My understanding of tariffs is like this. An importer is currently purchasing an item for certain amount who them sells it the consumer. If a 25% tariff is imposed, the importer increases his price to the consumer who will pay an additional 25% for the item. What happens to the money used to pay the 25%? Does the importer get to keep the 25% or are they required to pay that 25% to the Government? Is this a program to increase the wealth of the importers or tax scheme where the consumers are paying the extra cost of the item and that money goes to the Gov’t.?

Perhaps there are some economics majors who can explain how all of this talk of imposing tariffs really works?

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Bill

Well, Bill, it's like, the answer to the question of "Who killed the Kennedys?," in the Rolling Stones classic Sympathy for the Devil.

They need us more than we need them, bottom line.
There's absolutely zero that we can't produce, enriching American workers in the end, making us totally self-reliant.
it's just another way to get other countries to fall in line and stop taking advantage of us. Eventually, they will all fall in suit.
Eggs are high due to the bird flue, but I paid around $3.00 a dozen yesterday, so don't take the bait.

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Dave Ramsey Cultist

It's an incentive for us to manufacture those items here in the U.S.

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H Richard
SWCA1967 SWHF244

I agree with HEMI 100%. When used correctly, tariffs are simply a tool. All the bleeding heart Karen’s will tell you otherwise. As far as it being a tax on consumer, if you don’t want to pay it. Don’t buy the product. And that is what Canada and Mexico are afraid of. You won’t buy it. Don’t you wish all taxes were optional?

That's certainly part of it. But another part is an inducement for Canada and Mexico to make the effort to stop illegal immigration and fentanyl from coming across their borders into the US. It's already working...Mexico has caved and will be sending their military to the border for a pause in the tariffs.

Now...it's Canada's turn.

It's great to have a muscular foreign and economic policy again.

The tariff is paid to the US government by the importer or the exporter, depending on the terms of the sale. Also, bear in mind that much of what we import is component parts so it ends up being a 25% increase in cost of maybe 5% or 10% of the final cost. In many cases, the exporter, in an effort to maintain the business, absorbs some portion of the tariff by means of a price cut. I was buying Chinese stainless pipe during the last round of tariffs with China. Our net pricing did not change that dramatically. Will there be some price effect, certainly. If you were to buy a fully completed product out of Canada or Mexico, directly, you would certainly see the impact of that price change. I guess the price of tequila may go up, and some produce items. Most of us will have a hard time identifying the difference.

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Robert
SWCA #2906, SWHF #760

Tariffs are also negotiating tools to leverage other countries into acting in ways that are more desireable, and not necessarily tied to the economy. For instance Mexico has just agreed to send 10,000 troops to the border to reduce drug trafficking, and our tariff has been suspended, at least temporarily.

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What, me worry?

I'm not sure that I buy into the whole tariff scenario . Canada in particular is a strong ally of the USA . We share the longest undefended border in the world and it just doesn't make sense to me to be doing this to some of our long time friends and allies.
I'm not sure of the statistics but I can't imagine that much fentanyl is flowing from our northern border .
Also if fentanyl is flowing into our country ...which it is ... it's because there's such a demand for it .
We likely need to be looking after ourselves and cleaning up the issues we have here in our own country regarding illegal drug use first and not blaming our problems on our friends and neighbors...north or south.

.

Sent from my SM-G781U1 using Tapatalk

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Regards,
Bruce

Answers to the OP's questions are reminiscent of the old allegory of the blind men describing an elephant by feel. What you think it is depends a lot on which part you have grabbed onto.

Long term there ain't no such thing as a free lunch--the gummint collects the tariff, but somebody down the line picks up the tab.

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de minimus non curat lex

There is a trade deficit. Canada sells way more to the US than they buy. Crude oil can skew the numbers a bit but the US Govt feels as though they are propping up (subsidizing) Canada. They simply want Canada to do more. Especially with the military protection Canada enjoys by being a border country.

In the many areas where I lack expertise, I depend on people who know what they're talking about to explain things to me.

Nobel Prize-winning economist Milton Friedman died back in 2006. I read a number of his books when I was young, and I think his opposition to tariffs is just as valid today as it was decades ago...

In 1962, Milton Friedman Made the Case for Unilateral Free Trade as the Best and Fastest Path to Economic Prosperity | American Enterprise Institute - AEI

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Where Law Ends, Tyranny Begins

Tariffs are great bargaining exercises. Also
Tariffs are a great attention getter for
countries that won’t come online.

What is not mentioned is Tariffs the U.S pays.
There’s more than one story as to what’s
going on.

Even if Tariffs took effect, markets will adjust.
There are different producers, consumers seek
substitute products, price decreases, and other
Companies will take advantage of others
misfortune, people want in on American markets.

Recall what happened to Bud Light. They
didn’t have a tariff but similar
consequences.

