President Trump is conducting a large -scale tariff on the closest trade partner in the United States. From Tuesday, companies that bring products from Canada and Mexico to the United States will pay 25 % of tariffs. Imports that bring products from China will pay 10 % in addition to existing taxation.
The president argued that these tariffs did not raise the price of American consumers, and would be foreign if they pay.
However, a simple review of how tariffs function suggests that it is not. What you need to know who pays is as follows:
Who pays tariffs before?
Customs duties are extra charges that make profits when you come to the United States. It is a so -called recorded importer, a company that is in charge of importing the product that physically pays for tariffs to the federal government.
10 % or 25 % of tariff fees are often charged for low import prices paid to buy from overseas before marking the selling price, rather than the full sticker prices found in stores. At the store.
Many recorded importers are registered in the government’s electronic payment program, and automatically deducted from bank accounts to bring products to the country. Mr. Trump has the idea of creating a completely new institution to deal with the money obtained from his tariffs, but tariff revenue is collected by US customs border security.
The recorded importer is from all the nationality. They can become US and foreign companies, regardless of the existence of the United States. He is also a customs agent that works on behalf of other companies to handle imports and exports.
However, Richard Mojica, a customs lawyer of Miller & Chevalier, stated that the recorded importer was usually the owner or buyer of the product and was usually a US company.
Many US companies have been dissatisfied with Trump’s frequent claims that foreign countries pay for tariffs, and they have paid their taxes.
Arnoldcamler, chairman of Kent International, based in New Jersey, which manufactures bicycles in China and South Carolina, has paid tariffs on both bicycles and parts since Trump imposed Chinese tariffs. I said. 2018.
“The Trump administration was very proud to say that China was paying tariffs,” he said. “I always said I would be happy if someone in China wanted to pay it, but we paid it.”
Most foreign products are already subject to customs duties when they come to the United States. The United States agreed to reduce tariffs of various levels of various levels when joined the World Trade Organization, revealed that foreign exporters are engaged in unfair trade behavior. In that case, we impose various other tariffs.
Nevertheless, the average tariff rate in the United States is low, about 2.5 %, and lower than most other countries. Trump’s new tariffs will be added to existing tariffs.
Who will eventually pay the cost?
The next question is the person who ultimately bear the cost of tariffs. Imports can choose to absorb the cost, which is the benefit. Some importers say that paying 25 % of tariffs will be completely erased and closed.
If the importer does not want to absorb the cost of tariffs on his own, they can try to force them to lower their prices to the suppliers they sold. Or, you can pay the cost to your customers in a higher price.
All cases differ depending on how much the company can demonstrate other companies. If the importer is a large and powerful purchaser of the product, you may be able to feed the supplier the cost of tariffs. However, if it is a small and medium -sized business that orders a small amount, it is probably not possible.
Some economic research, Trump’s tariffs in which China has launched hundreds of billions of dollars from China, has found that most of its costs have been passed to American consumers.
The tariffs that Mr. Trump on foreign steel may have worked slightly different. One year after these tariffs were enforced, the 2020 paper suggested that only about half of the costs were passed to consumers.
Camler of Kent International said that Trump’s customs duties with Chinese products had to raise prices. “And they say this is not inflation,” he said. “It’s not true.”
Giving the cost of tariffs to consumers may seem bad. However, Wendy Edelberg, a senior fellow of the Brookings Institute, said that it was actually the center of the overall idea of tariffs.
“The point of tariff is to raise the domestic price,” said Edelberg. A typical debate to impose tariffs is that US manufacturers cannot compete with the lower prices of imported goods, and they are healthy and profitable only when the goods are high.
The idea of raising the price, “It’s been burned because of the reason for imposing tariffs.”
Some Trump authorities argue that the increase in consumer costs is offset by changes in currency value. Economists believe that imposing tariffs tends to strengthen the value of the dollar. China may underestimate currency to respond to tariffs. With any of the changes, Americans can buy more foreign products in $ 1, increase their purchasing power, and offset tariffs.
However, if it happens, it means that foreign products are not really expensive to Americans than in Japan, and are the senior fellows of the International Economic Research Institute, former Chief Economist of the International Currency Fund. Maurice of Seld said. The government accepts income from tariffs, but customs duties do not affect consumers’ purchases. On the other hand, the stronger dollar will be relatively expensive in other markets and hurt the exporter.
“If you believe that customs duties are completely disabled due to currency evaluation, it does not actually affect the trade balance and manufacturing because it does not actually make imports more expensive.” He said. “In fact, the import price has not risen, and the trade balance is damaged to reduce the competitiveness of exports.”
How much does this cost the household and the economy?
Economists say that companies are more likely to give American consumers a part of the cost of new tariffs in order to maintain profit margins.
Estimating the tax foundation is a think tank that supports tax declining, and in 2025 it will cost more than $ 830 per household from Canada and Mexico tariffs. 2034, group estimation.
These quotes do not include additional costs for the Trump administration. Delete what is called a deminnal exemption. This change will be particularly impacted on products coming from China to the United States, as Trump will be subject to tariffs that Trump will be shipped for less than $ 800 in his first term.
Mike Short, the president of Chlobinson’s global transfer, is the president of Chlobinson, a truck transport company that ships products nationwide, and the impact of tariffs on the industry is not like a switching economy. Ta.
Even if there is a new tariff, “The cargo still needs to move, the production line still needs to run, and consumers still need to expect perfect shelves.”
However, in the long term, economists hope that consumers and companies will be forced to reduce the purchase of foreign products at higher prices, and that tariffs will be dragged by the economy. Goldman Sachs’s analysts estimate that Canada and Mexico’s full tariffs will increase the number of core prices by 0.7 % and the total US production will decrease by 0.4 %.
Researchers at Peterson International Institute in Washington estimate that 25 % of tariffs will attack Canada and Mexico, but will slow down economic growth and accelerate inflation around North America. They say that adding tariffs from China will immerse that the United States’s gross domestic product will immerse yourself in about one -third percent points by 2027.
Mr. Trump remains immovable in his view that it is valuable if he has pain.
“Do you have any pain?” He wrote on Sunday on social media. “Yes, maybe not (and maybe not!). But we will make the United States great again, and it’s worth the price that we need to pay.”
