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Old 06-30-2018, 07:58 PM
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Insider
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Join Date: Jul 2016
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your example is pretty much the most simple and straight forward out there

in the case of Germany/USA and cars if the situation was as you say then the USA would have little to lose since the USA sells dramatically fewer cars to Germany than Germany does to the USA so the USA would be hurt far less on any reduction in sales to Germany Vs Germany and their reduction in sales to the USA

here are the issues as they are and slightly more complex.....you have to assume that a consumer will instead switch to a USA built car Vs a German built car because of the increased cost.....if the consumer goes ahead and buys the German car and pays the higher price well that USA consumer paid a higher price for the same product.....then you would have to assume that the USA government would do something beneficial with the increased tax revenues Vs what we all know they would do and that is find a way to do something destructive to USA business or consumers with that increased revenue

then there is also the issue that a USA consumer might just but a Japanese or British or Italian luxury car and thus there is no additional sales for USA builders and no additional tax/tariff dollars for the USA to use beneficially (or destructively as would most likely happen)

the HOPE would be that Germany reduces their tariffs on USA cars and then the USA does the same and that results in the same number of sales of German cars in the USA and a few more sales of USA cars in Germany and a net benefit to the USA in increased sales of USA cars (or more likely trucks) to Germany

what generally happens though is Germany looks at things made in the USA that are popular in Germany (probably liquor, software and computers, airplanes) and raises tariffs on those and tries to reduce the sales of those in Germany.....and more likely the USA consumer will just pay the higher price for the German car or they will buy some other foreign luxury car while Germany MIGHT be able to find the products they need from some other supplier and thus the USA does not gain car sales from USA consumers and they lose sales of the other products to Germans

Germany is probably not the best example for an exercise like this because many of the things that Germany buys from the USA are probably things that they have a harder time finding from others and the things that Germany sends to the USA our consumers will probably buy at a higher price

there are exceptions like machine tools, steel products that have been fabricated in a particular way ect.....there are most likely some substitutions that the USA could get from Italy or there might be some sources in the USA at a bit higher cost and for the USA some software, some engines, some highly complex tooling, some medical equipment, and other things that Germany could find elsewhere if they had to, but they would probably prefer not to

it is a much more complex and much less beneficial exercise when you are comparing two highly developed economies and outcries that have some groups of products that they are experts at making

it is a much more straight forward exercise when you are looking at a more advanced economy like the USA Vs a less developed economy that is known for "cheap labor and low cost" like China and India

in my opinion you have to look at the overall cost to your own consumers and the importance/need of the products Vs the cost to your economy of letting a company dump low cost stuff on you while they use the profits to build their economy to then compete with you in the more advanced products that they have a hard time sourcing from anyone besides your country or a few others that do not put up with their unfair trade practices

and in my opinion that is what is going on with the USA Vs China in particular they send us a ton of low cost, throw away crap that the USA could lice without for decades and that the consumer could either find elsewhere or could just not replace as often and China uses the profits from that to build their advanced industries to try and undercut the USA in those industries in the future.....while the USA sends food, raw materials, advanced machines and software, and other things that China actually NEEDS at a far greater level Vs the rubber tomahawks and stuffed plush toys and tainted dog chews that China send to the USA

so the USA should have stood up to China long ago and also forced the USA consumer to adapt to not having dollar store throw away crap that litter the yards of the rental properties they abandon when they do the midnight move 3 days before being evicted yet again......while making it more expensive for China to import the things they NEED like raw goods and advanced machines and technology that they use to turn around and further undercut our economy
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