It’s true on its surface - most people don’t know about economics, across all political spectrums, and so rely on leaders (which I thought is what liberalism advocates for?).
It’s not a helpful model if you want to understand what’s going on. So then the interesting parts to explore are the reasons they want to believe it, and the reasons given by the educated economists who also support the position
> 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 the exporters (other countries) pay the tariff?
edit: in the context of giving good economic advice.
Funny how the in-depth analysis of motivations is strictly in one direction, ratcheting the Overton window forever rightward.
On one hand we had mountains of articles about "economic anxiety" & "The MAGA next door" in 2016. On the flip side is "Fuck your feelings" and never a "humanizing, fish out of water" longform article about the life of a Democratic Socialist in a small Texas town after Biden 2020.
I’m not telling you it’s a moral obligation to understand. It’s in your interest.
Explain. Hopefully with details on how that tactic was utilized by the most politically effective group in the US in the past 50 years - the Heritage Foundation.
They deliberately disinformed the public, there is blatant evidence that the news anchors were aware that they were lying. Not just bending facts a little or opining, but knowingly and purposefully lying.
The pretext of freedom of expression, and more narrowly freedom of press should not *continue* to apply to businesses/individuals which are found liable/guilty of such destructive behavior for the society they operate in.
The same should apply to people like Alex Jones, you had your chance to use freedom and you have wasted it, move on to another profession.
I still believe the SCOTUS is trying to uphold the principles in the Constitution, for now. And there are already limits on what on can say in public, yelling fire in a theater when there's no fire is not far from what FOX is doing. Lying at this scale to cause panic based on such lies has demonstrable deleterious effects on society. The effect is delayed due to the scale of the target groups, but the principle is the same and courts/juries are able to observe this when it happens.
His argument was in defense of the process to uncover truth.
Given that Fox has clearly said they cannot be taken seriously, and that they were from inception created to muddy the waters and wage war for political gain, they are an enemy to the process that was envisioned back in that era.
If someone is demonstrably selling false goods, and multiple sources have evidenced this, as has a court of law, should that all be dismissed because every single individual in America has not taken the time to look at the evidence?
At some point you abdicate roles and responsibilities to others, so that they can do the job of ensuring that a fair debate takes place.
Republicans on court are very clearly pusuing agenda that has nothing to do with that.
The upcoming decision about tariffs might flip me completely on this issue, I see zero legal reason for global tariffs to be within the power of any individual, including the President. If the Court presents any argument in favor of them, I don't think I will consider it legitimate anymore.
I believe that admission was because ending the trial and eating the judgement, was less damaging than allowing the light of discovery and trial ingress into their workings.
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.
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 (say, Walmart) may pass the cost to customers or whatever, but tariffs are entirely inconsequential and irrelevant to foreign exporters. There's no way to send a bill to a foreign entity demanding a tax for some goods that have arrived at a port, after all.
Well that’s not true. Otherwise you are going to have to explain why so many outside the USA were upset with tariffs, and why there were retaliatory ones applied on the inverse.
I make no other claim that your quoted assertion is wrong.
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.
It's no different than, say, the state of Oklahoma deciding to increase taxes on new vehicle sales by 10%, and playing it as "we're going to make Toyota pay more to sell vehicles here!" Toyota isn't paying anything, is unlikely to change its global pricelists in response, and won't really care... because it's a state charging its own citizens more tax, nothing more. Just like these tariffs were a country charging its own importers more "tax" to punish them for buying abroad.
I'll use your example. Your argument is that when Toyota sells fewer cars as a result of a new tax increasing the landed cost of their products, that they aren't being made worse off? Sure Toyota isn't literally cutting the check to the state, but unless they are selling a product that is perfectly inelastic (they aren't, no such product exists in the real world), they will have less revenue, ceteris paribus.
I get that the suppliers aren't literally paying for the tariffs via transferring dollars to the US CBP.
I am saying that reduced demand and sales for a product as a result of a higher cost is an actual realized loss for the producer caused by the tariff. The producers are paying an economic cost for the tariffs by either reduced volume or reduced margin. My citation is the article you are commenting on.
This is a well known, demonstrable and universally accepted concept in economics you are trying to argue against. It is called tax incidence, and it very intentionally discards who pays the tax directly, and concentrates on the respective proportions of consumer and producer surplus that are claimed by the increased tax.
This is literally what the paper this post is linked to is about; what proportion of the economic cost of the tax is borne by the seller and what portion is borne by the buyer. Go get
I mean, just to be clear, I think the tariffs are a bad plan. But targeted vs broad seems more like an implementation detail… the big picture plan is the bad part!
One big problem with arguing about this is that it will take many years for the effects of the tariffs to settle. If there’s new opportunity for local competition of goods that we’ve been importing, new companies can’t form and meet that demand over night, it will take longer than the president has to see that succeed, which certainly hasn’t stopped him from claiming it already has.
Tariffs rates by this administration are capricious and punitive, not targeted and strategic.
This isn’t the first time tariffs have been used in a country to push purchasing preferences. The problem is that it hurts them and it hurts us, it’s just a net economic drain and doesn’t effectively achieve the local economic boost that some want it to, especially in today’s global economy where trade has become so integral that we no longer produce many of the products we buy, and therefore tariffs can’t fix. “There is near unanimous consensus among economists that tariffs are self-defeating” https://en.wikipedia.org/wiki/Tariff
The only fruit of this is real economic pain for the American consumer. But that was likely the goal, so mission accomplished I guess.
