How Does a Trade War Work?
The WTO says customs duties on imports are called tariffs.
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1.What is a tariff?
The WTO says customs duties on imports are called tariffs.
2.On paper, who usually pays the tariff first?
Legally the importer, like Leo, pays the tariff; economically it depends on who changes prices.
3.In case A, the helmet costs 100 and the tariff is 10 percent. What does Leo pay?
In the made-up example, 100 plus a 10 tariff is 110.
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Sources (7)
- Tariffs (WTO, Goods Council tariff page)
- Settling disputes: a unique contribution (WTO, Understanding the WTO)
- Amiti, Redding, Weinstein: The Impact of the 2018 Trade War on U.S. Prices and Welfare (NBER Working Paper 25672; JEP 33(4), 2019)
- Cavallo, Gopinath, Neiman, Tang: Tariff Passthrough at the Border and at the Store (NBER WP 26396; AER: Insights 2021)
- Protectionism (Milestones in the History of U.S. Foreign Relations, Office of the Historian, U.S. Department of State)
- Eigene Rechnung: Preiskette
- Exposé Folge 246 (05_szenen/exposee_v1.json)
Education only. Not financial advice.