Co-blogger John Murphy, “Why should America pay tariffs?” May 29, 2025 points out that US tariffs are primarily paid by the United States. It cites the relay literature.
I note that trade occurs between individuals and businesses, not between countries. This is true and important, but it is not a relief to the problem of those who are burdened by customs.
Tax and tax. There is an easy way to assess who will bear the tax burden. Look at the elasticity of supply and demand.
If our demand is less elastic and the supply of exporters is more elastic, we will bear most of the tax burden. However, if demand is highly elastic and exporter’s supply is less elastic, exporters will bear most of their tax burden.
December 19, 2024, with the idea of ”Taxes hurt both Canadians and America” defense, here’s what I wrote about the issue:
Many people, like me, who are critical of tariffs, claim that US consumers are owing the full cost of tariffs. For example, Rachel Lane of CBS News, who wrote in August 2019, said, “The fact is that companies here pay duties on US customs and border security when Chinese goods reach the US coast.” It is true that America writes checks. But one of the first things economists teach undergraduates about taxes is that knowing who writes a check doesn’t know exactly who is responsible for the tax. It is the relative elasticity of supply and demand that determines the division of the burden on producers (exports) and consumers (importers).
It is considered Canadian oil. On the one hand, many Americans in the Midwest states rely on Canada. However, depending on the tariff, they become probabilistic when oil is shipped by train from other parts of the United States. It’s expensive, but it’s a way to adjust it. However, Canadian oil producers have few alternative customers to sell outside of the US. This good option is lacking, which means less elasticity in the supply. They could absorb a large portion of the tariff costs by not raising prices too much. result? Canadian oil producers will bear more than half of their tariff burden on oil. The result depends on the product in question. The fact that so many Canadians are sweating suggests that Trump is threatening.
Generalisation is that US consumers are certainly burdened with most of the burden of the US government not possible. But there’s no need to do that. That’s an empirical question.
John rests on many debates about methodological individualism. However, focusing on the mitigation of supply and demand elasticity is consistent with methodological individualism.
