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The incidence result isn’t surprising, but incidence alone isn’t a full policy critique. Consumers bear most taxes in general: corporate, VAT, payroll, etc. Th
by kaicianflone 9mo ago
The incidence result isn’t surprising, but incidence alone isn’t a full policy critique. Consumers bear most taxes in general: corporate, VAT, payroll, etc.
The real distinction is that tariffs are conditional. Currently, firms can avoid them by changing sourcing. That makes them more behavior-shaping than revenue maximizing.
Given that the U.S. never reversed the TCJA corporate cuts from 2020-2024, tariffs are one of the few active levers currently increasing the marginal cost of offshore supply chains.
- DangitBobby 9mo agoBut it's only a lever to behavior changes if it's possible for domestic supply chains to compete with the costs global + tariff supply chains. My understanding is it's pretty much unfathomable for US manufacturing to compete on even with eye-watering tariffs on any reasonable timeline, let alone the handful of years (I suspect) the local companies will expect tariffs to continue. So I expect it's just lever for government revenue and citizen pain. The past 40 years or so of neoliberalism has effectively and intentionally dismantled domestic manufacturing.