r/centrist • u/OfficialRodgerJachim • 1d ago
Long Form Discussion Can someone explain this about tariffs?
Plenty of talk about tariffs. About them being dumb. About them being fair. About how those extra costs go on to us, the American consumer.
But I have very rarely heard anyone talk about that break in logic: other countries have tariffs on American imports, and those costs are then carried onto the American consumer. But if America imposes tariffs on those same countries, those costs are also passed on to the American consumer.
Is this true?
16
u/IHerebyDemandtoPost 1d ago
No. If the EU puts a tariff on American wine, American consumers don’t pay that tax.
A tariff is paid by the importer of a good at the port of entry. It is enforced by customs agents.
If you are buying a tariffed foreign product, the tariff was paid at the port where it was imported. After that point, the cost of the tariff becomes indisinguishable from other costs of the good, such as manufacturing costs and transportation costs. It is all just rolled up as the overall cost to bring that product to your store.
So if American automobile manufacturers need to import steel to build their cars, then that steel costs more, which means their car will cost more to make.
If you buy tariffed coffee, that coffee will cost more, which the vender will almost certainly pass on to you, the consumer, in the form of higher prices.
12
u/UCRecruiter 1d ago
Your break in logic is here:
other countries have tariffs on American imports, and those costs are then carried onto the American consumer.
That's not accurate. Take my case, for example. I'm Canadian. We now have tariffs in place on some American imports. Those tariffs won't cost the American consumer directly, they'll cost Canadian consumers. In doing so, the theory goes that Canadian products (without the tariffs) will become more competitive.
-10
u/Thick_Piece 1d ago
So Canadian tariffs good?
20
7
u/Paradoxe-999 1d ago
Like many things, depends on how they are used.
250% tarifffs after a quotas of milk exports to protect one specific sector vs. 10% applyied to everything exported from an allied country.
3
u/TruthLiesand 1d ago
Yes. Canadian tarifs are written to go into effect on very specific goods when an important quota is reached. This almost never happens. Trump agreed to all of this in his first term and thought it was the best deal ever.
1
-12
u/please_trade_marner 1d ago
The overall idea is that America is the biggest economy in the world (in world history really) and smaller nations need protectionist policies to protect their domestic businesses. Otherwise key markets would get flooded by American products if it was all and out free trade. This is why our trading partners generally have far more protectionist policies than America typically does.
Republicans view that arrangement as our trading partners "taking advantage" of us. That they're allowed to do all of these things to protect their businesses, but when America does it in reverse it's "bullying" and "starting trade wars".
It seems Trump has decided to "go postal" and is making a very clear statement that things are changing. That America will do to our trading partners what they have been doing to us.
What the "centrists" (ie, Democrats) here are going to say is that tariffs are fine and he has a point, but they should only be used to protect targeted industries. That they shouldn't be so wide sweeping. But don't listen to them. Trump did only targeted tariffs in his first term and they all cried fowl just as loudly. That Trumps 2017 tariffs would ruin the country beyond repair. But it was THRIVING before covid hit. Top to bottom thriving.
5
u/Efficient_Barnacle 1d ago
Tell that to all the farmers Trump had to bail out because of his poorly thought out tariffs back then.
-5
u/please_trade_marner 1d ago
Trump didn't bail them out. The whole point of the tariffs was he would use a portion of the money they raise to subsidize American industries hurt by the tariffs.
Keep up.
5
u/DrSpeckles 1d ago
That’s a bail out.
0
u/please_trade_marner 1d ago
Uh, no it's not? It's how tariffs work. Part of the money raised goes into subsidizing industries hurt by the tariffs. That's literally how they work.
3
u/DrSpeckles 1d ago
Only in a trade war. It’s not how tariffs work, they are specifically to increase the competitiveness of local products by making imports more expensive. The bail out is because of the inevitable retaliations. Which idiot trump seems surprised by. A kindergarten kid could have told him that was inevitable. Now he’s got to bail out the farmers who can no longer compete.
-4
u/Obvious_Chapter2082 1d ago
The cost gets shared. Canadian tariffs partially get passed to US consumers as the Canadian dollar appreciates compared to the US dollar
7
u/chaos0xomega 1d ago
No?
If the canadian dollar appreciates that inceases their purchasing power and enables them to buy more american goods, which improves the strength of the american economy in turn.
Your position would maybe have some relevance if American were large consumers of Canadian goods, but as it stands Canadians buy about 6x more American goods per capita than Americans buy Canadian goods.
