Post #50412 by ptheland on the US Policy board

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How does the foreign producer pay the tax?

To add a bit of detail to albaby's reply, the foreign producer "pays" a part of the tax by being forced to accept a lower price for their goods due to the tax. How much lower depends on the elasticities of supply and demand. When there is a tariff, the buyer always pays more per unit and the producer always gets less per unit (barring some edge cases where either supply or demand are essentially fixed), with the difference being the tariff. Moving into the real world, the importer and shipper might similarly be forced to accept a lower fee for their services because of the tariff. So the actual cost of the tariff can get split up among several parties.

--Peter

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