Sam (crazy candle person) ✦ pfp
Sam (crazy candle person) ✦
@samantha
1/ I have a nuanced take on tariffs, as someone who actually imports/exports and has manufacturers in the U.S. and Canada for /humankind. Originally when Trump was elected a lot of my manufacturing friends thought that he would get rid of the “de minimis” (which the media is referring to a loophole or subsidy). The de minimis rule outlined in the USMCA dictates that goods imported under $800 are not subject to tariffs. That means that Americans buying almost anywhere outside of the U.S. for goods under $800 are not subject to paying state taxes, because they’re paying for goods (incl. tax) to other countries. This gave a lot of room for Chinese manufacturers like SHEIN and Temu to dominate the market for fast fashion and home goods. However, me and my friends thought that he would get rid of the de minimis for *just China. It is unusual that he started with Canada and Mexico.
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Sam (crazy candle person) ✦ pfp
Sam (crazy candle person) ✦
@samantha
2/ Under USCMA, each product imported has a harmonized tariff schedule (HTS) code. And some products fell under the de minimis, while others didn’t. For example, candles were duty-free and technically *American tax free since I sell them for only $80 USD each. The tax I charge goes to the Canadian government. But books are not duty free, and Americans pay duties on them to go the U.S. government if they are imported from Canada. Now, if your products (or the number of products you ship) are over $800, purchasers are responsible for tariffs. That was with the old trade agreement, USCMA. If I shipped $1000 worth of candles under the old trade agreement, the purchaser would only be responsible for paying a 12.5% tariff for candles. Each HTS code has a specific tax rate under USCMA. Now, Trump has 1. Removed the de minimis for all products imported from Canada/Mexico 2. Subjected all products to a 25% tariff, way higher than the average specific tax rate matching each HTS code.
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Sam (crazy candle person) ✦ pfp
Sam (crazy candle person) ✦
@samantha
3/ A lot of my manufacturing friends understood why he did this - which was to make manufacturing more local and reduce the power that China has on manufacturing. They don’t doubt that Americans can get up to speed on the tech or the machinery. But it’s finding workers who are willing to work in those kinds of dull/hard labour manufacturing positions, and also seeing whether the tariffs will be able to meaningfully create business loans. Conversely, you’d have to be willing to see whether American manufacturers would be willing to pay *more* to keep manufacturing in america. More meaning 1. They will need to pay 30% (China already has a 20% tariff under USMCA, then the 10% ontop of that in the recent announcement), more to get the supplies to build out manufacturing if the supplies are from China, or 25% out of CA/Mexico. And 2. Increased salaries. A lot of businesses don’t run on margins as high as this, so this is tit for tat tariff situation will impact business, such as mine, right now.
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Sam (crazy candle person) ✦ pfp
Sam (crazy candle person) ✦
@samantha
4/ Lastly, American consumers. Will American consumers be willing to pay 25% more on goods from other countries? Trump mentioned making “those countries pay”, which means that importers pay tariffs on goods. This is something that importers do as a courtesy, that eats into their margin, that they are not obligated to do. It assumes that the U.S. has so much business that manufacturers are willing to eat that tariff to keep their business in the U.S. But most manufacturers don’t have that margin in the first place, and that’s why you see countries rapidly starting to make trade agreements outside of the U.S. Only time will tell. And it’s hard to say what will happen in future. The big bet is that all of this will funnel into an American manufacturing super power.
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jon pfp
jon
@jonbray.eth
really interested to see if this plays out by bolstering American manufacturing it's a pretty big bet for someone like Trump who's clearly very concerned with legacy as it could reflect pretty poorly on his administration if that doesn't happen. makes me think that he surely has some knowledge that it's likely to play out like that given how hard he's going on tarrifs
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Sam (crazy candle person) ✦ pfp
Sam (crazy candle person) ✦
@samantha
Just in, he cares about security https://x.com/justintrudeau/status/1886529228193022429?s=46&t=kvXSq0PMHK3pxIfZ4x0gbw Manufacturing no where to be seen 🤣
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