Americans Are the Ones Paying for Tariffs, Study Finds
wsj.comOf course... who did you think would pay?
> who did you think would pay?
The general premise of tariffs is that a foreign product costs e.g. $100 whereas a domestic product costs $120. If you then put a 50% tariff on the foreign product, it would cost $150, and then people would prefer the domestic product and only be paying 20% instead of 50%. Moreover, they might prefer the domestic product in general (e.g. higher quality and/or patriotism) and only buy the foreign product if it's actually less expensive, and then the foreign manufacturer would have to lower their price from $100 to $70 so that the tariff only raises the price to $105 because any higher price than that and they lose the business.
The result, in theory, is that you would pay $5 more rather than $50 more. Meanwhile the government collected $35 in tariffs on the foreign product, $30 of which came from the manufacturer rather than you, and that allows the government to lower your other taxes by $35 at the same level of government spending and borrowing.
There are essentially two things required for this to work in your favor on net: 1) the tariffs cause the foreign manufacturer to lower their pre-tariff prices at all, and 2) the government uses the tariff revenue instead of some other taxes they would have collected directly or indirectly from you, so that your net tax burden stays the same. It can also be some mix of these, e.g. the foreign manufacturer lowers their price by $10, you pay $15 in tariffs and get a $10 reduction in other taxes, and then you're ahead by $5.
Ironically, the primary way domestic taxpayers end up paying more is if the tariffs succeed in causing people to buy domestic products, because then there is no tariff revenue on the domestic products and people pay the higher price for the domestic products without a reduction in other taxes.
There's a third requirement which you've glossed over somewhat: a domestic manufacturer of that product needs to exist. For many of the products which are currently the subject of US tariffs, domestic manufacturing is nonexistent, or is itself impacted by tariffs on imported materials.
> a domestic manufacturer of that product needs to exist.
It doesn't have to currently exist. If the tariff causes it to cost less to make it domestically to avoid the tariff then companies start making the product domestically, which is kind of the point.
That doesn't really work in situations where the industrial base doesn't exist for local manufacturing, and where building that would be likely to take much longer than the tariff will be in place (to say nothing of the costs).
The example I used in a sibling reply - LCD manufacturing - is a perfect example. Existing companies can't simply start producing those on a moment's notice - building the necessary facilities would take years, and would likely require a $1B+ investment. It's extremely hard to justify that when it's likely that the tariff situation would change before production even started, let alone before the costs were recovered.
> That doesn't really work in situations where the industrial base doesn't exist for local manufacturing, and where building that would be likely to take much longer than the tariff will be in place (to say nothing of the costs).
a) There isn't actually a time limit on how long you can impose the tariffs. Nothing is preventing the next administration from continuing them if that's what's necessary to make it happen.
b) What about all the things where domestic production can be spun up more quickly?
> Existing companies can't simply start producing those on a moment's notice - building the necessary facilities would take years, and would likely require a $1B+ investment.
Apple by itself has a hundred times more cash than that sloshing around, to say nothing of the rest of the industry.
> It's extremely hard to justify that when it's likely that the tariff situation would change before production even started, let alone before the costs were recovered.
A lot of this is just sensible hedging. If building a domestic factory would require a price of $120 to have a sensible risk-adjusted return and China is selling for $100, you don't do it. But that's the sale price, not the unit cost. The unit cost might only be $50, you just need $120 to cover the initial investment and a competitive return.
If tariffs increase the sale price to $150, now it's profitable to build the domestic factory. Then if the tariffs continue you make a lot of money. If they go way, well, now you're selling something it costs you $50 to produce for $100 instead of $150 and it takes you longer to earn back your investment capital. That's not as profitable, but it's not like you're out of business. Which makes it a sensible bet to do it -- if the tariffs continue then you make out like a bandit and if they don't, your returns are only slightly below market instead of being well above, which isn't actually that much downside risk.
in a globalized world might I add there is no such thing as a product only created in one country.
I don't know about "only created in one country", but there are certainly products which are only made in a few countries. One example is LCD and OLED panels - virtually all are made in China, Taiwan, and South Korea. As far as I'm aware, there is no large-scale fabrication of these parts in the Americas or Europe.
Good luck creating Bordeaux outside of France.
> whereas a domestic product costs
There is hardly anything that is made domestically in the US. So the premise falls apart almost immediately. This premise works great for India where domestic production exceeds exports by massive margins and the economy depends mostly on domestic economy. It does not work for US where there is hardly any domestic production and is totally import driven economy.
The US has the second largest manufacturing base in the world after China. It's larger than India and is even slightly larger than the EU. It used to be the largest. Moreover, if the premise is that you're trying to bring back manufacturing capacity, it doesn't matter if something is currently made in the US, what matters is what it would cost if it was, because a tariff in excess of the difference would then make that cost effective.
Obviously in the latter case you would then have to wait until that manufacturing capacity comes back online, but "customers switch to a domestic product" isn't the only thing that can cause foreign manufacturers to have to lower prices. They could also switch to substitute products or reduce consumption and then foreign manufacturers would still have to lower prices to limit the extent to which that happens.
