8 ms·

Isn't this literally economics 101? How did we ever even end up imagining that tariffs are somehow paid by the exporter??

protoster 9mo ago
Many problems in the world would be solved if people actually read Economics 101.
- energy123 9mo ago
  Agreed, and the intention here isn't to block any particular policy outcome, it's to ask that you narrowly scope your tools to what can work, instead of being the 20th failed attempt at price controls or tariffs. (And Econ 101 will teach you when tariffs can make sense, too)
- mekdoonggi 9mo ago
  Surprisingly few Americans can read, and surprisingly fewer at a college level.
  - Insanity 9mo ago
    I get your point, but literacy rate is high in the US, so most Americans can, in fact, read. However, they rarely read books and indeed most don’t read at a university level. Rarely reading books is also not tied strictly to the US.
    - dghlsakjg 9mo ago
      Studies consistently find about 20% of Americans are functionally illiterate, depending on what is meant by functionally illiterate. Typically this means that they can read, but frequently cannot grasp the meaning of what they read. The US is actually pretty illiterate compared to peer countries.
      - Insanity 9mo ago
        Higher than I expected although I’m not totally surprised given the US educational system.
  - dghlsakjg 9mo ago
    I was an econ major, and a lot of the lower level courses were required for business majors. It was genuinely shocking how many people from the latter group just could not understand the absolute basics of supply curves and demand curves. The upside is that I was able to help them understand it by offering tutoring, where I was in limited supply, and there was endless demand for my services!
- like_any_other 9mo ago
  Does reading Econ 101 make one okay with losing their industrial base to a competitor that hasn't bought into the free market dogma?
  - SantalBlush 9mo ago
    It gives a few reasons why you're still not getting that industrial base back, even after tariffs.
    - like_any_other 9mo ago
      Oh it teaches you to resign yourself to slow decline? A very useful class then, I can see why it is so lauded.
wanderinghogan 9mo ago
I suspect tens of millions of Americans believe whatever they are told by their trusted "news" source. My only basis is anecdotal though, a dozen or so "maga/trump no matter what" family members and people I grew up with are mostly believing the tariffs are something other countries are paying the US.
- throw101010 9mo ago
  FOX News, after their scandal with Dominion, should have been broken down or even shutdown. They deliberately disinformed the public, there is blatant evidence that the news anchors were aware that they were lying. Not just bending facts a little or opining, but knowingly and purposefully lying. The pretext of freedom of expression, and more narrowly freedom of press should not *continue* to apply to businesses/individuals which are found liable/guilty of such destructive behavior for the society they operate in. The same should apply to people like Alex Jones, you had your chance to use freedom and you have wasted it, move on to another profession.
  - TheOtherHobbes 9mo ago
    Rupert Murdoch is personally responsible for incalculable harm to prosperity and democracy across the West.
  - floren 9mo ago
    Can you stretch your imagination to a scenario in which a hostile administration, eager to shut down critical reporting, might declare that various outlets are engaging in fake news and must thus be shut down? Let's be glad a precedent wasn't set.
    - hbarka 9mo ago
      You forgot the /s
    - harikb 9mo ago
      Afraid of precedent? Your comment gave me a chuckle, but not in the way you think.
senorrib 9mo ago
No, it isn’t that simple. Who bears the most weight depends on the elasticity of the curve on each side. This is confirming demand is more inelastic, which causes it to bear the burden, but could have been the other way around.
- 1718627440 9mo ago
  Yes, I don't think these two comments are incompatible.
- jeffbee 9mo ago
  That only makes sense if you believe Americans constitute the entire global demand, ie if you are a raging moron.
- nosianu 9mo ago
  What does elasticity matter if you no longer make a profit? Isn't the only thing that could matter - apart from strategic considerations of financing a loss for a time - if the margins are big enough? Who wants to pay for people to take their products below the full cost of making them, apart from some investor-financed hype startups?
  - senorrib 9mo ago
    1) You’re assuming there’s no profit to be made 2) Profit is implicitly embedded in the elasticity curve
    - nosianu 9mo ago
      1) No, please learn to read and to comprehend. I wrote > Isn't the only thing that could matter ... if the margins are big enough 2) No, the standard price elasticity of demand curve does not directly include profits. It primarily models the relationship between price and quantity demanded.
  - nasmorn 9mo ago
    This is what the supply curve describes. For each individual producer there is a hard cutoff but in aggregate these are a curve
kevin_thibedeau 9mo ago
There's this tribe who have been systematically shepherded into having no critical thinking skills.
