Trudeau decided to go ahead with retaliatory tariffs even though Trump’s order includes a mechanism to escalate the rates if Canada retaliates against the U.S.
I imagine you have a fridge, a stove, and know how to cook. Sometimes you cook at home, sometimes you eat out.
Let’s say that you want to stop eating out, or maybe save money, or maybe you do it just because it’s fun: each time you order out, you put 25% of the bill in a jar at home.
Eating out becomes more expensive for you (now that you need to pay the jar), but the restaurant makes the same money. In the long term, the restaurant might loose out on money if you decide that paying the jar is too expensive and you just decide to cook at home. But hey! You have a jar full of money at home. Maybe you’ll do something with it one day.
Replace the jar with tariffs and cooking out with whatever we buy from around the world and you have what’s happening now.
Except the money in the jar doesn’t belong to you, it goes to the government.
The thing people struggle to understand about the economy (especially in individualist USA) is that you’re not the only one making these decisions.
Imagine the government taxes some restaurants, but doesn’t tax others, what would you do? Go to the restaurant that’s not taxed because it’s cheaper, right? Problem is everyone else does the same thing. The restaurant is too full. Then what happens? That restaurant raises prices because it’s in higher demand for what they’re selling. Rules of supply and demand. So now you have some restaurants charging more because there’s been a tax slapped on them, and the ones that aren’t being taxed raising their prices because they can’t instantly expand the restaurant to meet the new demand for their products over their competitors.
And will those restaurants expand? Only if they know the government won’t remove the tax on their competitors. But is anyone going to make significant investments trusting that impulsive Trump won’t change policies in the future? Nope.
So everything is going to cost more. But US businesses will probably make record profits, and that’s what really matters, right?
I imagine you have a fridge, a stove, and know how to cook. Sometimes you cook at home, sometimes you eat out.
Let’s say that you want to stop eating out, or maybe save money, or maybe you do it just because it’s fun: each time you order out, you put 25% of the bill in a jar at home.
Eating out becomes more expensive for you (now that you need to pay the jar), but the restaurant makes the same money. In the long term, the restaurant might loose out on money if you decide that paying the jar is too expensive and you just decide to cook at home. But hey! You have a jar full of money at home. Maybe you’ll do something with it one day.
Replace the jar with tariffs and cooking out with whatever we buy from around the world and you have what’s happening now.
Except the money in the jar doesn’t belong to you, it goes to the government.
The thing people struggle to understand about the economy (especially in individualist USA) is that you’re not the only one making these decisions.
Imagine the government taxes some restaurants, but doesn’t tax others, what would you do? Go to the restaurant that’s not taxed because it’s cheaper, right? Problem is everyone else does the same thing. The restaurant is too full. Then what happens? That restaurant raises prices because it’s in higher demand for what they’re selling. Rules of supply and demand. So now you have some restaurants charging more because there’s been a tax slapped on them, and the ones that aren’t being taxed raising their prices because they can’t instantly expand the restaurant to meet the new demand for their products over their competitors.
And will those restaurants expand? Only if they know the government won’t remove the tax on their competitors. But is anyone going to make significant investments trusting that impulsive Trump won’t change policies in the future? Nope.
So everything is going to cost more. But US businesses will probably make record profits, and that’s what really matters, right?
But a more accurate example for America would replce the kitchen at home with just microwave
America destroyed their manufacturing capacity outsourcing it all and failed to reinvest any of the profit from that move
Factories don’t pop up like in the sims games
Same thing for all the skills. You don’t basically deskill everyone over the decades and expect that to be available again overnight.
True. Microwaves, tv dinners, and hot pockets.