During the time the tariffs were in effect — February 2018 to February 2023 — the cost of laundry equipment rose by 34%, according to Bureau of Labor Statistics data. Overall inflation was just 21% during the same time frame. The price of appliances overall rose by 23%. So laundry equipment rose by at least 11% more than it probably would have otherwise without the tariffs.
When the washing machine tariffs expired in 2023, prices promptly fell. From February 2023 to February 2024, laundry equipment prices dropped by 11%, while overall inflation rose by 3% and appliances overall fell by 5.1%. Imports rose in 2023, surpassing pre-tariff levels.
The 2019 study found the net annual cost to consumers for each new job created by the tariffs was about $815,000.
Trade is made worthwhile by comparative advantage. Once you impose tariff this advantage disappears. Tariffs and other trade barriers are used by banana republics to incentivise “import substitution,” a fancy term for protectionism.
There is no free lunch, tariffs create jobs at the expense of inflation.
Read below, the Chinese will definitely see a lot of deflation. The responses globally will wash up quickly on us as deflation.
We know from prior to 2020 that a lot of exceptions to tariffs were made by the admin. This time I doubt exceptions will be made. I think TFG wants to strip China of any trade surplus. This means US corporations with factories in China will be bringing back economic upheaval here. But probably only for 2025.
Tariffs can contribute to deflation by reducing external demand, which can exacerbate industrial overcapacity. Deflation can be harmful to the economy and can lead to a vicious cycle of lower spending and investment, which can lead to lower economic growth and higher unemployment.
Explanation
Tariffs
Tariffs are taxes on imports that can raise prices for consumers. While tariffs can benefit domestic producers and the government, they can also reduce aggregate demand and distort production and consumer behavior.
Deflation
Deflation can hurt consumption, businesses, and growth. It can lead to consumers spending less, which can lead to businesses lowering wages or laying off employees to maintain profit levels.
Effects of tariffs
Tariffs can have mixed effects. While tariffs can benefit domestic producers, they can also negatively impact consumers. Tariffs can also lead to declines in domestic output and productivity, more unemployment, and higher inequality.
Additional effects of deflation
Deflation can make existing debt more expensive for many borrowers.
Deflation can drive down spending and investment, which can lead to lower economic growth and higher unemployment.
My perception is that all appliance prices went up under TFG. Even if tariffs were not placed on them, seems like the manufacturers raised prices " in sympathy" with the tariffed items.
I would like new oven and frig, but just walking thru Costco and looking at the prices, my currently working ones are OK for now.
If only we can have another pandemic, I’m sure prices would drop /#sarcasm
We were kicking that idea around a while back. Offshoring production may make stuff cheaper, but a lot of people who used to make those things see their standard of living fall, and we, as a nation, become dependent on the goodwill of others. Notice the recent announcement by China of restrictions on the export of Germanium.
Remember Carrier and the welders? Claims made he would save those jobs–failed as usual. Jobs went to Mexico. Workers laid off. Then MORE workers laid off at same company.
OK, tariffs it is then. Except on washing machines.
I get there is off-shoring without tariffs which effects people, but it also benefits others as well, money flowed to different sectors and different jobs were created. If we kept up protectionist measures and limited off-shoring we would have a different economy and others would have been negatively effected, but harder to quantify as they are the one that never benefited vs those the were negatively benefited.
I won’t pretend to know the end game about the talk of imposing huge tariffs but I don’t take them at face value and believe them more to be bargining chips, short term pain for longer term gain.
Todays Wall Street Journal has an article on the decisions pending for Polaris, best known for their snow mobiles, jet skis, Indian motorcycles, and ATVs. They are a Minnesota company but now have their largest most profitable plant in Mexico. Tariffs could mean a major hit to profits.
As to manpower and job skills, in the good old days lots of farm families had lots of kids to help with the manual labor. They often grew up with good mechanical skills and a strong work ethic. Liked to stay near family. So took jobs with local manufacturing plants.
Today much lower birth rate and mechanization of farming means two kids per 2000 acres rather than 4 to 6 per 180 acres. Yes, that work force is much smaller. Remaining plants have trouble hiring workers. Many are closing.
We will be watching closely. In motorcycles, Harley is the main competitor. Not much competition on the top end but aging buyer is a problem. Buyers have very deep pockets. Can probably charge whatever they want.
Honda and Suzuki probably compete on the youth end of the market. Are those imported or made in USA with imported parts?
Polaris has much younger demographics. Products like snowmobiles and jet skis often purchased by parents for the enjoyment of their children.
Recall, the same time that “voluntary import constraints” were put on Japanese cars, Harley was sheltered with a protectionist tariff. Probably didn’t hurt that Malcolm Forbes was a Harley fan, and had the President’s ear.
The 1983 motorcycle tariff, or Memorandum on Heavyweight Motorcycle Imports, was a presidential memorandum ordering a 45% tariff on heavyweight motorcycles imported to the United States, signed by President Ronald Reagan on April 1, 1983, on the US International Trade Commission’s recommendation to approve Harley-Davidson’s petition for import relief. The tariff expired in 1988
Funny how the crowd that boasts about “free enterprise” and against “big gummit”, uses the government to protect it’s business interests.
Sure, he’s right up until the point where you can no longer produce that which you need.
For instance, SpaceX has a dozen suppliers - in Taiwan. And a few more in Vietnam. And elsewhere in Asia.
Then suddenly you can’t get what you need thanks to international events you don’t control, and either finished goods or even certain rare raw materials are unavailable, and you find that Milton Freedom was desperately wrong, but it’s too late because you’ve followed him right into being a 3rd rate power, and quickly you realize the mantra of “the market is never wrong” is the siren song of death.