Discussion
Given the recent approach by Trump it looks to me there is little point in applying tariffs as they currently function as it just hits the consumer, whether they be individuals or business buyers of the product/resource and can potentially hurt exports due to increased costs.
The flip side is supposed to be onshoring of more jobs but that just means the tariffs have increased costs enough to make domestic production viable, people/business in the country applying the tariffs are still potentially poorer as a result.
It's fairly obvious my knowledge on this subject is poor and the below is simplistic in the extreme so hopefully this might be a learning opportunity at worst and not a metaphorical pasting from those in the know
Would it not make sense to have the country/business/individual exporting pay the tariff as opposed to those in the importing country.
A tariff of 25% on Chinese steel imports would require the individual/company/government to pay the country importing the steel. 100 million £/$ of steel imports would see 25 million £/$ paid to the treasury of the country importing. Most of the major commodity prices appear to be set on international markets so fairly easy to set tariffs, for lesser goods i appreciate there is potential for jiggery pokery by the exporting nation but even their domestic prices could be a good starting point.
Note like many i would like to see a world where no tariffs were required due to fairly equitable global pay and conditions, it ain't happening any time soon though.
The flip side is supposed to be onshoring of more jobs but that just means the tariffs have increased costs enough to make domestic production viable, people/business in the country applying the tariffs are still potentially poorer as a result.
It's fairly obvious my knowledge on this subject is poor and the below is simplistic in the extreme so hopefully this might be a learning opportunity at worst and not a metaphorical pasting from those in the know
Would it not make sense to have the country/business/individual exporting pay the tariff as opposed to those in the importing country.
A tariff of 25% on Chinese steel imports would require the individual/company/government to pay the country importing the steel. 100 million £/$ of steel imports would see 25 million £/$ paid to the treasury of the country importing. Most of the major commodity prices appear to be set on international markets so fairly easy to set tariffs, for lesser goods i appreciate there is potential for jiggery pokery by the exporting nation but even their domestic prices could be a good starting point.
Note like many i would like to see a world where no tariffs were required due to fairly equitable global pay and conditions, it ain't happening any time soon though.
rscott said:
What would be the difference? The cost to the company/person buying the product would be the same whether the tariff is collected by the importer or exporter.
Yep, but at least the additional revenue raised would be coming from the country of export vs the tax payers of the country doing the importing so the cost to the consumer should theoretically be lower. Simplistic yes, though as i said it's a subject i have very little knowledge of.wc98 said:
Given the recent approach by Trump it looks to me there is little point in applying tariffs as they currently function as it just hits the consumer, whether they be individuals or business buyers of the product/resource and can potentially hurt exports due to increased costs.
The flip side is supposed to be onshoring of more jobs but that just means the tariffs have increased costs enough to make domestic production viable, people/business in the country applying the tariffs are still potentially poorer as a result.
It's fairly obvious my knowledge on this subject is poor and the below is simplistic in the extreme so hopefully this might be a learning opportunity at worst and not a metaphorical pasting from those in the know
Would it not make sense to have the country/business/individual exporting pay the tariff as opposed to those in the importing country.
A tariff of 25% on Chinese steel imports would require the individual/company/government to pay the country importing the steel. 100 million £/$ of steel imports would see 25 million £/$ paid to the treasury of the country importing. Most of the major commodity prices appear to be set on international markets so fairly easy to set tariffs, for lesser goods i appreciate there is potential for jiggery pokery by the exporting nation but even their domestic prices could be a good starting point.
Note like many i would like to see a world where no tariffs were required due to fairly equitable global pay and conditions, it ain't happening any time soon though.
The importer pays the tarrifs. Those costs get added to said product and paid for by the end customer. Just means higher prices for people. The flip side is supposed to be onshoring of more jobs but that just means the tariffs have increased costs enough to make domestic production viable, people/business in the country applying the tariffs are still potentially poorer as a result.
It's fairly obvious my knowledge on this subject is poor and the below is simplistic in the extreme so hopefully this might be a learning opportunity at worst and not a metaphorical pasting from those in the know
Would it not make sense to have the country/business/individual exporting pay the tariff as opposed to those in the importing country.