> The US has the second largest manufacturing base in the world after China. It's larger than India and is even slightly larger than the EU.
Of only end products. The "largest manufacturing base" is misleading when majority of inputs for your finished goods are dependent on imports.
> it doesn't matter if something is currently made in the US
It definitely does matter. The right way to have gone about this was to first build the manufacturing capacity in US before imposition of tariffs. It was done in the reverse, which led to US revealing its hand too early, allowing for rest of the World to re-calibrate and start the process of de-dollarization.
> foreign manufacturers to have to lower prices. They could also switch to substitute products or reduce consumption and then foreign manufacturers would still have to lower prices to limit the extent to which that happens.
It won't happen. There is no reason for exporters to lower prices when tariffs only set a new normal. Once the prices have gone up and consumer spending has stabilized around those jacked up prices, that will set the benchmark. Just study history. No product has been devalued due to any contingent circumstances unless the product itself becomes obsolete. Here you are not talking about novel products being developed and manufactured that will obsolete something popular. You are talking about bringing back manufacturing of nuts, bolts etc. Things that are critical and have an already established price in the market that will only go up higher in price once manufacturing moves to US eventually. Rest of the World will adjust to the new higher price.
> Of only end products. The "largest manufacturing base" is misleading when majority of inputs for your finished goods are dependent on imports.
Isn't it easier to figure out how to manufacture screws given steel than to figure out how to manufacture airplanes given screws?
> The right way to have gone about this was to first build the manufacturing capacity in US before imposition of tariffs.
But what's the incentive to do that if there are no tariffs? You either need a reward for doing it (subsidies) or a penalty for not doing it (tariffs). But the US government is already running unsustainable deficits, so there is no money for subsidies unless you want to pay higher taxes or cut some other spending, and good luck convincing people to do either of those things.
> There is no reason for exporters to lower prices when tariffs only set a new normal.
If China charges $100 to manufacture something that the US would have to charge $120 to manufacture and then you put a >$20 tariff on it, China could keep charging the same prices, but that would make it cost effective to make it in the US. To prevent that from happening they would have to lower the price, and therefore have the incentive to.
Now suppose it would cost $200 to manufacture in the US and the tariff is 50%. Can China just keep the price where it is and make the customer pay $150? The customer has a finite amount of money, so if they did then the customer would buy a new phone every six years instead of every four years. Meanwhile the $1000 phone just became cost effective to manufacture domestically, because 50% of that is more than the $100 increase in manufacturing cost, so they lose that business too. What response to this do they have other than to lower prices?
China has a third of global manufacturing capacity (and have to run flat out to avoid deflation due to domestic consumption that will never grow to meet domestic production capacity). Only the unsophisticated could believe the US is going to increase domestic manufacturing capacity at the levels needed to make domestic sourcing superior in some manner. That’s why these tariffs are not grounded in reality.
In three years at the most, these tariffs are done. Cheaper to eat the premium in the short term versus suboptimally invest capital in long duration investments (ie local factories and equipment to fill them). Manufacturing jobs continue to decline, as they have since the election.
US factory headcount falling despite Trump's promised manufacturing boom - https://news.ycombinator.com/item?id=46638269 - January 2026
U.S. Among Top 3 Markets Manufacturers Are Leaving - https://www.manufacturing.net/supply-chain/news/22950252/us-... - September 16th, 2025
> China has a third of global manufacturing capacity (and have to run flat out to avoid deflation due to domestic consumption that will never grow to meet domestic production capacity).
This sounds like the case that they'd end up paying more of the tariffs, because they can neither reduce production nor absorb the output domestically, which leaves lowering prices to try to sustain the same volume.
> In three years at the most, these tariffs are done.
That's not happened the last time. Trump was out for four years and Biden kept a lot of the tariffs.
> Manufacturing jobs continue to decline, as they have since the election.
"Manufacturing jobs" are a talking point but were never really going to happen. The only way the US is actually going to compete is by increasing automation, which doesn't do much for "manufacturing jobs". But it does get the manufacturing into the same timezone as the people designing the products to prevent those jobs from going next, keep the knowhow of production active domestically, reduce dependence on China, etc.
> https://fred.stlouisfed.org/series/TLMFGCONS
This is a graph showing that construction spending on manufacturing in the US is more than double what it was a decade ago and trending only slightly down from the all-time high in the period trailing when the COVID money ran out and the Fed started to raise interest rates.
While in the abstract and academic sense this is true, in practice there are two big problems that make it an utter non-starter*:
1) Due to the absolutely massive supply chains that have been built up in East Asia (not just China, but many other countries around there), and lack of same in the US, even for products where it's physically possible to produce it all domestically, from the raw materials on up, it would take decades of sustained investment without return before actual consumer products could be made on anything other than a one-off basis. Any step that can't be done in-country gets the tariffs slapped on again. And there are a fair number of raw materials we just don't have, at least not in the kinds of amounts that, um, the entire rest of the world does, that are required for mass production.
