US President Donald Trump told world business leaders on Thursday to manufacture in the United States or face tariffs, in his first major speech to global leaders since returning to the White House this week. … “Come make your product in America and we will give you among the lowest taxes of any nation on earth,” Trump said today, speaking remotely to the World Economic Forum (WEF) in Davos, Switzerland.
“But if you don’t make your product in America, which is your prerogative, then very simply you will have to pay a tariff,” he added.
And he also still thinks that a tariff is paid by the exporter and not the importer.
Tariffs affect both sides, but the side with the protectionism can build up a local industry thanks to the tariffs. (Assuming access to the relevant resources)
That is why all industrialized nations used high tariffs to protect their emerging industries and once they were established demanded low tariffs from other countries to keep their industries small and the markets dependent.
While in the short run this means a price increase for the consumer, in the long run the local employment and production increase the wealth to offset the initial price increase. That is why “free trade agreements” by industrialized nations often hav devastating effects on the developing nations they push them on. Western “free trade” has ravaged farmers and small business producers in Africa, Asia, South America…
Finally the government can spend the money it raised through the tariffs to stimulate further growth with spending, or by lowering taxes in other fields.
Trump understands very well what he does there, and it is not like the economic theory behind it is complicated. The question is, whether this strategy makes sense for the US when there is retaliatory measures taken by the affected countries seeking to export to the US.
It is the same principle like carbon taxes btw. if you oppose tariffs solely based on the notion that they are “paid by the importer and not the exporter”, you would need to reject carbon taxes, as they are “paid by the consumer, not the company.”
I don’t think you understand the actual levers that stopped tarrifs.
Funny that, I do oppose carbon taxes that are not the sole responsibility of the company PRODUCING the emissions.
The carbon tax is obligatory by the company. The company puts it on top of the price. The consumer price increases by the value of the carbon tax.
It is the same thing. It does not matter whether a tax is “paid by the consumer” or “paid by the producer” it always ends up being part of the price of the product that the consumer pays.