A tariff of 25% on Chinese steel imports would require the individual/company/government to pay the country importing the steel. 100 million £/$ of steel imports would see 25 million £/$ paid to the treasury of the country importing. Most of the major commodity prices appear to be set on international markets so fairly easy to set tariffs, for lesser goods i appreciate there is potential for jiggery pokery by the exporting nation but even their domestic prices could be a good starting point.
Note like many i would like to see a world where no tariffs were required due to fairly equitable global pay and conditions, it ain't happening any time soon though.
I suspect for some items it would mean people switch to products made in the UK, but how much do we make in this country?
Challo said:
The importer pays the tarrifs. Those costs get added to said product and paid for by the end customer. Just means higher prices for people.
I suspect for some items it would mean people switch to products made in the UK, but how much do we make in this country?
In the food industry it appears to be 60/40 in favour of home produced vs imported if i have read the stats correctly. Will take someone that is better at sorting the data to get overall figures including manufacturing etc. I did find some interesting snippets that while being a bit o/t show an overall downturn but at least in favour of the balance of trade (i think !).I suspect for some items it would mean people switch to products made in the UK, but how much do we make in this country?
The value of total goods imports decreased by £52.2 billion (8.2%) in 2023 compared with 2022, and total goods exports fell by £17.4 billion (4.4%), primarily because of falling imports and exports of fuels.
After adjusting for inflation, the total imports of goods decreased by £37.8 billion (7.4%) in 2023 compared with 2022, while total goods exports fell by £15.2 billion (4.6%). https://www.ons.gov.uk/economy/nationalaccounts/ba...
It isn't just about pay and conditions. Tariffs are seen as a way of stimulating domestic industry. Usually import tariffs to give domestic producers a protected market which can enable them to invest in improving the product to the point that it can be competitive internationally. However they can also just lead producers to be complacent and harm consumers.
Export tariffs are less common but do exist. Norway and Sweden placed export tariffs on lumber to stimulate more processing of lumber products domestically.
When I was studying this stuff they were generally seen as a bad idea but could be beneficial in very specific circumstances.
In reality they're usually more to do with politics than economics.
Export tariffs are less common but do exist. Norway and Sweden placed export tariffs on lumber to stimulate more processing of lumber products domestically.
When I was studying this stuff they were generally seen as a bad idea but could be beneficial in very specific circumstances.
In reality they're usually more to do with politics than economics.
JuanCarlosFandango said:
It isn't just about pay and conditions. Tariffs are seen as a way of stimulating domestic industry. Usually import tariffs to give domestic producers a protected market which can enable them to invest in improving the product to the point that it can be competitive internationally. However they can also just lead producers to be complacent and harm consumers.
Export tariffs are less common but do exist. Norway and Sweden placed export tariffs on lumber to stimulate more processing of lumber products domestically.
When I was studying this stuff they were generally seen as a bad idea but could be beneficial in very specific circumstances.
In reality they're usually more to do with politics than economics.
I get the first paragraph though given we are generally dealing with fairly mature economies trading between each other (Chinese less so than others), i'm not sure that should even be a factor outside of genuinely new tech but i suppose that's where the last sentence of that paragraph comes in.Export tariffs are less common but do exist. Norway and Sweden placed export tariffs on lumber to stimulate more processing of lumber products domestically.
When I was studying this stuff they were generally seen as a bad idea but could be beneficial in very specific circumstances.
In reality they're usually more to do with politics than economics.
I've learnt something new there regarding export tariffs so the thread hasn't been a waste of time from my point of view, was expecting to be put back in my box in short order
The Trump is now looking at VAT levying countries as the next stage. EU firmly in the frame along with potentially the UK.
Apart from the fact it is part of his plan, which isn’t so cockamayme as some would think, to price out external production, there is I wonder an element of him being used as a sock puppet by the P25 bunch as a means of driving down taxes generally as concept across the western world purely as an ideological goal. I am increasingly of the view that Trump’s agenda (and hitting the ground running) is think tank driven (quelle surprise) and is taking him down some fascinating cul de sacs he has no idea he is wandering into.
