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53 sats \ 2 replies \ @didiplaywell 7 Aug \ parent \ on: To tariff or not to tariff econ
I do not assume that, I know that's how it's first hand, from direct experience in Argentina. A company must keep margins to stay solvent so all tax increments are always passed towards the customer. Tariffs are simply a tax imposed to US citizens when buying foreign products. A company can withstand temporal costs variations, but an official 100% tariffs will only mean that you get to paid double for the same product. You will see it in action by yourself.
That may approximately hold for small poor countries, but not large wealthy ones. The loss of business for exporters to the US would lower the prices they're able to charge.
You're also assuming no viable domestic producers of substitutes.
The equilibrium increase from tariffs is going to be significantly less than you're describing.
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The loss of business for exporters to the US would lower the prices they're able to charge.
There's a limit of viability, as any protectionist policy proved over and over, it will only cause imports to cease, not to become cheaper.
You're also assuming no viable domestic producers of substitutes.
I do am assuming viable domestic substitutes, that's one of the key factors in ensuring that tariffs will take effect only on the consumer side. That, together with decreasing and expensive imports, will cause local prices to rise. The US citizen will feel 100% of the tariffs one way or another.
The equilibrium increase from tariffs is going to be significantly less than you're describing.
Just wait and see.
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