this post was submitted on 17 Mar 2025
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Leopards Ate My Face

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Tariff Isn't Tax on Other Countries?🤪 (lemmy.world)
submitted 2 months ago by [email protected] to c/[email protected]
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[–] [email protected] 0 points 2 months ago (1 children)

Wouldn't refunding the amount of the tariff to the customer fix this? Ignoring the very important diplomatic and retaliation tariffs which makes the whole post unusable for real life

  • Canada sells a product A $100.
  • Tariffs makes it $120 when you buy it
  • so Canada gets $100, USA gets $20, USA customer pays $120.
  • USA has now $20, they can directly refund the customer for $20 via a policy to reduce the price of the category of A.
  • So customer gets $20 reduction of the product A via tax something, so USA now has $0 and USA customer actually paid only $100.
  • Except now if USA company make the product A they can sell it for like $100 and customer pays $80.
  • There is a slight increase of imported goods price here because tariffs cannot actually refund $20, it will be a % of the local vs imported production.
  • Over time you can expect to get a local advantage because of this price inequality, so local companies will be subsidized by imports until imports are no longer significant.

Where am I wrong here ?

[–] [email protected] 1 points 2 months ago (1 children)

In your scenario how is the local made $100 item bought at $80? Where is a $20 refund paid from? You are double spending it on both imported and local goods

[–] [email protected] 1 points 2 months ago

In the scenario local good is still worth $100 but given that you refund all good by the amount added by the tariff later, you have $20 refunded (not really $20 as i tried to show previously, but $20 x total_tariff / total_amount_of_good_bought_locally_and_imported, so somewhere between $80 and $100 net for local production and between $100 and $120 for imported good, depending on the ratio import/import+localprod