5 ms·

The exporter gets paid the same as before. The buyer pays more. There's a subtle difference, can you spot it?

by exe34 1y ago

xyzzy123 1y ago
Without knowing what the product and market structure is, you cannot tell if the cost of the tariff will be borne by the seller or the buyer.
- exe34 1y ago
  The shipment won't be released by customs until the buyer pays the tariff. I can tell who's paying. It's impressive how so many are contorting their minds trying to make this seem uncertain.
jakewins 1y ago
This isn’t actually how it works though. Who pays the tariff is the same as who pays a tax: it depends on the price elasticity of supply and demand. If the demand curve is very price sensitive - like people might stop buying wool blankets if the price went up 50%, and buy cotton blankets instead - then the tariff will be paid by the suppliers, because they must lower their prices to make the final price the same. And similarly, if the buyers are inelastic, they will pay the tariff. Like for baby formula, maybe parents are willing to stomach significant price hikes without changing how much they buy.
- thesumofall 1y ago
  As with many things in economics the effect of a measure often depends on the timeframe one considers. Honestly, anything could be true if one just chooses the appropriate timeframe. However, the tariffs clearly introduce an inefficiency which - globally speaking - will be net negative. Locally speaking, though, who knows …
  - vasco 1y ago
    > However, the tariffs clearly introduce an inefficiency which - globally speaking - will be net negative. Nobody can predict this. Tariffs are used by trump mostly as a negotiation and distraction tactic. In that sense they've been extremely effective.
    - dekerklas 1y ago
      [flagged]
      - degurechaff 1y ago
        salah posting?
        dekerklas 1y ago
        [dead]
    - exe34 1y ago
      > they've been extremely effective. yes, as a pump and dump scheme. He and people in his administration have made a lot of money with tariffs!
  - ThunderSizzle 1y ago
    Tariffs existed before Trump, and existed by other countries against the US. Did those not introduce inefficiency? Actually, it probably produced more inefficiency because most people were probably under thr impression most of the world was under free trade, hence the existence of the WTC. Not knowing a tax is much more inefficient than knowing a tax.
    - estearum 1y ago
      Yes, they were inefficient. No tariffs anywhere are the same combination of breadth and depth as the Trump ones. > Not knowing a tax is much more inefficient than knowing a tax. Why would this be true?
- throwaway173738 1y ago
  > If the demand curve is very price sensitive - like people might stop buying wool blankets if the price went up 50%, and buy cotton blankets instead - then the tariff will be paid by the suppliers, because they must lower their prices to make the final price the same. And the people buying cotton blankets are materially worse off than they were before the tariffs were imposed. They have to accept an inferior product until the wool supplier’s prices have adjusted. Or the wool supplier folds and not nobody can buy wool blankets anymore.
Borealid 1y ago
Let's imagine, hypothetically speaking, that demand is perfectly inelastic. The price of a good is $10, and buyers will absolutely refuse to pay more than $10 under any circumstances. Before a tariff is imposed, the seller sells the good for $10 and keeps $10 in revenue. If a tariff of $1 is imposed under these hypothetical circumstances, does the buyer pay more? Does the exporter get paid the same as before? Clearly, it's neither guaranteed that the buyer will "pay more" nor that the export will "get paid the same as before". In reality because demand is neither 100% elastic nor 100% inelastic, what tends to happen is that the cost of the tariff is split in some ratio between the buyer and seller. I find it mildly amusing that there are so many people claiming that it's 100% on one side or other, when it's trivially easy to see why that can't be GUARANTEED TO BE the case.
- vasco 1y ago
  >I find it mildly amusing that there are so many people claiming that it's 100% on one side or other, when it's trivially easy to see why that can't be GUARANTEED TO BE the case. To be fair most people on one side think they know better than Adam Smith and the people on the other side usually never opened a book, so it's a tough bargain.
  - mlrtime 1y ago
    One way 100% to get people to see your viewpoint is to insult them. Which side are you talking about?
    - vasco 1y ago
      If you read carefully you'll notice I did both sides.
      - jibal 1y ago
        I noticed that what you wrote was neither true nor fair.
        1y ago
charcircuit 1y ago
I don't see it. Exporter pays: Consumer ends up paying price + tariff, then seller pays the tariff to the shipping company, which pays it to the government. Importer pays: Consumer pays price, then later pays the tariff to the shipping company, which pays it to the government. In both cases the consumer is paying price + tariff. A small difference is that some consumers could be psychologically tricked by the lower price tag in the importer pays model. Note that what I'm saying doesn't concern itself with changes in pricing due to this.
- ThunderSizzle 1y ago
  > Note that what I'm saying doesn't concern itself with changes in pricing due to this. That's the problem with your semantics then. If the manufacturer no longer makes the same income because they can't increase the final price, in effect the consumer didn't pay the tariff.
  - exe34 1y ago
    what happens in practise is that local sellers also increase their prices so that the customer still pays more, but the exporter isn't paying any tariff. if exporters paid tariffs, every country would put tariffs on things that they didn't make themselves. they only do it for things they're trying to compete in making. can you figure out why?
- bregma 1y ago
  To simplify: if the exporter lowers their price, the consumer pays the same, the exporter gets less, and the consumer pays the tariff to the government. If the exporter charges the same price, the consumer pays more, the exporter get the same as before, and the consumer pays the tariff to the government. The consumer always pays the tariff. The exporter never pays the tariff.
  - charcircuit 1y ago
    Please pretend that the exporter hypothetically pays the tariff. It just changes who is paying who. The end result is the same.
mbrumlow 1y ago
The buyer might pay more. If the importer (which is often a foreign institution) tries to pass the cost along to the customer. And the customer looks at the product group and decides to buy the higher priced item. But on average the tariff is doing what it was meant to do. Promote the consumption products provided by a different vendor. Namely ones that tariffs don’t apply to. It’s not a hard concept to understand, and talking about who pays is a distraction. Namely because it will be case by case involving 3 or more parties who won’t all chose the same choices they have every time.

