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.
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
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
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:
found the economics student
Or the consumer can’t/won’t take on the extra burden of cost, and the business loses enough sales to go under.
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