8 ms·

Why do we repeatedly say that tarrifs are passed off in full to the consumer in the form of higher prices? Isn't that as obviously wrong as the argument for the

Why do we repeatedly say that tarrifs are passed off in full to the consumer in the form of higher prices? Isn't that as obviously wrong as the argument for them, that they're paid entirely by the other countries? Is there a reason to believe, or evidence, that it's not a mixture of the two? edit: I want to highlight esseph's reply has a link to evidence that last year's tarrifs were passed off 90% to consumers, which is exactly the type of info I was looking for.

JDEW 8mo ago
> by the other countries That makes zero sense. You mean “by lowering the profit margin on the goods sold to the US by that specific company”. Countries don’t pay tarrifs (bar state intervention), companies do. But yes, it’s probably a mix of the two: raising prices and lowering profit margins.
AnimalMuppet 8mo ago
Well, the analysis by the Federal Reserve said that domestic entities (consumers and companies) paid 90% of it. So, yes, saying that consumers pay it all is wrong, but it's less wrong than saying that foreign countries pay it all. I don't recall seeing a split between domestic consumers and domestic companies, but I'm fairly sure that consumers are paying more than the 10% that foreign entities are.
NoLinkToMe 8mo ago
It is a mixture of the two. But my reading of various studies indicates that in this mixture, the majority was passed to consumers in the form of higher prices.
Hikikomori 8mo ago
It's much more true than saying that the foreign company pays it. Depends on how much slack there is in profit margins for both the exporter and importer, but the consumer does pay most of it, like 90%.
- deleted 8mo ago
  [deleted]
- RupertSalt 8mo ago
  I recommend that commenters shell out and pony up for a thesaurus before its import duty is magnified sixfold.
esseph 8mo ago
"American consumers bore 90% of last year's nearly six-fold tariff increase, adding $1,000-$2,400 to average household budgets, despite overall inflation dropping to 2.4% in January 2026." https://www.forbes.com/sites/petercohan/2026/02/15/consumers-are-paying-more-in-tariffs-as-inflation-cools/ https://www.forbes.com/sites/petercohan/2026/02/15/consumers...
- furyofantares 8mo ago
  Exactly the type of info I was hoping for, thank you.
tombert 8mo ago
What an odd thing to say. The businesses in the other countries are, you know, businesses. Even if it were Chinese companies that were paying the tariffs, that will be baked into the cost of the good. This is literally first-day economics. No such thing as a free lunch. The cost of the item that the end user pays should reflect all costs associated with production and distribution to that end user. I have no idea how the fuck the rumor that these tariffs will be “paid by other countries” started. If there are suspicions that the tariffs are temporary then they might be willing to eat the cost temporarily so it’s not passed onto the consumer immediately, but that’s inherently temporary and not sustainable especially if it would make it so these companies are losing money.
- furyofantares 8mo ago
  > I have no idea how the fuck the rumor that these tariffs will be “paid by other countries” started. It's what POTUS was saying since day 1. That we've been getting ripped off and we're gonna make the other countries pay us etc etc etc. It is, as I said in the post, obviously wrong - but that's where it comes from.
  - whattheheckheck 8mo ago
    Well its completely wrong. Tariffs are regressive consumer taxes that hurt people who make <$200k/year the most while enriching the inner circle of crony capitalism. Corrupt and should be prosecuted for such criminal robbery of the American people
  - tombert 8mo ago
    I guess I mostly don't understand how anyone believed it. He ran on lowering grocery prices, and he was going to do this by making tariffs. So his plan boiled down to "I'm going to lower prices by raising prices". With Trump it can be tough to tell if it's idiocy of malice but at some point I suppose it's a distinction without much of a difference.
    - Freedom2 8mo ago
layer8 8mo ago
For goods for which no domestic equivalent alternatives exist, why would the foreign suppliers lower their prices to compensate for the tariffs (which are paid by the importers to the government)? More generally, the cost of the tariffs will be split between foreign suppliers and local importers/consumers according to the competitiveness and availability of domestic suppliers, and according to market elasticity for the respective goods.
- cortesoft 8mo ago
  Well, they would likely have to lower their profit margin because the demand is reduced by the higher prices. Fewer purchasers will want to/be able to buy the item at the higher price. The supply and demand curve will find a new equilibrium, but it isn’t like the sellers are going to sell the exact same quantity of items with the price exactly increased by the tariff amount.
  - wolrah 8mo ago
    That assumes that demand is meaningfully elastic, that suppliers have room in their margins to absorb it, and that they're willing to. That is obviously not the case for a lot of things. Products with inelastic or less elastic demand we can skip over because it's pretty self explanatory. Products like the random cheap widgets a lot of us would buy from random Chinese sellers are often high volume low margin products with a lot of competition. Think about stuff like a USB->TTL serial board that's basically two connectors, one cloned chip, and a few supporting components on a single layer PCB. Hypothetically this is an ideal case for free market economics and these things should have already been basically as cheap as they can be at every step in the chain. For less competitive items, particularly lower volume specialty items, a vendor may also decide that it's just not worth sacrificing profits in other markets by letting them know there's room to come down. A lot of the independent hardware designers I've been wanting to buy things from sell out every batch one way or another so they just don't care, demand exceeds supply even if demand from the US is reduced. Others have decided the volatility of the situation just isn't worth it with the risk of products getting delayed or additional charges added resulting in chargebacks and lost products and have simply stopped selling to the US altogether.
sdenton4 8mo ago
Here's evidence : https://www.kielinstitut.de/publications/news/americas-own-goal-americans-pay-almost-entirely-for-trumps-tariffs/ https://www.kielinstitut.de/publications/news/americas-own-g... "Importers and consumers in the US bear 96 percent of the tariff burden."
- IcyWindows 8mo ago
  That's not just consumers. That is "importers and consumers"
- phil21 8mo ago
  Importer != Consumer. I think that's very obvious to anyone paying attention to this whole thing. In fact, it's a small minority of imports that are direct to consumer. It absolutely is a mix of the importer (e.d. manufacturer, producer, wholesaler, retailer, etc.) absorbing some in their margin and the consumer picking up the bill via price increases for the rest. It's quite obviously not 96% being paid by the consumer across the board just from looking at the CPI numbers. All this study states is the obvious: foreign producers didn't lower their cost by much in response to tariff burden. They largely charged the same rate to a buyer in the US vs. a buyer in Germany. This isn't to defend the tariff situation - just that this study gets trotted out a whole lot in an extremely disingenuous manner. Other data that exists is better that measures direct consumer impact.
  - sdenton4 8mo ago
    The study makes it clear that the people footing the bill for the tariffs are in the US - it is not the rest of the world paying Trump's taxes, it's Americans, whether directly as consumers or importers.
- davorak 8mo ago
  I have to assume that some of that 4% has second order negative effects on US importers and consumers. Profit margins can not always go down by 4% and in those cases goods and services would then not be available to US importers and consumers is only one example. My assumption is that the 96% statistic does not fully encapsulate the negative costs to consumers. I have to to wonder how much higher the burden is over 96% when all second order effects are taken into account.
fastasucan 8mo ago
Does anyone have a good explanation on how supposedly other countries were paying the tariffs? If so, nothing would deter the american consumer from buying foreign?