Apart from the fact it is part of his plan, which isn’t so cockamayme as some would think, to price out external production, there is I wonder an element of him being used as a sock puppet by the P25 bunch as a means of driving down taxes generally as concept across the western world purely as an ideological goal. I am increasingly of the view that Trump’s agenda (and hitting the ground running) is think tank driven (quelle surprise) and is taking him down some fascinating cul de sacs he has no idea he is wandering into.
Limited practical knowledge but.....
Tariffs just impact the final consumer of a product. Everyone involved in the chain just passes the cost on.
Surely this just leads to cost of living increases, inflation etc due to wage increases (because people say they can't afford things any more and demand more money), cost increases of products (due to stuff/services being more expensive to provide) etc
Great if a country benefits from the import tariffs in terms of infrastructure investments etc but how likely is that?!
Tariffs just impact the final consumer of a product. Everyone involved in the chain just passes the cost on.
Surely this just leads to cost of living increases, inflation etc due to wage increases (because people say they can't afford things any more and demand more money), cost increases of products (due to stuff/services being more expensive to provide) etc
Great if a country benefits from the import tariffs in terms of infrastructure investments etc but how likely is that?!
wc98 said:
Would it not make sense to have the country/business/individual exporting pay the tariff as opposed to those in the importing country.
A tariff of 25% on Chinese steel imports would require the individual/company/government to pay the country importing the steel. 100 million £/$ of steel imports would see 25 million £/$ paid to the treasury of the country importing. Most of the major commodity prices appear to be set on international markets so fairly easy to set tariffs, for lesser goods i appreciate there is potential for jiggery pokery by the exporting nation but even their domestic prices could be a good starting point.
Small problem the exporter is in a different country so not subject to the law of the importing country.A tariff of 25% on Chinese steel imports would require the individual/company/government to pay the country importing the steel. 100 million £/$ of steel imports would see 25 million £/$ paid to the treasury of the country importing. Most of the major commodity prices appear to be set on international markets so fairly easy to set tariffs, for lesser goods i appreciate there is potential for jiggery pokery by the exporting nation but even their domestic prices could be a good starting point.
xx99xx said:
Limited practical knowledge but.....
Tariffs just impact the final consumer of a product. Everyone involved in the chain just passes the cost on.
Surely this just leads to cost of living increases, inflation etc due to wage increases (because people say they can't afford things any more and demand more money), cost increases of products (due to stuff/services being more expensive to provide) etc
Great if a country benefits from the import tariffs in terms of infrastructure investments etc but how likely is that?!
Again this will be a simplistic answer but those increases are always pro rata. Take a coffee shop , if the cost of wages goes up by £2 an hour it doesn't follow that a cup of coffee goes up by £2 if there are half a dozen people working there selling thousands of cups of coffee a week.Tariffs just impact the final consumer of a product. Everyone involved in the chain just passes the cost on.
Surely this just leads to cost of living increases, inflation etc due to wage increases (because people say they can't afford things any more and demand more money), cost increases of products (due to stuff/services being more expensive to provide) etc
Great if a country benefits from the import tariffs in terms of infrastructure investments etc but how likely is that?!
If the cost of the coffee goes up by 10% parity can be maintained by only increasing it by 10%. I'm talking about basically charging those selling product from overseas into a country for the ability to do so. Like you i would like to see that money used for investment in infrastructure, like you i am sceptical it would happen regardless who is paying the tariffs.
xx99xx said:
Limited practical knowledge but.....
Tariffs just impact the final consumer of a product. Everyone involved in the chain just passes the cost on.
Surely this just leads to cost of living increases, inflation etc due to wage increases (because people say they can't afford things any more and demand more money), cost increases of products (due to stuff/services being more expensive to provide) etc
Great if a country benefits from the import tariffs in terms of infrastructure investments etc but how likely is that?!
