They're the same idiots who lose their shit whenever a minimum-wage increase is proposed because "it'll get passed onto the consumer", but with tariffs, they think businesses will just happily eat the loss. Just like how they think corporations will trickle down any extra money they can get. They just change their stance based on what FOX News tells them. No thinking involved, no thinking wanted.
That is the biggest thing I dont get about it. Even if you dont fully understand tariffs, and think that it is someone else in the chain having to pay the tariffs. Do they just think they will sell stuff for less profit or even a loss.
I get that. But even if it worked as they think, the outcome is the same. Whether it's the importer, the manufacturer or the Chinese government, the extra money is, ultimately, baked into the retail price.
Now I'm curious. Let's say there existed a mechanism by which the U.S. Treasury would be remitted tariffs by the Chinese government. How would that be passed onto the consumer?
Temu has an item that costs $100 to manufacture and ship to the U.S., which tariffs it at 54% (about where we are) and the Treasury bills the Chinese government for $54 in tariffs. My assumption is that the Chinese government is not going to simply start cutting checks for tariffs it paid; they're going to go after exporters to recoup them.
Temu needs to get at least $100 out of the sold item to cover its manufacturing and shipping costs plus $54 more to reimburse the government. That money doesn't come out of thin air, so they raise the retail price of the item enough that they get their $100 and the government gets the $54 they're owed. There is a vicious circle in that, because raising the retail price to $154 would result in $83 in tariffs instead of $54. Lather, rinse repeat. This is why importers usually get hit with tariffs instead of exporters.
My assumption is that the Chinese government is not going to simply start cutting checks for tariffs it paid; they're going to go after exporters to recoup them.
That's an assumption. But there is a fundamental difference here: If you apply a new tax to a private entity, it can only absorb so much before it is no longer profitable and must go out of business. That is why taxes are, at least in part, passed on to the consumer. This would not apply if the "tax" was an intergovernmental transfer.
In any case, it's very much a hypothetical discussion as the U.S. government obviously has no such authority.
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u/Blrfl 23h ago
Even if it did work that way, the manufacturer isn't just going to eat the cost of the tariffs. They'll still be passed along to the end consumer.