Headline: New York Times, 11/7/2024
The exporting company doesn't pay a thing
A tariff is a tax that is put on a product when it crosses a border. For instance, a company that brings its product into the United States — the importer — actually pays the tariff to the U.S. government.
The more important question, though, is who bears the ultimate cost. A company may try to (1) pass the cost on to its customers by raising its prices. It may (2) eat the cost of the tariff itself, cutting into its profit margins. Or, it could try to (3) force foreign suppliers to bear the burden by negotiating to pay less for their products.
Which of these happens depends on the particular company. But in the case of the hefty tariffs that Mr. Trump put on China during his first term, economic studies found that most of those costs were passed on to American consumers. [emphasis and numbering added]
We have a winner! #1. The consumer pays.
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