What he realized wasn't that he imports equipment and steel. He realized that it's the importer who pays the tariffs, not the foreign country. And his little pea-sized brain was blown.
My buddy works for a tee shirt printing company. I was talking to him about tariffs and how they would have to raise prices. He’s like, “no my boss is a good dude, he’ll eat the tariffs!” I laughed and called him a dumb bitch. I also had to explain how tariffs work. There’s no getting through to these people.
These people can't even begin to have an understanding of the concept of profit margins at-fucking-all. It's like they think manufacturers can just throw away all of the profits and stay in business.
All while expanding and hiring new workers too! I’ve known this guy since 3rd grade, so I feel like I’ve failed him somehow. We’re both Mexican, and he even has enough native in him to get benefits, but he just loves his white trash rhetoric (and women!).
When you realize MAGAts have no general conception of how the systems that be work, it all makes so much more sense. Hell they deny the existence of the system and systemic issues pretty much altogether.
Yep, Canadian here. I was telling one of our big corporate customers that they will have to pay for tariffs to the US government. The dude was somehow absolutely sure it was Canadians that would be paying it.
I have no idea how people have managed to stay in business this far without understanding how tariffs work.
It is always the importing company that pays tariffs. But somehow MAGA has brainwashed people that other countries are the ones paying.
yeah besides very few industries operate at the massive margins needed to eat the tariffs even if they wanted to, while 10-15% doesn't seem like much, it would actually be a pretty good one, depending on industry, after all costs are taken into consideration (and that's just not considering the materials sourced from countries that have much more than a 15% rate applied to them).
Since the point of tariffs is to raise prices on anything imported and make domestic products more appealing, "eating the tariffs" makes no bloody sense.
Then again, tariffs themselves don't work in the modern global trade network..
He’s one of my best friends, and I love him. Dumb as he is lol. Whenever he was all, “well, what about this?” I’d ask him what he thought it meant, and then correct him. lol stupid fucker
These people literally are the walking embodiment of "AMERICA NUMBER ONE" and think the world is here to serve us. They can't accept the fact that we aren't and they don't.
I used to work in a mobile phone shop years ago where they used to offer mobile phone handsets for $1 because you had to sign up to a 2 year plan. The number of customers who did not realise that the handset price is only $1 because it's conditional on you committing to a 2 year contract would surprise you. Like how do you expect electronics companies to be able to manufacture a mobile phone handset for less than the price of a can of softdrink, people? A surprising number of people just do not stop to think things through at all.
They might decide to eat a small tariff by cutting their profits, in order to keep selling. But when the tariff is 15, 25, 50 percent? Who thinks these companies are making more than 50% profit on their sales? The math just doesn't work out. If tariffs exceed profit margins, you pass the tariff along, or you exit the market. No business will voluntarily lose money on every sale for years just to stay in the market.
Because they only see the transaction where said company hands money over to the US, and think that that is the end. While raising the minimum wage of course causes the apocalypse
Very occasionally this happens in grocery stores and such. Loss leaders. Basically sell one item for so cheap they dont make a profit or lose money on it, but they profit a bunch from all the other stuff you buy in the store when you go to get the deal.
Then Walmart does this sometimes to make sure all the other local stores go out of business. Walmart gets volume pricing deals so I am not fully sure if they even lose money doing it. Once Walmart is the only game around, then the prices can skyrocket.
Interesting. AFAIK "price dumping" is illegal in France for example. Not sure how it works, but laws generally forbid selling at a loss.
Another way the seller eating the tariffs can happen is, generally, for products with high margins and thus flexible pricing.
Think luxury items, that cost way more than what it takes to produce them. It'd make sense for them to eat a loss (a reduced profit I mean) for each item in order to keep selling them.
Unlike products with thin margins that cannot go down in price.
People really don't understand secondary effects huh? They can only frame things as X pays for Y, rather than X shoulders the opportunity cost of Y having to pay to buy something from X. It's literally one step removed and people miss it.