The exporter gets paid the same as before. The buyer pays more. There's a subtle difference, can you spot it?

by exe34 1y ago

The exporter gets paid the same as before. The buyer pays more. There's a subtle difference, can you spot it?

Without knowing what the product and market structure is, you cannot tell if the cost of the tariff will be borne by the seller or the buyer.

exe34 1y ago
The shipment won't be released by customs until the buyer pays the tariff. I can tell who's paying. It's impressive how so many are contorting their minds trying to make this seem uncertain.

jakewins 1y ago

This isn’t actually how it works though. Who pays the tariff is the same as who pays a tax: it depends on the price elasticity of supply and demand. If the demand curve is very price sensitive - like people might stop buying wool blankets if the price went up 50%, and buy cotton blankets instead - then the tariff will be paid by the suppliers, because they must lower their prices to make the final price the same. And similarly, if the buyers are inelastic, they will pay the tariff. Like for baby formula, maybe parents are willing to stomach significant price hikes without changing how much they buy.

thesumofall 1y ago
As with many things in economics the effect of a measure often depends on the timeframe one considers. Honestly, anything could be true if one just chooses the appropriate timeframe. However, the tariffs clearly introduce an inefficiency which - globally speaking - will be net negative. Locally speaking, though, who knows …
- vasco 1y ago
  > However, the tariffs clearly introduce an inefficiency which - globally speaking - will be net negative. Nobody can predict this. Tariffs are used by trump mostly as a negotiation and distraction tactic. In that sense they've been extremely effective.
  - dekerklas 1y ago
    [flagged]
    - degurechaff 1y ago
      salah posting?
      - dekerklas 1y ago
        [dead]
  - exe34 1y ago
    > they've been extremely effective. yes, as a pump and dump scheme. He and people in his administration have made a lot of money with tariffs!
- ThunderSizzle 1y ago
  Tariffs existed before Trump, and existed by other countries against the US. Did those not introduce inefficiency? Actually, it probably produced more inefficiency because most people were probably under thr impression most of the world was under free trade, hence the existence of the WTC. Not knowing a tax is much more inefficient than knowing a tax.
  - estearum 1y ago
    Yes, they were inefficient. No tariffs anywhere are the same combination of breadth and depth as the Trump ones. > Not knowing a tax is much more inefficient than knowing a tax. Why would this be true?
throwaway173738 1y ago
> If the demand curve is very price sensitive - like people might stop buying wool blankets if the price went up 50%, and buy cotton blankets instead - then the tariff will be paid by the suppliers, because they must lower their prices to make the final price the same. And the people buying cotton blankets are materially worse off than they were before the tariffs were imposed. They have to accept an inferior product until the wool supplier’s prices have adjusted. Or the wool supplier folds and not nobody can buy wool blankets anymore.