JDEW 8mo ago

> by the other countries That makes zero sense. You mean “by lowering the profit margin on the goods sold to the US by that specific company”. Countries don’t pay tarrifs (bar state intervention), companies do. But yes, it’s probably a mix of the two: raising prices and lowering profit margins.

AnimalMuppet 8mo ago

Well, the analysis by the Federal Reserve said that domestic entities (consumers and companies) paid 90% of it. So, yes, saying that consumers pay it all is wrong, but it's less wrong than saying that foreign countries pay it all. I don't recall seeing a split between domestic consumers and domestic companies, but I'm fairly sure that consumers are paying more than the 10% that foreign entities are.

NoLinkToMe 8mo ago

It is a mixture of the two. But my reading of various studies indicates that in this mixture, the majority was passed to consumers in the form of higher prices.

Hikikomori 8mo ago

It's much more true than saying that the foreign company pays it. Depends on how much slack there is in profit margins for both the exporter and importer, but the consumer does pay most of it, like 90%.

deleted 8mo ago
[deleted]
RupertSalt 8mo ago
I recommend that commenters shell out and pony up for a thesaurus before its import duty is magnified sixfold.

esseph 8mo ago

"American consumers bore 90% of last year's nearly six-fold tariff increase, adding $1,000-$2,400 to average household budgets, despite overall inflation dropping to 2.4% in January 2026." https://www.forbes.com/sites/petercohan/2026/02/15/consumers-are-paying-more-in-tariffs-as-inflation-cools/ https://www.forbes.com/sites/petercohan/2026/02/15/consumers...

furyofantares 8mo ago
Exactly the type of info I was hoping for, thank you.

tombert 8mo ago

What an odd thing to say. The businesses in the other countries are, you know, businesses. Even if it were Chinese companies that were paying the tariffs, that will be baked into the cost of the good. This is literally first-day economics. No such thing as a free lunch. The cost of the item that the end user pays should reflect all costs associated with production and distribution to that end user. I have no idea how the fuck the rumor that these tariffs will be “paid by other countries” started. If there are suspicions that the tariffs are temporary then they might be willing to eat the cost temporarily so it’s not passed onto the consumer immediately, but that’s inherently temporary and not sustainable especially if it would make it so these companies are losing money.