Canadian tariffs will affect different regions in different ways. Some not so much, some will really get bitten. My state gets all its natural gas, 80% of its electricity and most of its heating oil from Canada...so the 10% tariff on energy will hurt. Most of this countries framing lumber comes from Canada, so that will hurt. Sure...we have trees...but we also have an endless supply of enviro's, bureaucrat's and lawyers that will all fight to protect them. I don't think the tariffs will happen; Canada will fold like Mexico just did. But anyone who thinks the tariffs on Canada won't affect them is sadly mistaken.

Well that makes a certain amount of sense ..I guess .
I freely admit I know very little on the subject but I just can't see needling and prodding our good friends and allies .
But ...we will see what goes on and hopefully I'll learn something along the way.

The naivete on this topic is breathtaking. I laughed out loud when I read the comment that we can produce all we need and be totally self-reliant.

There are minerals and agricultural products we need and use that we don't have in this country...we must get them from elsewhere. And other countries are in the same boat. I don't know any nation on earth that is totally self-sufficient.

There's another benefit of free trade that hasn't been mentioned here: It promotes peace between nations. You're a lot less likely to go to war with trading partners than you are with countries where you have no relationship.

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Where Law Ends, Tyranny Begins

It's only February 3rd, and you already won the understatement of the year award!

Love the Stones, and especially that song

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Pete
I ain't no fortunate son

Recession and inflation incoming

Look at the bright side...can't be worse than the last four years! But I'll tell ya, the latrest hits to my 401k account with only a year to go until I planned to retire is very depressing...and working for a government contractor has my anxiety level through the roof.

That might have something to do with the disparate populations.

US 340 million
Canada 41 million

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Release the Kraken

Seen this movie before (we lost).

"Smoot-Hawley Tariff ActUnited States [1930]
Also known as: Hawley–Smoot Tariff Act, United States Tariff Act

Smoot-Hawley Tariff Act, U.S. legislation (June 17, 1930) that raised import duties to protect American businesses and farmers, adding considerable strain to the international economic climate of the Great Depression.

Smoot-Hawley contributed to the early loss of confidence on Wall Street and signaled U.S. isolationism. By raising the average tariff by some 20 percent, it also prompted retaliation from foreign governments, and many overseas banks began to fail. (Because the legislation set both specific and ad valorem tariff rates [i.e., rates based on the value of the product], determining the precise percentage increase in tariff levels is difficult and a subject of debate among economists.) Within two years some two dozen countries adopted similar “beggar-thy-neighbour” duties, making worse an already beleaguered world economy and reducing global trade. U.S. imports from and exports to Europe fell by some two-thirds between 1929 and 1932, while overall global trade declined by similar levels in the four years that the legislation was in effect." Smoot-Hawley Tariff Act | History, Effects, & Facts | Britannica

Never saw as many bent knees in any accident I ever worked.

Didn't sleep at that famous hotel chain, and certainly ain't no exspurt. Can ask questions however.

What specific tariffs did Canada have in place against U.S. before this started?
Were there any trade agreements put in place before that favored canadian interests over U.S. ?
Are there any goods canada simply didn't allow in before this?

As for tariffs enacted in the 30's, it would appear trade relations and international trade are far more complex now?

Lets see here. Tariff threats have already worked for multiple countries?

People don't get it. This these are just negotiating techniques. What did TR say? Speak softly but carry a big stick? The difference is the speak is not so softly.

218% on dairy products. They are more than a little protectionist on that one.

Neither Canada nor Mexico are our friends in any way.

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- Post No Bills -

Yeah I give up explaining it.

Simply put, the importer pays the tariffs when the goods are received from overseas. That money goes to the government (it's a FEDERAL tariff, after all). He increases prices to his distributors/wholesalers/retailers right down the line to recoup the added expense.

When the end consumer finally buys the item, the price is obviously higher because nobody in between is willing to eat the added cost - they just raise prices on to the next guy. In the end the consumer is the one who pays for the tariffs.

So the short answer is YES, tariffs DO make prices higher for the consumer, and the money goes to the government. Tariffs are taxes.

As for replacing those goods with American production, I say that is a whole different discussion.

These aren't my words, but it's as good an explanation as any:

"The United States-Mexico-Canada Agreement (USMCA) replaced the North American Free Trade Agreement (NAFTA) on July 1, 2020. The USMCA is a trade agreement that aims to create a more balanced environment for trade between the United States, Mexico, and Canada. What is the USMCA intended to do? Support freer markets, support fairer trade, support robust economic growth in North America, and support high-paying jobs for Americans."

The USMCA was intended to build a multi-nation economic bloc to compete with the EU and BRICS. It was negotiated and implemented by the first Trump administration. The current and proposed tariffs on Mexico and Canada are a violation of this agreement.