2) Trump isn't applying tariffs in a strategic manner to get domestic manufacturing to come back. He's applying tariffs as his personal punishment stick, and to all appearances that's the best he's actually capable of doing with them. In order for any of what I described in #1 to happen, ever, the tariffs need to be applied consistently, predictably, and for a long time.
Trump doesn't want to do any of that. He's just found a magic stick that makes people kowtow to him, and he's going to use it however he pleases.
* Not that I think you're unaware of these, based on your post; to a large extent I'm just expanding upon your second paragraph here.
> it would take decades of sustained investment without return before actual consumer products could be made on anything other than a one-off basis.
That's true of some products, not all of them, or even a majority. And even for those products, well, if it's going to take a long time then we better get started.
> And there are a fair number of raw materials we just don't have
This is again not the common case, and even then it's not necessarily the wrong solution. For example, China currently dominates the production of rare earths and the US doesn't have sufficient reserves, but Australia does, so higher tariffs on China than Australia create an incentive to move mining operations to Australia which breaks China's lock, and creates the incentive to invest in rare earth processing in the US, since then you're only paying the (lower) tariff on the (lower-priced) raw materials rather than the (higher-priced) refined product.
> Trump isn't applying tariffs in a strategic manner to get domestic manufacturing to come back.
This is more of a Trump problem than a tariff problem. If you do something wrongly enough it obviously doesn't work as well as it otherwise might.
> China currently dominates the production of rare earths and the US doesn't have sufficient reserves, but Australia does, so higher tariffs on China than Australia create an incentive to move mining operations to Australia which breaks China's lock
There are "sufficient reserves" (known rare earths in the ground) across the globe and the US absolutely has large reserves.
> to move mining operations to Australia which breaks China's lock
There are already mining operations in Australia delivering raw concentrates in bulk to China. Again, not a shortage of mining operations or a shortage of reserves in the ground.
It's the concentrate processing that China invested time and capital in decades past - every other country about the globe (save for Malaysia, to their regret) figured they'd leave the acres of acid ponds and low level radioactive waste to the Chinese.
Now the US wants Australia to take that on, and that's a deal with the devil for Oz while the current POTUS cannot be trusted to hold up any deal.
> There are "sufficient reserves" (known rare earths in the ground) across the globe and the US absolutely has large reserves.
The US isn't even in the top 5. China has 44MT, the US has 1.9MT. It's not zero but it's only ~2% of the world's reserves.
> Now the US wants Australia to take that on, and that's a deal with the devil for Oz while the current POTUS cannot be trusted to hold up any deal.
What deal? It's a valuable commodity. If you establish the capacity to produce it then you either sell it to the US or you sell it to someone else.
I think we all understand how tariffs are intended to work. The problem is that we also know from experience that this is not how they work in practice, and historically are associated with negative economic outcomes overall. The findings described in the article appear consistent with past negative experience.
One correction regarding the tax impact: since tariffs are a flat tax and not progressive, to the extent that they displace progressive income tax, the net tax burden on the average taxpayer would increase, not remain the same.
> The problem is that we also know from experience that this is not how they work in practice, and historically are associated with negative economic outcomes overall.
In general taxes are associated with negative economic outcomes overall, and tariffs are taxes. But displacing other taxes with them doesn't inherently bring a net cost.
> One correction regarding the tax impact: since tariffs are a flat tax and not progressive, to the extent that they displace progressive income tax, the net tax burden on the average taxpayer would increase, not remain the same.
The net tax burden on the average taxpayer would always be the same for any change which is revenue-neutral. Whether the median taxpayer would pay more or less depends on who is buying the things being imported and what the alternate tax system looks like. For example, if the middle class is paying ~20% in practice and the rich pay >30% on paper but <20% in practice, that isn't actually a progressive tax system as implemented. Likewise, if the tariffs are on e.g. phones, but the top quintile buy a $1000 phone every two years and the bottom quintile buy a $100 phone every five years, the tariffs are being imposed on something the rich buy 25 times as much of. Meanwhile things like food and shelter are largely produced domestically.
"The general premise of tariffs is that a foreign product costs e.g. $100 whereas a domestic product costs $120."
The analysis following seems to think that the tariff is placed upon the retail price of the goods as opposed to the production cost, which excludes marketing, final transportation, storage, r&d, domestic staff costs, profit, etc.
A more important aspect not mentioned is getting rid of the de minimis exemption that allowed people to ship stuff tariffs-- free into the US as long as they declared the value less than $750.
> The analysis following seems to think that the tariff is placed upon the retail price of the goods as opposed to the production cost, which excludes marketing, final transportation, storage, r&d, domestic staff costs, profit, etc.
No, it's just using the wholesale price of the product as imported as the basis for comparison. What happens to it after that is unrelated to the tariff and doesn't care whether you paid the same money for a foreign product + tariff or a higher priced domestic product without tariff.
But people don't buy at the wholesale price.
Your analogy could be:
Both products cost $300 at checkout.
What happens if you avoid conflating cost and price and also assume that pricing is vaguely competitive, rather than cartoonishly favorable to tariffs?
