• Sceptiksky@leminal.space
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    5 hours ago

    Wouldn’t refunding the amount of the tariff to the customer fix this? Ignoring the very important diplomatic and retaliation tariffs which makes the whole post unusable for real life

    • Canada sells a product A $100.
    • Tariffs makes it $120 when you buy it
    • so Canada gets $100, USA gets $20, USA customer pays $120.
    • USA has now $20, they can directly refund the customer for $20 via a policy to reduce the price of the category of A.
    • So customer gets $20 reduction of the product A via tax something, so USA now has $0 and USA customer actually paid only $100.
    • Except now if USA company make the product A they can sell it for like $100 and customer pays $80.
    • There is a slight increase of imported goods price here because tariffs cannot actually refund $20, it will be a % of the local vs imported production.
    • Over time you can expect to get a local advantage because of this price inequality, so local companies will be subsidized by imports until imports are no longer significant.

    Where am I wrong here ?

    • Dnb@lemmy.dbzer0.com
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      3 hours ago

      In your scenario how is the local made $100 item bought at $80? Where is a $20 refund paid from? You are double spending it on both imported and local goods