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Comment by makomk | Hacker News Reader

Anyone who'd been paying attention to the mainstream media would've heard the opposite: that the tariffs would come straight out of US consumer's pockets. See for instance https://www.nytimes.com/2018/08/21/business/economy/trump-ch...

The impression that that readers of say the New York Times would be left with at this point is that Trump stupidly imposed tariffs that only hit American consumers, whereas China brilliantly targetted tariffs right at Trump's base. This appears to be the precise opposite of the truth: the tariffs on China are mostly affecting China, and whilst the overall impact of the soy tariff isn't clear it was definitely the result of it being one of the few things the US exported to China in significant amounts rather than of ingenious Chinese planning.

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And of course the effect is far more dramatic over time than just the direct tariff hits.

It's pushing companies to move their supply chains out of China, as few are expecting that this is a short-term trade conflict.[1] This will go on for decades in varying forms.

The US wins in all scenarios from that effect. Some limited manufacturing comes back to the US; win. Some manufacturing moves to Mexico, whose labor costs are now often cheaper than China's; win. Some manufacturing moves to China's Asian rivals with cheaper labor costs, such as Vietnam; win. The US will push half a trillion dollars into Vietnam via a trade deficit over the next decade, that they can use to develop with. Every dollar of supply chain the US pushes out of China and into smaller neighboring rivals, is a win for the US strategically. The goal is to dilute China and redistribute trade into numerous other Asian nations that aren't a superpower threat. This isn't just a trade conflict, it's the start of a long-term political contest over whether China is going to acquire hegemony over Asia - something only China has an interest in, which leaves the US with a dozen regional allies against that outcome.

The strongest results will be the long-term supply chain shift that will gradually take place over a decade or more. The longer the US keeps up the pressure the better that outcome.

[1] https://www.bloomberg.com/news/articles/2018-10-23/companies...

Great comment, your one paragraph really changed the way I think about East Asia. Thanks!

Wow, the NYT lies to paint Trump in a bad light! Whooda thunk?

I definitely didn't think imposing tariffs was a good idea, but once it was explained that a lot of other countries (including Canada) impose a lot of tariffs on us, and that this action was an attempt to level the playing field, it suddenly seemed like it wasn't such a stupid idea after all, and it may actually be working to the benefit of the U.S.

The tariffs do actually come directly out of the importers pocket (i.e. local manufacturers). Since the general public doesn't know what tariffs are, it's right to tell it that way.

BUT there is a whole other dynamic attached to tariffs. I.e. the foreign producer lowering it's prices to not lose important clients.

Tax collection is not tax incidence. Tariffs are collected from importers. That does not mean tariffs "come out of" importers.

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