Assuming that pricing is vaguely competitive is conflating cost and price, since competition would cause margins to be thin. The general issue is that domestic production often has a higher cost, e.g. because domestic labor is more expensive, or because foreign production has already amortized some long-term fixed costs over past sales that a new domestic manufacturer would yet have to recover over future sales. It then needs a higher price, at least temporarily, in order to be competitive, which is what tariffs do.
Because Canadian government gives money to some industries to pay for tariffs. It's called Regional Tariff Response Initiative (RTRI).
Based on my (limited) understanding of RTRI, they have very specific items they fund and pretty low overall impact to the trade balance ($1M per org and $1B over 3 years program total across all industries). From [1]:
----------
Productivity improvement:
- investing in digitization, automation, or technology to enhance business productivity and competitiveness
- reshoring production, research & development (R&D) operations, recruiting highly qualified personnel (HQP) and expertise
Market expansion and diversification:
- developing and diversifying markets to help businesses find new customers
- business support, market development and diversification, and guidance services (e.g., advice for businesses from a sectoral expert organization)
Strengthening supply chains and trade resilience:
- optimizing supply chain logistics and ensuring compliance with standards to gain market access and/or enhance sales
- strengthening domestic supply chains and facilitating internal trade to increase the resilience of businesses and reliability of domestic markets
----------
This $1B program — even if it all went straight to subsidizing tariffs on Canadian imports — would be a pretty small rounding error out of the total $200B raised through tariffs from the article.
If anything, RTRI funds are largely about efficiency and pivoting to new markets. While there may be some outcomes that result in producers being able to lower their export costs, they're not "paying for" US tariffs.
Edit: formatting.
--
1: https://www.canada.ca/en/prairies-economic-development/servi...
But that still doesn't reduce the cost to US customers, it just means the Canadian businesses gets a subsidy to make up for reduced sales.
Mexico?
Exactly. This sounds more like an onion headline, lol
Why is this flagged? Why are things critical of this administration usually flagged? Moderation on HN is a joke.
Is HN really a place to criticize administration?
As for tariffs, SmarterEveryDay has proven that we need them with his smart grill scrubber that got destroyed by cheap Chinese copycats the moment it became popular.
I'm working on a smart air quality monitor, I don't want competition with the Chinese either.
> Is HN really a place to criticize administration?
Articles critical of economics policies aren't criticizing the administration, but the policies. Yes, economic policies are of interest to technology, and articles related to it are of interest to us.
Even ignoring the fact that an article critical of a policy isn't specifically critical of the administration, yes, HN is really a place to criticize any administration.
> I don't want competition with the Chinese either.
You also only want to be able to sell your goods in the US? Because the outcome of tariffs is retaliatory tariffs, which will considerably reduce your available market. No matter what you're going to have competition from China, and tariffs ensure markets outside of the US will be more dominated by them.
If your product can so easily be duplicated, and for cheaper, it's probably not a great product.
> If your product can so easily be duplicated, and for cheaper, it's probably not a great product.
Or maybe it is just a good simple product made in an environment with regulations and high living standards.
> in an environment with regulations and high living standards.
Is this a joke? The US has poor living standards for these types of workers. Minimum wage in low minimum wage states. Poor or no healthcare. Most are probably on government assistance programs. Tariffs hit these workers hardest as well, because they're the most likely to be laid off, and also the ones paying the largest percentage of their salaries for products affected by tariffs.
The factories in China cranking these things out also have poor conditions, but the reason they're making stuff so cheaply is because their factories are typically more advanced. You can get small batches made cheaply, which is nearly impossible in the US. This allows them to compete with even somewhat niche products.
Also, let's be a bit real here. Nearly every "American Made" product at some point offloads the production outside of the US, and there's plenty of companies in the US that make dupe products as well.
It’s not really anything to do with tech though, is it?
“This doesn’t belong here” is perfectly valid reaction to stuff covered on a million other sites.
It doesn't need to be tech. From the Guidelines section of HN:
On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity.
Off-Topic: Most stories about politics, or crime, or sports, or celebrities, unless they're evidence of some interesting new phenomenon. Videos of pratfalls or disasters, or cute animal pictures. If they'd cover it on TV news, it's probably off-topic.
Read your own post?
> Off-Topic: Most stories about politics > If they'd cover it on TV news, it's probably off-topic.
I shouldn’t be surprised when people flag such things.
Currently on the front page, and not flagged:
* California is free of drought for the first time in 25 years * Inside the secret world of Japanese snack bars * Danish pension fund divesting US Treasuries * Driver killed and several injured after second train derails near Barcelona * De-dollarization: Is the US dollar losing its dominance? (2025)
It's common to have things that are covered on TV news on the front page. It's more common for anything negative about Trump to be flagged, though.
It is a dupe
Unflag this. Tariffs are a tech story.
You really don't need ANY study to know the obvious thing that tariffs are taxes on imports. It is being paid by Americans from DAY 1. The only difference being American Companies were taking the brunt of it all and it is now obvious that they cannot keep swallowing it and will eventually pass it on to the American consumers.
It is crazy that so many in US STILL think tariffs are being paid for by exporting countries.