Yes it does but laws of supply and demand suggest that internal production will replace external.Tariffs just impact the final consumer of a product. Everyone involved in the chain just passes the cost on.
Surely this just leads to cost of living increases, inflation etc due to wage increases (because people say they can't afford things any more and demand more money), cost increases of products (due to stuff/services being more expensive to provide) etc
Great if a country benefits from the import tariffs in terms of infrastructure investments etc but how likely is that?!
Of course it will potentially (as per Ricardo) be more inefficient and cost more but the result is that internal production is pump-primed and the internal economy benefits at the cost of poor productivity and poor consumer outcome which is why the likes of Smith and Ricardo were against it.
The French tried a version of it (called mercantilism) in the 18th century. It failed in the long term.
That said what Trump and his puppet masters are targeting is the effect of especially the EU which has distorted the global market (I’ll come on to China in a mo) by putting in various barriers to trade (tariffs, sales taxes and non regulatory barriers (NTBs)). To be honest I’m enjoying the sight of the EU squealing as they have been a constant source of market distortion since the establishment of the single market and customs union meaning that prices are jacked up unnecessarily and EU customers have paid a premium for food).
However the big play is China. China is running riot in a world that the previously pro free market U.S. has effectively let an arguably malign actor leverage low costs, no respect for IP, and a rapacious foreign policy, free reign to undermine US interests (and the wider west).
It’s fascinating stuff to watch. I would imagine Beijing is losing its s
t right now trying to calculate how much is Trump retardism and how much is a very calculated play to undermine it, while it is planning its long run up to invasion of Taiwan.Because have no doubt once Trump has Nato, Russia and the EU in a line he will be going for an economic showdown with China. He has always been very clear about that, and I suspect his Brains Trust is absolutely pushing him that way.
Ridgemont said:
The Trump is now looking at VAT levying countries as the next stage. EU firmly in the frame along with potentially the UK.
Apart from the fact it is part of his plan, which isn’t so cockamayme as some would think, to price out external production, there is I wonder an element of him being used as a sock puppet by the P25 bunch as a means of driving down taxes generally as concept across the western world purely as an ideological goal. I am increasingly of the view that Trump’s agenda (and hitting the ground running) is think tank driven (quelle surprise) and is taking him down some fascinating cul de sacs he has no idea he is wandering into.
That's interesting , have to admit i haven't looked into the project 2025 stuff. The in your face stuff is a bit overwhelming on it's own given what's going on in the States at the moment without doing a deeper dive, imo. I agree 100% that most of what's going on hasn't come from his mind, more in the tradition of the figurehead with the dodgy characters doing the prompting in the background ala Reagan and several others.Apart from the fact it is part of his plan, which isn’t so cockamayme as some would think, to price out external production, there is I wonder an element of him being used as a sock puppet by the P25 bunch as a means of driving down taxes generally as concept across the western world purely as an ideological goal. I am increasingly of the view that Trump’s agenda (and hitting the ground running) is think tank driven (quelle surprise) and is taking him down some fascinating cul de sacs he has no idea he is wandering into.
I had never really thought of VAT in terms of tariffs until today and it has exposed a large gap in my limited knowledge (beyond a vague idea of importing a car from Japan upon which I would have to pay import duty and vat)!
Can someone help with the following;
American company (A) manufactures a widget and sells it to UK company (B), who plans on retailing the widget.
If B pays the import duty and VAT, can they reclaim the VAT (assuming they are registered), before selling it with VAT to the end consumer? In that case it’s not really a “tariff”as they are only paying VAT on the value added, or is it not reclaimable? (I hope that makes sense….)
Can someone help with the following;
American company (A) manufactures a widget and sells it to UK company (B), who plans on retailing the widget.
If B pays the import duty and VAT, can they reclaim the VAT (assuming they are registered), before selling it with VAT to the end consumer? In that case it’s not really a “tariff”as they are only paying VAT on the value added, or is it not reclaimable? (I hope that makes sense….)
tim0409 said:
I had never really thought of VAT in terms of tariffs until today and it has exposed a large gap in my limited knowledge (beyond a vague idea of importing a car from Japan upon which I would have to pay import duty and vat)!
