09/25/24 Afternoon CommStock Report – Tariffs-Aghast from the Past

Part 3 of 3 When a tariff is placed on China…China doesn’t pay the tariff. The buyer of the Chinese made product sold in the US or EU does. If a tariff of 60% was put on all Chinese goods being imported, the buyers of those goods have a tough decision to make. How much do they raise their prices to compensate? …the full 60%, which would be a shock to their customers, or do they eat some of the margin taking a loss themselves? If Trump looks strong near Election Day, I would expect trade with China to surge. For example, a maker of US grain handling equipment said that the only place that he could currently get some component he needed was from China so he bought a 3-year inventory of the part hoping to avoid a trade disruption or tariff hike. The supply chain is global with parts sourced from all over the world. A 10-20% tariff imposed on all US imports from everywhere may mean there is nowhere else to source goods but domestically. If those sources do not currently exist here then industry would need to expand to create the plants and local supply to…