3 ms·

I think you're correct about the importer paying the tariff, but it doesn't really matter, does it? If I sell into the US and have to pay the tariff, I'm going

I think you're correct about the importer paying the tariff, but it doesn't really matter, does it? If I sell into the US and have to pay the tariff, I'm going to raise my prices to cover the additional expense. Regardless of who pays, the importer's final cost is higher, who then passes it onto the consumer.

A_D_E_P_T 2y ago
A lot of imports are basic components; low-level industrial inputs. So there are lots of products which are genuinely made in America -- with, e.g., Chinese aluminum or Canadian steel -- yet will nevertheless probably go up in price. It almost becomes an across-the-board thing. Practically every American-made product that contains aluminum is going to go up in price, for instance, as there's not nearly enough US aluminum production to satisfy demand. (And, even if there were, US aluminum tends to be considerably more expensive than foreign aluminum, even with the 25% tariff applied...)
llamaimperative 2y ago
Yes ultimately it will. People don't have a good intuition for this, but when you buy a good you are paying for the entire supply chain of that good. All the way up to the batteries that go into the miner's headlamp as he pulls raw ore out of the earth.
jgalt212 2y ago
> 'm going to raise my prices to cover the additional expense. Only if the market will bear such expense. If your product sells at $100 and the tariff is $15, what makes you think the importer will be able to sell the same number of units at new price of $115? Depending on the demand, the $15 cost will be born by a combo of the importer and consumer.
- fatbird 2y ago
  Well, yes, that's the point: it doesn't matter who pays up front, it affects the supply/demand equation, typically hurting everyone. Regardless of where I am in the chain, I'm not going to run at a loss and hope to make it up in volume.
  - jgalt212 2y ago
    It doesn't hurt the government, though. The first order effect is new tax revenues they don't have to source elsewhere.
    - fatbird 2y ago
      As you pointed out, demand will drop, so there's fewer sales, and it drives inflation, slowing the economy, leading to (ultimately) a reduction in revenue all around. Also, it's basically a heavy sales tax, since it's through purchasing that's it's implemented, and sales taxes are always regressive (the poor spend all their money on consumables, the rich spend only a portion, so the poor pay more proportionate to their income). There's a reason no economist these days is in favour of tariffs.

A_D_E_P_T 2y ago

A lot of imports are basic components; low-level industrial inputs. So there are lots of products which are genuinely made in America -- with, e.g., Chinese aluminum or Canadian steel -- yet will nevertheless probably go up in price. It almost becomes an across-the-board thing. Practically every American-made product that contains aluminum is going to go up in price, for instance, as there's not nearly enough US aluminum production to satisfy demand. (And, even if there were, US aluminum tends to be considerably more expensive than foreign aluminum, even with the 25% tariff applied...)

llamaimperative 2y ago

Yes ultimately it will. People don't have a good intuition for this, but when you buy a good you are paying for the entire supply chain of that good. All the way up to the batteries that go into the miner's headlamp as he pulls raw ore out of the earth.

jgalt212 2y ago

> 'm going to raise my prices to cover the additional expense. Only if the market will bear such expense. If your product sells at $100 and the tariff is $15, what makes you think the importer will be able to sell the same number of units at new price of $115? Depending on the demand, the $15 cost will be born by a combo of the importer and consumer.

fatbird 2y ago
Well, yes, that's the point: it doesn't matter who pays up front, it affects the supply/demand equation, typically hurting everyone. Regardless of where I am in the chain, I'm not going to run at a loss and hope to make it up in volume.
- jgalt212 2y ago
  It doesn't hurt the government, though. The first order effect is new tax revenues they don't have to source elsewhere.
  - fatbird 2y ago
    As you pointed out, demand will drop, so there's fewer sales, and it drives inflation, slowing the economy, leading to (ultimately) a reduction in revenue all around. Also, it's basically a heavy sales tax, since it's through purchasing that's it's implemented, and sales taxes are always regressive (the poor spend all their money on consumables, the rich spend only a portion, so the poor pay more proportionate to their income). There's a reason no economist these days is in favour of tariffs.