Trudeau decided to go ahead with retaliatory tariffs even though Trump’s order includes a mechanism to escalate the rates if Canada retaliates against the U.S.
Except the money in the jar doesn’t belong to you, it goes to the government.
The thing people struggle to understand about the economy (especially in individualist USA) is that you’re not the only one making these decisions.
Imagine the government taxes some restaurants, but doesn’t tax others, what would you do? Go to the restaurant that’s not taxed because it’s cheaper, right? Problem is everyone else does the same thing. The restaurant is too full. Then what happens? That restaurant raises prices because it’s in higher demand for what they’re selling. Rules of supply and demand. So now you have some restaurants charging more because there’s been a tax slapped on them, and the ones that aren’t being taxed raising their prices because they can’t instantly expand the restaurant to meet the new demand for their products over their competitors.
And will those restaurants expand? Only if they know the government won’t remove the tax on their competitors. But is anyone going to make significant investments trusting that impulsive Trump won’t change policies in the future? Nope.
So everything is going to cost more. But US businesses will probably make record profits, and that’s what really matters, right?
Except the money in the jar doesn’t belong to you, it goes to the government.
The thing people struggle to understand about the economy (especially in individualist USA) is that you’re not the only one making these decisions.
Imagine the government taxes some restaurants, but doesn’t tax others, what would you do? Go to the restaurant that’s not taxed because it’s cheaper, right? Problem is everyone else does the same thing. The restaurant is too full. Then what happens? That restaurant raises prices because it’s in higher demand for what they’re selling. Rules of supply and demand. So now you have some restaurants charging more because there’s been a tax slapped on them, and the ones that aren’t being taxed raising their prices because they can’t instantly expand the restaurant to meet the new demand for their products over their competitors.
And will those restaurants expand? Only if they know the government won’t remove the tax on their competitors. But is anyone going to make significant investments trusting that impulsive Trump won’t change policies in the future? Nope.
So everything is going to cost more. But US businesses will probably make record profits, and that’s what really matters, right?