So let me say, I agree entirely that the tariffs raise consumer prices. Trumps tarrifs plan is indeed insane, and his claims about it being paid by China or whoever are entirely ludicrous.
However, as a technical point, all taxes have a “tax incidence” that you can measure. The tax incidence is the percent of the tax on a corporation, good, service etc that is borne by an entity. It is not always 100% on a consumer except in the most trivial, “consumers pay for everything” kind of way. For competitive or reputational reasons a firm with substantial revenue might decide to absorb some cost, rather than pass it on. In those cases, the tax incidence is not 100% on the consumer, but shared by the business out of their revenue.
I promise though, Trump has the mind of a decomposing tangerine and absolutely could not speak about or understand the subtleties here.
Anyway, politically speaking, I’ll never bring this up again. Please keep hammering Trump however you like and I’ll keep my corrections to myself, lol.
So let me say, I agree entirely that the tariffs raise consumer prices. Trumps tarrifs plan is indeed insane, and his claims about it being paid by China or whoever are entirely ludicrous.
However, as a technical point, all taxes have a “tax incidence” that you can measure. The tax incidence is the percent of the tax on a corporation, good, service etc that is borne by an entity. It is not always 100% on a consumer except in the most trivial, “consumers pay for everything” kind of way. For competitive or reputational reasons a firm with substantial revenue might decide to absorb some cost, rather than pass it on. In those cases, the tax incidence is not 100% on the consumer, but shared by the business out of their revenue.
I promise though, Trump has the mind of a decomposing tangerine and absolutely could not speak about or understand the subtleties here.
Anyway, politically speaking, I’ll never bring this up again. Please keep hammering Trump however you like and I’ll keep my corrections to myself, lol.
You’re cool. I’m happy to hear it. Economics and the stock market are my least favorite and least understood topics.
I’m just tickled to have this better understanding of tariffs and inflation from all the political commentary. Economists keep showing up on podcasts.
“Decomposing tangerine” is appreciated as well. His Cluster B brain is also 80yo brain and doesn’t appear to be weathering life very well of late.