Donald Trump addressed UAW workers at the General Motors plant in Michigan, on Thursday. He spoke about the future auto industry. He warned that China would soon be a dominant force in the auto industry and threaten their jobs.
Concerns about the competition of Chinese electric cars (EVs), despite recent victories for General Motors by converting their sites into EV production facilities, persist. Trump has advocated that the US respond to this threat by imposing tariffs.
Trump, however, referred to the tariffs as “taxation of foreign governments.” This comment sparked online reactions. Mark Cuban clarified what tariffs are on X, formerly Twitter.
Responding to @MMthee0ne
Tariffs are taxes imposed by the government of a foreign country on goods imported. Walmart is an example. Walmart, for example, imports billions upon billions of products. Walmart will pay the US Government if there is a 10% tariff.
What is the tariff system?
Mark Cuban is correct in his explanation.
The importing company pays tariffs when a foreign country, such as the US, imposes them on imports.
Walmart, for example, would be liable to pay the US Government an extra $100 million if it imports goods worth a billion dollar from China, but is subjected to a tariff of 10%.
Walmart will likely increase the price of these goods to recover the cost. This means that the consumer is ultimately responsible for the costs.
Tariffs hurt local consumers.
Why impose tariffs if they hurt consumers locally?
Protecting domestic industry is the primary goal.
The tariffs increase the price of foreign products, making them less competitive.
It is a way to prevent foreign firms from dominating local markets and driving out domestic companies.
Consider the current trade tensions that exist between China and Canada regarding EV tariffs. China is interested in exporting its EVs into Canada. However, if this happens, Canadian automakers may struggle to compete with the price.
Canada has implemented a tariff of 100% on Chinese electric vehicles to protect the industry.
This will not only cost Canadians more money, but it may also make it harder for Chinese carmakers to even enter the Canadian auto market.
Tariffs were designed to protect jobs and discourage foreign competition.
Trump and Cuban: The debate on tariffs
Trump may be right to advocate tariffs in order to protect local industries. However, calling tariffs a tax on foreign governments is inaccurate.
According to the law, the consumer pays the tariffs, and not the government.
Mark Cuban as well as Donald Trump both raise valid issues.
Trump is right about tariffs’ protective function, but his explanation of their working was incorrect.
The debate has nevertheless highlighted the complexity of trade policy and its impact on domestic industries and consumers.
Cuban’s criticism of Trump’s taxation policies abroad: who’s paying for the cost? The ICD published the first article.
This site is for entertainment only. Click here to read more
