>even with 24% VAT
If you are buying your finished goods from Europe you shouldn't be paying VAT.
If you are buying your finished goods from Europe you shouldn't be paying VAT.
That's sad for those employees in Texas, but relatedly, why were you manufacturing in Texas before? Was it just quick delivery or were labor rates lower in Texas?
Based on your description, your product sounds like it requires highly skilled assembly labor.
How much would labor rates have to fall in Texas for you to move manufacturing back despite the tariffs?
Folks were screaming it from the rooftops for months prior to the election. So many folks, yourself included, refused to accept reality and now we all suffer the pain.
I would say "Maybe folks will learn!" But I know they won't. US voters as a bloc seem to have an incredibly short memory. They'll forget about all of this pain and stupidity within moments of Trump leaving office.
What this administration's model of tariffs completely misses is how fungible labor and manufacturing are in the world now. Business is as much about strength of information as strength of arm or strength of steel. It's hard to believe they had any professionals in the room when they came up with this "protectionist" scheme.
A good analogy a friend once gave me was that there are two ways to build a car in the US. You can tool up an industry ecosystem where you can gather (or produce) base materials and then shape and combine them into small parts, make the small parts into larger parts, do final assembly, and roll them off an assembly line. Or, you can take about as much land as you'd use for that, maybe a bit less, and grow corn. Lots of corn. Lots and lots of corn. Then you put that corn on a boat. Ten months later, that boat comes back with cars on it.
When the world is that varied a place, one country trying to jam its finger in the dkye via tariffs is a fool's errand. The economy will interpret artificial cost as damage and route around it.
> Noone in their right mind will start building factories in USA because of temporary tariffs that all might go away with an executive order and a stroke of a pen comes January 2029.
(I checked because the story just smells weird...)
I understand from your post that you are a business person, buying product, performing value added services and selling for profit. Although I know little about business, I would guess that if one of your suppliers raised the prices on one of the inputs to your finished goods, you would likely increase the price of your product to preserve your profits and continue your business as a venture. I would guess that you would not pay the additional cost out of your own pocket.
My question is; why did you not expect the same logic to play out in the tariffs situation? That any country would pay the additional cost of doing business out of their own pocket and not pass it on to the consumer?
If you are traveling or sell in Europe: in Europe, it is generally expected (or even mandatory) that customers are displayed the price all taxes included.
Why would they pay a tax that's levied by the US government? In both the most literal sense, and in the sense of keeping their prices the same.
Even if you assumed that, you started at step 1 and didn't think past that.
Let's assume China pays the tariff. Is China going to eat that? They will probably pass it onto the seller.
OK now what? Let's say before the tariffs, their total unit cost is $5, and they sell it to you for $10 (I'm just making stuff up here).
Tariffs were 145% at some point. So China pays $14.50. China passes it onto the seller, now the total unit cost is $19.50. They lost $9.50.
Are they in the business to lose money with every sale? No.
However, that presents a problem. The tariff they paid? It's higher than the price they sold it to you. That will remain the same regardless of the price you have to pay. Even if they charged you $1mil, they could not make a profit, because the tariff would be $1.45mil.
So, yeah, you were very much wrong. The idea is not only unrealistic, it is mathematically impossible if the goal is to actually make money when tariffs are 100% or more.
“Man on the street” doesn’t know how tariffs work (or at least believes the bullshit), and I’m not surprised. But I’m truly surprised that someone running a business fell for this, especially given the person saying it.
You have been importing parts from China, yet you didn't know how tariffs work? I have a hard time believing this.
Like all the other sibling comments, just... sigh.
I did not assume any such thing.
My current home remodeling project with new siding and windows and so on, I've had to pay ~$2K extra in tariffs on just the materials for my soffits (planks of Canadian cedar). Boils my blood in anger.
> The fact that the stupid person is often stubborn must not blind us to the fact that he is not independent. In conversation with him, one virtually feels that one is dealing not at all with a person, but with slogans, catchwords and the like, that have taken possession of him. He is under a spell, blinded, misused, and abused in his very being.
I spend a lot of time (too much, apparently) chatting with MAGA folks and this is a stunningly accurate description. It really is just pre-programmed slogans. You see it now even in Congressional hearings of cabinet members, which is fucking horrifying.
... Wait, why did you assume that? Like, you looked at, in one corner, essentially every economist in the world, and on the other corner ol' Minihands, with his background in failing to sell steak and run casinos, and thought "yeah, this guy's probably right"?
I'm genuinely kind of fascinated; was this a kind of active "expertise is bad, people who don't know anything are more likely to be right about things than experts in those things" thing?
> and even with 24% VAT (local tax) it is way cheaper to produce your merch and then send it to USA
If you are paying VAT on product which you are then exporting to the US, then you need to urgently talk to an accountant. You should likely not be paying this, and depending on the country you may have a limited window to reclaim such overpayment.
It's mandatory to include VAT in displayed consumer prices, yeah. In some countries there are _other_ point of sale fees which may not have to be displayed, though; in particular deposit return fees for cans and bottles often aren't displayed.