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This only needs to be explained to Americans who are somehow still hanging on to Donald Trump's explanation of tariffs: that they are gonna make foreigners pay.
by kazinator 1y ago
This only needs to be explained to Americans who are somehow still hanging on to Donald Trump's explanation of tariffs: that they are gonna make foreigners pay.
Tariffs are taxes that locals pay on stuff imported from abroad.
- cosmicgadget 1y agoNot worth explaining, they exist in a different reality. One where thousands of sex trafficking victims had just two culprits, a bathroom full of classified documents was not a felony, and "find me votes" isn't a crime.
- throwawaylaptop 1y agoIf an American screw driver is $10, and a Chinese one was $5, I bought Chinese. If you tariff the Chinese one to $8, I will buy American. China knows this, so they change the price on their screw driver (that actually costs them 0.75) accordingly, so that it can still be sold for $5, because they know there's a ceiling on what people will pay. China doesn't have pure competition. The price of their goods isnt really related to cost by it more of what the buyer will pay.
- JumpCrisscross 1y ago> Tariffs are taxes that locals pay on stuff imported from abroad Importers pay the tariff. But where the tax burden falls is more complicated. Short answer is that right now, we don't have strong evidence for where the burden is falling. Given how volatile tariffs have been, and the variety of leverage positions of American importers across industries, it will probably be years before we can suss out a signal from the data.
- kazinator 1y agoYou are right. A tax removes money from the transaction. Broadly speaking, the burden will be felt by either party in inverse proportion to how much choice they have in selecting that transaction.