[throwaway657656]

"These are external taxes paid by the exporting countries. Beautiful tariffs will allow the US to eliminate the IRS and replace it with an ERS".

Basically no point in even having a conversation about it. The same way you don't discuss evolution with someone who thinks the universe is 6000 years old.

[tombert]

This is so frustrating, because of course manufacturing countries aren't going to operate at a loss, so whatever price increase that happens will be paid for by the consumer eventually.

And if they eliminated the IRS because the ERS covers all our expenses, that would effectively mean that we have shifted all of our income tax revenue away from relatively wealthy high-earners to the poor (who currently pay little to no income tax), since the poor have to buy items at the price they're listed.

[throwaway48476]

Who pays the tariff depends on the relative elasticity of supply and demand.

[crazygringo]

It is extremely rare for manufacturers to absorb the tariffs.

Profit margins in most industries simply aren't high enough to cover it. A business can't absorb 20-25% tariffs if its profit margin is only 5%.

And manufacturing is particularly known for its low profit margins.

So no. I mean, in theory you are technically correct. But the way elasticity works in practice is that the buyer is who pays the tariffs in virtually all circumstances.

[throwaway48476]

This is the case of low elasticity of the supply curve.

[crazygringo]

Yes, that's what I meant with my last sentence.

[mitthrowaway2]

Is your reasoning that the supplier has the option of eating the tariff by cutting prices, such that the price paid by the purchaser remains the same?

If they had that much margin headroom available to cut prices by 20% and remain profitable, wouldn't that basically prove that they weren't dumping product in the first place?

[throwaway48476]

What I stated is the textbook definition.

For suppliers with fixed costs there are strong incentives to lower prices to stimulate demand sufficient to maintain utilization where possible. The commodity NAND market is an example of this. The fabs are extremely sensitive to utilization which leads to wild profit and loss swings.

[insonable]

sure, and a good baseline assumption for most consumer goods is that price elasticity of demand is pretty low in the short term, so consumers pay most of the tariff. then in the long run perhaps things change and more non-tariffed substitutes become available resulting in maybe a 50/50 split of "who pays" (after all, the substitutes didn't have comparative advantage before, so are probably a bit more costly to produce). in any case, total quantity sold will be less, consumers benefit less, and suppliers benefit less... but the government does get revenue.

[baby_souffle]

Can you give a few examples of this?