Just trying to understand more. As far as I understand trying to produce for instance the price of a t-shirt in the US domestically at the same price of China just isn't possible. So in that case do they find a different supplier or do they just eat the price of the tarriffs and hike up the consumer price?
The only way I see it is that this is bad strategy and it just makes goods cost more. Thoughts?
There is a possibility of finding a different supplier in an alternate country, as my T Shirt right now was made in Bangladesh. Though there is a possibility that for whatever reason, a supplier has to buy Chinese for some very specific reason. Not all factories are made equal.
But yes, tariffs do just hike up the consumer price.
In order to "eat the price of the tarriffs", wouldn't they have to not hike up the consumer price, accepting reduced profits instead? That doesn't seem likely.
Businesses not only have cost of goods sold, they have salaries, rents, taxes, and various other kinds of overhead. Very few businesses have enough profit margin to eat 25% tariffs.
Right! The suggestion just doesn't make sense. Of course consumers will pay the tariffs in the form of increased prices.
They have no choice but to go bankrupt instead of eating the tarrifs.