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There is a debate. The issue is you have first order effects, second order effects, third order effects, etc. If we want to be naive, we only look at first order effects, which gives us the people tariffed pay the tariffs. If we want to be intelligent, we include first order and second order (and so on) effects. What certain people are doing is focusing on particular higher order effects while totally ignoring first order effects. For certain goods this might even be a roughly accurate analysis, but in general it is nonsense. But this is the genesis of the "debate".

The first order effect would be raising prices. A second order effect would be people buying different goods. A third order effect would be importers lowering prices to remain competitive (this is where we get the idea that they pay the cost of tariffs). Another third order effect would be local producers raising prices. A fourth order effect would be importers raising the prices again, because local producers raised prices also. The net effect is higher consumer prices, but potentially not by that much, while foreign producers might have to substantially lower prices. I don't know what good this would apply to, one that is neither a commodity, but it has a very competitive local market. Movies maybe? Trump also came up with the idea that local sellers wouldn't raise prices, and instead eat the price difference. This is highly questionable, but maybe for some goods it would work out...



All that is theory. Look into actual tariff loving countries for the results.




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