brysonreece 9mo ago
I think the record has shown that this administration isn’t very considerate of frivolous things like “fact-based study” or “empirical evidence.”
dfee 9mo ago
even if we take the number presented as fact (i'm not sure we should), the articles claim is that: > "Foreign exporters absorb only about 4% of the tariff burden-the remaining 96% is passed through to US buyers." so yeah, the exporter does pay some burden. it's not binary. indeed, tariff exports can be designed in a way to dial either direction. certainly, we could dial foreign exporters burden to 0% – and we could dial it back up to 4% (where we're currently at). but, 4% likely isn't a hard ceiling, either. Of course, the 4% number is an aggregate, not the blanket value across indidual goods (or services). finally, the effect of tariffs is argued to be wealth transfer to the US Treasury. this is worth thinking harder about. but also, exports may change from whom goods are purchased. thus, it's a diplomatic policy, as well.
- soared 9mo ago
  This is a whole lot of words with no meaning. Yes 4% is a number that can go up or down, cool? 4% is absolutely meaningless compared to to what was shouted loudly about how other countries would be paying these. Does it change who customers buy food from? No, because everyone increases their prices regardless of if they’re impacted by tariffs or not. The 2018 washing machine tariffs are a clear cut example of why tariffs are a garbage strategy. https://www.warrantyweek.com/archive/ww20250522.html#:~:text=In%20January%202018%2C%20safeguard%20tariffs,imports%20from%20China%20and%20Mexico. https://www.warrantyweek.com/archive/ww20250522.html#:~:text... Price Pass-Through: Studies found that 100% of the tariff cost was passed through to consumers, resulting in an estimated $1.5 billion in additional costs to American families in the first year. The "Unexpected" Dryer Rise: Although tariffs only applied to washers, the price of dryers (a complementary good often sold with washers) also rose by an equivalent amount—approximately $92 per unit—as manufacturers increased prices on laundry pairs. Job Creation Cost: While the tariffs helped domestic manufacturers like Whirlpool, LG, and Samsung shift production to the U.S. and create about 1,800 new jobs, researchers estimated that consumers paid over $800,000 annually for each job created. Outcome: The tariffs resulted in a 49% decline in imports from 2017 to 2019. They expired in February 2023, after which washer prices decreased.
  - dfee 9mo ago
    It wasn't a whole lot of words with no meaning, it was a response to the parent comment. > Isn't this literally economics 101? How did we ever even end up imagining that tariffs are somehow paid by the exporter?? My response was that it's not binary, but a mixed case. And, furthermore, from the perspective of an individual exporter, their export profile may change if goods and services are purchased from a different exporter. E.g. if the same good may be cheaper without a 25% tariff, then you'd expect the incentive to pay less to have some effect. The US Treasury would still get money, but the exporting country might change.
postflopclarity 9mo ago
many of us never imagined this. but about 30% of the country have 0 literacy or critical thinking skills.
- deleted 9mo ago
  [deleted]
dghlsakjg 9mo ago
Kind of. Econ 101 normally covers tax incidence (which side bears the burden of a tax). It has a lot to do with elasticity of both demand and supply. If foreign exporters can easily shift to other markets or adjust production (elastic supply), they'll pass most of the tariff cost to consumers through higher prices. If American consumers have few substitute products (inelastic demand), they'll end up absorbing most of the cost. Of course if the opposite is true, the sellers end up eating the tariff. The reality is that tariffs typically get passed through to consumers as higher prices, not absorbed by exporters. The exact split depends on how flexible each side can be, but empirical evidence shows consumers usually bear most of the burden.
- parliament32 9mo ago
  > pass most of the tariff cost to consumers What do you mean by "pass the cost"? Exporters do not pay tariffs, importers do. The exporter doesn't give a shit because it doesn't affect them at all. This is one of the most fundamental misunderstandings of how tariffs work in the first place. The entity that's picking up the cargo at the port is who literally has to pay CBP for them to release the goods. The middleman (say, Walmart) may pass the cost to customers or whatever, but tariffs are entirely inconsequential and irrelevant to foreign exporters. There's no way to send a bill to a foreign entity demanding a tax for some goods that have arrived at a port, after all.
  - hippo22 9mo ago
    The exporters care because tariffs cause the demand curve for their products to shift to the left. As a result, the exporter can either choose to lower prices or sell fewer items. If they choose to lower prices, then that means the cost of the tariffs has “passed onto them.”
  - mbrumlow 9mo ago
