If they had bought American floodlights they had saved 255k in tarrifs. So if they had paid 200k for the floodlights they would have still been better of.
One could argue, that there might be no American Floodlight Company - well here is the incentive to build one.
Secondly the money isn't lost, it goes to the state. Like a tax, but it is called differently. With this 255k more the state can now subsidise the local floodlight industry.
If anything of the above comes to fruition... That's a different matter...
That is not even remotely correct. The American Floodlight Company would sell the floodlights for slightly below the 392k - the total amount these guys paid. Something like 350k and tell the consumers they just saved "42k". Because the alternative is? Import it and pay huge tariffs. This is what happened last time with washing machines.
The protectionism also means American Floodlight Company no longer needs to innovate. Because they can keep producing the same lights over and over again. What are people going to do? Look for innovative floodlights overseas and pay huge tariffs?
It also means American Floodlight Company products cannot be exported. It is costlier and not innovative. Japanese, Chinese, Koreans brands are going to leave them behind.
In the meantime, American Floodlight Company is a business, not a charity. They will find loopholes like get cheap parts -- this will be easier as world moves on to newer, more efficient lights, so that overall input costs are low - despite the tariffs. Then assemble it in US and claim it to be "Made in USA".
Win, Win for the company while the consumers can take a hike.
Yes that's the most likely outcome, but OP asked for the benefits - and I guess my explanation is the naïve thinking that lead to the tarrifs in the first place
Floodlight companies don't appear overnight. I suspect they won't appear at all, given the instability of the tariffs and the fact that the next President (or even the current one) could wipe them off, rendering their shiny new Floodlight factory completely useless overnight. This extends to any industry.
Tariffs need to be stable and updated with several months of advance notice - otherwise they don't serve their purpose.
Thanks to the chicken tax we already know how this will develop: The US floodlight company will sell those US-made lights these lights for ~400k (so at the margin of market price plus tariffs), and no one outside the US will want to buy them. This is literally what already happened with the US car industry.
There are many companies all over the world focused on local markets. The car industry is strategic, but I wouldn't mind buying a floodlight from a company that doesn't export anything.
Like "they" came for middle-class Americans in stable US government jobs?
If they cared about re-creating a middle class with jobs, they wouldn't have started with wantonly eliminating so many of them using a method similar to checking if the packaged spaghetti is cooked. Toss it randomly at the wall and see what sticks.
There is no unemployment problem. Producing floodlight is not high paying job. If things become more expensive, more people will fall out of the middle class because they will no longer be able to afford what they previously could.
These tariffs are probably the worst way to try to do that. America had its best “middle class” when companies and CEOs were heavily taxed and when unions were thriving. The politicians ranting about “bringing jobs back to America” are the same ones that dismantled the things that actually _made America great_, and if they actually cared about the quality of living for most Americans they would do actual work to get there instead of alienating our economy to benefit themselves and their rich friends.
> Secondly the money isn't lost, it goes to the state. Like a tax, but it is called differently. With this 255k more the state can now subsidise the local floodlight industry.
Alternatively the taxes can be lowered so that overall the American consumers don't lose buying power (imports get more expensive but people also have more money to spend).
> Secondly the money isn't lost, it goes to the state. Like a tax, but it is called differently. With this 255k more the state can now subsidise the local floodlight industry.
Is that what is planned? The US has a lot of dept internationally I assumed the additional money goes into paying that back, or at least stabilize the dollar somehow
During the last Trump trade war with China, there was about $28B paid out to American farmers as “Market Facilitation Payments”. So basically the taxes collected from our own tariffs went to subsidizing the impact of retaliatory tariffs. The whole thing is pretty dumb.
But I meant that if you take an example of tshirt production that gets sold in the US, with fabric that comes from Bangladesh, one producer in Vietnam, one in the US. The final price consists of materials, labor, shipping. Both effectively have materials and shipping tariffed and for the Vietnam company additionally the labor is tariffed.
So the only difference is the application of the tariff on the labor for the Vietnam company.
Lutnick: "It's time to train people not to do the jobs of the past, but to do the great jobs of the future. This is the new model where you work in these kinds of plants for the rest of your life and your kids work here and your grandkids work here. We let the auto plants go overseas."
United States Secretary of Commerce ladies and gentlemen!
It harms 100% of Americans which means it harms the 50% of Americans who advocate for science, education, and health. Anything that causes any harm to this group in any way at any cost is what that other 50% wants and derives the benefit from.
American products are too expensive, so nobody buys them. Import taxes make imported products more expensive so that they are even more expensive than the American products. The hope is that this makes it cheaper for American consumers to buy American products than to buy imported products.
But the elephant in the room is that the American-made products are now so expensive that you cannot profitably export them to any other country. So you have effectively limited the market size to purely the internal American market. And that means Chinese companies might have much better economies of scale. Because they can capture customers worldwide and not just inside America.
But most likely, the house of cards will fall over before you ever ship the first American-made product: Headlights need injection-molded parts. Since this was historically almost fully outsourced, the U.S. has almost no production capacity in this area. Building these factories takes 2 to 5 years. That means, unless everyone is fully convinced that these taxes will stay in effect for at least 5 years, nobody is going to build the necessary manufacturing capacity. And good luck finding US investors who are happy to invest millions into a factory with a predicted 5% profit margin.
It offsets the cost of cheaper Chinese labor and material costs. With the goal of making "made in the USA" products price competitive where they were not before.
In the abstract this possibly makes more jobs in the USA for manufacturing these items. It also keeps the entire process conducted in US Dollars that stay entirely within our borders which is theoretically better for currency stability and value.
Of course it what you describe is a lasting situation, no one outside of the US would buy from an industry that is only propped up by subsidies, whose product is available for cheaper elsewhere, and likely subject to counter-tariffs. From there, the USD-labelled trade outside of the US would decrease, which makes it a less interesting proposition for foreign companies to hold USD, and, by extension, T-bonds.
US companies that actually made viable products for the international market would now have to compete with artificially subsidized companies on their costs, risk getting caught in tariffs, and, unless they build a critical product, probably see their international sales decline.
Negatively polarize the Democratic Party out of their anti-trade posturing (sweatshops! outsourcing pollution! look at the rust belt!) for a generation?
Both Bill Clinton and George W. Bush were huge free traders, and Barack Obama largely carried on that bi-partisan tradition.
But the resurgent left of the Democratic Party, inspired by the anti-WTO “Battle of Seattle” and led by folks like Elizabeth Warren, made free trade toxic to enough of the party that Hillary Clinton in 2016 felt she needed to come out against Obama’s Trans-Pacific Partnership which she herself had taken a lead in negotiating.
Trump ostensibly killed it, but it was already dead. Even an incredibly beneficial trade agreement—both economically and strategically—had no constituency of consequence on Capitol Hill. With Trump’s “help” maybe one will reemerge.
The TTP was structured as the economic equivalent of the Island Chain containment. It's conception lead to Made in China 2025 which wasn't rolled back just because USA withdrew from TPP.
Obama had the right idea, Trump if he understood it (lol) would have used it to screw China instead of giving China a free pass by withdrawing from it.
Note that China <-> US relations soured under Obama, well before Trump came into the picture and most of it was a direct result of TPP and policies like it designed to contain China economically.
One could argue, that there might be no American Floodlight Company - well here is the incentive to build one.
Secondly the money isn't lost, it goes to the state. Like a tax, but it is called differently. With this 255k more the state can now subsidise the local floodlight industry.
If anything of the above comes to fruition... That's a different matter...