consumer action / consumer info

Who pays for Trump’s tariffs? You do of course!

Here is one example from Planet Money that illustrates the point:

“In early 2018, after the American company Whirlpool complained about foreign competition, the Trump administration implemented tariffs on washing machines imported from all over the world. It’s a 20% tariff on the first 1.2 million washing machines sold a year and a 50% tariff on every one after that.”

“While these tariffs were imposed on foreign manufacturers, the study by Flaaen, Hortaçsu, and Tintelnot, like study after study before it, finds it’s ultimately U.S. consumers who pay. New washing machines in America got about 12% more expensive. That’s not too surprising.”

“What is surprising is that dryers also got more expensive even though they weren’t subject to the tariff. That’s because washers and dryers are in econospeak “complementary goods.” They are more valuable together and are typically bought at the same time. “Before the tariffs, most manufacturers were pricing paired washer and dryer models at the exact same sticker price,” Felix Tintelnot, a co-author of the study, says. “This pricing strategy was maintained after the tariffs… so the full effect of tariffs on prices is only visible after factoring in the price of the complementary good – dryers.”

“The clear losers in the study are Americans who needed to buy a washing machine or dryer in the last couple years. But, because the tariffs made foreign washing machines more expensive, it made American-made washing machines more appealing — and it convinced LG, Samsung, and Whirlpool to create about 1,800 jobs making washing machines and dryers in the US. Cool, right? Not really. After taking into account the extra money paid for these appliances because of the tariff, those 1,800 jobs ended up costing Americans about $815,000 per job every year.”

Get more details and examples at: https://www.npr.org/sections/money/2019/05/21/725135293/more-tariffs-on-china-more-head-scratching-from-economists?utm_source=npr_newsletter&utm_medium=email&utm_content=20190521&utm_campaign=money&utm_term=nprnews

Bottom Line: Trump’s Tariffs hurt U.S. consumers! 

Source: Financial Planning for Women