    > The exporter doesn't give a shit because it doesn't affect them at all. Well that’s not true. Otherwise you are going to have to explain why so many outside the USA were upset with tariffs, and why there were retaliatory ones applied on the inverse. I make no other claim that your quoted assertion is wrong.
jcims 9mo ago
There's been this phrase 'passing costs off to the consumer' that I've heard since I was a kid, used as some kind of indictment against companies raising prices when their costs go up. Even as a kid I was confused. Where else is the money going to come from?
- deleted 9mo ago
  [deleted]
- layer8 9mo ago
  In theory, from reduced profits, or from increased efficiency incentivized by fear of reduced profits.
- SpaceNugget 9mo ago
  I'm confused how you could be confused. Obviously the company that's passing off their costs to the consumer?
- dghlsakjg 9mo ago
  This is why Econ 101 is important. There are circumstances where much of the burden of increased production costs is borne by the producer. When demand is very elastic (consumers are price sensitive, or there are many good substitutes), and supply is inelastic (its hard to change the level of output), the suppliers will eat the cost.
- TheOtherHobbes 9mo ago
  Profits, bonuses, and dividends. Which would be a nice balance to the way productivity has rocketed since the late 70s, and has mostly flowed to the top 1%. Ultimately - and predictably - wealth hoarding becomes economic self-harm. You need distributed prosperity if you want diverse growth and economic and social stability.
  - tt24 9mo ago
    Productivity has tracked wages pretty well. The graphs you’re referring to compare median wages to mean productivity, which is of course nonsense.
dahart 9mo ago
It doesn’t help that the person who imposed these tariffs was indeed claiming the cost would be borne by foreign countries, and the political party in power is repeating the claim ad nauseam on every channel imaginable. It’s a misleading claim, but OTOH the point of making imports more expensive for Americans is to push them to prefer US made products, and if that happens and imports go down then at some level it’s true that tariffs cost other countries. The biggest most important question is whether that’s actually happening - whether US consumers are switching to US-made brands - whether the US even makes alternatives to most of the imports we’re now taxing - whether demand for imports is dropping - or whether the politicians are just collecting a lot more tax money and raising the cost of living. One big problem with arguing about this is that it will take many years for the effects of the tariffs to settle. If there’s new opportunity for local competition of goods that we’ve been importing, new companies can’t form and meet that demand over night, it will take longer than the president has to see that succeed, which certainly hasn’t stopped him from claiming it already has.
- shaky-carrousel 9mo ago
  It won't cost other countries because what is not sold to the US is sold everywhere else.
  - dahart 9mo ago
    That’s certainly possible, but by no means guaranteed, right? If someone selling goods to the US is selling out (supply-limited) the rest of the global market might absorb the US share. But one might wonder if that was the case, why would they be selling to the US in the first place. I would, by default, assume that losing the US market reduces demand for any given non-US export, and the amount that it hurts depends on how big the US market was compared to the non-US market. This isn’t the first time tariffs have been used in a country to push purchasing preferences. The problem is that it hurts them and it hurts us, it’s just a net economic drain and doesn’t effectively achieve the local economic boost that some want it to, especially in today’s global economy where trade has become so integral that we no longer produce many of the products we buy, and therefore tariffs can’t fix. “There is near unanimous consensus among economists that tariffs are self-defeating” https://en.wikipedia.org/wiki/Tariff https://en.wikipedia.org/wiki/Tariff
SauntSolaire 9mo ago
I understood part of the point of the tariffs as encouraging on-shore production of some items by increasing the price of their imported counterparts. Such protectionist practices were used by China to bootstrap their own automobile industry, before they became competitive in the global market. Of course, China had surplus capacity of untapped cheap labor, which America does not. Barring an evolution in automated manufacturing, or an overhaul of regulatory policy, I'm pessimistic it's possible to accomplish the same in the US. But, in principle, tariffs have a valid place in supporting an emerging local industry.
- tetha 9mo ago
  This has been my understanding for e.g. European chips as well: First you subsidize and support the creation of currently not commercially viable chip fabs on-shore. Literally handing companies money under some obligation into the future. Eventually the on-shore chips are produced, but they have higher total cost of ownership for the users: Logistics may be cheaper due to less distance, or more expensive because they are not well-trodden paths yet. Production costs like labor, water, energy could be higher. And the chips could just have higher failure rate, because problems in the new processes need to be kinked out. But to get local consumers to switch to these switches, one applies tariffs to other sources of chips so the on-shore chips become more competitive artificially, until they become actually cheaper and competitive. The way it is threatened here isn't in the use case of tariffs at all from my limited understanding.