Countries geographically closer to the USA might reason differently because close countries usually trade more and they have more to lose. But even in this case, if a Mexican or Canadian company can find other markets or discovers that it can keep selling at the same price, they will not bear any of the burden of the tariffs.
Russian like sanctions were applied to Italy about 100 years ago because of colonial wars in Africa. Despite the sanctions lasted only 6 months, Italy discovered that they ended up trading less with the usual partners and more with others. Tariffs are somewhat similar to sanctions as they apply friction to trading.
I wonder what supply and demand curves look like if you keep telling people that the increased costs will be paid by foreigners and not them?
I assume it has an impact eventually but it must dampen the speed of response if people believe that.
Isn't the only thing that could matter - apart from strategic considerations of financing a loss for a time - if the margins are big enough? Who wants to pay for people to take their products below the full cost of making them, apart from some investor-financed hype startups?
I wrote
> Isn't the only thing that could matter ... if the margins are big enough
2) No, the standard price elasticity of demand curve does not directly include profits. It primarily models the relationship between price and quantity demanded.
Supply curve??? The OP wrote "This is confirming demand is more inelastic"
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.
Such protectionist practices were used by China to bootstrap their own automobile industry, before they became competitive in the global market. Of course, China had surplus capacity of untapped cheap labor, which America does not.
Barring an evolution in automated manufacturing, or an overhaul of regulatory policy, I'm pessimistic it's possible to accomplish the same in the US. But, in principle, tariffs have a valid place in supporting an emerging local industry.
First you subsidize and support the creation of currently not commercially viable chip fabs on-shore. Literally handing companies money under some obligation into the future.
Eventually the on-shore chips are produced, but they have higher total cost of ownership for the users: Logistics may be cheaper due to less distance, or more expensive because they are not well-trodden paths yet. Production costs like labor, water, energy could be higher. And the chips could just have higher failure rate, because problems in the new processes need to be kinked out.
But to get local consumers to switch to these switches, one applies tariffs to other sources of chips so the on-shore chips become more competitive artificially, until they become actually cheaper and competitive.
The way it is threatened here isn't in the use case of tariffs at all from my limited understanding.
I'm mostly responding to the position that tariffs have no place in economic policy, when we've seen them used successfully in other countries. Should Congress pass a bill legislating tariffs, then I could see them having more of the desired effect, though as I said I'd still be pessimistic without broader changes.
It was genuinely shocking how many people from the latter group just could not understand the absolute basics of supply curves and demand curves.
The upside is that I was able to help them understand it by offering tutoring, where I was in limited supply, and there was endless demand for my services!
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.
The US is actually pretty illiterate compared to peer countries.
Even as a kid I was confused. Where else is the money going to come from?
There are circumstances where much of the burden of increased costs is borne by the producer. When demand is very elastic (consumers are price sensitive, or there are many good substitutes), and supply is inelastic (its hard to change the level of output), the suppliers will eat the cost.
Which would be a nice balance to the way productivity has rocketed since the late 70s, and has mostly flowed to the top 1%.
Ultimately - and predictably - wealth hoarding becomes economic self-harm. You need distributed prosperity if you want diverse growth and economic and social stability.
Out of that price: $3 goes to production cost, $3 goes to tariffs, and $4 goes to profits.
Now the taxes/tariffs are doubled. The producer can up their price to $13, meaning $3 to production, $6 to tariffs and $4 to profit.
But customers might not accept any price higher than $10. They won't buy.
So instead you continue selling for $10 and your costs are: $3 for production, $6 for tariffs and $1 in profit.
That's what people mean when they say that companies are paying the tariffs. They're not profiting as much as before.
In practice it's usually a mix of higher consumer prices, lower company profits, or even some products not being imported anymore.
Doesn't really work when main reason for product existence on market is either "no equivalent" or "this particular subgroup is only imported" (say given specifically tasting cheese).
> "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 dial it back up to 4% (where we're currently at). but, 4% likely isn't a hard ceiling, either. Of course, the 4% number is an aggregate, not the blanket value across indidual goods (or services).
finally, the effect of tariffs is argued to be wealth transfer to the US Treasury. this is worth thinking harder about. but also, exports may change from whom goods are purchased. thus, it's a diplomatic policy, as well.
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.
> Isn't this literally economics 101? How did we ever even end up imagining that tariffs are somehow paid by the exporter??
My response was that it's not binary, but a mixed case. And, furthermore, from the perspective of an individual exporter, their export profile may change if goods and services are purchased from a different exporter.
E.g. if the same good may be cheaper without a 25% tariff, then you'd expect the incentive to pay less to have some effect.
The US Treasury would still get money, but the exporting country might change.
It's a national sales tax really.
It's constantly disappointing how the apparent intellectuals who frequent and operate HN will rally to that side out of libertarian convenience and out of annoyance and disgust at "wokism". And then will inevitably be shocked when everything goes sideways again. Hopefully the education will stick longer this time than it did after G.W.Bush.
[1] https://en.wikipedia.org/wiki/Reality-based_community
[2] https://en.wikipedia.org/wiki/Alternative_facts
[3] https://www.npr.org/2020/09/29/917747123/you-literally-cant-...
[4] https://mashable.com/article/alex-jones-defense-performance-...