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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

#511

Post by lcnPylGDnU4H9OF »

groundzeros2015 wrote: post #491
lcnPylGDnU4H9OF wrote: post #409

Earlier quoted context omitted.

Let's keep in mind that a tariff is, by definition, a tax that is paid by an importer to their own government for importing some good. > the educated economists who also support the position > the tariffs are something other countries are paying the US I'm quite sure the provided definition of a tariff is accurate. Given that, who are these economists and what are the reasons they give for supporting this belief that…

Is your position that nobody educated in economics would ever support a tariff? edit: in the context of giving good economic advice.

My position is that nobody educated in economics would believe that a tariff is something exporters from other countries pay the government of the importer's country.

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

#512

Post by dghlsakjg »

parliament32 wrote: post #206
dghlsakjg wrote: post #52

Earlier quoted context omitted.

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…

> pass most of the tariff cost to consumers What do you mean by "pass the cost"? Exporters do not pay tariffs, importers do. The exporter doesn't give a shit because it doesn't affect them at all. This is one of the most fundamental misunderstandings of how tariffs work in the first place. The entity that's picking up the cargo at the port is who literally has to pay CBP for them to release the goods. The middleman (…

It relies on understanding that the person paying the bill for the tariff is not necessarily the person that takes the economic hit. If you read the second half of the sentence you quoted it hints at that. The exporter does "give a shit", because all other things being equal, the net cost of the product has gone up, which will reduce demand (and therefore sales at a given price point) in any market that has the slightest bit of elasticity, which is just about every market.

Simplified: a seller can lower their price by the amount of the tariff. The buyer is responsible for paying the tariff bill, but the seller is the one eating the cost at the end of the day, it is "passed" to the seller.

Alternatively, the seller can refuse to budge on price. The seller makes the same amount per unit, and the buyer gets the privilege of paying the tariff while not receiving any sort of break on the price. The entire cost of the tariff is "passed" to the buyer.

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

#513

Post by yardie »

bee_rider wrote: post #463
cael450 wrote: post #358

Earlier quoted context omitted.

I have spent my whole life intimately involved with southern Republicans. They will never ever not vote Republican, let alone vote Democrat. It is an identity marker. It doesn’t even really matter what the policies are. They’ll complain for a while, but they will always internalize a Republican policy shift no matter what it is. They used to treat “free market economics” as a religion just 10 years ago. Secondarily,…

I don’t really know how we’d get there, but the US would be better structured as an EU of regions, IMO. The states are too small, but we’ve got regions with definite noticeable cultural differences (Northeast vs Southeast, etc etc). These areas have more similar values than the country as a whole, and are big enough to handle 99% of their issues. Like, we should not have done the ACA, just merged all the various alre…

The EU is moving in the opposite direction and trying to become more cohesive. The politicians and technocrats see the Euro as hamstrung with weak fiscal policies.

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

#514

Post by WillPostForFood »

rorylawless wrote: post #278
WillPostForFood wrote: post #236

Earlier quoted context omitted.

to the surprise of absolutely no-one with even the most basic grasp of how economies function. No, it is surprising, as noted in the article, because basic economics suggests that suppliers will adjust pricing, and eat some of the tariff to keep their products competitive. Page 5: This finding was initially surprising to some observers. Standard economic models suggest that the incidence of a tariff depends on the re…

Yes, however the next paragraph outlines why it wasn’t surprising to other observers. Summarized, low competition and structural constraints.

Yes, so turns out people with a basic grasp of how economies function can have different models of how things work. This a great paper, and important in that it shows who is paying the tariffs in the examples they looked at. What it still leaves unaddressed is the obvious prediction of increase in CPI not really showing up.

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

#515

Post by mikepurvis »

notahacker wrote: post #339
mikepurvis wrote: post #264

Earlier quoted context omitted.

