The Economic Perspective: “Who Pays Tariffs?”

This is Mary Walden with economist MW welcoming you to the economic perspective. Today’s program asks, who pays tariffs.  Mike, the debate over trade continues between the U.S. and several countries, especially China.  One tactic used in this debate is imposing tariffs on other country’s products.  Tell us exactly what tariffs are and who ultimately pays them.

  1. Tariffs are a tax on an imported product
  2. Technically paid by the company importing the product
  3. But importer could try to pass that on in several ways
  4. One is to increase sales price of product – so ultimate buyer pays
  5. Another is to force foreign country who made the product to take a discount
  6. Third is for the importer to pass on cost to its workers
  7. Hard to track – evidence shows ultimate buyer pays, foreign maker pays, and importing company absorbs

Mary:  And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.