[Kenswing]

Originally Posted by ColdNoMore

What I find incredulous, are the number of people (including those at the very top) who seem to be clueless... as to how tariff's actually work.

If an American importer buys widgets from China at $1 each, but then a tariff of 25% is put on them...it now costs the AMERICAN IMPORTER $1.25 for each widget.

NOT China.

Now the importer has to make one of the following decisions.

1. Eat the increase and sell widgets at the normal price...with the associated reduction in "profit" (selling price minus purchased price, plus overhead of course)
2. Increase widget price a little, to recoup SOME of the tariff they've paid to the U.S. government...while their business absorbs the rest.
3. Pass on all of the cost to American consumers.

Please note that NONE of the importer's choices, has China paying anything...to the U.S. Government.

NOTHING.

In choice #2 & #3, it is the U.S. consumer paying for at least part of the tariff.

Why do so many...not understand this?

It's easy to understand. The costs are always passed on to the consumer. But that's the real goal. To make Chinese products more expensive for the consumer so they'll try to source their products elsewhere.

To say China pays nothing is not really true. They will pay in lost sales if people can find their products from someone else cheaper. Whether we can actually find our products elsewhere is the catch right now. But even if the manufacturing doesn't come back to the U.S., Vietnam, Malaysia, Singapore, et al, are more than happy to step into the marketplace. If we add enough cost to Chinese manufactured goods to make the other countries competitive production will shift.