US is sabotaging itself and pushing in the same "New World Order" that the right-wing conspiracy nuts kept warning about but ironically have been instrumental in accelerating it themselves anyways.
Or maybe that was the design all along. To not go out in a whimper but with a big bang.
If I were the Democrats, I would do nothing and just let the US admin destroy whatever little credibility it has left on the World stage... thereby securing mid-terms and the next Presidential elections.
> If I were the Democrats, I would do nothing and just let the US admin destroy whatever little credibility it has left on the World stage... thereby securing mid-terms and the next Presidential elections.
Not a great idea. The US will have lost a lot of political goodwill by then. And given up a lot of geopolitical status and influence. The devices will be back in the saddle but have to resort to really unpopular measures to clean up the mess, basically guaranteeing a republican win afterwards.
And some credibility and influence will never recover. The rest of the world will remember there can always be another trump. And they will have switched to (and restarted) local industries. Once those are running there's no incentive to look at US ones again. And any geopolitical influence that was lost will already have been filled by other players who will entrench themselves.
> The US will have lost a lot of political goodwill by then
Not really. All Governments across the World have undergone similar crisis in their own Countries, in different points in time in their own history, and know well to differentiate an erratic Government from its populace. I bet no one has ill-will towards Americans (unless you are into terrorism) and so will obviously want to mend ways once a better admin is elected and put in place.
The issue really though is not about political goodwill. It is about business that gets moved elsewhere. Once moved, it is really hard to bring it back. So US will then have to make a lot of concessions when it comes to that. The reason rest of the World is upset with the new tariff regime is not because they are being affected by it monetarily (which they actually are not), but because they do not want to sever a well established system and go looking for new buyers/sellers. For example, China decided to stop buying soybeans from US (after Trump threatened tariffs) and switched to buying from Argentina. Now once a new US admin is in place, it will have to give a better deal for China to switch its already established supply chain with Argentina to US again. Inertia is a good thing in trade. Infact, I feel it is even more important than building a moat. People are willing to continue paying higher price (even if something cheap is available elsewhere) because they do not want to go through the hassle of moving away from already established supply-chains and renegotiate new deals.
> really unpopular measures to clean up the mess
Agreed.
> Once those are running there's no incentive to look at US ones again
They will if US comes with better deals. This is the "unpopular measures to clean up the mess" you were pointing to earlier. Right now there is a mismatch between what US is actually worth and what it is projecting. I am not saying it is not a superpower anymore. It still very much is. But it is failing to recognize the rise of great powers in the rest of the World. And is unable to reconcile with multi-polarity that has already arrived and exists. As long as US is in denial of this reality, it will continue to make mistakes.
> And any geopolitical influence that was lost will already have been filled by other players who will entrench themselves
I agree but I'll go further and argue that the Trump admin is behaving erratically because it has realized it has lost geopolitical influence and that other players have already entrenched themselves. Trump has diagnozed the problem correctly (that US has lost its hegemony in many areas) but has no expertise (or even experts around him) to advice him on the right course of action.
> Not really. All Governments across the World have undergone similar crisis in their own Countries, in different points in time in their own history, and know well to differentiate an erratic Government from its populace. I bet no one has ill-will towards Americans (unless you are into terrorism) and so will obviously want to mend ways once a better admin is elected and put in place.
The governments probably yes but what will be lost for much longer is the heart of the people. In Western europe we really idolised American society. Most movies in the cinema were (and still are) American. A lot of music is. There is a huge American influence on western European society.
However right now that idolisation has turned to irritation and eyerolling. I mean, if America was that great, how could it fall so quickly like that? And if Trump starts a war over Greenland that will turn worse pretty quickly. And those things take much longer to revert. Like they say, trust arrives on foot and leaves on horseback.
I remember when I was in Holland in the 80s, the Germans were still deeply detested for what they had done to us 40 years earlier. And any cultural German phenomenon was tainted by it. And with that buyin to German economic developments and products, political proposals etc. And their tourists "conquering" our beaches with their towels. And yes we did make exceptions for good Germans, just like we know there are good Americans too. But in general the feeling was pretty negative and it took a long time to mend. A government can strike a peace deal pretty quickly but people don't just turn around like that.
In the 90s that dislike for the Germans really started to turn and it's pretty much gone now but it remained for a very long time.
> They will if US comes with better deals. This is the "unpopular measures to clean up the mess" you were pointing to earlier. Right now there is a mismatch between what US is actually worth and what it is projecting. I am not saying it is not a superpower anymore. It still very much is. But it is failing to recognize the rise of great powers in the rest of the World. And is unable to reconcile with multi-polarity that has already arrived and exists. As long as US is in denial of this reality, it will continue to make mistakes.
The US still is a military superpower but it can't maintain that without the hearts of the people. Again look at Germany, they were by far the most powerful military nation in the world. Yet they were defeated because the rest of the world got sick of them and they had to go. The US even joined forces with China and Russia, as unlikely partners as they were even in those days.
