4 ms·

Incorrect. There was a recent study done on tariffs effects. The study found negligible effects on consumer good prices. Turns out most tariff costs were eaten

Incorrect. There was a recent study done on tariffs effects. The study found negligible effects on consumer good prices. Turns out most tariff costs were eaten by manufacturers in China. (The importers forced them to eat the costs) Which prompted them to either shut down or move overseas

zephharben 8y ago
Can you share a link to this study?
- burfog 8y ago
  I recall seeing it, but I can't seem to track it down at the moment. It was a study done by Europeans, concluding that China was eating about 83% of the tariff cost. The remaining 17% hits the US consumers. Of course, that 17% can sort of be returned to the American consumers via reduced taxes or increased federal spending. The jobs are nice too.
  - zephharben 8y ago
    This study reached a different conclusion: http://www.princeton.edu/~reddings/papers/CEPR-DP13564.pdf http://www.princeton.edu/~reddings/papers/CEPR-DP13564.pdf
gruez 8y ago
That might be true for US tariffs, but what about retaliatory tariffs enacted by China?
simonh 8y ago
That can only ork in the short term though. If they go bust prices will go up for consumers due to constrained supply. If they move abroad to avoid the tariffs, we’ll presumably the reason they didn’t already do that was higher manufacturing costs abroad, so again increased costs for consumers, even if less than the tariffs. You can put it off for a while, but not indefinitely. After all the justification given for the tariffs was to make less efficient local production more viable. Higher consumer prices are an explicit part of that calculation.
- fountainofage 8y ago
  It could also mean the demand for these items is very elastic, so manufacturers will have to eat the tax or higher manufacturing costs.
  - nybble41 8y ago
    That assumes that manufacturers can reduce their margins without going out of business. That will not generally be true in a competitive market, however, since economic profit (which includes opportunity costs) tends toward zero.

zephharben 8y ago

Can you share a link to this study?

burfog 8y ago
I recall seeing it, but I can't seem to track it down at the moment. It was a study done by Europeans, concluding that China was eating about 83% of the tariff cost. The remaining 17% hits the US consumers. Of course, that 17% can sort of be returned to the American consumers via reduced taxes or increased federal spending. The jobs are nice too.
- zephharben 8y ago
  This study reached a different conclusion: http://www.princeton.edu/~reddings/papers/CEPR-DP13564.pdf http://www.princeton.edu/~reddings/papers/CEPR-DP13564.pdf

gruez 8y ago

That might be true for US tariffs, but what about retaliatory tariffs enacted by China?

simonh 8y ago

That can only ork in the short term though. If they go bust prices will go up for consumers due to constrained supply. If they move abroad to avoid the tariffs, we’ll presumably the reason they didn’t already do that was higher manufacturing costs abroad, so again increased costs for consumers, even if less than the tariffs. You can put it off for a while, but not indefinitely. After all the justification given for the tariffs was to make less efficient local production more viable. Higher consumer prices are an explicit part of that calculation.

fountainofage 8y ago
It could also mean the demand for these items is very elastic, so manufacturers will have to eat the tax or higher manufacturing costs.
- nybble41 8y ago
  That assumes that manufacturers can reduce their margins without going out of business. That will not generally be true in a competitive market, however, since economic profit (which includes opportunity costs) tends toward zero.