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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: albaby1 SILVER
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Number: of 84361 
Subject: Re: Mark Cuban Says: Let's Play Trump Jeopardy
Date: 09/09/24 3:40 PM
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Won't the effect be to price them out of the market? If you have a 100% tariff, that doubles the price of the item. Suddenly it will be cheaper to buy from somewhere else. So consumers won't pay for the tariff because they won't buy the product at all, opting for cheaper alternatives.

For extremely large tariffs on products for which there are alternatives, sure. You can always create a large enough tariff that operates the same way as a ban.

The various tariff plans that are getting floated by Trump aren't structured that way - he's talking about a 10% across-the-board tariff and a 60% tariff on China.

So consider a product like smartphones, where something like 80% of the global market is manufactured in China. Producers that manufacture in China aren't going to suddenly forego the US market entirely, but they're unlikely to be able to get US consumers to eat 100% of the tariff themselves. So if a phone was priced at $500, it's unlikely that the producer is going to be able to charge $800 and still sell as many. Instead, they'll raise the price to somewhere lower than $800, but north of $500. In a world where consumers and producers were equally price elastic, you'd see them land at perhaps $650 - so consumers end up paying $150 more for the phone, producers earn $150 less for the phone, fewer phones are sold, and the government pockets the $300.

That's a large enough tariff that you'd see massive investments in relocating manufacturing capability to avoid it - but that takes time, and may not be feasible (you can't necessarily recreate Chinese manufacturing milieu in, say, Canada).
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This community has written 84,309 posts about US Policy. The article-length ones it recommended most:
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