[senorrib]

No, it isn’t that simple. Who bears the most weight depends on the elasticity of the curve on each side. This is confirming demand is more inelastic, which causes it to bear the burden, but could have been the other way around.

[sgc]

Producer has minimal margins and cannot lower their price. Consumer, at least in the immediate future, has more money to spend. Never were the curves going to be any different in this case. Only in the case of a poorer country placing tariffs on a wealthier country with higher margins, would this be any different than the blindingly obvious outcome here.

The only fruit of this is real economic pain for the American consumer. But that was likely the goal, so mission accomplished I guess.

[pmontra]

An Asian factory of imperial rulers and scales might have had to bear the burden because they have only the USA to sell to. However if they have products that they can sell to all the world and they manage to, why lower the prices to the USA instead of selling more to other markets?

Countries geographically closer to the USA might reason differently because close countries usually trade more and they have more to lose. But even in this case, if a Mexican or Canadian company can find other markets or discovers that it can keep selling at the same price, they will not bear any of the burden of the tariffs.

Russian like sanctions were applied to Italy about 100 years ago because of colonial wars in Africa. Despite the sanctions lasted only 6 months, Italy discovered that they ended up trading less with the usual partners and more with others. Tariffs are somewhat similar to sanctions as they apply friction to trading.

[nosianu]

What does elasticity matter if you no longer make a profit?

Isn't the only thing that could matter - apart from strategic considerations of financing a loss for a time - if the margins are big enough? Who wants to pay for people to take their products below the full cost of making them, apart from some investor-financed hype startups?

[senorrib]

1) You’re assuming there’s no profit to be made 2) Profit is implicitly embedded in the elasticity curve

[nosianu]

1) No, please learn to read and to comprehend.

I wrote

> Isn't the only thing that could matter ... if the margins are big enough

2) No, the standard price elasticity of demand curve does not directly include profits. It primarily models the relationship between price and quantity demanded.

[nasmorn]

This is what the supply curve describes. For each individual producer there is a hard cutoff but in aggregate these are a curve

[nosianu]

No, the standard price elasticity of demand curve does not directly include profits. It primarily models the relationship between price and quantity demanded.

Supply curve??? The OP wrote "This is confirming demand is more inelastic"

[ZeroGravitas]

There's a weird recursion here though.

I wonder what supply and demand curves look like if you keep telling people that the increased costs will be paid by foreigners and not them?

I assume it has an impact eventually but it must dampen the speed of response if people believe that.

[1718627440]

Yes, I don't think these two comments are incompatible.

[jeffbee]

That only makes sense if you believe Americans constitute the entire global demand, ie if you are a raging moron.

[BartjeD]

I think this nuance is one of the 1000 pieces that you could say are nuances if you look at them individually.

But, integrally the whole package is just wishful thinking.

I mean, maybe it was elastic for imports from Heard and McDonald Islands. Penguins don't care about margins after all.