Nerv14

I have had debates with people on other forums about tariffs and many people correctly say that a tariff would increase the prices of goods if a tariff was to be high enough to end the trade imbalance of the United States.

However, I was saying that if the dollar gets weakened to a point that there is no longer any trade imbalance wouldn't that make oveseas products as expensive as if a tariff was used?

That would mean that the costs of overseas goods are going to increase, one way or another, and that would take away the main problem with having a tariff, if the tariff would prevent the dollar from being weakened.

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michaelr

I usually would not support a tariff, however in the last few months I have changed my position. Your correct when you say left alone overseas products will cost more. The imbalances set forth by this administration is nothing short of treasonous and will cause the downfall of this country.

The devalued causes an entire range of problems in it own right, inflation and trade imbalance is a good start. The question should be, "what can be done?", to that I answer higher interest rates and short term tariffs.

johnlocke

The devaluation of the dollar would not fix the trade imbalance problem. Countries, like Japan, buy up the dollar to keep the Yen from outpacing it in value- thereby making this approach problematic.

Countries, like China, have a long history of pegging their currency to the dollar Despite claims that the yuan has been de-pegged a regression analysis performed by bloomberg.com appears to indicate that it is still pegged on a de-facto basis.

More to the point, dollars are not just weak externally. When the dollar devalues it devalues EVERYWHERE which leads to inflation in the domestic market.

A devalued dollar also creates problems in a debt based economy and increases the amount of debt service we must pay to borrow money in the future (from other countries and investors).

Bottom line is that the "weak dollar" is ultimately bad for the US because it's a fiat currency. Thus it would be better to endure the tarriffs than to further weaken it.

This is a picture of a conservative trying to fix the economy.

Nerv14

interesting point, my only problem with that statement is that a few years ago Japan tried to buy up alot of our currency to make the yen weaker to the dollar but since the yen and dollar have such huge economies behind them the buyout did practically nothing to both currencies. From what I have seen it is much too expensive for much change to happen in currencies by buying them up.

However, eventualy other coutries will notice that the dollar is too weak and eventualy they would stop trying to pin their currency to the dollar, but I have no idea what low level of the dollar would make other countries give up.

I have been trying to get someone to answer my question for a while on other forums and thank you for answering it, especially since your arguement supports a tariff

william the wierd

Putting up an actual tariff would be a foreign policy error. A Value Added Tax is the way to go. It violates no treaties and can be set up to have the same effects.

Socio-biology and selection is a fact of life and death not a political option

Politics is a continuation of war by other means

Calling congress a parliament of whores insults the morals and principle of crack whores

Nerv14

what is a value added tax? If it accomplishes the same thing as a tariff than I would guess that other countries would still have the same responce as they would of to a tariff.

william the wierd

A VAT affects everything sold in the economy, it is rebated on exports and if the wording is parsed properly the rate can reflect import dominance without violating any treaties. While some retaliation may happen the normal response is to establish plants in the country using this strategy i. e. insourcing not outsourcing

Socio-biology and selection is a fact of life and death not a political option

Politics is a continuation of war by other means

Calling congress a parliament of whores insults the morals and principle of crack whores

Nerv14

oh, when I was making a forign trade plan on another forum, I actually supported that with a tariff so it would have the exact same effect of a weakened dollar, but without a weakened dollar.

william the wierd

It happens. the devil is in the details and the details are in the foototes 300 pages away.

Socio-biology and selection is a fact of life and death not a political option

Politics is a continuation of war by other means

Calling congress a parliament of whores insults the morals and principle of crack whores

Latherty

The VAT doesn't work as a tariff at all.

It taxes domestic production exactly as it taxes imported production. It is released on exports, otherwise the taxing government would tax its own exports higher than the goods sold by competitors.

I fail to see how this operates to benefit of domestic manufacturers.