|
Alpena MI | You should read the article just to make sure I got the drift correctly, but he says to create a "tariff" by having US exporters sell a certificate into a highly liquid market place where foreign importers could compete in buying these certificates to allow access to the US market. If we export more dollars of product than we import, then the certificate market is flooded, and the tariff on imports is low. If we export fewer dollars of product than we import, then there are fewer certificates available for importers to purchase, thereby raising the price to access the US market for importers. Imports have a higher price, allowing domestic production to be competitive in the US market.
Say our trade is severely imbalanced, and we aren't exporting nearly as many dollars as we are importing. $100,000 out and $200,000 in. Exporters put 100,000 certificates on the market (1 certificate per dollar exported). Importers need access to the US market and there are only half as many certificates as there are dollars of product to import. Suddenly, the product with the highest margin value can raise the price of a certificate to a level that is unsustainable for a low margin product, and in doing so, creating a need to supply the low margin product domestically, because that product is now going to have a higher value because there were other imports that could sustain a 10%, 20% or whatever percent tariff the certificates cost in that scenario. If trade is equal, the value of the certificate should be a reasonable rate. If trade is heavy exports, then the certificate market is flooded and importers can hammer down.
My "in a nutshell" take on the article.
Edit for spelling, trying to put the 2 year old to sleep and write a summary. ;)
Edited by whiterock91 5/3/2025 19:57
| |
|
Warren Buffet on Tariffs and Trade
