Thursday, September 27, 2018

US Tariffs on China


Our 10% Tariff on $200 billion of Chinese imports would produce $20 billion in US federal revenue and may result in a $20 billion increase in cost to corporations, some of which may be passed on to US consumers. 

But corporations already had a tax cut of 14% in the corporate tax rate from 35% to 21% and should not have a problem giving some of their tax cut back to the government in the form of Tariff charges for a while. There are some costs and risks changing vendors, especially when the goal is to completely eliminate tariffs. But most other countries are interested in taking this business hoping for a long-term relationship

If US corporations can divert their manufactured imports from China to another country like Vietnam or Indonesia, they could dodge the Tariffs completely. 

Tariffs on Chinese food are easier to deal with, because all countries produce food. There are few costs or risks to changing food vendors.  Food is traded and priced globally.

The 25% tariffs on steel and aluminum will need to last until the US plants become operational and increase their productivity.  The Tariffs will result in cost increases for corporations that use steel and aluminum, if they continue to import these commodities. The oil and gas pipeline construction underway will need to absorb these costs until the US steel and aluminum plants can improve their processes to increase through-put and lower costs.

Trump’s use of Tariffs should convince other countries to get serious about providing their own products for domestic consumption and attending to their own trade policies. Trump is challenging all governments to put their own countries first and allow them to become great again. If they do this, their countries will prosper to benefit their citizens and enable them to restore stability.

Norb Leahy, Dunwoody GA Tea Party Leader

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