The US' hegemony was a carefully constructed combination of military power, economic power (the petrodollar in particular) and cultural adoration. Two of those are already crumbling and it's using the military power to forcefully hold on to its position. That is not sustainable.
Some of the things Trump always complained about like the overwhelming majority of money for NATO coming from America, that was not just laxness from Europe, it was by design. America didn't want a too powerful Europe. They didn't want Europe to have its own nuclear umbrella. It bought influence. But you can't pull too hard on that. This is why you see that influence crumbling so fast.
> It is crazy that so many in US STILL think tariffs are being paid for by exporting countries.
They knew it was a lie then, and they know it's one now. A plurality of voters want what's happening currently, they're not crazy, it's just a mix of xenophobia, isolationism, and inbreeding.
The problem with that last is that if the Democrats do nothing, there's a very real chance that Trump deploys the military to either prevent the midterms from happening, or to force their outcome to be what he wants.
(Of course, if they do something there's still a chance he does that—they have to do the right thing and they have to do it well to reduce the chances by much!)
There's also that pesky matter of, y'know, their constituents. Who are getting bled dry by the stagflation that's happening.
> You really don't need ANY study to know the obvious thing that tariffs are taxes on imports. It is being paid by Americans from DAY 1. The only difference being American Companies were taking the brunt of it all and it is now obvious that they cannot keep swallowing it and will eventually pass it on to the American consumers.
I say they exact same thing to my liberal friends who endorse corporate tax increases, but they don't think it is obvious that companies will eventually pass it on to the American consumers.
Corporate tax or even personal income tax is not the same as tax on cost of the product itself. As a corporate, I can structure my expenses in such a way that I never pay tax irrespective of whether the tax rate is 10% or 50%. There are ways to do that (through deductions/expenses/investments in assets that can be depreciated and included as expenses etc) and even defer my earnings over a period of time. You have various ways to reduce final tax liability.
You cannot escape paying tariffs or sales tax as it is levied on the product you are purchasing. It is not a tax that is levied AFTER you have calculated your income.
Duh!
I am checking conservative echo chambers from time to time and find it ridiculous that they always find a positive spin on all the obvious grifting and destruction that is happening around them. we are witnessing the downfall of an empire with our own eyes and can do absolutely NOTHING
Best part is how "west" wants Russians public to revolt against tyranny while we boil like a frogs ... And do absolutely nothing.
I build homes and so am adjacent to many blue collar Trump fanatics, here's the thing I constantly hear;
> My tool for X used to cost $500 or $2000. The $500 was imported and good enough for me. I could never justify spending $2000 on the Made in USA version although it was very well built and I wanted it. Now, with tariffs, the import costs $1800, so it's easy for me to justify spending $2000 on the Made in USA option. Trump got me to buy American and support American manufacturing. Go MAGA!
It's strange how if the same economic condition existed due to a Biden (or any liberal presidents term) they surely would have been villainized for eliminating ANY lower cost option, increasing the cost of business (when tools cost more, everything they create costs more), and simply stealing food from people's families (as the $1500 extra he spent would have presumably remained in this contractor's profits in the pre-tariff reality not to long ago). It takes massive mental gymnastics to view this as beneficial and anything other than a direct tax on American consumers. The brain washing rhetoric of conservative media is an extremely powerful weapon.
is there really nothing to do?
"The Times 03/Jan/2009 Chancellor on brink of second bailout for banks."
[dupe] Discussion: https://news.ycombinator.com/item?id=46680212
You needed a study for that conclusion?
Are we getting income tax breaks then?
Far from getting a break, you guys are paying tax on tax. You indirectly pay for import taxes every time your companies import raw materials needed to finish their goods (added value) and then that final value (cost of import + added value) has its own sales tax. AFAIK there are no input credits for US sales tax. Then you also have VAT but at least VAT is only on the added value.
Income tax is way better as you can reduce the tax burden by including expenses/deductions. You cannot do the same for tariffs, sales tax and VAT as an end consumer. VAT is only beneficial to businesses as they can subtract inputs from outputs.
> You indirectly pay for import taxes every time your companies import raw materials needed to finish their goods (added value) and then that final value (cost of import + added value) has its own sales tax.
This isn't really any different than any other kind of taxes. You pay income tax and then pay sales tax using the money that was already taxed as income. The construction company pays sales tax when it buys a backhoe, which increases construction costs and therefore real estate prices, and then you pay property tax on the higher real estate prices, and make the bigger mortgage payment with money that was already taxed as income.
The only way you'd really get something different with tariffs is if the supply chain for some product passes through the local country multiple times, i.e. it gets imported, exported and then imported again. Which probably happens occasionally but isn't the common case.
Meanwhile how many times something is taxed isn't really the relevant thing. It's, how much in total are you paying in taxes? If you pay ~10% three times, that's not really any worse than paying ~33% once. It is, of course, worse than paying 10% once.
