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A tariff is a tax on the local population, not a penalty to the origin country. The tariff is added to the sales price so the origin country is repaid. It ma
by gloverkcn 10y ago
A tariff is a tax on the local population, not a penalty to the origin country. The tariff is added to the sales price so the origin country is repaid. It makes the price of foreign goods higher for local purchasers to allow the local market to be competitive.
If it doesn't bring manufacturing jobs back (which it won't) it will do nothing, but lower sales. the amount lowered depends on the size of the tariff, and how much that makes the products unaffordable to the locals.
- digitaltrees 10y agoI agree with you but would argue that the lower demand created by the tarred is the penalty on the origin country.
- tropo 10y agoThings aren't so simple. A tax (tariff in this case) negatively affects both sides of a transaction. The effect on our side is then mitigated because the money from that tax lets us reduce other taxes in our own country. So yes, in the end it does work out to be a penalty to the origin country. The only local harm relates to marginal utility, but this is offset by the benefits of national security and improvements to the mix of different types of employment.