Paid by the importer of the which maybe passed on to the consumer if the market accepts the rise in costs.
Who actually pays the tariff?
Who actually pays the tariff?
OK, so the importer remits the tariff to its nation’s customs service, but who really pays the tax on imported goods? The answer, I am sorry to say is, it depends.
A business will, if it can, pass its higher after-tax costs on to consumers. Thus, the price of Chinese TVs sold in the US may rise rapidly. But the firms selling those TVs eventually will face competition from companies that sell lower-cost TVs made in a third country that is not subject to the import tax. In that case, some of the tax may be paid by the firm’s shareholders in the form of lower profits or by its workers in the form of lower compensation.
Or, the firm may switch to a non-Chinese supplier and, in effect, nobody will pay the tariff. Still, demand for imported goods subject to the tax won’t go to zero right away—so the government will collect some revenue from the import tax. That’s what the president was bragging about.