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  1. #1
    Super Moderator GeorgiaPeach's Avatar
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    Why Tariffs on Mexico Won't Raise Prices

    Why tariffs on Mexico won't raise prices




    Posted By Roger Simmermaker On 02/15/2017


    Every day it seems, someone somewhere, whether it’s in the Wall Street Journal, Automotive News, or Bloomberg Businessweek (all of which I subscribe to) is saying that if we were to raise tariffs on imports from Mexico that it would automatically result in higher prices on all products for all American consumers.Few things could be further from the truth.


    As stated in Peter Coy’s article in Bloomberg Businessweek on February 2, 2017, “If Mexicans absorb the cost of the tariff by cutting their prices to maintain market share, they’ll pay for the wall. If the tariff gets passed along in higher U.S. prices, then Americans will pay for the wall.”


    And that’s just dealing with the imported goods.


    A tariff is a discretionary tax. If a consumer buys the imported product that is subject to the tariff, the consumer might pay the tax or tariff (if the producer adds the cost to the purchase price). If the consumer buys an American-made alternative (which is usually in no short supply) the consumer does not pay a tax or tariff.


    Perhaps Abraham Lincoln said it best: “And again, by the tariff system, the whole revenue is paid by the consumers of foreign goods… By this system, the man who contents himself to live upon the products of his own country, pays nothing at all. And surely, that country is extensive enough, and its products abundant and varied enough, to answer all the real wants of its people.”


    The real life examples of today suggest that many producers would simply eat the tariff and not raise prices on imports at all.



    Irish Spring, for example, makes several types of body wash, including an American-made version that I like and use. Irish Spring (owned by U.S.-based Colgate-Palmolive) also makes certain varieties of body wash in Mexico. Guess what? All of the body wash varieties sold by Irish Spring cost exactly the same in my local supermarket, priced at $4.99 each, whether they are made in America or made in Mexico. This is despite the fact that Mexican wages are a mere one-eighth of American wages.


    Clearly, Colgate has been pocketing the extra profits from the more cheaply produced body wash they are making in Mexico instead of passing the cost savings on to you – the consumer.


    Are the varieties of Softsoap made in Mexico cheaper for the American consumer than the ones made in the USA? No. Why are Hallmark greeting cards made in America often less expensive than the ones made in China? Why can I find combs made in USA at my wife’s favorite beauty supply store that are cheaper than the ones made in China?


    There are numerous other examples, and they aren’t all inexpensive products found at grocery stores. Do you think the Mexican-made Toyota Tacoma is less expensive on the auto dealer lot than the Toyota Tacoma made in America? Of course not.

    The point is that not only will tariffs on Mexican imports not raise prices for most consumer products, but also that it is already cheaper to “Buy American” in many cases.


    Again, here is the wisdom of Abraham Lincoln: “The tariff is the cheaper system…while by the direct tax system, the land must be literally covered with assessors and collectors, going forth like swarms of Egyptian locusts…”


    With import tariffs, companies and corporations are encouraged to stay in or relocate to America, providing American jobs for American workers, who are the only ones who pay taxes to the U.S. Treasury. We have already seen companies like Ford and Carrier adjust plans to move to Mexico at the mere floating of the idea of an import tariff. BMW is now discussing shifting work from Germany to the U.S. if tariffs are implemented. Toyota CEO Akio Toyoda says Toyota will adjust if the rules of trade evolve – an obvious recognition of U.S. sovereignty.


    Free traders and most multinational corporations don’t like protectionism and import tariffs. Why? Because it’s in their economic interest to have goods imported as cheaply as possible. They don’t care that workers in foreign countries don’t pay taxes to America to support the benefits they want and enjoy themselves like an educated citizenry, Social Security, Medicare, national defense, space exploration, fire and police protection, easy access to our courts and legal system, or adequate infrastructure like roads, highways, parks, bridges, airports, dams, and water systems.


    No, free traders don’t want American workers – the only workers who pay taxes to and for America – to make the products they might buy because they might be paid higher wages and just might occasionally command a higher price for those products.


    But they do want the workers employed by companies that they feel are nave enough to stay and produce in America to pay taxes for all those benefits they receive and enjoy. They just don’t want to pay for them. They want the benefits of the greatest country on earth and her high living standards at no cost to them. I guess some people think there is still such a thing as a free lunch.

