Trade · 6 pages · 12 min

Why consumers and producers do not want the same tariff

A tariff raises the domestic price, which helps sellers of that good and costs the people who buy it.

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From the opening

Consumers and producers do not want the same tariff because the duty drives a wedge into the domestic price of the imported good. Producers who compete with that import receive a higher price, and buyers of the good pay the higher price. The opening covers the duty lifts the internal price, competing producers receive more, and buyers pay the same rise.

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Inside

  • The duty lifts the internal price
  • Competing producers receive more
  • Buyers pay the same rise
  • Downstream users side with buyers
  • Where the idea stops applying
  • A distinction worth keeping

Sources

  • Tariff price wedge
  • Incidence of a tariff on buyers and sellers