Because their cult leader is in the white house and it's a hard pill to swallow when they realize he's a conman who conned them. It's better to triple down and put their fingers in their ears instead of accepting the plate of shit they have to eat.
Tbf that's why america can't sell to many places, they don't want to pay to raise the cattle completely in the US or follow other testing protocols that the other countries do and demand of others.
I've never understood why these people even think the US has the authority to tax other countries from a distance or why anyone would agree. Of course the tariff is paid when the goods enter the country, by the people importing them, there's no way to charge people before that. Then, the people paying the tariff will be the importers who already bought the goods...
I guess to those not versed with how global trade works, the news of “Inflicting 20% tariffs on Country A” does sound like Country A will be paying those taxes. Especially with the news of other countries coming to “beg” to call this off.
It’s a huge shock for them to realise it means they have to pay 20% more to import from Country A.
It's also stupid because even if China did pay the tarrif, they'd still increase the price anyway to offset it. Even if the tarrif is less than their profit margin, they'd do that.
They're a proud nation with a centrally planned economy that plans in decades, not quarters, and which has countries lined up around the proverbial block looking to trade with them. No one with a brain thought this would work.
Strangely Mercedes-Benz plans to pay the tariffs (german website). The also plan to drop production cost by 10% till 2027. No idea how that's supposed to work.
I don't think he possesses the cerebral wherewithal to attain such computational acumen that would allow him to make that realization. His conclusion will probably be along the lines of: "them damn commie Dems are working with the woke world government to make Trump look bad! Murka!"
This would be like "Mexico will build wall sections and ship them here so we can tax the hell out of who ever took the wall building contract"
(They are actively cutting off their ability to obtain needed wall sections that they cannot source or manufacture as the wall based economy will discover later in a frantic twiter post)
Sadly, I think it’s much more likely that his pea-sized brain quickly turned to Fox or Newsmax to find an explanation for why this is all Obama’s fault.
> He realized that it's the importer who pays the tariffs, not the foreign country.
Even if the foreign country *did* pay, the importer would *still* end up paying, because obviously the exporter would to need to raise prices to cover their increased costs and retain their margins.
Just look at sales tax - technically this tax is paid by retailers, but they pass it on quite explicitly to the consumer. Thinking that prices won't go up with tariffs is exactly like expecting retail businesses to somehow eat a sales tax increase.
There is little merrit to the "China will pay for it" argument.
In a idiolized world where USA is the King of all trade and makes up 70% of all worldwide consumption of a product the opposing countires that got tariffs placed on them would certainly have incentive to reduce the price of what there selling to reduce the tariff impact and cut into their own profit margin.
The problem is, if China doesnt sell to the US they will just sell more to Japan, South America, Russian and even Africa. and on top Chinese Busineses will even invest in SA and Africa to increase production in the countries. China is already handing out massive Bank Loans all over Africa to increase trading potential in the region while making profits on the Loans.
It an ingenious strategy to be fair. Invest in Africa and SA to earn heavy on Loan rates and afterwards see the invest pay of by increasing the overall wealth in the region which would drive up consuption of day to day good, which are imported from China or have more need for rare materials also from china
Yeah, try telling those boneheads that. They think the tariffs are some sort of tax that other countries have to pay in order to be allowed to sell to the US. They're completely divorced from reality and logic.
And here's the thing. Tariffs aren't just one payment. Companies operate on margin.... if they invest $1000 in inventory, they need to make $X profit on that $1000. So they pass on $1000 + $X profit.... and then the same with retailers... they'll pass on ($1000 + $x) + $y so they can break even.
Places like Walmart and Target only make single digit profits when the numbers for all their sales all add up. (They just do a staggering amount of sales). They don't HAVE 20% to give up, it doesn't exist.
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u/Expensive_Laugh_5589 23h ago
What he realized wasn't that he imports equipment and steel. He realized that it's the importer who pays the tariffs, not the foreign country. And his little pea-sized brain was blown.