this post was submitted on 17 Mar 2025
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[–] IDKWhatUsernametoPutHereLolol@lemmy.dbzer0.com 64 points 15 hours ago (5 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

[–] merdaverse@lemmy.world 16 points 13 hours ago* (last edited 13 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 7 points 11 hours ago

found the economics student

[–] phx@lemmy.ca 5 points 11 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.

[–] calcopiritus@lemmy.world 2 points 9 hours ago* (last edited 9 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.

[–] Flocklesscrow@lemm.ee 9 points 14 hours ago

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

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