No. of Recommendations: 7
So if Apple wants to continue to sell the same number of iPhones under the new tariffs as before, it can't simply jack up the price by 60%.
But I never claimed that. I claimed that the price was inelastic, not perfectly inelastic. Apple won't have to split the tariff 50/50 with the American consumer, it will be able to pass more than half of it along. It will eat a bit of the tariff, and it will sell somewhat fewer units. If you want to move on to 2nd order affects, Android phones will be similarly affected. But because they are generally lower priced to begin with, there will be some shift from Apple to Android phones. That will increase demand for Android phones, allowing those makers to pass a bit more of the tariff along to end users than microecon might otherwise suggest.
And that's still inflationary to the US consumer.
We don't need to nail down the exact effects to know that broad tariffs across the board will increase consumer prices. Some will be affected more (the products like cell phones with steeper, less elastic, demand curves) some will be affected less (products with more elastic demand curves). But ALL will be affected in some way, causing inflation.
We're getting buried in the weeds here and missing that bigger picture.
--Peter
