Posted on 10/09/2019 5:36:36 AM PDT by BeauBo
The greatest share of the tariff burden falls not on American consumers or firms, but on Chinese exporters... a 25 percentage point increase in tariffs raises US consumer prices on all affected Chinese products by only 4.5% on average, while the producer price of Chinese firms declines by 20.5%. The US government has strategically levied import duties on goods with high import elasticities, which transfers a great share of the tariff burden on to Chinese exporters.
(Excerpt) Read more at econpol.eu ...
They presented a theoretical basis for why China would bear the brunt of the costs, and it has played out as they predicted. The bottom line is price elasticity - which depends on whether the buyer or the seller needs the sale more (but mostly on the buyer).
When the buyer really needs what they are buying, they will pay more if they have to - price is elastic.
This paper argued that the Trump Administration optimally selected the first $250 billion of products for tariffs, that were the most inelastic to price changes - so Chinese manufacturers would have to mostly (over 80%) absorb the cost. It has since worked out that way in practice.
According to their analysis, the tariffs on the rest of Chinese imports (more finished consumer goods), just starting to roll out, will increase consumer prices in the USA a bit more than the earlier ones (about a 6% rise, just on those tariffed products), but that China will still be paying the lion's share of those tariffs. Ultimately, the stuff we buy from China, is not really stuff that we absolutely have to buy from them, so we are just not willing to pay pay much more to buy it from them, vs. another producer.
So the net result is a significant overall benefit to the USA, just on the transaction. The longer term benefits of securing our supply chain, stimulating domestic production and starving aggressive communists of resources; are likely priceless.
I was talking to some liberals about this last week. I told them that I expect to be impacted because I buy most of my stuff from Amazon. I told them that I expect some products to become more expensive, and others to simply disappear. and I’m willing to pay that price.
I’ve already seen the effects. I was actually going to buy a Harbor Freight nail gun, until I discovered that an American made tool at Home Depot was the same price.
I am really curious, what did they say?
Donald Trump really took this issue from Democrats. I am curious if they agree with you, or whether “if Donald Trump is for it, I’m against it” works on this issue as well.
When Trump is done with 'em, the Forbidden City will be down to the Twobidden City. /rimshot
Layers of strategy - all pushing to Make American Great Again... absolutely brilliant...
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