- carefulfungi 9mo ago
  I don’t think the evidence supports this. This was the marketing of tarifs. But the reality is rates have been changed rapidly, added, dropped - this is just leverage Trump is using to exert his will. Whether it is Greenland, defense spending by NATO, whims of narcissism, or kickback deal making (like NVIDIA or Intel). There is little evidence this policy is designed to increase US manufacturing.
  - SauntSolaire 9mo ago
    I agree in the case of the US, which I chalk up partially to investors knowing the US tariffs are both arbitrary and transitory. Even if the Trump administration were consistent, there's the possibility that the next president will undo them and corporations need more than a four-year guarantee before making investments. I'm mostly responding to the position that tariffs have no place in economic policy, when we've seen them used successfully in other countries. Should Congress pass a bill legislating tariffs, then I could see them having more of the desired effect, though as I said I'd still be pessimistic without broader changes.
croes 9mo ago
They believed Mexico pays for the wall.
Pxtl 9mo ago
American Conservatives explicitly admitted they are not part of the reality-based community (their words) back in 2004 [1]. In 2017 Kellyanne Conway offered "alternative facts" (her words). In a lawsuit, Fox News admitted that Tucker Carlson's commentary was not to be taken literally. Alex Jones similarly claimed in a lawsuit that his work is "performance art" and is playing a character like The Joker. [4] It's constantly disappointing how the apparent intellectuals who frequent and operate HN will rally to that side out of libertarian convenience and out of annoyance and disgust at "wokism". And then will inevitably be shocked when everything goes sideways again. Hopefully the education will stick longer this time than it did after G.W.Bush. [1] https://en.wikipedia.org/wiki/Reality-based_community https://en.wikipedia.org/wiki/Reality-based_community [2] https://en.wikipedia.org/wiki/Alternative_facts https://en.wikipedia.org/wiki/Alternative_facts [3] https://www.npr.org/2020/09/29/917747123/you-literally-cant-believe-the-facts-tucker-carlson-tells-you-so-say-fox-s-lawye https://www.npr.org/2020/09/29/917747123/you-literally-cant-... [4] https://mashable.com/article/alex-jones-defense-performance-artist https://mashable.com/article/alex-jones-defense-performance-...
PunchyHamster 9mo ago
I guess one explanation of the delusion would be "surely if exporter product is more expensive they will have to lower price to compete with locally made product, and if they do not the local equivalent will just sell better". Doesn't really work when main reason for product existence on market is either "no equivalent" or "this particular subgroup is only imported" (say given specifically tasting cheese).
tclancy 9mo ago
Because people vote for the name on the ticket and not the dude he planned to put in charge of the economy who, economically speaking, has always been a madman on a corner soapbox ranting that every other economist doesn’t understand the effects of tariffs. He’s great.
SilverElfin 9mo ago
It is, but there has been lots of resistance to this understanding. Part of why is repeated lies. Bessent just the other day was going on about how tariffs are the “signature” economic policy of the administration. This is a person who was highly trusted on economic topics, now supporting anything Trump does blindly. Trump keeps saying things like “tariffs brings us trillions”, which is obviously false but a lot of his base accepts it as the truth. One reason why this works is the base has been told that news media lies to them and that only a few people in social media can be trusted.
aeternum 9mo ago
So do buyers also pay for 96% of the advertising, 96% of the manufacturing, etc.?
- square_usual 9mo ago
  Yes, actually? It's baked into the pricing?
  - aeternum 9mo ago
    Sam Walton would argue for taking it from margin and making it up with volume.
- kgwxd 9mo ago
  100+% actually, or else the company is losing money.
kgwxd 9mo ago
Some people believe anything they're told, as long as it's from "their guy". Their guy said that's how they work. Their guy is currently POTUS.
yodsanklai 9mo ago
Tariffs do hurt the exporter nonetheless, which I suspect is a goal in itself for Trump and some of his supporters. Agents aren't rational, this is eco 102.
rcpt 9mo ago
Tax incidence is a legitimately complicated problem. People get it wrong all the time
citrin_ru 9mo ago
An exporter could in theory reduce prices specifically for the US market to avoid sell volume decline (which happens when consumers face higher prices because of tariffs). But in most cases they cannot because profit margins are no high enough to begin with.

