Trudeau decided to go ahead with retaliatory tariffs even though Trump’s order includes a mechanism to escalate the rates if Canada retaliates against the U.S.
So from my understanding and the consensus from Reddit/Lemmy when Trump first announced tariffs is this will only hurt consumers because the companies will pass the cost onto the consumer. Now that Canada is doing the same does this means that they are also passing a secret tax to their consumers as well? I’m not Canadian but I thought they were having a hard time with their economy right now so is this the best move to make for the consumer?
Trump is putting tariffs on things Americans buy from overseas that he believes should be made in America. The gamble is that companies that makes those products will choose to open factories/production in the US in response to the tariffs, which will create new jobs and growth in the country.
In comparison, retaliatory tariffs suggested by Trudeau and Sheinbaum are going to impact high demand goods that Americans import that would be very difficult to source in the US (or elsewhere in the world) in the short term. There is unlikely to be significant impact to the Canadian or Mexican economies because Americans must purchase those items and absorb the extra costs.
An example is cars, which can move back and forth across the border many times during assembly. Car manufacturers must simply absorb those extra costs due to the tariffs now.
I imagine you have a fridge, a stove, and know how to cook. Sometimes you cook at home, sometimes you eat out.
Let’s say that you want to stop eating out, or maybe save money, or maybe you do it just because it’s fun: each time you order out, you put 25% of the bill in a jar at home.
Eating out becomes more expensive for you (now that you need to pay the jar), but the restaurant makes the same money. In the long term, the restaurant might loose out on money if you decide that paying the jar is too expensive and you just decide to cook at home. But hey! You have a jar full of money at home. Maybe you’ll do something with it one day.
Replace the jar with tariffs and cooking out with whatever we buy from around the world and you have what’s happening now.
Except the money in the jar doesn’t belong to you, it goes to the government.
The thing people struggle to understand about the economy (especially in individualist USA) is that you’re not the only one making these decisions.
Imagine the government taxes some restaurants, but doesn’t tax others, what would you do? Go to the restaurant that’s not taxed because it’s cheaper, right? Problem is everyone else does the same thing. The restaurant is too full. Then what happens? That restaurant raises prices because it’s in higher demand for what they’re selling. Rules of supply and demand. So now you have some restaurants charging more because there’s been a tax slapped on them, and the ones that aren’t being taxed raising their prices because they can’t instantly expand the restaurant to meet the new demand for their products over their competitors.
And will those restaurants expand? Only if they know the government won’t remove the tax on their competitors. But is anyone going to make significant investments trusting that impulsive Trump won’t change policies in the future? Nope.
So everything is going to cost more. But US businesses will probably make record profits, and that’s what really matters, right?
That’s a good question, but it seems Canada tariffs will not be broad-based like US is doing. Instead limited to items that are either not critical consumer items, or can be sourced elsewhere at similar cost.
So from my understanding and the consensus from Reddit/Lemmy when Trump first announced tariffs is this will only hurt consumers because the companies will pass the cost onto the consumer. Now that Canada is doing the same does this means that they are also passing a secret tax to their consumers as well? I’m not Canadian but I thought they were having a hard time with their economy right now so is this the best move to make for the consumer?
Nobody sid it would only hurt consumers
It would hurt consumers first which is why the majority of the canadian tariffs are delayed 21 days
Trump is putting tariffs on things Americans buy from overseas that he believes should be made in America. The gamble is that companies that makes those products will choose to open factories/production in the US in response to the tariffs, which will create new jobs and growth in the country.
In comparison, retaliatory tariffs suggested by Trudeau and Sheinbaum are going to impact high demand goods that Americans import that would be very difficult to source in the US (or elsewhere in the world) in the short term. There is unlikely to be significant impact to the Canadian or Mexican economies because Americans must purchase those items and absorb the extra costs.
An example is cars, which can move back and forth across the border many times during assembly. Car manufacturers must simply absorb those extra costs due to the tariffs now.
I imagine you have a fridge, a stove, and know how to cook. Sometimes you cook at home, sometimes you eat out.
Let’s say that you want to stop eating out, or maybe save money, or maybe you do it just because it’s fun: each time you order out, you put 25% of the bill in a jar at home.
Eating out becomes more expensive for you (now that you need to pay the jar), but the restaurant makes the same money. In the long term, the restaurant might loose out on money if you decide that paying the jar is too expensive and you just decide to cook at home. But hey! You have a jar full of money at home. Maybe you’ll do something with it one day.
Replace the jar with tariffs and cooking out with whatever we buy from around the world and you have what’s happening now.
Except the money in the jar doesn’t belong to you, it goes to the government.
The thing people struggle to understand about the economy (especially in individualist USA) is that you’re not the only one making these decisions.
Imagine the government taxes some restaurants, but doesn’t tax others, what would you do? Go to the restaurant that’s not taxed because it’s cheaper, right? Problem is everyone else does the same thing. The restaurant is too full. Then what happens? That restaurant raises prices because it’s in higher demand for what they’re selling. Rules of supply and demand. So now you have some restaurants charging more because there’s been a tax slapped on them, and the ones that aren’t being taxed raising their prices because they can’t instantly expand the restaurant to meet the new demand for their products over their competitors.
And will those restaurants expand? Only if they know the government won’t remove the tax on their competitors. But is anyone going to make significant investments trusting that impulsive Trump won’t change policies in the future? Nope.
So everything is going to cost more. But US businesses will probably make record profits, and that’s what really matters, right?
But a more accurate example for America would replce the kitchen at home with just microwave
America destroyed their manufacturing capacity outsourcing it all and failed to reinvest any of the profit from that move
Factories don’t pop up like in the sims games
True. Microwaves, tv dinners, and hot pockets.
That’s a good question, but it seems Canada tariffs will not be broad-based like US is doing. Instead limited to items that are either not critical consumer items, or can be sourced elsewhere at similar cost.