Is free trade good or bad?

[Kidlicious]

Why not? I don't know much about economics, but I know the costs of doing business ultimately get passed on to the consumer.

I struggle to see how the average US consumer would benefit from a trade war with Mexico. I certainly see how poor Mexicans would be hurt -- maybe that is enough "benefit" for some to be in favor. The only argument is "the jobs will come back", which I believe is 1) a pipe dream and 2) not applicable to many of the affected trade goods (agricultural products being the most obvious example).

It's true that consumers will pay for the tariffs, but US producers will respond to higher prices because they can make more profit. Also, the Mexican producers can't maximize their profits by increasing their price by the whole 20%. In fact, in a competitive market they have no control over the price.

Then there are others exporting to the US as well that factor in, and the US can export to other markets instead of Mexico.

[Kidlicious]

I doubt you'll see any savings at the supermarket on meat or grains. Increased prices on fruits and veggies, as well as increased cost of living, will push consumers toward cheap food like processed meat and grain products, soaking up much of the increased supply. Corn prices are now mostly tied to oil prices anyway. Both because input costs as well as competition from for corn due to ethanol. Whatever little downward pressure there would be on prices the supply chain will make up for in higher costs.

If prices do drop though, it hurts American farmers who get the double whammy of decreased income and increased prices. This puts marginal farms out of business and rather quickly supply would drop back to a new, lower production equilibrium.

If this were true grocery prices would never fall. They do fall. In fact, they are on a downward trend right now.

[Aeson]

We don't have the tariffs right now. There are obvious mechanisms by which agricultural product prices can drop given what I posted.

Lower barriers to trade. Cheaper labor sources. Cheaper input costs. 2 of 3 (maybe 3 of 3) of which go the more expensive direction in a trade war.

Oil prices have been low for the last couple years, which is currently the major downward pressure on prices of agricultural products.

[Kidlicious]

We don't have the tariffs right now. There are obvious mechanisms by which agricultural product prices can drop given what I posted.

Lower barriers to trade. Cheaper labor sources. Cheaper input costs. 2 of 3 (maybe 3 of 3) of which go the more expensive direction in a trade war.

Oil prices have been low for the last couple years, which is currently the major downward pressure on prices of agricultural products.

Why don't you think lower prices will be passed on to consumers if Mexico raises a tariff?

[Aeson]

I already explained why it wouldn't happen with ag products. I also noted why it's a bad thing even if prices were to lower.

[Kidlicious]

I already explained why it wouldn't happen with ag products. I also noted why it's a bad thing even if prices were to lower.

Consumers usually like lower prices.

Didn't you admit that corn products are lower in the grocery store because of a lower price of oil?

[Aeson]

Read what I said if you're interested.

Tariffs are not oil.

[Kidlicious]

Read what I said if you're interested.

Tariffs are not oil.

I already read what you said. Tariffs do the same thing.

[Aeson]

Oil and tariffs are quite different, actually.

[Kidlicious]

Because tariffs are racist?

[Aeson]

No.

[giblets]

They're not racist, they just screw over consumers in favor of special interests.