Re:China Blocks WhatsApp
by logfromblammo on Tuesday September 26, 2017 @01:39PM
(#15340884)
Punitive import tariffs don't work as punishment. They convert a portion of the consumer benefit from trade into taxes, a portion into domestic producer benefit from trade, and throw the rest away as deadweight loss. The foreign producer-exporter is barely even scratched. It's just an excuse to grab money from domestic consumers using another country as the scapegoat.
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every tax ever conceived is ultimately always paid by the consumer, yes. The point of such a tariff is however to increase the price of the foreign product, essentially giving local competitors a price advantage.
Re:China Blocks WhatsApp
by logfromblammo on Tuesday September 26, 2017 @03:47PM
(#15341946)
Inaccurate. Taxes are usually shared between consumers and their trade partners, and the relative burden on each is determined largely by price elasticities in the supply and demand curves. Generally speaking, the more sensitive consumers are to changes in price, the more the tax burden is shifted to suppliers.
In the case of an import tariff, it is paid entirely by consumers, and domestic suppliers get a windfall from it, rather than sharing the burden. That's because there are two supply curves in play, domestic and international, and only one demand curve, because consumers generally don't care where the goods come from, and the internal trade of foreign markets is ignored.
This doesn't work so well when your entire manufacturing industry explicitly relies on chinese production. Everything from debt to infrastructure has some dependency rooted in China. This is the whole point. Increase reliance on china for just about everything and it makes the idea of counter tariffs next to impossible.