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American importers and consumers bear the cost of 2025 tariffs: analysis

kielinstitut.de

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Re: American importers and consumers bear the cost of 2025 tariffs: analysis

#51

Post by sgc »

senorrib wrote: post #24
sensanaty wrote: post #13

Isn't this literally economics 101? How did we ever even end up imagining that tariffs are somehow paid by the exporter??

No, it isn’t that simple. Who bears the most weight depends on the elasticity of the curve on each side. This is confirming demand is more inelastic, which causes it to bear the burden, but could have been the other way around.

Producer has minimal margins and cannot lower their price. Consumer, at least in the immediate future, has more money to spend. Never were the curves going to be any different in this case. Only in the case of a poorer country placing tariffs on a wealthier country with higher margins, would this be any different than the blindingly obvious outcome here.

The only fruit of this is real economic pain for the American consumer. But that was likely the goal, so mission accomplished I guess.

Re: American importers and consumers bear the cost of 2025 tariffs: analysis

#52

Post by dghlsakjg »

sensanaty wrote: post #13

Isn't this literally economics 101? How did we ever even end up imagining that tariffs are somehow paid by the exporter??

Kind of.

Econ 101 normally covers tax incidence (which side bears the burden of a tax). It has a lot to do with elasticity of both demand and supply. If foreign exporters can easily shift to other markets or adjust production (elastic supply), they'll pass most of the tariff cost to consumers through higher prices. If American consumers have few substitute products (inelastic demand), they'll end up absorbing most of the cost. Of course if the opposite is true, the sellers end up eating the tariff.

The reality is that tariffs typically get passed through to consumers as higher prices, not absorbed by exporters. The exact split depends on how flexible each side can be, but empirical evidence shows consumers usually bear most of the burden.

Re: American importers and consumers bear the cost of 2025 tariffs: analysis

#53

Post by Insanity »

mekdoonggi wrote: post #41
protoster wrote: post #18

Earlier quoted context omitted.

Many problems in the world would be solved if people actually read Economics 101.

Surprisingly few Americans can read, and surprisingly fewer at a college level.

I get your point, but literacy rate is high in the US, so most Americans can, in fact, read.

However, they rarely read books and indeed most don’t read at a university level.

Rarely reading books is also not tied strictly to the US.

Re: American importers and consumers bear the cost of 2025 tariffs: analysis

#55

Post by BartjeD »

senorrib wrote: post #24
sensanaty wrote: post #13

Isn't this literally economics 101? How did we ever even end up imagining that tariffs are somehow paid by the exporter??

No, it isn’t that simple. Who bears the most weight depends on the elasticity of the curve on each side. This is confirming demand is more inelastic, which causes it to bear the burden, but could have been the other way around.

I think this nuance is one of the 1000 pieces that you could say are nuances if you look at them individually.

But, integrally the whole package is just wishful thinking.

I mean, maybe it was elastic for imports from Heard and McDonald Islands. Penguins don't care about margins after all.

Re: American importers and consumers bear the cost of 2025 tariffs: analysis

#56

Post by bartread »

I'm glad they've done the work here and put a figure on it - the impact absolutely needed to be quantified - but I also have to say... to the surprise of absolutely no-one with even the most basic grasp of how economies function.

People, lots of people, lots of people who have a really deep understanding of national and global economics (unlike me), have been warning about this since talk of tariffs became common currency a year ago.

I wouldn't like to comment on HN's political leanings in the round and, obviously, there are a large portion of non-US readers/commenters on the site (including me), but will say this: there are a portion of you who voted for this. Exactly this.

What were you thinking? What was going through your heads? I'm genuinely curious.

EDIT: Wow... well, having asked the question, it looks like I now have a lot of answers and perspectives to read. Thank you all for taking the time to comment.

Re: American importers and consumers bear the cost of 2025 tariffs: analysis

#57

Post by pembrook »

Obviously this was always going to be the case.

But here’s the hard truth: the US has needed to raise taxes for decades given its inability to reduce spending.

Hence they massively inflating runaway deficit. If this is the only way Americans will accept tax increases, and they aren’t willing to decrease spending, then this policy will ironically end up being the only way forward to climb out of the financial hole.

Re: American importers and consumers bear the cost of 2025 tariffs: analysis

#58

Post by jcims »

sensanaty wrote: post #13

Isn't this literally economics 101? How did we ever even end up imagining that tariffs are somehow paid by the exporter??

There's been this phrase 'passing costs off to the consumer' that I've heard since I was a kid, used as some kind of indictment against companies raising prices when their costs go up.

Even as a kid I was confused. Where else is the money going to come from?

Re: American importers and consumers bear the cost of 2025 tariffs: analysis

#59

Post by soared »

dfee wrote: post #37
sensanaty wrote: post #13

Isn't this literally economics 101? How did we ever even end up imagining that tariffs are somehow paid by the exporter??

even if we take the number presented as fact (i'm not sure we should), the articles claim is that: > "Foreign exporters absorb only about 4% of the tariff burden-the remaining 96% is passed through to US buyers." so yeah, the exporter does pay some burden. it's not binary. indeed, tariff exports can be designed in a way to dial either direction. certainly, we could dial foreign exporters burden to 0% – and we could d…

This is a whole lot of words with no meaning. Yes 4% is a number that can go up or down, cool? 4% is absolutely meaningless compared to to what was shouted loudly about how other countries would be paying these.

Does it change who customers buy food from? No, because everyone increases their prices regardless of if they’re impacted by tariffs or not.

The 2018 washing machine tariffs are a clear cut example of why tariffs are a garbage strategy.

https://www.warrantyweek.com/archive/ww20250522.html#:~:text...

Price Pass-Through: Studies found that 100% of the tariff cost was passed through to consumers, resulting in an estimated $1.5 billion in additional costs to American families in the first year. The "Unexpected" Dryer Rise: Although tariffs only applied to washers, the price of dryers (a complementary good often sold with washers) also rose by an equivalent amount—approximately $92 per unit—as manufacturers increased prices on laundry pairs. Job Creation Cost: While the tariffs helped domestic manufacturers like Whirlpool, LG, and Samsung shift production to the U.S. and create about 1,800 new jobs, researchers estimated that consumers paid over $800,000 annually for each job created. Outcome: The tariffs resulted in a 49% decline in imports from 2017 to 2019. They expired in February 2023, after which washer prices decreased.

Re: American importers and consumers bear the cost of 2025 tariffs: analysis

#60

Post by Trasmatta »

shevy-java wrote: post #26

I actually think Trump is going to lose big soon. One turning point was the death of Renee Good. Past this point the ICE stormtroopers may kill anyone else too, no matter who that is - just step in front of a car and shoot when the car moves. For serious penalty, all those TechBro cronies need to have all assets seized. They are imcompatible with democracy.

I do think Trump and the rest of his cronies have way overplayed their hand. They've been ruling like they have 60% public support, when it's nowhere close to that. A lot more damage is still to come, but the pendulum is swinging back. That's why Trump is so scared of the midterms.
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