protoster 9mo ago

Many problems in the world would be solved if people actually read Economics 101.

energy123 9mo ago
Agreed, and the intention here isn't to block any particular policy outcome, it's to ask that you narrowly scope your tools to what can work, instead of being the 20th failed attempt at price controls or tariffs. (And Econ 101 will teach you when tariffs can make sense, too)
mekdoonggi 9mo ago
Surprisingly few Americans can read, and surprisingly fewer at a college level.
- Insanity 9mo ago
  I get your point, but literacy rate is high in the US, so most Americans can, in fact, read. However, they rarely read books and indeed most don’t read at a university level. Rarely reading books is also not tied strictly to the US.
  - dghlsakjg 9mo ago
    Studies consistently find about 20% of Americans are functionally illiterate, depending on what is meant by functionally illiterate. Typically this means that they can read, but frequently cannot grasp the meaning of what they read. The US is actually pretty illiterate compared to peer countries.
    - Insanity 9mo ago
      Higher than I expected although I’m not totally surprised given the US educational system.
- dghlsakjg 9mo ago
  I was an econ major, and a lot of the lower level courses were required for business majors. It was genuinely shocking how many people from the latter group just could not understand the absolute basics of supply curves and demand curves. The upside is that I was able to help them understand it by offering tutoring, where I was in limited supply, and there was endless demand for my services!
like_any_other 9mo ago
Does reading Econ 101 make one okay with losing their industrial base to a competitor that hasn't bought into the free market dogma?
- SantalBlush 9mo ago
  It gives a few reasons why you're still not getting that industrial base back, even after tariffs.
  - like_any_other 9mo ago
    Oh it teaches you to resign yourself to slow decline? A very useful class then, I can see why it is so lauded.

wanderinghogan 9mo ago

I suspect tens of millions of Americans believe whatever they are told by their trusted "news" source. My only basis is anecdotal though, a dozen or so "maga/trump no matter what" family members and people I grew up with are mostly believing the tariffs are something other countries are paying the US.

throw101010 9mo ago
FOX News, after their scandal with Dominion, should have been broken down or even shutdown. They deliberately disinformed the public, there is blatant evidence that the news anchors were aware that they were lying. Not just bending facts a little or opining, but knowingly and purposefully lying. The pretext of freedom of expression, and more narrowly freedom of press should not *continue* to apply to businesses/individuals which are found liable/guilty of such destructive behavior for the society they operate in. The same should apply to people like Alex Jones, you had your chance to use freedom and you have wasted it, move on to another profession.
- TheOtherHobbes 9mo ago
  Rupert Murdoch is personally responsible for incalculable harm to prosperity and democracy across the West.
- floren 9mo ago
  Can you stretch your imagination to a scenario in which a hostile administration, eager to shut down critical reporting, might declare that various outlets are engaging in fake news and must thus be shut down? Let's be glad a precedent wasn't set.
  - hbarka 9mo ago
    You forgot the /s
  - harikb 9mo ago
    Afraid of precedent? Your comment gave me a chuckle, but not in the way you think.

senorrib 9mo ago

No, it isn’t that simple. Who bears the most weight depends on the elasticity of the curve on each side. This is confirming demand is more inelastic, which causes it to bear the burden, but could have been the other way around.

1718627440 9mo ago
Yes, I don't think these two comments are incompatible.
jeffbee 9mo ago
That only makes sense if you believe Americans constitute the entire global demand, ie if you are a raging moron.
nosianu 9mo ago
What does elasticity matter if you no longer make a profit? Isn't the only thing that could matter - apart from strategic considerations of financing a loss for a time - if the margins are big enough? Who wants to pay for people to take their products below the full cost of making them, apart from some investor-financed hype startups?
- senorrib 9mo ago
  1) You’re assuming there’s no profit to be made 2) Profit is implicitly embedded in the elasticity curve
  - nosianu 9mo ago
    1) No, please learn to read and to comprehend. I wrote > Isn't the only thing that could matter ... if the margins are big enough 2) No, the standard price elasticity of demand curve does not directly include profits. It primarily models the relationship between price and quantity demanded.
- nasmorn 9mo ago
  This is what the supply curve describes. For each individual producer there is a hard cutoff but in aggregate these are a curve

kevin_thibedeau 9mo ago

There's this tribe who have been systematically shepherded into having no critical thinking skills.