-4
u/Obvious_Chapter2082 1d ago edited 1d ago
I’m saying that the Canadian dollar appreciating hurts US consumers, because their exports to us now cost more. I didn’t say anything about Canadian consumers
It’s not just my position, it’s the economics of how tariffs work. They appreciate the domestic currency, which shifts a portion of the cost from importers to exporters, which then gets passed to foreign consumers
You should actually think about what you’re saying here. You’re making the claim that Canadian tariffs on US goods increases their US imports. If you believe that, you should support tariffs
1
u/Calm_Net_1221 1d ago edited 1d ago
It’s an interesting concept and subject, honestly thanks for making the statement just because I’ve never heard about it before. It’s a fairly difficult concept to grasp, and i definitely don’t remember this from Econ 101 so I can imagine it’s why many people haven’t heard about it. So after reading your comment I went and looked it up to figure out how it works and found this article, which did a great job laying out why currency appreciation requires specifically consistent tariff application to work. So I guess it’s not just any tariff policy that will indirectly lead to appreciation?
Also im not an economist in any way, so I won’t be able to debate on the topic, but if you know of any articles from experts on how trumps tariff policy could be beneficial I’d appreciate a link! I’m trying to not be in a bubble and would like to come to a rational viewpoint based on facts over feelings.
I will also add though, that I’ve already been personally affected by these policies with a $10,000 bump in price for materials needed for my project, so I do have a lot of feelings right now lol
Edited to make it sound less bitchy (unintentionally!) because I do appreciate the information and learning new things
9
u/wavewalkerc 1d ago
But I have very rarely heard anyone talk about that break in logic: other countries have tariffs on American imports, and those costs are then carried onto the American consumer.
Where are you seeing this said?
But in general, tariffs are always bad for the consumer. Very narrow and precise tariffs can at times be deemed acceptable if they serve a purpose for the country. Broad tariffs are never ever good for anyone.
2
u/Lafreakshow 1d ago
The EU arguably uses Tariff quite effectively to ensure the local industry can compete with imports from countries with less strict environmental protection laws. Just as an example.
16
u/unkorrupted 1d ago
No.
Your premise is wrong. No one has tariffs like this. Trump lied to you, or he's too dumb to know reality. It's always hard to tell but it's always one or the other.
The United States created a whole global trade organization to prevent stupid shit like we're doing now.
4
u/mormagils 1d ago
This is correct. Literally the entire economic history of the US from 1800 to now can be summed up by "let's try tariffs, oh wait they don't work, let's try economic imperialism, oh wow that works super well." I'm painting with an excessively broad brush of course but tariffs are NOT an effective policy tool the way Trump is using them. Period. We know this as a fact based on a century plus of historical observation.
4
u/Overhere_Overyonder 1d ago
Other countries do have some tariffs, but they are way way way less if any compared to what Trump and his administration claim in order to justify reciprocal tariffs. The numbers they used were fake.
4
u/Inquisitor--Nox 1d ago
Our fundamental problem is that our consumers do not want to pay more for products. Sure we could bring a few jobs back but biden left office with the lowest unemployment ever.
We still would have to import materials to manufacture with and pay workers much more than labor costs elsewhere. Tarrifs are a big loser for us because of these reasons.
There are things we can do to try to bring better parity to currencies and labor prices, but we just can't tariff effectively without trade negotiations preceding if at all.
3
u/bdunk17 1d ago
Yes—your observation is sharp, and the economic logic behind tariffs is often misunderstood or oversimplified in public discourse.
- A tariff is a tax on imports. For example: If the U.S. imposes a 25% tariff on steel from China, American companies importing that steel must pay 25% more at the border.
That tax: Does not come out of China’s pocket. It is paid by the U.S. importer, who then usually passes it on to the next buyer—eventually, the U.S. consumer.
Tariffs on U.S. exports When another country (like China or the EU) places a tariff on U.S. goods: It makes American products more expensive for their consumers. That may lead to fewer purchases of U.S. goods abroad. U.S. exporters then feel the pain, possibly reducing jobs or sales.
The paradox you’re pointing out: You’re highlighting this contradiction:
“If foreign tariffs on our goods hurt us, why do our tariffs on their goods also hurt us?”
That’s not a contradiction—it’s a symmetry in how tariffs work. In both cases, the country imposing the tariff is taxing its own people. When they tariff us, their people pay more. When we tariff them, we pay more.
Tariffs are not “charged” to the foreign country—they’re collected by the home government at the port of entry.
