How Will Trump’s Tariff’s Affect Prices?
Donald Trump wants to impose:
- 60% tariff on many Chinese goods, coming into the United States.
- 100% tariff on many Mexican goods.
- 20% tariff on many other countries goods.
- 200% tariff on some manufacturers divesting into Mexico.
Donald Trump on Tariff’s.
“Tariffs are the greatest thing ever invented.”
Many people voted for Trump, for that very reason. The American manufacturers cannot compete with prices for Chinese made products, so the Chinese prices must rise.
How will Tariff’s Work?
I wonder how many of those voters realise what difference those Tarrif’s will actually create.
Tariffs increase the price of goods. Higher prices = Rising Inflation.
Using an example like the following, we can give an idea of the basics of tariffs.
Assume an American product costs $200, and the Chinese copy currently costs $100.
A 60% tariff could change the Chinese price closer to $160.
The 60% tariff (or tax), will go into the US government’s pocket, to be spent on other things.
That 60% will be paid by the American buyer, not by China.
American buyers will see their cost of living rise, with their choices then being:
- Pay the current higher price for American made products..
- Pay the new higher price for Chinese made products..
Another example could be:
An American product costs $160, and the Chinese copy currently costs $100.
A 60% tariff could change the Chinese price closer to $160.
This might be classed as the perfect situation, with the individual Americans being able to choose which of the products they buy, with both being similar priced.
However, there might be many “American” products that use Chinese components, and the extra 60% tax would then increase the “American made” product prices.
The 60% tariff (or tax), will go into the US governments pocket, to be spent on other things.
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