> This isn't really any different than any other kind of taxes. You pay income tax and then pay sales tax using the money that was already taxed as income
It definitely does make a huge difference. From sibling comment I got to know US does not even have VAT. It only makes the situation worse as the businesses operating in US cannot offset input credits against their output liability as Sales Tax has no such concept. So you are paying tax-on-tax-on-tax all the way to your raw materials that have been imported APART from paying tariffs. No wonder prices are so jacked up in US and to compensate that, you all have inflated salaries. The US Government is fleecing its citizens dry. Please study how VAT/GST works in EU/India/Australia and compare it with Sales Tax regime in US and you will know why Sales Tax is so bad.
> Meanwhile how many times something is taxed isn't really the relevant thing. It's, how much in total are you paying in taxes? If you pay ~10% three times, that's not really any worse than paying ~33% once. It is, of course, worse than paying 10% once.
You are not paying 10% three times. Assuming raw material was imported at $X + %10 of $X (tariff is 10%), value add was say $10, then the IRS is collecting say sales tax of 10% of the total value: 10 % of (($X + %10 of $X) + $10). Now this is just the simplest chain where raw material -> imported by manufacturer -> sold directly to consumer. But that is not how it is done. You typically buy from a retailer who buys from a dealer who buys from a wholesaler/manufacturer. So that would be 10% every time ON THE FULL VALUE (not just on value added).
To demonstrate a simple raw material -> imported by manufacturer with value added -> sold to dealer/distributor -> sold to retailer -> sold to customer, this is what it would look like:
1. Imported by manufacturer:
$X + %10 of $X
2. Value added ($10) and sold to dealer/distributor:
10 % of (($X + %10 of $X) + $10)
3. Dealer stocking/shipping charges added (say $10 again) and sold to retailer:
10% of (10 % of (($X + %10 of $X) + $10) + $10).
4. Retailer stocking/service charges added (say $10 again) and sold to consumer:
10% of (10% of (10 % of (($X + %10 of $X) + $10) + $10) + $10).
The longer the chain, the more tax-on-tax you are paying (in some cases the total final tax can even go above the actual cost of making the product). This nonsense is solved by VAT/GST where the tax you pay for acquiring raw material or processed inputs comes back to you as input credits, which you can use to offset your output tax liability. There is no compounding of tax in VAT/GST.
EDIT: added an example for more clarity
Wrong on so many accounts, including the IRS and where in the supply chain that sales tax is applied.
My answer is based on typical definition of what sales tax is. I have no idea how it is actually implemented in US and how it avoids tax pyramiding and if it actually can or not. But I know for a fact that ST has no concept of input tax credits unlike VAT/GST.
EDIT: Turns out US sales tax indeed works like I described above [1]. There are definitely some instances where B2B sales can be exempt from paying sales tax but it does not seem to be pervasive enough to be worth highlighting: because supposedly 40% of business transactions are taxed at intermediate stages (are paying sales tax at every stage).
Quoting from article:
"Some studies estimate that around 40% of the total sales tax revenue comes from taxes levied on business-to-business sales."
[1]: Reference: https://www.fonoa.com/resources/blog/vat-vs-sales-tax-where-...
> because supposedly 40% of business transactions are taxed at intermediate stages (are paying sales tax at every stage)
That's not what that says.
If a business buys office furniture because it wants to furnish their offices rather than because they're in the business of selling office furniture then they pay sales tax on it even though it's a "business-to-business" transaction. This isn't any different than when they buy real estate so they have offices and then pay property tax on it. They're the end customer and the end customer pays the tax.
This results in "double taxation" (they pay the tax on the furniture, they pass the cost on to their customers as higher prices, the customers pay more tax on the higher prices), but that's the same as any other overlapping set of taxes.
What it doesn't do is cause longer supply chains to pay more in taxes, because that's the case where they can get the exemption when they're buying something for resale.
> That's not what that says.
Just saw your replies to my comments.
It does say that (cascade effect where tax is added to each stage of the supply chain):
"The lack of exemption can make the business the end consumer, meaning that the sales tax burden falls on the business and cannot be credited, as there is no mechanism to do that. Therefore, taxes on intermediate stages in the supply chain on businesses may result in a cascade effect where the tax is added to each stage of the supply chain leading up to a final sale to consumers. Some studies estimate that around 40% of the total sales tax revenue comes from taxes levied on business-to-business sales."
Even the scenario you gave me is handled in VAT/GST type of systems easily through input credits. So yes what you are saying is true too but that is not cascading tax. The 40% being talked about is cascading tax that is applied on value-add.
> This results in "double taxation" (they pay the tax on the furniture, they pass the cost on to their customers as higher prices, the customers pay more tax on the higher prices), but that's the same as any other overlapping set of taxes.
No the cascading tax is not this scenario (even though the scenario you said is true too but that is not what the 40% figure represents).
> they buy real estate so they have offices and then pay property tax on it
No it is not the same thing. There are property taxes in GST/VAT regimes too. Property tax is direct tax. GST/VAT/ST is indirect tax. Both are totally different categories. You would still have to pay property tax irrespective of which indirect tax regime you are in.
