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> tariffs levied by the EU and/or Germany are bad for me, because it is going to raise prices in the EU and Germany That’s short term thinking. Signed: a Spani

> tariffs levied by the EU and/or Germany are bad for me, because it is going to raise prices in the EU and Germany That’s short term thinking. Signed: a Spaniard who has seen all of the country’s industry dismantled since we joined the EU to be moved to Germany and Eastern Europe and now we’re screwed.

Propelloni 1y ago
Thinking otherwise is no-term thinking, tariffs hurt consumers in the short term, long term, or any other term. Anyway, why would some industry move from a comparatively low-cost country like Spain to a comparatively high-cost country like Germany? Manufacturing goes where total cost of manufacturing is lowest. Transportation has become so cheap since the mid-20th century that it has lost all impact on deciding on manufacturing locations. Thus the consumer prices can also be low, independent of the location of the manufacturer and the consumer. Tariffs raise sales prices again in the flawed idea that this would raise manufacturing costs abroad. But of course they don't, and seriously, how would they? Tariffs just make imports more expensive and thus actually make prices go up for consumers in the levying country. In the best case it creates a situation where an out-competed local manufacturer can start to manufacture again at cost and compete on prices. But obviously this will be higher than the price of pre-tariff goods, otherwise the local manufacturer wouldn't have been out-competed in the first place. I mean, come on, that's basic economics. In the second best case the manufacturer just stops exporting to tariff country because its market vanished. Why would it vanish? Right, because consumers cannot afford the goods anymore. This creates an opportunity for a competitor that could manufacture at higher cost to sell goods at prices that still cover its cost, because otherwise -- you already guessed it -- the competitor could have competed before tariffs. Again, basic economics. Whatever, consumers pay more -- and have less choice. Yay for tariffs! So what about "yeah, think long term", what does that mean? Let's say long term means 5-10 years or more, because that's about the time you need to launch manufacturing again. OK, there comes a new manufacturer along, or an ailing one recovers because higher prices cover higher manufacturing costs. In beautiful tariff world nations effectively closed their borders for trade, so markets have become much smaller. Even ignoring the initial higher costs, smaller markets mean smaller scale. The new small market will be unable to match the scaling effects of the old large market, there are just not enough consumers. Thus manufacturing will stay more expensive. This in turn will make goods more expensive for consumers. That's not quite as basic but still. Of course we could veer off into some kind of post-capitalistic market system, and depending on what exactly that means I would probably be fine with it. However, I don't think that's what is going to happen.

Propelloni 1y ago

Thinking otherwise is no-term thinking, tariffs hurt consumers in the short term, long term, or any other term. Anyway, why would some industry move from a comparatively low-cost country like Spain to a comparatively high-cost country like Germany? Manufacturing goes where total cost of manufacturing is lowest. Transportation has become so cheap since the mid-20th century that it has lost all impact on deciding on manufacturing locations. Thus the consumer prices can also be low, independent of the location of the manufacturer and the consumer. Tariffs raise sales prices again in the flawed idea that this would raise manufacturing costs abroad. But of course they don't, and seriously, how would they? Tariffs just make imports more expensive and thus actually make prices go up for consumers in the levying country. In the best case it creates a situation where an out-competed local manufacturer can start to manufacture again at cost and compete on prices. But obviously this will be higher than the price of pre-tariff goods, otherwise the local manufacturer wouldn't have been out-competed in the first place. I mean, come on, that's basic economics. In the second best case the manufacturer just stops exporting to tariff country because its market vanished. Why would it vanish? Right, because consumers cannot afford the goods anymore. This creates an opportunity for a competitor that could manufacture at higher cost to sell goods at prices that still cover its cost, because otherwise -- you already guessed it -- the competitor could have competed before tariffs. Again, basic economics. Whatever, consumers pay more -- and have less choice. Yay for tariffs! So what about "yeah, think long term", what does that mean? Let's say long term means 5-10 years or more, because that's about the time you need to launch manufacturing again. OK, there comes a new manufacturer along, or an ailing one recovers because higher prices cover higher manufacturing costs. In beautiful tariff world nations effectively closed their borders for trade, so markets have become much smaller. Even ignoring the initial higher costs, smaller markets mean smaller scale. The new small market will be unable to match the scaling effects of the old large market, there are just not enough consumers. Thus manufacturing will stay more expensive. This in turn will make goods more expensive for consumers. That's not quite as basic but still. Of course we could veer off into some kind of post-capitalistic market system, and depending on what exactly that means I would probably be fine with it. However, I don't think that's what is going to happen.