brysonreece 9mo ago

I think the record has shown that this administration isn’t very considerate of frivolous things like “fact-based study” or “empirical evidence.”

dfee 9mo ago

even if we take the number presented as fact (i'm not sure we should), the articles claim is that: > "Foreign exporters absorb only about 4% of the tariff burden-the remaining 96% is passed through to US buyers." so yeah, the exporter does pay some burden. it's not binary. indeed, tariff exports can be designed in a way to dial either direction. certainly, we could dial foreign exporters burden to 0% – and we could dial it back up to 4% (where we're currently at). but, 4% likely isn't a hard ceiling, either. Of course, the 4% number is an aggregate, not the blanket value across indidual goods (or services). finally, the effect of tariffs is argued to be wealth transfer to the US Treasury. this is worth thinking harder about. but also, exports may change from whom goods are purchased. thus, it's a diplomatic policy, as well.

soared 9mo ago
This is a whole lot of words with no meaning. Yes 4% is a number that can go up or down, cool? 4% is absolutely meaningless compared to to what was shouted loudly about how other countries would be paying these. Does it change who customers buy food from? No, because everyone increases their prices regardless of if they’re impacted by tariffs or not. The 2018 washing machine tariffs are a clear cut example of why tariffs are a garbage strategy. https://www.warrantyweek.com/archive/ww20250522.html#:~:text=In%20January%202018%2C%20safeguard%20tariffs,imports%20from%20China%20and%20Mexico. https://www.warrantyweek.com/archive/ww20250522.html#:~:text... Price Pass-Through: Studies found that 100% of the tariff cost was passed through to consumers, resulting in an estimated $1.5 billion in additional costs to American families in the first year. The "Unexpected" Dryer Rise: Although tariffs only applied to washers, the price of dryers (a complementary good often sold with washers) also rose by an equivalent amount—approximately $92 per unit—as manufacturers increased prices on laundry pairs. Job Creation Cost: While the tariffs helped domestic manufacturers like Whirlpool, LG, and Samsung shift production to the U.S. and create about 1,800 new jobs, researchers estimated that consumers paid over $800,000 annually for each job created. Outcome: The tariffs resulted in a 49% decline in imports from 2017 to 2019. They expired in February 2023, after which washer prices decreased.
- dfee 9mo ago
  It wasn't a whole lot of words with no meaning, it was a response to the parent comment. > Isn't this literally economics 101? How did we ever even end up imagining that tariffs are somehow paid by the exporter?? My response was that it's not binary, but a mixed case. And, furthermore, from the perspective of an individual exporter, their export profile may change if goods and services are purchased from a different exporter. E.g. if the same good may be cheaper without a 25% tariff, then you'd expect the incentive to pay less to have some effect. The US Treasury would still get money, but the exporting country might change.

postflopclarity 9mo ago

many of us never imagined this. but about 30% of the country have 0 literacy or critical thinking skills.

deleted 9mo ago
[deleted]

dghlsakjg 9mo ago

Kind of. Econ 101 normally covers tax incidence (which side bears the burden of a tax). It has a lot to do with elasticity of both demand and supply. If foreign exporters can easily shift to other markets or adjust production (elastic supply), they'll pass most of the tariff cost to consumers through higher prices. If American consumers have few substitute products (inelastic demand), they'll end up absorbing most of the cost. Of course if the opposite is true, the sellers end up eating the tariff. The reality is that tariffs typically get passed through to consumers as higher prices, not absorbed by exporters. The exact split depends on how flexible each side can be, but empirical evidence shows consumers usually bear most of the burden.

parliament32 9mo ago
> pass most of the tariff cost to consumers What do you mean by "pass the cost"? Exporters do not pay tariffs, importers do. The exporter doesn't give a shit because it doesn't affect them at all. This is one of the most fundamental misunderstandings of how tariffs work in the first place. The entity that's picking up the cargo at the port is who literally has to pay CBP for them to release the goods. The middleman (say, Walmart) may pass the cost to customers or whatever, but tariffs are entirely inconsequential and irrelevant to foreign exporters. There's no way to send a bill to a foreign entity demanding a tax for some goods that have arrived at a port, after all.
- hippo22 9mo ago
  The exporters care because tariffs cause the demand curve for their products to shift to the left. As a result, the exporter can either choose to lower prices or sell fewer items. If they choose to lower prices, then that means the cost of the tariffs has “passed onto them.”
- mbrumlow 9mo ago
  > The exporter doesn't give a shit because it doesn't affect them at all. Well that’s not true. Otherwise you are going to have to explain why so many outside the USA were upset with tariffs, and why there were retaliatory ones applied on the inverse. I make no other claim that your quoted assertion is wrong.

