Reply to: May's speech

[AtW]

India and US are among the top rice exporters, I thought that the free trade with them was a "done deal" no?

Free trade does not mean there are no tariffs on anything!!!

[CoolCat]

I quite like Ms Mays outfit though, I had not realised she was such a big Bay City Rollers fan

[tomtomagain]

To do that the government needs to invest in education, then in 10-15 years time the country will start to see benefits. By which time the current crop of politicians will be retired on their massive pensions.

I agree. Doesn't matter how long it takes. It needs to be done.

[tomtomagain]

Trade agreements with these countries would first have to be settled

Really? I can buy wine today from all of them.

At a comparable price to the French stuff.

[darmstadt]

Well red wine is quite simple.

I'd buy it from Australia, New Zealand, Chile or the US.

Trade agreements with these countries would first have to be settled

[WTFH]

Or, heaven forbid ..... start the long overdue "Rebalancing" of the economy from consuming to manufacturing. You know? That thing, that everyone says is really important to do! This is the ideal opportunity to actually start doing it!

To do that the government needs to invest in education, then in 10-15 years time the country will start to see benefits. By which time the current crop of politicians will be retired on their massive pensions.
But the government's current plans are not to educate children in skills, but to spend as little as possible yet wanting more from the educators.

Bring back polytechnics, bring back student grants, not loans. Instead of having universities selling off places to foreigners, make sure all the locals get offered first.

...and that costs money. It doesn't give a quick return so modern investors are not interested. They want quick returns, forget long term benefits.

[tomtomagain]

Well red wine is quite simple.

I'd buy it from Australia, New Zealand, Chile or the US.

If I wanted desperately to have "French" Red wine, then I'd be prepared to pay extra for it - but being a savvy shopper, I'd try the "New World" alternatives first. And once I had discovered one I liked, I might never switch back.

Tesco, tesco offsets it's 50% import tax cutting it's CT bill

I think you'll find that you cannot "Offset" one tax against another. That's not how taxation works ... the government is pretty clear on that. Nor can you off-set fines.

As for the end customer choice it will soon be "rice or chips" after paying the rent/mortgage + train ticket.

Well I don't have mortgage, nor do I travel on the train. And I actually like rice and chips ( not at the same time ).

You have a very negative outlook. You'll be unable to see the opportunities as they arise and take advantage of them. Nevermind.

[sal]

Nope, just chips. Rice is imported.

India and US are among the top rice exporters, I thought that the free trade with them was a "done deal" no?

[DaveB]

As for the end customer choice it will soon be "rice or chips" after paying the rent/mortgage + train ticket.

The end result is that the UK public will bear the majority of the burden of any potential import tariffs

If you think that the big importers are going to absorb much if any of the import tariffs cost, you need to get off the kool-aid.

Nope, just chips. Rice is imported.

[sal]

The import tax will be received by the Government but is paid for by the importer, which is usually a company ( but can be an individual, as anyone who has bought stuff from outside the EU and had to pay for it to clear customs knows ).

Whether the "Importer" chooses to pass on the cost of the goods to the end consumer is up to the circumstances of that particular importer and the goods he is trying to sell.

Broadly he has the following choices:

• Pass on the full cost of the duties - at a risk of losing market share to others
• Absorb some of the cost - pass on a partial increase
• Source alternative goods from countries which won't attract import duties
• Source goods locally

A lot of it comes down to how competitive that market is for that particular item.

So for example if we end up putting a quid on a bottle of French red wine the importer ( Tesco ) can either pass all of that on, pass some of it on, or buy a shipment from Australia and promote that instead.

The end consumer has a choice:

• Buy the goods at an increased cost.
• Buy a cheaper alternative.
• Don't buy the goods at all.

And the government has choices too depending on what it's political priorities are.

For example it could fund public services or cut the general personal tax rate or cut corporation tax or provide tax breaks for exporters or provide tax breaks for local manufacturers.

My point is that although all taxes are "bad" ( in that they depress economic activity ) it does not mean that the importer, the consumer or the government is helpless.

Choices can be made to changes in any given situation and appropriate responses taken.