But a monarchy/autocracy hardly guarantees you success either. Isn't this Bill Gates and charter schools all over again? Basically, the boring solution (democracy) gets you boring, middle-of-the-road results, while a monarchy is more likely to get you an outlier. The outlier might be at the top or the bottom of the pack, but because it's not democracy any more you don't have any say, so tough toenails if it's the wro…

There's no connection with monarchy at all - the only absolute monarchy is Qatar and we know their money comes from a lot of oil per capita. The other countries all have legislatures involving multiparty democracy with or without quirks/flaws (Switzerland has referenda, the microstates still give their constitutional monarch significant executive powers, Singapore's major party has completely dominated since the 1960…

I agree that the top of the list is clearly small-population edge cases, but one could also make an argument that strong, consistent economic leadership yields more coordination and reduces waste and thrash in the market (boom/bust cycles, etc).

All of it still comes down to the competency of that leadership though.

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

#516

Post by dfee »

stavros wrote: post #95
dfee wrote: post #17

Americans will rightly be suspicious when a think tank in Germany writes about tariff relief that benefits them. Of course, we should all be critical always – that's the first word in the term "critical thinking".

I find this comment suspicious, and rightly so: We should be critical of it.

You should! Think critically about everything, friend!

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

#517

Post by aeternum »

square_usual wrote: post #295
aeternum wrote: post #181

Earlier quoted context omitted.

So do buyers also pay for 96% of the advertising, 96% of the manufacturing, etc.?

Yes, actually? It's baked into the pricing?

Sam Walton would argue for taking it from margin and making it up with volume.

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

#518

Post by nikitaga »

lovlar wrote: post #323
bartread wrote: post #56

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 cur…

One of the main reasons we end up with populist leaders who make decisions not in the interest of their population, but in service of their own pursuit of power, is social media and the attention economy. If people stopped spending hours each day scrolling through Instagram, TikTok, and Facebook feeds, media incentives would change. Journalism would become more thorough and responsible, rather than optimized for outr…

The main reason for populism is that the incumbent governments do a consistently poor job satisfying their constituents' preferences and interests, so people get desperate to find something / someone different that might work better. Always has been, always will be, social media or not.

Example: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4230288

We haven't invented a governance structure yet that would be immune to this, although some are better than others. I'm sure the current social media algorithms are harmful as well. You can ban viral algorithms, but the hostile actors whose literal job it is to drive polarization / populism will just find other strategies to effectively deliver their message.

"Education" is nice and all, but millions of people keep smoking despite the obvious harm and decades of education, not to mention the many limitations, taxes, and bans. I mention smoking as an obviously-bad-thing that everyone knows is bad. Education succeeded, and yet, here we are, still puffing poison. But you can also look already-polarized political topics. There's been no shortage of education on those topics either, but if that worked well enough, we wouldn't be decrying populism right now.

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

#519

Post by UncleMeat »

kryogen1c wrote: post #168

Almost all the comments acting like this is some truth bombshell, like people in trumpistan all thought raising tariffs magically made the us economy better. This is a straw man, no? Tariffs are a mid-long term strategy to encourage onshoring business, for reasons including military, national security, and political influence on foreign powers. This is a complicated topic involving the global economy and evolving int…

My aunt is a republican lobbyist. She is also a drunk. This means that she gets drunk and texts my family her unfiltered thoughts all the time.

She absolutely thinks that tariffs magically make the US economy better in a very short time period. She thinks that the governments of the countries that she hates are paying them and that the tariffs are solving the deficit problem. She thinks that the number of manufacturing jobs in the US has skyrocketed.

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

#520

Post by SailorJerry »

rorylawless wrote: post #278
WillPostForFood wrote: post #236

Earlier quoted context omitted.

to the surprise of absolutely no-one with even the most basic grasp of how economies function. No, it is surprising, as noted in the article, because basic economics suggests that suppliers will adjust pricing, and eat some of the tariff to keep their products competitive. Page 5: This finding was initially surprising to some observers. Standard economic models suggest that the incidence of a tariff depends on the re…

Yes, however the next paragraph outlines why it wasn’t surprising to other observers. Summarized, low competition and structural constraints.

Yes, the next paragraph explains why the surprised economists were wrong. I agree with the GP though that the GGP was too quick to say

> to the surprise of absolutely no-one with even the most basic grasp of how economies function.

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