A lot of folks don't understand how tariffs work, so I thought it may be worth providing a short explanation. A tariff is a tax that people or businesses in the U.S. pay when they purchase a product from another country. For example, the U.S. may put a 50% tariff on steel from Canada. (short 🧵) - ThreadSky

shiplives.bsky.social • 15 hours ago

A lot of folks don't understand how tariffs work, so I thought it may be worth providing a short explanation.

A tariff is a tax that people or businesses in the U.S. pay when they purchase a product from another country. For example, the U.S. may put a 50% tariff on steel from Canada.

(short 🧵)

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embroidery-journey.bsky.social•14 hours ago

I mean honestly people can google it! I feel like at this point it’s weaponized incompetence

shiplives.bsky.social•15 hours ago

That means that if a company in the US is buying steel from Canada it would pay a 50% tax on that purchase. The *purchaser* in the US pays the tariff; nobody in Canada pays the tariff.

The idea is that this would make Canadian steel so expensive, nobody will buy it, and will buy US steel instead.

shiplives.bsky.social•15 hours ago

But there are can be some problems here.

1). Is it possible for domestic producers to meet demand? In this example, can US steel producers supply enough steel to meet all of the needs of US manufacturing?

shiplives.bsky.social•15 hours ago

2). If it *is* possible for domestic production to meet demand, how long will it take to ramp up production? What will US manufacturers do in the meantime -- do they have sufficient stock to keep working, or will they have to slow or halt manufacturing for a time?

shiplives.bsky.social•15 hours ago

3). Would domestic production meet demand at the same price point? Or will there be a sharp increase in the cost of steel, driving up the cost of the manufactured product? If the latter, will consumers be willing to pay that higher price?

And, of course...

shiplives.bsky.social•15 hours ago

4). If domestic production cannot meet demand (which may be the case in many instances, due to climate or natural resources), that means A) manufacturers will be idled; or B) if it's a direct-to-consumer products, the cost of the relevant product will go through the roof.

shiplives.bsky.social•15 hours ago

Meanwhile, the relevant industry sector in whatever nation is being targeted is going to be suffering due to reduced demand. So, that nation will respond with retaliatory tariffs aimed at US products, hurting US manufacturing, agriculture, or whatever the relevant sector is.

sidestream.bsky.social•11 hours ago

What’s your thinking on Miran’s view? Namely that tariffs are a tool to strengthen the dollar and incentivise domestic production. This benefits the working class by bringing back factory jobs.

The theory is that a strong dollar, paired with tariffs, could make U.S. exports competitive.

shiplives.bsky.social•10 hours ago

That’s the classic economic theory. And, like many classic economic theories, it works perfectly in theory. But it doesn’t account for counter-tariffs, irrational decisions (in the theoretical sense), irrational decisions (in a political sense), or practical constraints.

shiplives.bsky.social•10 hours ago

(By practical constraints I mean fixed external factors you can’t control, such natural resources, climate, etc.)

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