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0 pointsjakewins7mo ago0 comments

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.

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throwaway1737387mo 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.

thesumofall7mo 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 …

ThunderSizzle7mo 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.

estearum7mo 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?

vasco7mo 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.

exe347mo 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!

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