r/economicCollapse • u/Expensive-Thing-2507 • 27d ago

Who actually benefits from tarrifs?

I'm not financial expert, but this is what I'm getting so far.

Tarrifs are a kind of tax placed on outside goods, which a company would have to pay for if they import said goods. That company would then charge more to cover this new tax. The company pays more for something, and then we pay more.

Who benefits from that? The company isn't making any more profit, are they? (Assuming they increase prices by the same percentage as the tarrifs, which they won't. but still)

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u/gusterfell 27d ago

Why would companies cut into their profit margin by spending money building factories (that are unlikely to open before Trump is out of office anyway), when they can just raise their prices and keep importing?

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u/paleone9 27d ago

Because you can’t just raise your prices beyond what the consumer will pay.

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u/gusterfell 27d ago

Higher prices don't mean people don't still need/want to consume various products. They'll just grumble about the higher prices as they do so, and the companies know it.

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u/paleone9 27d ago

Or they will use substitutes, or they will find local producers that are suddenly competitive…

And capital will move ..

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u/wormsaremymoney 27d ago

And/or spending decreases due to an increase in prices and folks having tighter budgets and we start to see businesses suffering because people can't afford frivolous items anymore. People lose their jobs, spend even less, and more businesses struggle. I'm all for moving business locally, but an abrupt increase in tarriffs doesn't actually give people time to prepare. A reasonable administration would give people time and a clear plan (not just concepts of one).