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PaperclipPerfector  12d ago (text post)   33243 thread views

Culture War Roundup for the week of February 10, 2025

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Yeah, Trump's tariff announcement today was good actually. Certainly much better than his previous ideas.

  1. Reciprocal tariffs. We charge others what they charge us.

  2. VAT offsets. If European countries average 20% VAT and we average 6% sales tax, that's the equivalent of a 14% difference in tariffs that need to be accounted for.. Edit: I am wrong. Thanks to @The_Nybbler.

There's a good chance Trump could lower taxes in the US in a revenue neutral way.

A VAT isn't similar to a tariff at all, and reciprocating Euro VAT with American tariff is harm to Americans with no purpose. The way VAT works is an American hammer costs e.g. $10 in the US and $12 in Europe because of VAT... but a European hammer of the same base price ALSO costs $10 in the US and $12 in Europe. There's no unfair practice there.

If you set the tariffs off against sales tax, you've made a truly horrible incentive; it makes it easier for states to raise their sales taxes up to Euro/Canadian VAT levels.

i still dont get why people think VAT is comparable to tariffs? is trumps idea of "fair" that we keep taxing our own products with VAT but make an exception american imports?

Reciprocal tariffs. We charge others what they charge us.

Except that others don't charge us tariffs, we charge ourselves tariffs. It's more like "we charge ourselves what others charge themselves". When you formulate it that way it becomes clear why this is a losing proposition.

If it's purely self charging then why are there retribution tariffs? Obviously when you raise the price of a good when produced by foreigners such that you give your internal market an advantage it is bad for those foreigners. They need to pass the cost to the consumer but that would make them uncompetitive. The winner of tariffs is special local interests, the loser are general internal interests and foreign competitors. The only interests influential in foreign states are the foreign competitors thus foreign states oppose it.

The whole "the consumer pays 100% of the tariff" has ben debunked a million times. The cost is never passed on 100% to the consumer.

Can you provide more information on this? I'm curious what proportion is, as I'd assume it'd be fairly close intuitively, and I've never seen anything otherwise.

A quick peruse of google scholar give this paper: https://sci-hub.ru/https://www.jstor.org/stable/1814161

It suggests that for a change in tariff rates, less than 1/3 is reflected in end consumer prices.

Sorry I don't have more sources, I haven't read many econimics papers even though I'm an economist 🙃

That's okay, that is more that sufficient - thank you!

I don't see what that has to do with what I wrote.

I've always thought reciprocal carbon taxes on imports would be an amazing scissor-wrench to throw in the works.
Get the free traders arguing with the greens about why you can import silicon made with coal in China at 0% tax, but silicon made with coal in the US gets taxed and regulated to death.

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