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Comment by bruce511 | Hacker News Reader

The shelves wont be empty, the stuff is freely available, it just costs more to the US consumer. Just because there's a giant tarif on Brazil doesn't mean Americans stop drinking coffee.

And of course people are still selling to the US. From our perspective nothing has changed. It's not costing us any more than it did before.

Markets remain up, bolstered partly by the AI stocks, but also because the market believes US consumers will continue to consume. Their appetite for consumption, and debt, remains unabated.

Am I building a factory in the US? No. The current administration makes that very unappealing. The US society is unstable right now, policy is fluid, enforcement of laws seems weak, the labor market is (justifiably) paranoid. As a foreigner I'm not even traveling to the US anytime soon. There are other, more appealing, opportunities to explore.

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Which does manage to hit the nail on the head: people in general still don't understand what a tarriff is. They fully expect a tarriff to hit the foreign exporter somehow, when it's actually billed to the importer at point of import. The importers are the ones who place the orders. The exporters aren't impacted directly at all - it depends entirely on whether the orders stop coming in. The orders don't cost them more to fill in anyway.

The issue for the importer is cash flow. The tarifs have to be paid on entry, ie before the coffee is sold.

This suits large importers over small ones, they have the cash reserves to cope.

The other issue for importers is uncertainty. The tarifs might be high this week (when my stock arrives) but it might be low next week when my competitors stock arrives, putting me at a disadvantage.

So "shelves being bare" is primarily a business risk / cash flow issue. Partly handled with more frequent, smaller, orders (driving up consumer prices some more.)

And yes, I agree, most American consumers don't understand that fundamentally the goal of tarifs (good and bad) is to drive up the price. To that end though the administration is being very successful.

That's not wrong, but it isn't the full picture either.

Access to the US market has other values. If the manufacturer is carrying USD denominated debt, they or someone else must obtain those dollars through trade. Access to a large market may unlock economies of scale for producers. Losing access may drive up their overall costs to serve other markets.

These are just two of the most obvious things which I can immediately think of. There are likely other factors as well.

But that's the thing: they don't lose access. To lose access they'd have to actually be undercut by local producers, or untarriffed competitors. They experience the effect wholly through demand modification - and simply ship whatever orders come in, with some pressure to keep lowering prices if they can. It's a tarrif - not sanctions.

(I think tariffs are stupid)

> The exporters aren't impacted directly at all

This isn't true, at least if you believe in standard economic theory (not believing standard economic theory is what got us in this mess!).

The issue is that the tariff increases the effective price to the consumer, so it shifts the demand curve downward by the cost of the tariff (the price consumers are willing to pay the producer for a given quantity of goods).

Markets always find their equilibrium, and the resulting equilibrium point is a lower transaction price and lower quantity than before. Quantifying the shift requires knowing both the supply and demand elasticities.

In other words, both the producer and consumer share the burden of the tariffs. The producer receives less from the consumer, and the consumer pays a higher total cost than before. Who pays more of the tariff is question that we again need the elasticities to answer.

It only hurts the producer if they don't find alternate markets.

There will absolutely be some short term pain. But in the long run it makes the producer stronger.

Now it's easy to cherry pick products that are easier to move than others. There absolutely will be winners and losers on the production side. It'll certainly be interesting to see this play out.

You are describing indirect impacts though. The exporters does not directly pay tarrifs except if they're also the importer, or acting as a facilitator on behalf of the customer. The change in demand is indirect - because it can only happen if customer behavior changes. Does the consumer care about 100% tarrifs on a $1 product with no internal competitors? Probably not. Demand may be completely unaffected, and in any case that's a problem for the importer who has to clear things through customs, not the exporter who simply has to label things appropriately like they always have.

But that's not what people think: People think the tarrifs work like a bill from the US government - like taxes, where they understand it's possible (though again, generally not how) to wind up owing the government more money in September.

What they imagine is very clearly something that looks like that - that companies directly pay some fee to access the US market and then sell things as normal. Or will be taxed some extra money after selling things to the US.

Yes it's all wildly inconsistent on the slightest inspection, but people are relating to this on a vibes level and then generally inventing the justification post facto because they certainly never thought about tarrifs till this president.

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