A Tax By Any Other Name

It may be bad timing using Airplane! to make a point about Trump’s tariffs, but economists are concerned about them.

https://econbrowser.com/archives/2025/02/i-guess-i-picked-the-wrong-week

It’s beyond comprehension that Trump continues to insist that an IMPORT TAX will be paid by the exporting country. One option would be for the exporter to accept reduced revenue as a way to maintain export volume:

1. A $100 item is levied with a 25% tariff
2. The item now costs $125 in the United States
3. The export price is reduced from $100 to $80
4. The resulting price with the 25% tariff is back at $100
5. No net negative effect on the consumer
6. No reduction in demand

Will that happen? Not likely, but that’s how it would have to work. One way to consider the tariffs as a good thing, is to think of them as compensating for the further tax cuts to come for those who don’t need them. I’ve convinced myself that was a reason why Biden kept Trump’s first term China tariffs in place.