Re: [PEN-L] Stephen Roach on China-bashing

[C Ruiz]

In a message dated 3/22/2006 7:09:10 P.M. Eastern Standard Time, [EMAIL PROTECTED] writes: I am not sure I understand his criticism. Why is it impossible that "tariffs can boost savings". One possible chain of events is tariffs -> increase in prices -> lower consumption -> higher savings. What am I missing? Comment:It is not a matter of impossibility but of necessity. There is no necessity in your casual links since: 1-If tariffs are raised (Very unlikely) then most likely American companies abroad and foreign ones, would reduce their profit margins rather to increase prices in order to keep sales and market shares. This is what Japanese firms did in the late eighties and early nineties 2 Even if prices go up that doesn't necessarily mean that savings go up but rather that the same income would purchase less which is a different thing.