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re: It’s basic math: here’s why you’ll NEVER notice the tariffs
Posted on 5/10/19 at 9:45 pm to buckeye_vol
Posted on 5/10/19 at 9:45 pm to buckeye_vol
quote:
They don't have to collude. If pre-tariffs the average price of 25% of a foreign item price $100 and the 75% of domestic item costs $110, then the average price wold be $107.50. If the foreign prices increase by 25% then that rises to $113.75. So why wouldn't I raise my prices knowing that the average price has risen by nearly 6% without any increase on domestic items
I would say this is false. The domestic market is still free trade. The loss of a low cost import has left a void for another competitor to enter the market at the current domestic item price. The domestic producers are obviously operating at an acceptable profit margin currently and this would allow them to generate more gross profit. Some domestic competitor will accept the current domestic price to take market share.
This post was edited on 5/10/19 at 9:47 pm
1
Posted on 5/10/19 at 9:53 pm to Colonel Flagg
quote:I'm not sure the barriers of entry would make this likely as is, especially in manufacturing, but more importantly, I don't think it would be feasible since we don't know how long the tariffs will last as they're likely temporary, especially if Trump is not reelected.
The loss of a low cost import has left a void for another competitor to enter the market at the current domestic item price.
So that would be a lot of money and time to get things running with a decent possibility that the tariffs aren't even in place when it's ready to go, especially if it's in the steel sector, where the available market share is already limited.
This post was edited on 5/10/19 at 9:55 pm
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