Warren Buffett calls Trump's tariffs a tax on goods, says 'the Tooth Fairy doesn't pay 'em'
"Tariffs are actually, we've had a lot of experience with them. They're an act of war, to some degree," Buffett said.
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I work in the corporate side of retail for a large company. I promise you not a single vendor is absorbing the tariffs, but a few are getting around it by just moving production for the US market to other factories they already own in Southeast Asia.
These companies were already afraid of the Chinese government absorbing them and moved "headquarters" to Singapore. This isn't hurting them, it's hurting us.
I promise you not a single vendor is absorbing the tariffs
I've tried to explain this to every person I've come across, and they simply don't understand that corporations with record breaking profits aren't simply gonna absorb the cost of the tariffs and are going to try to squeeze blood from a stone--aka try to get it out of you. The worst that's gonna happen is they post a few down quarters and end up absorbing a small percentage of the overall tariff until the buy pressure comes back.
Which is the entire point. All of trump’s actions are designed by his owner to hurt us.
I promise you not a single vendor is absorbing the tariffs, but a few are getting around it by just moving production for the US market to other factories they already own in Southeast Asia.
Often not even moving the production to other factories. The tracking on this stuff is comically underfunded and underserved. You can absolutely make a widget in a tariff country, like China, stamp it "Made in The Philippines" or Indonesia or wherever, and move it into the US without paying the tax.
These companies were already afraid of the Chinese government absorbing them and moved “headquarters” to Singapore.
Given the degree to which Singapore is beholden to Chinese owned and operated businesses and falls within the operating range of the Chinese military, this is more a Hong Kong style bureaucratic loophole than a real escape from China as a sphere of influence. Its like banking out of Bermuda while you work in the United States. A legal fiction that gets you out of a certain degree of taxation/regulation, but does nothing to shield you from the Coast Guard or the FBI.
Doesn't stop them passing the "tariff charges" on regardless if they actually have to pay or not
Don't be surprised if these companies suddenly show 10-25% increase in net profits.
That’s the whole point. Raise the price on things and then American producers can compete.
Why tariffs are stupid in three acts
Act 1
American producers: I can’t compete with that $10 foreign product, I have to sell my product at $12 to turn a razor thin profit.
Politician: ok I’ll slap a $5 tariff on the foreign product to protect you.
Act 2
American producer: awesome so now the foreign product costs $15! I can compete
American consumer: oh well I guess I can spend $12 instead of $10… sucks but America first I guess
Act 3
American producer: no need to leave $3 on the table, let’s sell ours for $14.99, I need more profits because everything I want to buy with my profits is now more expensive for some reason.
American consumer: the foreign one used to cost $10 and the domestic one cost $12… now they cost $15 and $14.99. I guess I’ll buy the American one and skip dinner tonight.
To be clear, I think it’s a shit idea and we know (since Elon is running things) the execution will be awful. Tariffs are almost always a shitty idea and will cause nothing but inflation. But that’s the point for Trump. It’s a stealth tax increase.
The only times I think tariffs are good is if:
But it’s always, in the end, a tax on your citizens and there are almost alway better ways to go about it than tariffs.
They'll still manufacture overseas as long as they can cause of shareholder value
