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Comment by threeseed | Hacker News Reader

I've seen countless interviews of Trump supporters who believe that China is the one paying for it. Which I can completely understand because if it is a cost on them it would be typically be called a tax.

That said the overwhelmingly majority are shocked but believe it's all just a negotiating tactic:

https://www.cbsnews.com/news/poll-trump-tariffs-13-04-2025/

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Some Chinese exporters are definitely splitting the cost of these tariffs with their American importer counterparts. While this isn't as significant as "China pays all the tariffs", it's also not "Americans pay all the tariffs".

Though, I haven't seen any analysis on how common this is, so the effect might be negligible in terms of how much "the Chinese" are paying for these tariffs.

Every tax, and tariff a tax, is shared between producer and consumer depending on elasticity of demand for the goods

Why is that the case? If an item (from every manufacturer) costs $5, and there's a new tax on it, making it cost $10, why would this be split between buyer and seller? The seller needs to make a certain margin on it, and it's not like the competition can sell any cheaper, or they already would have been.

The seller doesn't "need" to make any margin on it. Margins are set by the free market, and they are what they are, no more, no less.

Prices go down when demand goes down, right? Why's that, don't sellers need to make a certain margin?

If demand is elastic, then the seller has to lower prices (and their margin), otherwise people don’t buy their stuff (because they can do without). In this situation, the seller eats the tariffs, That’s the case for nice-to-have things like luxury goods and entertainment. If the seller cannot do that, e.g. because their margins become negative, they will just stop doing business (in the US or entirely).

The other end of the spectrum is stuff people cannot do without, in which case the seller has no incentive to lower their margins because their customers don’t have a choice. Then, tariffs are entirely paid by the buyer.

In reality, everything is in between and accurately estimating how much everyone will be paying is very difficult. What we can predict with certainty is that prices can only go up, and that some businesses will fold because they cannot absorb the loss.

Thanks for the explanation, that makes sense about the elastic demand.

A bunch of potential customers will buy at 5$ but not at 15$ so the seller will lose sales and hence money

+1 I feel like this point really doesn't get mentioned enough if at all unless someone did some level of economics at high school/uni.

The tariffs are not paid for by the foreign producer and domestic consumer alone unless PED=0 or PES is extremely large.

I've come across some other comments on Chinese forums. Some importers buy products for 10 RMB from China and then sell them in the U.S. for 10 USD. Later, they use tariffs as an excuse to raise prices to 15-20 USD. They couldn't care less whether you impose 100% or even 200% tariffs – they'd still profit unless the tariffs reach 1000%.

Also, check out this link[0] some people actually don't have many alternatives either.

[0] https://www.youtube.com/watch?v=jCS-LS4LUXk

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