I'm not an economist but can do some basic sums.
Trump says that steel and other metal going into the USA will now have a 25% tariff applied. (He announced a 50% tariff as well but rowed back on that a few hours later).
So let's say a car manufacturer can sell a vehicle at $1,000, and his cost is $700 of which $100 is for steel.
He is now paying $125 for the steel. He can increase his price for the vehicle to retain his profit margin or he can absorb some/all of the increased cost or he can decide to either not buy steel from wherever (assuming he can break the contract without cost) or not build the vehicle.
If he cannot get steel from elsewhere (I suspect that this is not a product that can be quickly made available) and cannot sell his vehicle whilst maintaining his profit margin, then his profit falls and he may have to make cuts in his workforce or elsewhere.
He could ask the supplier to reduce his prices but why would he? As far as he is concerned, the tariff is the choice of the USA and he is under no obligation to reduce his prices when he has no power to impact the tariff.
The latest White House press conference with the increasingly dim Leavitt said that the tariff is a tax paid by a foreign country to the USA. Does she not realise that the foreign country collects that from a US purchaser before paying it to them?
What am I missing? |  |
By continuing to use the site, you agree to our use of cookies and to abide by our Terms and Conditions.