Borealid 1y ago

Let's imagine, hypothetically speaking, that demand is perfectly inelastic. The price of a good is $10, and buyers will absolutely refuse to pay more than $10 under any circumstances. Before a tariff is imposed, the seller sells the good for $10 and keeps $10 in revenue. If a tariff of $1 is imposed under these hypothetical circumstances, does the buyer pay more? Does the exporter get paid the same as before? Clearly, it's neither guaranteed that the buyer will "pay more" nor that the export will "get paid the same as before". In reality because demand is neither 100% elastic nor 100% inelastic, what tends to happen is that the cost of the tariff is split in some ratio between the buyer and seller. I find it mildly amusing that there are so many people claiming that it's 100% on one side or other, when it's trivially easy to see why that can't be GUARANTEED TO BE the case.

vasco 1y ago
>I find it mildly amusing that there are so many people claiming that it's 100% on one side or other, when it's trivially easy to see why that can't be GUARANTEED TO BE the case. To be fair most people on one side think they know better than Adam Smith and the people on the other side usually never opened a book, so it's a tough bargain.
- mlrtime 1y ago
  One way 100% to get people to see your viewpoint is to insult them. Which side are you talking about?
  - vasco 1y ago
    If you read carefully you'll notice I did both sides.
    - jibal 1y ago
      I noticed that what you wrote was neither true nor fair.
      - 1y ago

charcircuit 1y ago

I don't see it. Exporter pays: Consumer ends up paying price + tariff, then seller pays the tariff to the shipping company, which pays it to the government. Importer pays: Consumer pays price, then later pays the tariff to the shipping company, which pays it to the government. In both cases the consumer is paying price + tariff. A small difference is that some consumers could be psychologically tricked by the lower price tag in the importer pays model. Note that what I'm saying doesn't concern itself with changes in pricing due to this.

ThunderSizzle 1y ago
> Note that what I'm saying doesn't concern itself with changes in pricing due to this. That's the problem with your semantics then. If the manufacturer no longer makes the same income because they can't increase the final price, in effect the consumer didn't pay the tariff.
- exe34 1y ago
  what happens in practise is that local sellers also increase their prices so that the customer still pays more, but the exporter isn't paying any tariff. if exporters paid tariffs, every country would put tariffs on things that they didn't make themselves. they only do it for things they're trying to compete in making. can you figure out why?
bregma 1y ago
To simplify: if the exporter lowers their price, the consumer pays the same, the exporter gets less, and the consumer pays the tariff to the government. If the exporter charges the same price, the consumer pays more, the exporter get the same as before, and the consumer pays the tariff to the government. The consumer always pays the tariff. The exporter never pays the tariff.
- charcircuit 1y ago
  Please pretend that the exporter hypothetically pays the tariff. It just changes who is paying who. The end result is the same.

mbrumlow 1y ago

The buyer might pay more. If the importer (which is often a foreign institution) tries to pass the cost along to the customer. And the customer looks at the product group and decides to buy the higher priced item. But on average the tariff is doing what it was meant to do. Promote the consumption products provided by a different vendor. Namely ones that tariffs don’t apply to. It’s not a hard concept to understand, and talking about who pays is a distraction. Namely because it will be case by case involving 3 or more parties who won’t all chose the same choices they have every time.