autism nest

Polish Harry Du Bois

Made this after talking to a friend d about my proclivity for bad decks in good formats

In his first term, Trump put some strategic tariffs on China, charging roughly 20-30% tariffs across a host of goods, but with a bunch of exemptions. Apple’s iPhone never got tariffed, for instance, and a lot of medical supplies went untouched. There’s a lot of hot air about tariffs increase consumer prices, but that’s not always true. The first round of Trump tariffs mostly didn’t increase consumer prices, but came out of corporate profits, so they didn’t generate inflation.  Why is that? Well it’s important to recognize that tariffs don’t apply to the retail price of a good, but to its wholesale price when imported. So a Nike shoe might cost $150 retail to an end consumer at a store but that’s before markup; Nike is paying $20 for it from a Chinese supplier. The $130 difference between what the Chinese supplier charges and the end American consumer pays is a mark-up, and it goes to Nike for branding, distribution, profit, etc. The tariff is charged on the $20. So even a very large 50% tariff will be just $10, which means Nike will still have a giant cushion, and can choose whether to pass the tariff along or reduce its profit, or both. Or it can negotiate some of the cost with its Chinese supplier.  This time, because the tariffs are hitting every sector, consumer prices are likely to change, though it will differ industry-by-industry. There are plenty of companies who have to raise prices to cover costs. But another reason for price hikes could be “seller’s inflation,” aka there’s market power throughout the economy, and corporations with such power have an excuse to charge higher prices, as they did during Covid. They can just blame Trump, and collect more profit. On the other hand, companies are scared of the new administration. So, for instance, Apple’s CEO Tim Cook may decide he will simply eat the extra $35 or so charged on each iPhone, and lose a few billion in profit, rather than anger Trump.

However, thanks to a 1990s era regulation allowing the consumer not the seller to be considered the importer, ecommerce vendors started sending individual packages where the value was less than $800 directly to end consumers, claiming these were “de minimis” and thus were de facto exempt from all duties, tariffs and customs requirements. So now Amazon can just send that bike to a consumer and avoid any duties and most paperwork while your local bike shop would have to pay tariffs on the bikes they stock. Today there are 1.4 billion package that come in de minimis, most from China. A lot of the four million daily de minimis packages are low-value fast-fashion online purchases. It’s effectively a completely tariff free no-inspection wild west zone of fentanyl and smuggling. This loophole is the basis of the business model of Shein, Temu, and Amazon, who have lobbied aggressively to maintain this kind of open border policy. That said, there are two parts to the de minimis loophole, and Trump only ended one of them. The first is the tariff exemption, which is now suspended. Everyone has to pay tariffs on everything from China, Mexico and Canada. That’s particularly important for the higher end goods below the threshold, the $750 bike or auto parts, for which a tariff does matter in and of itself. But for low value goods, that $3 t-shirt from Shein, which might wholesale at 30 cents, it doesn’t really matter. In that case, Temu will have to pay 10 cents, which is virtually nothing. The second exemption was mandating that importers go through the “Formal Entry” customs procedure so that CBP actually can tell what is in each box coming into the U.S. These orders didn’t touch that. That’s not as important for high value products, but this is the killer for the Shien and Temu-style products. These importers would have to radically upend their supply chains to comply, if that customs procedure were changed to require licensed brokers and bonding. Unfortunately, it wasn’t. And that means the flow of low-value de minimis packages will likely come in, mostly unabated. In fact, it means that the big guys, Temu, Shein, and Amazon, who have special customs relationships allowing them to easily pay the now-minimal tariffs, will now have an advantage over smaller importers who don’t. And the fentanyl flow won’t stop.

i loved phineas and ferb

Does that mean girls think I'm cute?

bunny yuri. Spread the news

He is the owner of the shop 😛😺🐈

Yeah man. Reading scholarly works on a topic informs you on that topic. That's how this works.

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