EDINBURGH, Scotland (AP) — The United States and the European Union agreed to a trade deal setting a 15% tariff on most goods, President Donald Trump announced Sunday, staving off for now higher import taxes on both sides that might have sent shock waves through economies around the globe.
The article really should have covered some basic economy.
The US consumer and factories are paying the US government 15 cents on every dollar of product they import from the EU.
That’s annoying for the EU, because it will mean fewer exports to the US. But it’s WAY worse for the US.
And on top of that, it’s really not so bad for the EU, all in all, the tariffs are lower than for many others, meaning that we might actually sell more. Of course, that’s assuming the US keeps imports steady, which they won’t, because prices will go up and thus demand goes down.
This is horrible for the EU. They now have a huge economic disadvantage over the US.
This is some of the hardest cope I have ever read. “If we work while the others are on strike then we can get paid while they do not!” https://en.wikipedia.org/wiki/Strikebreaker
Yeah, that IS the point of tariffs. It’s also a very basic understanding of global trade.
When you buy something from another continent, you’re already paying WAY more than when you’re buying it nearby. So why would you do that? Well, in most cases, it’s because you can’t buy it locally.
Global trade is global because lots of products aren’t produced everywhere. Much of what the EU is selling to the US is stuff that the US either doesn’t make, or doesn’t make in enough volume to cover its needs. And vice versa. Trade balances group products together, so it doesn’t usually show, but you can sell me a billion worth of ball bearings, and I can sell you a billion worth of ball bearings, and if I tariff you heavily, that won’t change at all because there are a thousand different types of ball bearings.
Now, traditionally, a tariff can promote growth of local industries, but you can’t just make a new factory in a few weeks, months or sometimes even years. If we assume the industry reacts immediately, it will be many years before simple factories are up, and decades before entire chains are reproduced.
And the industry won’t react immediately, because nobody trusts that these tariffs will stick. You need to put a tariff in place for decades to be effective, and Trump can’t even stick to a plan for months.
So in practice, just having short term stability is worth it. Plenty of industries are actively holding off on large purchases because it might suddenly have a 20% tax hike on top. Or lose one, or god knows what the orange idiot does next that will destroy your profit margin.
Because again, they’re not buying abroad for a small advantage, they’re doing it because that’s where this product is made, and they can’t buy it elsewhere.
That doesn’t remotely apply. Assuming International Trade is like your personal bank account is a Trump level misunderstanding of economics.
International trade is often done simply because it is cheaper. China is a manufacturing hub for a reason.
If European cars are more expensive people will buy an American car faster for example.
So, do you imagine there are factories producing goods that simply go unsold, (Tesla doesn’t count) just waiting for a reduction in foreign imports and/or an increase in price?
No, they’re producing to meet demands, having too much excess capacity is a waste of money, so they don’t have it.
cars are actually a funny example, because the tariff used to be 25%, so it actually decreased. But let’s pretend it didn’t. Let’s say a BMW just started costing 15% more, and people look for an alternative. They spot a US car, how much do you think that will cost? If you answered “14.5% more than yesterday”, you’re spot on!
But here’s the thing. There aren’t suddenly, magically more US cars to make up for the difference. The people who want that BMW-like car, will find it doesn’t actually exist at the previous price, simply because demand went up (and due to profit seeking).
Strange how you had to include “Tesla does not count” I wonder why you did that. Almost like you already know you are completely wrong and are admitting it.
It was a joke about how nobody wants to buy cybertrucks.
You’re the one who fucked up by picking an example that’s actually the reverse of what you wanted to show, and still not understanding it.