Correct. So you’re looking at a broken window fallacy.Zlaxer wrote: ↑Sun Aug 12, 2018 1:44 pmSuburbanFarmer wrote: ↑Sun Aug 12, 2018 7:06 amCan you define how a tariff puts any upward pressure on wages?
Tariffs are designed to make foreign goods more expensive than domestic goods, which in turn, makes it more profitable to manufacture the goods locally. Thus, the demand for labor goes up, which in turn, increases wages (not counting automation - I don't want to go down that route in this thread).
Manufacturers are already selling their goods at the highest price than can get - increasing labor costs then has to come out of profit margins...not out of higher prices.
Domestic manufacturers would collectively have to raise prices to match the foreign goods....but someone always undercuts...which opens the flood gates..
“We can sell more stuff, because they can’t sell it here”. Fine, until they all raise their prices to match - which they always will.
Now everybody is paying more, and the domestic companies have higher profits, for the same production.
Next, quality suffers because there’s no reason to try so hard. Now the consumer has a choice between shitty domestic stuff (beer, cars, whatever) vs slightly more expensive foreign stuff of higher quality.
End result: profits, and tax revenue, but no change in wages or production.