foreign governments put tariffs on imports into their country, it most directly hurts their own citizens by forcing higher prices and higher cost of living. It doesn't really "hurt" the US manufacturers in the traditional sense, they just don't sell as much product in foreign countries. In the same way, it may actually help individual US companies or industries in a very short term when the US government imposes import tariffs, but at the expense of the economy as a whole. In this way, those companies make monopoly profits via artificially high pricing. They are able to stay in business in spite of their inability to compete in a global market. (This is why there are still lobbyists today and what crony-capitalism is all about.) But, it is short term because it is still confiscating money from the economy to the government who squander it in very arbitrary ways - further hurting the economy. All "history" teachers should educating themselves in basic economics. Without an understanding of real economics, simply telling "history" stories and lecturing about "causes" can be very damaging. Look at how little high school graduates understand the economic world around them. "History lessons", I believe, are one reason why. Watch a few of these videos: www.mruniversity.com/courses/everyday-economics
Matthew Grose bro, you my friend are on point. That is exactly what’s happening. The public school system is a joke. 95% of Americans don’t understand basic finances or that GOLD is money. That’s the most basic Econ lesson right there, besides “no free lunch” of course. But apparently both of these concepts are too difficult to understand. I must be a genius with an IQ of 140 because I understand this...
Altacal yeah, the tariff gets passed down to the consumer and the economy gets hurt as a whole. Not to say that tariffs aren’t necessary, we need government to be funded somehow and income tax really sucks. But tariffs like any tax pull away from economic growth. That is why we want a small government. We want to be Conservative in the public sector
@@actualideas8078 Wow. So this is why the US is such a great place to live and has no poverty, while countries who have huge public sectors and high taxes like Sweden are very poor? Right?
Hawley-Smoot happened when the USA was a huge net EXPORTER. That is not the case today. We run huge trade deficits now, and import far more than we export. Tariffs today would not have the same result as the 1930's
Bruno TaTa tariffs actually are paid by the importer, the company receiving the item to resell is considered the importer. The importer, Walmart for example, can then decide if they would rather have lower profit margins, or maintain previous margins by passing on the price to us, the consumer.
Both importer and consumers, while consumers take higher prices so they cut their demand quantity; the importer then will suffer from less sales quantity (pass the taxes to consumers) or sacrifice profit margin (no pass taxes to consumers, raising cost) - in both way reduce revenue
Jay Johnson ok so why does he say 30 seconds in that “other countries are having to pay more to sell their stuff to us”. The importer subsidizes the tariff he pays by charging more from the consumer
Đạt Vũ yes. This dude is correct. Tariffs, like any tax, pull away from production and economic growth. The tariff is paid for by the country that lays the tariffs. Those tariffs then go to pay for government yes, but it is an indirect tax and a self correcting tax. If they raise it too high, less revenue will be brought in because less goods will change hands.
Your explanation itself is biased as it doesn't describe true economics. A US-imposed tariff doesn't "make other countries mad", what it actually does is RAISE the prices on goods that are imported into the US, in other words it adds a tax that WE within the US pay for goods that are imported.
KB9OKB you’re correct, but tariffs also decrease revenue for foreign exporters... so I’d be mad if I was trying to sell goods to another country but they raised tariffs so high that the importers and consumers couldn’t afford it, therefore slowing my business.
The bit you're missing is that it also causes imports to fall, which hurts production in other countries, which makes them poorer, which makes them less able to buy US goods (which you've *also* made more expensive); plus, the reason you were buying the imported goods instead of the domestic goods was because they were more efficient, so you're paying more for nothing.
I agree with the comments about tariffs being a tax on the consumer, which made life harder for Americans during the 1930s. But when jobs are scarce, everyone is looking for a real change, not more of the same. And I agree that all too often “made in America” means it’s more expensive. It will be hard to re-industrialize America...if even possible. But notice the CEOs of the large multinational companies are the ones who hate tariffs. Meanwhile they are collecting millions in bonuses, while the rest of us worry about keeping a job.
Bob no, that’s wrong. Your view on economics is skewed. You need to study the price of gold to understand what “expensive” means. If you think in terms of dollars instead of gold, you don’t know what you are talking about. Although you are correct that the USA may never become “re-industrialized” or that it would take a long time if it did happen (centuries).
Bob but who needs industrialization when you can print currency Forever! We should print a bunch more and give out bail outs to everybody and we can walk right into the promised land.... not
Same Shirt Different Day Yes, and printing trillions of dollars might keep us afloat until the next crisis. So you think gold will be what nations exchange when the value of a dollar crashes? (This hurts my head)
Since Hawley-Smoot, we now have Alibaba, and Walmart. America is getting beat to the point where, when I go to a trade show and say our products are Made in the USA. I don't even get considered by fellow American companies. The only way to get by with a low tariff is to undercut any remaining American workers. For every dollar spent on outsourced goods and services there is a dollar is lost wages for an American, who can't spend that with another American and so on. It should be about doubling the number of hands exchanged BEFORE going overseas, with no tariffs the game becomes a race to the bottom, where we give our money to China while it's hot off the printing press.
Dean Davis yeah but it also has to do with the regulations here in America and taxes within the US that incentivized investors to finance projects in foreign countries. Plus the oil companies love the extra globalized trade.
Dean Davis also don’t forget that the dollar is not money. The dollar has lost value in terms of purchasing power since 1913 and the federal reserve system, which caused the Great Depression in the first place. We need to focus on returning to a gold standard and not allowing central banks to create currency and monetize debt without any real credit it will only undermine real economic growth and lead to inflation
@@actualideas8078 I've since seen Peter Navarro showcase Trumps china trade defense which points out a matrix of over 200 Chinese non tariff trade barriers. This game is utterly rigged if failing to consider the endless incentives, include taxation and regulation as you mentioned. Let me add competitive regulatory to your list. meaning if they buy over some small amount of US goods they get an audit, scaring people off our product and therefore ensuring our currency remains in their country's circulation.