> If a business buys office furniture because it wants to furnish their offices rather than because they're in the business of selling office furniture
In VAT/GST regimes, these have input credits (which can be utilized to offset output tax liability), however they are not classified as raw materials/inputs either. They would be classified as assets (specifically under the heading "plant and machinery"). So instead of being inputs for whatever you are manufacturing/producing, they would be considered for depreciation (% of the total purchase is considered expense which you can spread out over many years until asset depreciates and is salvaged).
So your scenario is correct only in the limited sense of it being purchase of assets. Whereas in both Sales Tax and VAT/GST regimes it won't be considered an input. Here we are talking purely about inputs (raw materials or other inputs) that are used directly for producing outputs (manufactured goods/value-added goods). These have cascading effects in Sales Tax regime as opposed to VAT/GST.
The US has no VAT.
So that makes it even worse then because Sales Tax has no input credits to offset against.
Republicans elected a president on the promise of introducing a new tax. Can't make this shit up.
No.
It's like punching yourself in the face and then taking Tylenol for the pain until your friends do what you want. It's psychotic, doesn't work, and they're probably not going to want to hang out until you get some help.
Even with 90B in tariffs collected this fiscal year (since October) the government still spent 600B more than they collected.[1][2] Tax cuts would be great, but if you cut taxes without cutting spending you're just borrowing that tax cut from future generations. (270B of that 600B hole is interest payments on debt incurred by previous generations doing exactly that to us.)
[1] https://fiscaldata.treasury.gov/americas-finance-guide/gover...
[2] https://fiscaldata.treasury.gov/americas-finance-guide/feder...
In two weeks, just like the DOGE checks. Mark your calendar, two weeks.
> In two weeks, just like the DOGE checks. Mark your calendar, two weeks.
Is this before or after Infrastructure Week:
* https://politicaldictionary.com/words/infrastructure-week/
Oh no no, we still have tax cuts for the wealthy, $800B in debt servicing, and $1T/year in military spending to pay for. The tariffs were a regressive tax to compensate for the tax cuts for the wealthy.
The only threat that works against Trump doing destructive things is to say to build a slightly bigger white house for Biden to feature him in a reality show and put him on the front page on a full page and Trump on a the second page at a half page.
duh
Problems with this study...
Short Time Horizon for Data Analysis: The study relies on data from January 2024 to November 2025, covering only about 7-8 months after the April 2025 tariff announcements. This captures primarily short-run effects, where pass-through to import prices is often high (near 100%), but longer-term adjustments could lead to greater absorption by foreign exporters. For instance, studies of the 2018-2019 trade war, such as Amiti, Redding, and Weinstein (NBER Working Paper 26610, 2019), found that initial pass-through was complete but declined over time in sectors like steel (falling to around 50% after a year). The Kiel analysis may overstate long-term incidence on U.S. buyers by not accounting for delayed responses like supply chain reorganization or price negotiations.
Incomplete Data Coverage: The dataset from Panjiva includes only ocean-freight shipments (over 25.6 million transactions valued at $4 trillion), excluding air and land imports. This omission could bias results, as air freight often involves higher-value goods with different pricing dynamics, and land imports (e.g., from Mexico or Canada) might respond differently to tariffs. Broader U.S. import data from sources like the Census Bureau show that ocean freight accounts for a significant but not comprehensive share of trade, potentially skewing estimates of overall pass-through.
Reliance on Unit Values as Price Proxies: Import prices are measured as unit values (value per kg), which can be confounded by changes in product quality, mix, or shipping costs rather than true price adjustments. The authors acknowledge this as a potential issue and use validations like Indian FOB export data, but critics of similar studies (e.g., in the 2018-2019 trade war analyses by the U.S. International Trade Commission) note that unit values often overestimate pass-through by not distinguishing between price changes and compositional shifts. This could inflate the estimated 96% pass-through rate.
Weak Statistical Significance in Key Estimates: The baseline regression coefficient (β = -0.039) indicating 96% pass-through is only statistically significant at the 10% level, which is below conventional thresholds (5% or 1%) in economic research. This suggests the result may not be robust to minor specification changes or data noise, raising questions about the reliability of the claim that exporters absorb less than 4% of the burden.
Aggregation Masks Heterogeneity: The study reports an aggregate pass-through estimate but does not break it down sufficiently by product, country, or sector. Research on prior tariffs (e.g., Fajgelbaum et al., NBER Working Paper 25638, 2019) shows significant variation: undifferentiated goods like commodities may see more exporter absorption, while differentiated consumer goods exhibit fuller pass-through. By pooling data, the analysis may overlook these differences, leading to overly generalized conclusions.
Focus on Border Prices Without Retail Pass-Through Analysis: The paper examines pass-through at the border (to importers) but extrapolates to consumers bearing "nearly all the cost" without direct evidence on retail prices. Studies like Cavallo et al. (NBER Working Paper 26396, 2019) and the Federal Reserve Bank of Boston (Working Paper 19-12, 2019) find that while border pass-through is near-complete, retail pass-through is partial (around 50-80%), with retailers absorbing some costs through reduced margins. This gap could mean the study overstates the ultimate burden on end consumers, ignoring supply chain buffers.
Please refrain from posting an AI slop.
Same with corporate taxes, its just targeted a different way.