this post was submitted on 17 Mar 2025
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[–] IDKWhatUsernametoPutHereLolol@lemmy.dbzer0.com 68 points 23 hours ago (6 children)

Even if it were a tax paid by foreign companies, what difference does it make? They would just increase the prices the goods are sold at.

So, lets say, a smartphone that is priced at $1000:

With the 20% tariff in place:

If the Chinese conpanies pay the $200 per device, they just sell each phone at $1200 to the US importer.

If the US importers pay the $200 per device, similarily, they would tack on the $200 (on top of the usual markups), making it $1200 per phone.

There is zero difference, the end consumer always foots the bill.

This is so simple to understand, how are people this stupid

[–] Sceptique@leminal.space -1 points 4 hours ago (1 children)

Wouldn't refunding the amount of the tariff to the customer fix this? Ignoring the very important diplomatic and retaliation tariffs which makes the whole post unusable for real life

  • Canada sells a product A $100.
  • Tariffs makes it $120 when you buy it
  • so Canada gets $100, USA gets $20, USA customer pays $120.
  • USA has now $20, they can directly refund the customer for $20 via a policy to reduce the price of the category of A.
  • So customer gets $20 reduction of the product A via tax something, so USA now has $0 and USA customer actually paid only $100.
  • Except now if USA company make the product A they can sell it for like $100 and customer pays $80.
  • There is a slight increase of imported goods price here because tariffs cannot actually refund $20, it will be a % of the local vs imported production.
  • Over time you can expect to get a local advantage because of this price inequality, so local companies will be subsidized by imports until imports are no longer significant.

Where am I wrong here ?

[–] Dnb@lemmy.dbzer0.com 2 points 3 hours ago

In your scenario how is the local made $100 item bought at $80? Where is a $20 refund paid from? You are double spending it on both imported and local goods

[–] merdaverse@lemmy.world 19 points 22 hours ago* (last edited 22 hours ago) (1 children)

Not necessarily: the company can choose to absorb part or all the tariff, since the demand would drop at the higher price anyway, and they might make more overall profit at a lower margin per item. But generally yes, most of the cost will be passed on to the consumer and prices will increase on average.

Example:

[–] xtools@programming.dev 8 points 20 hours ago

found the economics student

[–] phx@lemmy.ca 7 points 20 hours ago

the end consumer always foots the bill.

Or the consumer can't/won't take on the extra burden of cost, and the business loses enough sales to go under.

[–] Flocklesscrow@lemm.ee 9 points 23 hours ago

It's why they're called "pass-through costs."

[–] calcopiritus@lemmy.world 3 points 18 hours ago* (last edited 18 hours ago)

The difference is that this way it's much easier to calculate prices.

If the tax were 20%, the exporter would have to do the inverse calculation. That is, "which price will result in me gaining $1000?" Which is not 1200, since 20% of 1200 is 240. x = 0.8y -> y = (1/0.8)*x -> y = 1.25x. so the exporter would have to price it at 1.25x the price, $1250. 20% of 1250 is 250.

So it's unintuitive that a 20% tax would result in a 25% price increase. That's my guess why tariffs are applied to the importer instead of exporter.

The only difference would be that money we spent would be going to the companies instead of the government. Tarrifs are a government putting taxes on their people to strangle industries in other countries. In both scenarios we pay the same, but the flow of money is different