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> Tariffs are paid by the importing entities Seems those entities would likely raise prices to cover increased tariffs.
by rascul 6y ago
> Tariffs are paid by the importing entities
Seems those entities would likely raise prices to cover increased tariffs.
- swiftcoder 6y agoThus making the prices of their local competitors more attractive. Ergo, protecting local producers. Notably, not to protect businesses in general - if your business is importing/retailing exclusively foreign goods, then tariffs are explicitly designed to disadvantage you versus someone retailing local products.
- clairity 6y agoonly if there is positive price elasticity, and that depends on market dynamics (price is a function of both supply and demand). for instance, if there is a local alternative that's 10% more expensive, you might have that 10% leeway available to you to increase prices, but not if demand drops sharply (negative price elasticity) because substitutes exist or the good isn't as essential as it seemed.