No. of Recommendations: 8
Now, Trump has long insisted that tariffs punish other countries. He once said, “We tax China.” No, Sir. You tax Americans. You slap a 25% tariff on imported goods, and what do you think happens? The companies don’t eat that cost out of patriotism. They pass it on to the store. The store passes it on to you. So congratulations, MAGA faithful: you’re now the proud owners of the Trump tax—and you didn’t even get a commemorative coin.
Again, this depends entirely on the relative price elasticities of the goods and the incidence of the tax.
There are at least four parties who can pay some portion of the tax (or all of it):
1) The foreign producer of the goods;
2) The importer who brings in the goods;
3) The retailer who sells the goods;
4) The customer who buys the goods.
The most likely outcome is that each of these four parties will pay at least some portion of the tax. IOW, for most goods, it's exceptionally unlikely that the incidence of the tax to any given group is zero.
How much is paid by which group is an empirical question, and might vary considerably from product to product (and region to region). For goods where the consumer is very price-sensitive, much of the tax might be borne by folks other than the end-user; for necessities or other products where consumers are very price inelastic, they'll bear more of the cost.
