Meanwhile, endless media outlets have been shouting from the rooftops that China does not pay the tariffs. They push forward with the position that the burden of this 15% increase will ultimately come from the pockets of American companies.
While it's well known that Trump is economically illiterate, there must be something more to this. In no way does Trump actually believe that China will pay the 25%. We have to assume that Trump simply must be aware of what will happen as a result of this increase and how it could benefit us.
Apparently, China is also well aware of what will happen. Their response to the new 25% tariff, is to increase their tariffs on goods imported from the US.
Huh? Why? If they're collecting more money from us, shouldn't they just take the money and run? Why increase the tariff on their end as well? Were not paying for it, right?
It looks as though both of these countries are just interested in making their citizens pay higher prices for imported goods. Or maybe, were just not grasping what's going on.
Think about all this for just a moment. The US increases the tariff and then China increases theirs. It doesn't look to make any sense....but it does. The effect of tariff increases has been taken too literally by the media. All people see is US companies paying more money.
But what happens when imported goods become to expensive for US companies? What happens when the tariff makes the price for imported good too high? Where might you look to get a better price?
You would look to buy domestic products, silly.
The point of increasing the tariff is to persuade local business to stop purchasing from abroad and instead spend the money right here in the good ole' USA. China doesn't pay the tariff: we do. But why pay it when you can get goods for a better price right here at home?
China understands this. If the increase to the tariff results in less Chinese imported goods being sold in the US, it only makes sense for China to increase their tariff to do the same to us. Pretty simple.
Of course, this whole plan fails if domestic products are still too expensive even with the increase.