    In the minds of free traders, American workers are labor cost problems to be dealt with, rather than contributors to a first world economy with high living standards.


    Import tariffs are a far better way to collect national revenue than direct taxes on the American people that everyone will pay. Congressional leaders are already floating the idea of raising the gas tax to pay for infrastructure projects, which everyone will pay for, unless your sole mode of transportation is a bicycle.

    Protective tariffs are nothing new. From 1789 to 1913, import tariffs comprised between 50 percent and 90 percent of all U.S. federal revenue.


    Americans are finally learning the free trade doesn’t work, and it is nothing more than a horrible, failed attempt to create national prosperity on the cheap. Auto workers in Mexico largely still can’t buy what they build with wages that can’t crack $30 a day. In the United States, Median household income declined 1 percent between 2005 and 2015 while the average price for a new vehicle shot up 21 percent, according to Edmunds.


    Free trade economists are having a severe identity crisis with many questioning what their place is in the world going forward as public support for free trade and globalization continues to dwindle.

    America needs to return to what was once called the “American System” of protective tariffs to promote American industry and turn away from free trade once and for all.




    http://www.wnd.com/2017/02/why-tarif...-raise-prices/


    Last edited by GeorgiaPeach; 02-16-2017 at 02:14 AM.
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  2. #2
    Senior Member Judy's Avatar
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    Hey, GeorgiaPeach, you forgot your link, here it is, I looked it up for you:

    http://www.wnd.com/2017/02/why-tarif...-raise-prices/

    Remember the carriage return!

    Great article.

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    Senior Member Judy's Avatar
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    America needs to return to what was once called the “American System” of protective tariffs to promote American industry and turn away from free trade once and for all.
    In college economics classes, we called it the American Economic System.

    Speaking of that, this is why we need to repeal the income tax and pass the FairTax. It's voluntary, it binds consumers to business which binds government to consumers. When consumers are happy with and confident in their government, we spend, invest and create jobs for each other and government prospers as well and in those good times, there is plenty of money to pay for infrastructure improvements, build that new school, new water treatment plant, new highway, new bridge, buy land and create a new park, bike trails, dog walks, whatever people would like that benefits everybody or lots of people. When consumers are unhappy with or have low confidence in their government, we retract, we save instead of spend, which reduces sales for business and revenues for the government which makes business and government unhappy.

    The FairTax creates the perfect symbiotic relationship between the people, our businesses and employers and the government because the FairTax forces them all to be working to make US happy, prosperous and confident.
    Last edited by Judy; 02-16-2017 at 03:12 AM.
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    MW
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    Quote Originally Posted by Judy View Post
    In college economics classes, we called it the American Economic System.

    Speaking of that, this is why we need to repeal the income tax and pass the FairTax. It's voluntary, it binds consumers to business which binds government to consumers. When consumers are happy with and confident in their government, we spend, invest and create jobs for each other and government prospers as well and in those good times, there is plenty of money to pay for infrastructure improvements, build that new school, new water treatment plant, new highway, new bridge, buy land and create a new park, bike trails, dog walks, whatever people would like that benefits everybody or lots of people. When consumers are unhappy with or have low confidence in their government, we retract, we save instead of spend, reduces sales for business and revenues for the government which makes business and government unhappy.

    The FairTax creates the perfect symbiotic relationship between the people, our businesses and employers and the government because the FairTax forces them all to be working to make US happy, prosperous and confident.
    http://www.fairtaxfraud.com/fallout.asp

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    Super Moderator GeorgiaPeach's Avatar
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    Quote Originally Posted by Judy View Post
    Hey, GeorgiaPeach, you forgot your link, here it is, I looked it up for you:

    http://www.wnd.com/2017/02/why-tarif...-raise-prices/

    Remember the carriage return!

    Great article.

    Thank you Judy.
    Judy likes this.
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    MW
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    I watched a segment on the Fox Business channel today concerning the import tax. Seems all the leaders of businesses and corporations that make products outside the United States are busy, busy, busy lobbying the President to bring an immediate halt to such tax talk. Of course it remains to be seen if Trump will listen to them or not. Stay tuned .........
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    Senior Member Judy's Avatar
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    The Retail Federation met with the President to lobby against the "border adjustment tax" or any tax that adds tax on top of the income tax. The FairTax doesn't do that, it changes out the income tax for the FairTax, like repealing and replacing Obamacare, repealing a bad program that doesn't work and replacing it with one that does.

