tariffs

THE PURPOSE OF THE TARIFFS

The purpose of the tariffs was to encourage American companies to bring manufacturing back to the U.S.A.

IT IS NOT GOING TO WORK.

For the past 50 or more years American companies has been purchasing items from companies primarily in Asia. The volume has grown significantly over the years, and the factories have grown to meet the demand accordingly.

These factories are not going to shut down their production. The American buyers are not going to stop buying. These American companies are not going to invest in building new factories in the U.S.A.

American companies have been opening retail outlets all over China. This will certainly keep the factories in China working. [China has a large population, a billion people] that’s a lot of people to dress. [My discussion deals with the textile business only of which I am very familiar with, I do not know what other industries are doing].

Companies in the U.S.A. have been very good to the poorer countries of the world helping them get out of poverty. China is the most graphic example. There are other Asian countries who have benefitted from the investments American business has made in those countries as well.

In China people are driving expensive cars and wearing expensive clothing, they have a good life. When the US government increases the import taxes [tariffs] on goods from China the American companies reduce their orders. The result is that the Chinese companies reduce production, but they are capitalists and look for new outlets for their production. It is a big world.

I heard that toys that sell at $25.00 as an example will go to$30.00 or as high as $40.00. footwear will increase by 15% in the U.S.A.

The list of items goes on and on.

Ultimately the American public, consumer is being affected by these cost increases.

How about government revenues, the importer takes in less merchandise even though the tax has increased what is collected may be less than would have been collected if the buyer had not reduced his buy with the old tax. The result is that there are fewer taxes collected by the US government.

I personally believe the quality of products in general will diminish, which reduces the price, so the consumer suffers. We have seen this before in America when material costs increase “cheaper” materials are used. This results in unhappy customers.

But back to the Asian world, they may not buy much from us if they must exercise paying higher taxes to their government. I personally do not know what we make and sell into Asia.

In the 1920s/30s I believe we built the oil industry in Saudi Arabia and probably the other middle east countries. Are we increasing the import taxes on oil? The reality is these middle east countries are flush with capital and as far as I know buy nothing from us except military stuff.

We the American businessman has helped to build the world economy which has helped to make the lives of people in these various countries better. The stumbling block in all cases is that the governments of all countries want a piece of the action. Isn’t that the way it has always been.

For those of you who haven’t read economic world history, it is time to start.