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this post was submitted on 17 Mar 2025
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Leopards Ate My Face
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Even if it were a tax paid by foreign companies, what difference does it make? They would just increase the prices the goods are sold at.
So, lets say, a smartphone that is priced at $1000:
With the 20% tariff in place:
If the Chinese conpanies pay the $200 per device, they just sell each phone at $1200 to the US importer.
If the US importers pay the $200 per device, similarily, they would tack on the $200 (on top of the usual markups), making it $1200 per phone.
There is zero difference, the end consumer always foots the bill.
This is so simple to understand, how are people this stupid
The difference is that this way it's much easier to calculate prices.
If the tax were 20%, the exporter would have to do the inverse calculation. That is, "which price will result in me gaining $1000?" Which is not 1200, since 20% of 1200 is 240. x = 0.8y -> y = (1/0.8)*x -> y = 1.25x. so the exporter would have to price it at 1.25x the price, $1250. 20% of 1250 is 250.
So it's unintuitive that a 20% tax would result in a 25% price increase. That's my guess why tariffs are applied to the importer instead of exporter.