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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jon pfp
jon
@jonbray.eth
as someone who's lost way too many friends to the opiate epidemic I'll certainly consider a coordinated effort to prevent fentanyl smuggling as a win feels like this will be the major thing that comes from tariffs—not fentanyl per se—but a way to force negotiations and hopefully get something mutually beneficial in exchange for dropping them. similar to the deal Tim Cook struck just before inauguration for a period of tariff exemption for Apple in exchange for moving their manufacturing to the US over the next year did this deal have any effect on imposed tariffs on Canada?
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Sam (crazy candle person) ✦ pfp
Sam (crazy candle person) ✦
@samantha
I'm very sorry you've lost friends to the opiate epidemic. Less than 50kg of fentanyl came through the north border vs. 21,000kg from the south border. The tariffs are disproportionate reaction to this, and the reason Trump listed the fentanyl crisis in the announcement for the tariffs is to get past bureaucratic bs such that he could put a tariff on right away. The reason he needs to rush this is because the Senate election is coming in 2026, and if the democrats win more seats, nothing will pass during his term. As a Canadian, it is not mutually beneficial to us. We are paying for the U.S.'s lack of border control by force, not because we want to. I really don't like my candle business being impacted because of the opioid crisis in the states. Canada had less than 3000 fentanyl related deaths in 1 year, while the U.S. had 77,000. I understand where you are coming from. But this is not mutually beneficial. This only delayed by the tariffs by 30 days, which is not that long.
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jon pfp
jon
@jonbray.eth
All good points, and yeah it definitely is playing on emotions related to the opiate epidemic to get it passed. As empathetic as I am for everyone it's affecting negatively (possibly even myself included) I also feel like if that's what it's going to take to maintain seats in the senate, then I think I'm okay with it. Maybe that's a cold take, but from my perspective, it's frustrating getting promises from our politicians only for things to stay gridlocked for most of my lifetime just because of unfavorable house and senate seats. So having all branches aligned, I think they've got to take the ball and run with it. If it doesn't work out in a beneficial way, those seats will likely end up changing regardless. I also don't think any North American country is in a good enough economic position for a prolonged trade war, so I am hopeful that cooler heads will prevail during negotiations.
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