Who is paying for U.S President Donald Trump's tariffs? SO FAR, it's U.S BUSINESSES and INDUSTRIES. Yes, you read that right.
This is what Trumpย toldย supporters in Sep 2024๐ and one year later, exactly he has reached to the point but taxes are borne by Americans:
โWeโre going to be a tariff nation. Itโs not going to be a cost to you. Itโs going to be a cost to another countryโฆ. I heard Kamala the other day, Comrade Kamala. She said, 'Oh, if you do that, heโs raising your taxes.' No. No. No. Iโm not raising your taxes. Iโm raising China and all of these countries in Asia and all over the world, including the European Union by the way, which is one of the most egregious.โ
Lets study the graph ๐
Image 1 - Tariff revenues are climbing fast. Every $ of goods that enters U.S, government is taking the larger cut as tax. This means tariffs system is real and working exactly as designed but the onus of burden lies on the Importers.
Image 2 - Shows that foreign exporters have only lowered prices by about 2% at most, which means U.S. importers are still paying nearly the same as before. In short, exporters arenโt discounting, so the tariff burden isnโt shifting overseas. In simple words, tariffs haven't forced Chinese, European or Mexicans to lower their prices and share the burden.
Meanwhile, tariffs imposed by quoting International Emergency Economic Powers Act (IEEPA) have been rejected by both the US lower courts and trump has asked for speedy trail with SC.
Sooner, Importers will pass down the price hike to the consumers. But why they haven't felt the heat yet๐
Might be stocks brought prior to tariffs, legal uncertainty, fear of losing customer base, business competition and they are absorbing initial cost as per strategy.
If SC upholds the tariffs - Prices will be passed down to every single consumer over a period of time. Who knows if the market is wide, exporters may share the burden.
#TariffWars