From cars to coffee - tariffs work!

The news that Bentley USA plans to increase the price of its vehicles is pleasing. Why? Because it enables us to look at President Trump's tariff initiatives from the extremes. Bentley cars are an example of an exclusive branded luxury good, whereas the tariff on Colombian coffee is a short sharp fix for a recalcitrant regime, too wedded to sucking on the teat of the generous Americans. I suppose the Colombian president comforted herself with a bit of salvaged pride by opting to send her private plane to pick up the deportees, but surely she should have acted sooner to prevent her bad guys going north to the US. According to President Trump, the south and central American regimes were emptying out their jails and psych wards. If Colombia was also doing this, then the egg on their faces is doubly deserved. Colombian coffee, as excellent as it may be, is a commodity with the price ascertained on the international market, according to supply and demand. There is no way a US customer is going to pay more for Colombian when supplies from Brazil and other producers are available at the international price. Deny it as they might, the return to the Colombian producer (and the Colombian economy), is reduced by the tariff amount. 

Back to Bentley cars where the tariff of 25 percent was imposed for a different reason. That was to bring home to European exporters that the days of protection for their domestic car industry, while creaming the US market, are over. Of course the tariff is levied at the border on the customs-declared price, which is likely to be no more than 60 percent of the showroom price. The US sticker price of a new Bentley will go up by 10 percent at most. Then again the old luxury goods line applies:

'If you have to enquire about the price, then you can't afford it'.