Prior to a Constitutional amendment that authorized the federal government to levy an income tax…the government had traditionally been funded by tariffs on trade. I guess there’s an argument tariffs can help keep income taxes in check…but that’s a pipe dream considering how Congress loves spending our money.

...by allowing any and every country to undersell us we moved much of our supply and manufacturing offshore. It's our own dam fault for allowing this to happen. "Cheap" goods ain't cheap in the long run.

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"He was kinda funny lookin'"

Oh, yes it can. Chronic unemployment under 4% is nearly unobtainable. That's what we've had the past few years.

It's my "understanding" that Trump likes tariffs....

So I like tariffs.

Do you have no idea how many Canadians have with us in WWI, WW2, Korea, Vietnam (as US volunteers), Gulf Wars, Iraq, and Afghanistan? For shame!

Untrue. Since 2015, we've run a trade surplus with Canada 5 of 10 years. TD Economics - Setting the Record Straight on Canada-U.S. Trade

1% of illegal immigration comes through Canada. 44 total pounds of fentanyl have been caught coming into the US from Canada in the past year.

No shame at all. I stand by what I said.

So; the last 'self-reliant' major country was 17th century Japan, which had a closed economy (called 'autarky' in economics) - no imports, no exports. How did that turn out?

In the 20th century, Hitler tried it without success.

"Autarky and Hitler
Hitler pursued a policy of autarky. It was his ambition to make Germany self-sufficient. However, this policy of autarky was dependent on his other policy of lebensraum which involved increasing the size of Germany through conquest. In practice, Hitler never achieved autarky and depended on the import of oil, even though Germany did expand to include all occupied territories." Autarky Meaning - Economics Help

Well…. CNN NBC FOX and Politico all say different. It’s amazing to me that so many people want to immediately side with Canada and Mexico. As mentioned earlier the cost of tariff can also be put on exporter. And importer can refuse to accept any increase in cost…….. but besides all that. Why can’t people understand it’s a negotiation tool. No different than an opening low ball offer at the car dealer. Did anyone ck to see if Mexico and Canada are honoring their commitments in the trade agreement. You might be suprised. Do you think our president is doing this to harm our economy and burden consumers with higher cost. C’MON people think about it. If nothing else, forcing Mexico and Canada to tighten up border security is worth an extra .25 cents a gallon on gas to me. Opioids are killing people. By the time I’m done typing this long winded rant. Canada will have probably already folded their cards. Lots of worrying about nothing.

So tariffs affect everyone? Good, put that money towards the $37,000,000,000,000 we all owe (dreamer) so everyone pays their fair share.

IMO making US goods more attractive if they are made onshore and creating incentives for corporations to invest in onshore manufacturing isn't a bad thing.

I think we got a little wakeup call a few years back about the level of dependency we had on other countries for some really important items.

I am not going to argue about if tariffs work or not, but I do support the use of them in an overall economic strategy.

It would be interesting to re-visit this thread a couple of years from now when we know the impact they had good or bad.

Another knee bent

Canada announces US tariffs on hold for 30 days after Justin Trudeau holds 'good phone call with President Trump'

Really ??
Canada has served along the the USA during the WWI, WWII including the D Day landings , the Korean War , The Gulf War , Iraq and Afghanistan . They provided planes and manpower to help battle the fires in California ...just to cite a few examples.
I'm sure there are many more but these are the ones that first come to mind...not friends of the USA in any way ?
We will certainly have to agree to disagree .

Purely TDS.

Exporters do NOT pay tariffs - importers do, and they pass it on to consumers.

I am opposed to starting fights with people who have always, always been on our side in war and peace.

Tariff. The tariff is paid to the government and the cost is passed to the consumer.

The consumer is NOT who decided to import products. That was decided by business so that they could make money of by buying and selling instead of manufacturing and selling

Just how are we going to replace these products. Most of the infrastructure to make a lot of it has been sold off by those same businesses. We already have a shortage of labor especially skilled labor. Even if we do start making these products they will cost more due to the higher cost of American labor. As 78% of the population is now living paycheck to pay check, how will they afford higher priced products??? Plus, how long will it take for the US manufacturing to set up to replace imports. It ain't gonna happen in just a few months.

There are 340 million citizens, 58 million are over 65 and 73 million under 18. That leaves 209 million, 2 million are in prison so that leaves 207 million. 11 million are totally disabled (this includes 1 million Veterans). That leaves 198 million. 3 million of those are non working women so that leaves 195 million. There are 1 million active gang members. Down to 194 million. 160 million of those are employed

Ya, it might get rough for working Americans. It will not be one bit uncomfortable for those running the show though

Again you are WRONG!!!!! Importers can put the cost back on exporter by demanding a reduced price on the commodity. It’s all in the deal you make. This is all finance and commerce 101. Here are the numbers. THE ART OF THE DEAL???? Sound familiar

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