furyofantares 8mo ago
> I have no idea how the fuck the rumor that these tariffs will be “paid by other countries” started. It's what POTUS was saying since day 1. That we've been getting ripped off and we're gonna make the other countries pay us etc etc etc. It is, as I said in the post, obviously wrong - but that's where it comes from.
- whattheheckheck 8mo ago
  Well its completely wrong. Tariffs are regressive consumer taxes that hurt people who make <$200k/year the most while enriching the inner circle of crony capitalism. Corrupt and should be prosecuted for such criminal robbery of the American people
- tombert 8mo ago
  I guess I mostly don't understand how anyone believed it. He ran on lowering grocery prices, and he was going to do this by making tariffs. So his plan boiled down to "I'm going to lower prices by raising prices". With Trump it can be tough to tell if it's idiocy of malice but at some point I suppose it's a distinction without much of a difference.
  - Freedom2 8mo ago

layer8 8mo ago

For goods for which no domestic equivalent alternatives exist, why would the foreign suppliers lower their prices to compensate for the tariffs (which are paid by the importers to the government)? More generally, the cost of the tariffs will be split between foreign suppliers and local importers/consumers according to the competitiveness and availability of domestic suppliers, and according to market elasticity for the respective goods.

cortesoft 8mo ago
Well, they would likely have to lower their profit margin because the demand is reduced by the higher prices. Fewer purchasers will want to/be able to buy the item at the higher price. The supply and demand curve will find a new equilibrium, but it isn’t like the sellers are going to sell the exact same quantity of items with the price exactly increased by the tariff amount.
- wolrah 8mo ago
  That assumes that demand is meaningfully elastic, that suppliers have room in their margins to absorb it, and that they're willing to. That is obviously not the case for a lot of things. Products with inelastic or less elastic demand we can skip over because it's pretty self explanatory. Products like the random cheap widgets a lot of us would buy from random Chinese sellers are often high volume low margin products with a lot of competition. Think about stuff like a USB->TTL serial board that's basically two connectors, one cloned chip, and a few supporting components on a single layer PCB. Hypothetically this is an ideal case for free market economics and these things should have already been basically as cheap as they can be at every step in the chain. For less competitive items, particularly lower volume specialty items, a vendor may also decide that it's just not worth sacrificing profits in other markets by letting them know there's room to come down. A lot of the independent hardware designers I've been wanting to buy things from sell out every batch one way or another so they just don't care, demand exceeds supply even if demand from the US is reduced. Others have decided the volatility of the situation just isn't worth it with the risk of products getting delayed or additional charges added resulting in chargebacks and lost products and have simply stopped selling to the US altogether.

sdenton4 8mo ago

Here's evidence : https://www.kielinstitut.de/publications/news/americas-own-goal-americans-pay-almost-entirely-for-trumps-tariffs/ https://www.kielinstitut.de/publications/news/americas-own-g... "Importers and consumers in the US bear 96 percent of the tariff burden."

IcyWindows 8mo ago
That's not just consumers. That is "importers and consumers"
phil21 8mo ago
Importer != Consumer. I think that's very obvious to anyone paying attention to this whole thing. In fact, it's a small minority of imports that are direct to consumer. It absolutely is a mix of the importer (e.d. manufacturer, producer, wholesaler, retailer, etc.) absorbing some in their margin and the consumer picking up the bill via price increases for the rest. It's quite obviously not 96% being paid by the consumer across the board just from looking at the CPI numbers. All this study states is the obvious: foreign producers didn't lower their cost by much in response to tariff burden. They largely charged the same rate to a buyer in the US vs. a buyer in Germany. This isn't to defend the tariff situation - just that this study gets trotted out a whole lot in an extremely disingenuous manner. Other data that exists is better that measures direct consumer impact.
- sdenton4 8mo ago
  The study makes it clear that the people footing the bill for the tariffs are in the US - it is not the rest of the world paying Trump's taxes, it's Americans, whether directly as consumers or importers.
davorak 8mo ago
I have to assume that some of that 4% has second order negative effects on US importers and consumers. Profit margins can not always go down by 4% and in those cases goods and services would then not be available to US importers and consumers is only one example. My assumption is that the 96% statistic does not fully encapsulate the negative costs to consumers. I have to to wonder how much higher the burden is over 96% when all second order effects are taken into account.

fastasucan 8mo ago

Does anyone have a good explanation on how supposedly other countries were paying the tariffs? If so, nothing would deter the american consumer from buying foreign?