Who Pays for Tariffs

President Trump should target elasticity and not origin.

Since the start of the year, the U.S. dollar has lost approximately 12% of its value. That drop has made the currencies of other major U.S. trading partners stronger in relative terms and less competitive.

For exporters selling into the U.S., this is already a problem: a stronger euro, yen, or yuan means their goods are more expensive for American buyers. Now add a new U.S. tariff on top.

In normal times, exporters might cut prices to “eat” the tariff and protect market share. But with currencies already stronger, their margins are squeezed, leaving little room to absorb the extra cost. The result is that more of the tariff burden passes directly to U.S. consumers.

Front-Loading and Elasticity

When tariffs are announced, importers often rush to bring goods in before they take effect, a phenomenon known as front-loading.

In this case, essentials: ie, food, industrial mate…