I have 0 maths or economy skills, so I do need it explained like I’m 5. They’re in the news a lot atm but I just don’t understand them
I have 0 maths or economy skills, so I do need it explained like I’m 5. They’re in the news a lot atm but I just don’t understand them
Everything that is not purely American is going to be a lot more expensive.
Even stuff that is purely American will go up.
Imagine I make shirts in the USA with no imported goods. My cost to make them is $10 and I sell them for $15. My primary competition is overseas shirt makers who have much lower costs and their final price in my market is $12, so consumers often flock to them as they are cheaper.
Well good news for me! Tarrifs have made foreign made goods more expensive for the end consumer, and now those competitors price their shirts at $20, making my shirts the cheaper option!
Except, I’m a good little capitalist, so to make as much profit as I can, I’m going to increase the cost of my shirts to $17, even though my cost to make them hasn’t changed. I’m still the cheaper option, I can play to people’s nationalism, and I’m still making more money than before!
Only the end consumer loses.
And that doesnt even factor in the fact that most made in America goods are made with materials imported from other countries. They are not going to eat that cost, they are going to pass it on to the next person until there is nobody left to pass it on to. The consumer.
But what is a tariff? What does it do?
A tariff is the price a foreign company has to pay to be allowed to sell their product in America. When the product normally costs $100 and the tariff is 20% then the company has to pay $20 to be allowed to sell their product. Those $20 go to the American government.
The importer pays it, not the foreign company.