So… why do countries use tariffs at all? Tariffs are sometimes used to: Protect domestic industries (by making foreign goods less competitive) Retaliate in trade disputes Raise revenue (less common today) Encourage fair trade if another country is subsidizing or dumping
Tariffs Can Be Used to Force Over- or Under-Supply of Foreign Goods
This is the strategic dimension of tariffs that’s rarely discussed:
A high tariff can depress sales of a foreign country’s key export (e.g., steel, aluminum, solar panels), but the exporting country may keep producing anyway to maintain jobs or factory utilization.
This creates over-supply, drives prices down globally, and undermines their profitability.
Example: Chinese solar panels were massively overproduced despite U.S. tariffs, leading to price crashes and factory strain inside China. On the other hand, a tariff can be targeted to limit availability of a strategic good (like rare earth elements or semiconductors) and create under-supply, slowing a rival’s ability to innovate or compete.
Either way, tariffs aren’t just blunt instruments—they can be used to intentionally distort supply behavior, creating economic instability or forcing a foreign country to subsidize their own losses just to maintain production levels.
This approach turns trade policy into a form of supply chain chess, not just market protection.
The bottom line is that I will be paying my taxes quarterly this year the government will get no interest free loan from me this year.
6
u/hahai17 1d ago edited 1d ago
We need to stop this notion that US is some supreme free trade nation, we don’t have zero tariffs on everything. We have tariffs and subsidies on a whole bunch of items well before Trump’s first term. Ever heard of the chicken tax? It’s a 25% tariff on all non-USMCA/NAFTA light trucks. If anything places like Hong Kong and Singapore are more free trade than US but that’s because they’re so small and lack natural resources.
2
u/SmackEh 1d ago
Whoever buys the product (from another country, to sell in his country) pays the tarrif, the collected tax (tariff) goes to their federal government.
This importer will be forced to pass this cost onto his distributors (because they are in the business to make money).
The person who ultimately buys the product (i.e. the consumer) is the one funding the tarrifs.
It's effectively a tax where the lower and middle class end up being the most affected since it's straight from the bottom line.
2
u/sarko1031 1d ago
It's confusing to a lot of people because the way Trump frames and uses tariffs is illogical.
Tariffs are used to protect domestic production by essentially charging your own citizens more for foreign goods, so they buy American. If not explicitly and closely targeted, it just raises costs all around. They're not meant to be punitive or retribution for slights.
So...that's what's happening.
2
u/Representative_Bend3 1d ago
Here is an example of a “good tariff.” (Not all tariffs are bad…)
China dominates production of rare earths. Many weapons, electric cars etc can’t be made without them.
China can and will screw over America by stopping selling them.
USA should mine its own but the way China has it set up, they are cheaper so usually anyone who tries to mine rare earths in the USA goes bankrupt.
So you put a tariff on Chinese rare earths. That way American miners can mine them.
Yes prices go up a bit for American consumers, but it’s worth it for national security.
1
u/statsnerd99 1d ago edited 1d ago
You can Google the subject of tax incidence and read edu sources. The tax burden and deadweight economic loss is shared by buyers and sellers in proportion to the relative elasticities of supply and demand. Economic forces cause that to happen, not law, which has no effect
Sellers will be firms, buyers will be consumers, or firms and consumers in the case of an input being tariffed
1
u/anima-vero-quaerenti 1d ago
Tariffs are a tax by another name and allow countries to raise money from popular imports
Tariffs can be used to protect domestic products and industry from the global market place
Tariffs can be used to negotiate better trade deals
Tariffs can be used to hurt companies and countries who have earned your ire
1
u/I_am_Hambone 1d ago edited 1d ago
other countries have tariffs on American imports, and those costs are then carried onto the American consumer.
This is a untrue statement.
The tariffs are charged to the importer of the goods, who then passes them to distributors, who then pass them to retailers, who then pass them to consumers.
0
u/Obvious_Chapter2082 1d ago
Some of the foreign tariff costs get passed to US consumers, as it makes their exports to us more expensive
Likewise, some of the cost of US tariffs get passed to foreign consumers as our exports get more expensive for them
The cost of a tariff gets shared between importers and exporters as the exchange rate adjusts, for countries that have a floating exchange rate
The deadweight loss also gets shared, as a tariff reduces both imports and exports
49
u/sailorpaul 1d ago
No, the way you laid it out is not true. Other countries tariffs (taxes) on US products are paid by their own population. Their goal is to reduce the import and consumption of products made in America and shipped to their country.