jcims 9mo ago

There's been this phrase 'passing costs off to the consumer' that I've heard since I was a kid, used as some kind of indictment against companies raising prices when their costs go up. Even as a kid I was confused. Where else is the money going to come from?

deleted 9mo ago
[deleted]
layer8 9mo ago
In theory, from reduced profits, or from increased efficiency incentivized by fear of reduced profits.
SpaceNugget 9mo ago
I'm confused how you could be confused. Obviously the company that's passing off their costs to the consumer?
dghlsakjg 9mo ago
This is why Econ 101 is important. There are circumstances where much of the burden of increased production costs is borne by the producer. When demand is very elastic (consumers are price sensitive, or there are many good substitutes), and supply is inelastic (its hard to change the level of output), the suppliers will eat the cost.
TheOtherHobbes 9mo ago
Profits, bonuses, and dividends. Which would be a nice balance to the way productivity has rocketed since the late 70s, and has mostly flowed to the top 1%. Ultimately - and predictably - wealth hoarding becomes economic self-harm. You need distributed prosperity if you want diverse growth and economic and social stability.
- tt24 9mo ago
  Productivity has tracked wages pretty well. The graphs you’re referring to compare median wages to mean productivity, which is of course nonsense.

dahart 9mo ago

It doesn’t help that the person who imposed these tariffs was indeed claiming the cost would be borne by foreign countries, and the political party in power is repeating the claim ad nauseam on every channel imaginable. It’s a misleading claim, but OTOH the point of making imports more expensive for Americans is to push them to prefer US made products, and if that happens and imports go down then at some level it’s true that tariffs cost other countries. The biggest most important question is whether that’s actually happening - whether US consumers are switching to US-made brands - whether the US even makes alternatives to most of the imports we’re now taxing - whether demand for imports is dropping - or whether the politicians are just collecting a lot more tax money and raising the cost of living. One big problem with arguing about this is that it will take many years for the effects of the tariffs to settle. If there’s new opportunity for local competition of goods that we’ve been importing, new companies can’t form and meet that demand over night, it will take longer than the president has to see that succeed, which certainly hasn’t stopped him from claiming it already has.

shaky-carrousel 9mo ago
It won't cost other countries because what is not sold to the US is sold everywhere else.
- dahart 9mo ago
  That’s certainly possible, but by no means guaranteed, right? If someone selling goods to the US is selling out (supply-limited) the rest of the global market might absorb the US share. But one might wonder if that was the case, why would they be selling to the US in the first place. I would, by default, assume that losing the US market reduces demand for any given non-US export, and the amount that it hurts depends on how big the US market was compared to the non-US market. This isn’t the first time tariffs have been used in a country to push purchasing preferences. The problem is that it hurts them and it hurts us, it’s just a net economic drain and doesn’t effectively achieve the local economic boost that some want it to, especially in today’s global economy where trade has become so integral that we no longer produce many of the products we buy, and therefore tariffs can’t fix. “There is near unanimous consensus among economists that tariffs are self-defeating” https://en.wikipedia.org/wiki/Tariff https://en.wikipedia.org/wiki/Tariff

SauntSolaire 9mo ago

I understood part of the point of the tariffs as encouraging on-shore production of some items by increasing the price of their imported counterparts. Such protectionist practices were used by China to bootstrap their own automobile industry, before they became competitive in the global market. Of course, China had surplus capacity of untapped cheap labor, which America does not. Barring an evolution in automated manufacturing, or an overhaul of regulatory policy, I'm pessimistic it's possible to accomplish the same in the US. But, in principle, tariffs have a valid place in supporting an emerging local industry.

