How Tariffs Work

 

Most of the cost of tariffs is passed on so the end result is higher costs and fewer choices for consumers while domestic corporations earn greater profits and the government gets what is effectively a tax.

"That's LITERALLY not how it works. What a tariff does is makes the price of building in America to be the same prices as made in foreign countries. In foreign countries they get taxed low, have EXTREMELY low wages, and then does not have to pay a tax (tariff) to send that product into America and then makes it WAY harder to build in America because they cannot compete with the prices of products made in other countries. Tariffs even out those prices which then encourages corporations to build factories in America. If its cheaper to build in and sell in America, then it gives them FAR more reason to build here.

The entire reason Toyota for instance, has some of their largest factories in America was due to Regan putting tariffs on japanese cars back in the 80's!" --Random Internet Person

I will respond to this comment here. Many people don't realize that American workers are competitive with workers in other countries because they are extremely efficient. This is because our workers are highly educated and US manufacturers employ a great deal of automation.

In 1980 President Reagan was elected and removed price controls on gasoline ending the energy crisis. Gas prices surged and Americans wanted to buy fuel efficient vehicles. American auto manufacturers were slow to respond so people bought Japanese cars because they were more fuel efficient, had higher quality standards, and were cheaper. Reagan convinced Japan to accept voluntary export restraints where Japan was limited to the number of cars it would export to the US. Japanese car manufacturers sent their more expensive cars to the US, raising the price of cars and limiting consumer access to the more affordable models.

In the 1980's my brother had a Honda Civic CVCC that got 50 mpg.