Lets use your Tesco/French wine example:

• Pass on the full cost of the duties - at a risk of losing market share to others - Government receives full import tax, paid by the customer.
• Absorb some of the cost - pass on a partial increase - Government receives 50% of the import tax paid by the customer and another 50% paid by Tesco, tesco offsets it's 50% import tax cutting it's CT bill and cuts some jobs to make up the lost profit to appease the shareholders.
• Source alternative goods from countries which won't attract import duties - Source French wine from where?
• Source goods locally - when did UK start producing French wine?

As for the end customer choice it will soon be "rice or chips" after paying the rent/mortgage + train ticket.

The end result is that the UK public will bear the majority of the burden of any potential import tariffs

If you think that the big importers are going to absorb much if any of the import tariffs cost, you need to get off the kool-aid.

[AtW]

I have no idea what was going on with the Liberation but I like it.

You will like it even better once they start floggings until the morale improves

[tomtomagain]

And importers buying in steel to export their cars?
Manufacturing has to buy components and raw materials from somewhere. Mostly in the UK that is from abroad.

Of course this is true.

However, if one group of countries imposes a tariff on you, then as a good business-person you seek out opportunities elsewhere.

Get a trade deal with Australia and countries in Africa and South America - I'm sure they'd be happy to export their raw materials our way ( none of which are in the EU at the moment, so I guess that would mean we are either paying tariffs today on their stuff that we could choose not to, or there are no tariffs in place. )

Buy components cheaper from China, Korea, Japan ( none of which are in the EU at the moment ).

Or, heaven forbid ..... start the long overdue "Rebalancing" of the economy from consuming to manufacturing. You know? That thing, that everyone says is really important to do! This is the ideal opportunity to actually start doing it!

All countries need a reboot every hundred years or so. Normally they require a catastrophic war as in impetus to change. BREXIT gives us the chance do to so without the bloodshed.

I can understand why the Remoaners don't want change. People don't like change in general, I know it's a little bit scary. Some of them did well out of the staus-quo - but unfortunately for a lot of UK citizens those benefits did not accrue to them.

However don't blow it out of all proportion. It's not like the whole of the UK is going to collapse and we'll be begging the EU to let us pay them £12B a year to rejoin.

[WTFH]

Surely if British importers had to pay tariffs on things we imported, that would provide more money to the treasury in order to give Corporation Tax breaks on the things we export in order to allow our exporters to reduce prices to offset the import tariffs that the buyers of our stuff would have to pay to their respective governments?

Zero sum game.

It's only a zero sum game if:
1. The government provides the tax breaks after receiving the money in.
2. The tax breaks are applied fairly to the exporters
3. The tax breaks equal the tariffs imposed by the countries the exports are going to
4. The companies choose to pass the tax breaks on.

1 won't happen, neither will 2, and 4 is a business decision. Let's look at 3...
(For those of you who are mathematically challenged or cannot understand logic, look away now and think about

The cost of raw materials to build a car is 30-50% of the car's overall cost.
Let's imagine that the import tariff is 5%, and the country we are exporting to are also imposing a 5% tariff. Also, let's imagine that all the raw materials are imported.
A £20,000 car would have £10,000 of raw materials, which would give HMG a £500 tariff.
A £20,000 car sold to export would have a £1,000 tariff on it.

500-1000 = -500

It's not a zero sum game.

[chopper]

The thing with free trade with the EU is that we have to pay them an extraordinarily large sum of money in order for people importing our stuff to have to not pay tariffs on them, and for our importers to not pay tariffs on the things we import.

Surely if British importers had to pay tariffs on things we imported, that would provide more money to the treasury in order to give Corporation Tax breaks on the things we export in order to allow our exporters to reduce prices to offset the import tariffs that the buyers of our stuff would have to pay to their respective governments?

Zero sum game.

It isn't really tariff free trade between Britain and the rest of the EU, if HMG is having to pay huge swathes of cash to the EU in order to get it.

[WTFH]

Because an overly strong GBP made it cheaper to import from abroad than to make it here.

In the past, but if, as is being suggested in this thread, there will be Turriff's put on imports, then the manufacturing industry will be paying more, meaning the products will cost more, not just to the local market but also to export.