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Comment by witcherchaos | Hacker News Reader

Incorrect. There was a recent study done on tariffs effects. The study found negligible effects on consumer good prices. Turns out most tariff costs were eaten by manufacturers in China. (The importers forced them to eat the costs) Which prompted them to either shut down or move overseas

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That can only ork in the short term though. If they go bust prices will go up for consumers due to constrained supply. If they move abroad to avoid the tariffs, we’ll presumably the reason they didn’t already do that was higher manufacturing costs abroad, so again increased costs for consumers, even if less than the tariffs.

You can put it off for a while, but not indefinitely. After all the justification given for the tariffs was to make less efficient local production more viable. Higher consumer prices are an explicit part of that calculation.

It could also mean the demand for these items is very elastic, so manufacturers will have to eat the tax or higher manufacturing costs.

That assumes that manufacturers can reduce their margins without going out of business. That will not generally be true in a competitive market, however, since economic profit (which includes opportunity costs) tends toward zero.

That might be true for US tariffs, but what about retaliatory tariffs enacted by China?

Can you share a link to this study?

I recall seeing it, but I can't seem to track it down at the moment. It was a study done by Europeans, concluding that China was eating about 83% of the tariff cost. The remaining 17% hits the US consumers.

Of course, that 17% can sort of be returned to the American consumers via reduced taxes or increased federal spending. The jobs are nice too.

This study reached a different conclusion: http://www.princeton.edu/~reddings/papers/CEPR-DP13564.pdf

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