tetha 9mo ago
This has been my understanding for e.g. European chips as well: First you subsidize and support the creation of currently not commercially viable chip fabs on-shore. Literally handing companies money under some obligation into the future. Eventually the on-shore chips are produced, but they have higher total cost of ownership for the users: Logistics may be cheaper due to less distance, or more expensive because they are not well-trodden paths yet. Production costs like labor, water, energy could be higher. And the chips could just have higher failure rate, because problems in the new processes need to be kinked out. But to get local consumers to switch to these switches, one applies tariffs to other sources of chips so the on-shore chips become more competitive artificially, until they become actually cheaper and competitive. The way it is threatened here isn't in the use case of tariffs at all from my limited understanding.
carefulfungi 9mo ago
I don’t think the evidence supports this. This was the marketing of tarifs. But the reality is rates have been changed rapidly, added, dropped - this is just leverage Trump is using to exert his will. Whether it is Greenland, defense spending by NATO, whims of narcissism, or kickback deal making (like NVIDIA or Intel). There is little evidence this policy is designed to increase US manufacturing.
- SauntSolaire 9mo ago
  I agree in the case of the US, which I chalk up partially to investors knowing the US tariffs are both arbitrary and transitory. Even if the Trump administration were consistent, there's the possibility that the next president will undo them and corporations need more than a four-year guarantee before making investments. I'm mostly responding to the position that tariffs have no place in economic policy, when we've seen them used successfully in other countries. Should Congress pass a bill legislating tariffs, then I could see them having more of the desired effect, though as I said I'd still be pessimistic without broader changes.

croes 9mo ago

They believed Mexico pays for the wall.

Pxtl 9mo ago

American Conservatives explicitly admitted they are not part of the reality-based community (their words) back in 2004 [1]. In 2017 Kellyanne Conway offered "alternative facts" (her words). In a lawsuit, Fox News admitted that Tucker Carlson's commentary was not to be taken literally. Alex Jones similarly claimed in a lawsuit that his work is "performance art" and is playing a character like The Joker. [4] It's constantly disappointing how the apparent intellectuals who frequent and operate HN will rally to that side out of libertarian convenience and out of annoyance and disgust at "wokism". And then will inevitably be shocked when everything goes sideways again. Hopefully the education will stick longer this time than it did after G.W.Bush. [1] https://en.wikipedia.org/wiki/Reality-based_community https://en.wikipedia.org/wiki/Reality-based_community [2] https://en.wikipedia.org/wiki/Alternative_facts https://en.wikipedia.org/wiki/Alternative_facts [3] https://www.npr.org/2020/09/29/917747123/you-literally-cant-believe-the-facts-tucker-carlson-tells-you-so-say-fox-s-lawye https://www.npr.org/2020/09/29/917747123/you-literally-cant-... [4] https://mashable.com/article/alex-jones-defense-performance-artist https://mashable.com/article/alex-jones-defense-performance-...

PunchyHamster 9mo ago

I guess one explanation of the delusion would be "surely if exporter product is more expensive they will have to lower price to compete with locally made product, and if they do not the local equivalent will just sell better". Doesn't really work when main reason for product existence on market is either "no equivalent" or "this particular subgroup is only imported" (say given specifically tasting cheese).

tclancy 9mo ago

Because people vote for the name on the ticket and not the dude he planned to put in charge of the economy who, economically speaking, has always been a madman on a corner soapbox ranting that every other economist doesn’t understand the effects of tariffs. He’s great.

SilverElfin 9mo ago

It is, but there has been lots of resistance to this understanding. Part of why is repeated lies. Bessent just the other day was going on about how tariffs are the “signature” economic policy of the administration. This is a person who was highly trusted on economic topics, now supporting anything Trump does blindly. Trump keeps saying things like “tariffs brings us trillions”, which is obviously false but a lot of his base accepts it as the truth. One reason why this works is the base has been told that news media lies to them and that only a few people in social media can be trusted.

aeternum 9mo ago

So do buyers also pay for 96% of the advertising, 96% of the manufacturing, etc.?

square_usual 9mo ago
Yes, actually? It's baked into the pricing?
- aeternum 9mo ago
  Sam Walton would argue for taking it from margin and making it up with volume.
kgwxd 9mo ago
100+% actually, or else the company is losing money.

kgwxd 9mo ago

Some people believe anything they're told, as long as it's from "their guy". Their guy said that's how they work. Their guy is currently POTUS.

yodsanklai 9mo ago

Tariffs do hurt the exporter nonetheless, which I suspect is a goal in itself for Trump and some of his supporters. Agents aren't rational, this is eco 102.

rcpt 9mo ago

Tax incidence is a legitimately complicated problem. People get it wrong all the time

citrin_ru 9mo ago

An exporter could in theory reduce prices specifically for the US market to avoid sell volume decline (which happens when consumers face higher prices because of tariffs). But in most cases they cannot because profit margins are no high enough to begin with.