Can someone help with the following;
American company (A) manufactures a widget and sells it to UK company (B), who plans on retailing the widget.
If B pays the import duty and VAT, can they reclaim the VAT (assuming they are registered), before selling it with VAT to the end consumer? In that case it’s not really a “tariff”as they are only paying VAT on the value added, or is it not reclaimable? (I hope that makes sense….)
Broadly yes, they can offset it.Can someone help with the following;
American company (A) manufactures a widget and sells it to UK company (B), who plans on retailing the widget.
If B pays the import duty and VAT, can they reclaim the VAT (assuming they are registered), before selling it with VAT to the end consumer? In that case it’s not really a “tariff”as they are only paying VAT on the value added, or is it not reclaimable? (I hope that makes sense….)
VAT is not a "tariff" in the way that cross-border levies are. They apply to even home grown goods as well as those from overseas (we use product categories and until recently it would apply consistently to those categories.....).
All taxes are ultimately paid by individuals one way or another. The only real difference is how many steps it takes to get there, and what chunks govts take on the way.
Traditional tariffs are a blunt instrument most of the time.
The US has sales taxes, which are very similar to VAT.
WC98 - I think you are confusing 'export tariffs' (which are a thing) with 'who remits the import tariff'
Export tariffs are used by countries that want to force companies to add more value in their country. An example would be putting large export tariffs on the export of bauxite, but none on aluminium, to try and get companies to build smelters. But the export tariff goes to the country exporting, not importing.
For import tariffs, you can buy goods either where the seller pays transport & customs duties, or just transport, or you can buy 'from the factory door' where you pay for transport & customs.
Take buying Xmas tree lights from China. Factory cost 100, transport cost 20, import tariffs 25.
So, you can choose to pay 100 to the manufacturer, 20 for transport, 25 for tariffs (that go to the govt of the importing country)
Or, 120 to the manufacturer, but they also cover transport, and you pay 25 tariffs
Or, 145 to the manufacturer, and they cover transport & tariffs.
In all cases, the cost to you of getting the Xmas tree lights to you is 145. Who actually sends the tariff payment to the government doesn't make the slightist bit of difference.
An analogy is fuel duty. At the moment, the fuel companies pay the duty direct to the government, because much easier and more efficient. But, no reason that when you buy fuel there would be two payments by you - one to the garage for supplying the fuel, and the other to the government for the fuel duty. But you are still paying the same price in either case, just because the supplier remits the duty to the government doesn't mean they will lower the price of the fuel in any way, shape or form.
WC98 - I think you are confusing 'export tariffs' (which are a thing) with 'who remits the import tariff'
Export tariffs are used by countries that want to force companies to add more value in their country. An example would be putting large export tariffs on the export of bauxite, but none on aluminium, to try and get companies to build smelters. But the export tariff goes to the country exporting, not importing.
For import tariffs, you can buy goods either where the seller pays transport & customs duties, or just transport, or you can buy 'from the factory door' where you pay for transport & customs.
Take buying Xmas tree lights from China. Factory cost 100, transport cost 20, import tariffs 25.
So, you can choose to pay 100 to the manufacturer, 20 for transport, 25 for tariffs (that go to the govt of the importing country)
Or, 120 to the manufacturer, but they also cover transport, and you pay 25 tariffs
Or, 145 to the manufacturer, and they cover transport & tariffs.
In all cases, the cost to you of getting the Xmas tree lights to you is 145. Who actually sends the tariff payment to the government doesn't make the slightist bit of difference.
An analogy is fuel duty. At the moment, the fuel companies pay the duty direct to the government, because much easier and more efficient. But, no reason that when you buy fuel there would be two payments by you - one to the garage for supplying the fuel, and the other to the government for the fuel duty. But you are still paying the same price in either case, just because the supplier remits the duty to the government doesn't mean they will lower the price of the fuel in any way, shape or form.
Edited by wisbech on Friday 14th February 06:08
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