    All businesses are going to lobby against all tax. Business never met a tax of any kind they didn't hate and rightly so. Businesses don't pay the FairTax, the consumer pays it, retail businesses just collect it from US.
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    MW
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    Quote Originally Posted by Judy View Post
    The Retail Federation met with the President to lobby against the "border adjustment tax" or any tax that adds tax on top of the income tax. The FairTax doesn't do that, it changes out the income tax for the FairTax, like repealing and replacing Obamacare, repealing a bad program that doesn't work and replacing it with one that does.

    All businesses are going to lobby against all tax. Business never met a tax of any kind they didn't hate and rightly so. Businesses don't pay the FairTax, the consumer pays it, retail businesses just collect it from US.
    I don't know why you continuously shove the unfairtax plan down our throats. Anyone that has researched it know it is a horrific plan that only serves the rich while soaking the middle class and poor. Besides all that, do you really think anyone is listening to your constant advertisement of the plan? I doubt it, but if they are, I'd suggest they read this:

    http://www.fairtaxfraud.com/fallout.asp

    The unfairtax plan would be the largest entitlement program in American history and would make most American families dependent on monthly checks from the federal government. Of course that is just one of many reasons the plan, which has been around for almost two decades, has failed to gain any real momentum in the U.S. Congress. It's your right to praise this horrific fantasy plan, but it's also my right to rebuke it when you do.
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    Senior Member Judy's Avatar
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    The people who wrote the anti-FairTax piece in your article don't understand how the FairTax works. For you to call a sales tax with a rebate an "entitlement program" clearly shows you don't either. The rebate is no different than the personal and dependent deductions on your existing income tax.

    The reason the FairTax hasn't passed yet is because the only time Republicans have had control of the White House, the House and the Senate since the bill was introduced was during GW Bush's second term, and GW decided to go with tax rate cuts instead to the grand chagrin of our Republicans.

    The reason you need a Republican House, a Republican Senate and a Republican White House is because Democrats prefer the income tax because they like the control it has over people, it encourages class warfare, and taxes one to subsidize another.

    Whether we can pass it now when we have control of the House, Senate and White House, who knows. Depends on what Congress and Trump can agree upon.

    I have no problem with your rebukes at all. You're free to run with the Dems and keep the income tax. But I'm a Republican who wants to repeal the income tax and replace it with a retail sales tax on new goods and services. The FairTax is good for our businesses, good for our economy, good for our people, good for social security and medicare, good for workers, good for employers, good for investors, good everyone.
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    MW
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    Quote Originally Posted by Judy View Post
    The people who wrote the anti-FairTax piece in your article don't understand how the FairTax works. For you to call a sales tax with a rebate an "entitlement program" clearly shows you don't either. The rebate is no different than the personal and dependent deductions on your existing income tax.

    The reason the FairTax hasn't passed yet is because the only time Republicans have had control of the White House, the House and the Senate since the bill was introduced was during GW Bush's second term, and GW decided to go with tax rate cuts instead to the grand chagrin of our Republicans.

    The reason you need a Republican House, a Republican Senate and a Republican White House is because Democrats prefer the income tax because they like the control it has over people, it encourages class warfare, and taxes one to subsidize another.

    Whether we can pass it now when we have control of the House, Senate and White House, who knows. Depends on what Congress and Trump can agree upon.

    I have no problem with your rebukes at all. You're free to run with the Dems and keep the income tax. But I'm a Republican who wants to repeal the income tax and replace it with a retail sales tax on new goods and services. The FairTax is good for our businesses, good for our economy, good for our people, good for social security and medicare, good for workers, good for employers, good for investors, good everyone.

    The unfairtax plan has numerous problems. It relies on unsound numbers and, in practice, it would cause taxes to rise, incentivize tax evasion, and shift the tax burden onto the middle class.

    Actually the writers of http://www.fairtaxfraud.com/fallout.asp know exactly what they're talking about and make complete sense. Anyone that has researched the pro's and con's of the unfairtax plan can clearly see how misleading supporters of the plan are.

    "The only thing necessary for the triumph of evil is for good men to do nothing" ** Edmund Burke**

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