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But why would they if they don't have a competition on price without a tariff?

• wat10000 1y ago
  Why wouldn’t they have competition?
  • geysersam 1y ago
    Even if you assume perfect competition costs like tariffs can be passed back to producers. Imagine a demand and a supply curve. From the perspective of a producer outside the country the tariff effectively shifts the demand curve, but doesn't affect supply. That's going to lead to a lower price at equilibrium. Of course, from the perspective of the consumer it's the opposite situation, the supply curve shifts which leads to a higher price at equilibrium. Both happen simultaneously, who pays most of the tariff depends on the elasticity of the supply and the demand