Who pockets a tariff?

[c.coyle]

I really should read invoices a little closer, not that I ever place huge orders where the tariffs would be worth worrying about.

But this got me to thinking. Who pockets the tariff I pay? Digikey (in which case it's a windfall)? The U.S. government (in which case it would be a tax)?, somebody or something else? An internet search didn't come up with an answer.

Since Section 301 tariffs were imposed by presidential order, I guess it's possible that the new prez would remove them.

 

[BigElCat]

But the Feds can't even begin to pay the interest on the debt.

Is this a pocket ?

I promise you, it is not in mine.

 

[sKiZo]

As mentioned, tariffs are charged on import and paid to the Treasury, sometimes picked up by the importer, but always ultimately paid by the consumer.

 

[NH-MAN]

The government of whatever country gets the tariff, the buyer paid the tariff incoming already and is now passing on the cost to you itemized instead of just adding it into the price sight unseen.

 

[Wolverine]

A tariff is an import tax leveled by a government against specific goods coming from another country. The tariff is paid to the country that has leveled the tariff and the tariff is paid by the importer NOT the country of origin. Tariffs are ultimately paid by the consumer because the primary goal of a tariff is by design meant to make the cost of the imported items more expensive in order to lower consumption.

Simple Example- Grapes coming from Country A are being brought by The Grape Company to be sold in Country B which has leveled a 25% tariff on grapes coming from Country A. The Grape Company pays the 25% tariff to the Treasury of Country B. To recover the cost of the additional 25% paid for the grapes The Grape Company raises the price of its grapes sold in Country B. The tariff has originated in Country B and is paid by consumers living in Country B to the government of Country B. The only way Country A is impacted by the tariff is if their grape growers start to sell less grapes to the Grape Company.

 

[blhagstrom]

However, Country A would be pressured to lower the cost of grapes to compete with grapes sourced from competing producers.

There is pressure on the country being tariffed.

The nature of business however, is that the price of grapes does go up and once up, tends to stay up. Consumers are “trained” to accept the new price. So even if the tariff goes away or the producers drop their price to compete, the customer price tends to stay high and the company profits increase.

This tends to occur for reasons outside of tariffs. Crop failures, supply disruption like wars or storms, high demand causing shortages, raw materials exhausted, embargos, political upheaval. Etc...

 

[NH-MAN]

Tariffs are used to encourage production in ones own country.

Our factory sold alot of equipment and parts in South American countries that had huge tariff's on incoming products. Our customers there had to "prove" to the country they were in that there were no manufactures of the same products made "in Country". Even after doing so we could only trickle in parts to them a few pieces at a time. If they had an order for 20 parts we had to trickle them in over a period of a month or more.

Canada is very protective of its work force so if you need to go there for work dont ever mention the word "work" or you will be denied entry at the border without an expensive work permit. I used to go there all the time for service calls and emergency calls and was always trying to find ways to lie to them why I was there.

When a huge plant is down that employs a thousand people and they are waiting for you to be there right now there is no time to get a permit: it kept getting harder and harder when they keep seeing your name.

We ended up training some people from a dealer up there as it became almost Impossible to get in. "I am going to a meeting" or going for a "sales call"
was getting old to them.

I always thought to myself why doesn't the USA do this too.

 

[Wolverine]

However, Country A would be pressured to lower the cost of grapes to compete with grapes sourced from competing producers.

There is pressure on the country being tariffed.

The nature of business however, is that the price of grapes does go up and once up, tends to stay up. Consumers are “trained” to accept the new price. So even if the tariff goes away or the producers drop their price to compete, the customer price tends to stay high and the company profits increase.

This tends to occur for reasons outside of tariffs. Crop failures, supply disruption like wars or storms, high demand causing shortages, raw materials exhausted, embargos, political upheaval. Etc...

I was really just trying to stick to answering the op's question regarding where the tariff money comes from and where the tariff money goes.

The goal is usually (but not always) to put pressure to the country being targeted with tariffs but a government really needs to do its homework before enacting tariffs. Tariffs tend to be associated with "trade wars" and are often done in a reactionary manner that does not always achieve the goal for which they were enacted. My opinion is that more often than not tariffs used to address trade issues are kind of like using a hammer as fly swatter. You might eventually kill the fly but you are probably going to end up with a lot of holes in your walls before you do.

 

[gadget73]

exactly, the idea is to make import stuff less competitive but there has to be in-country producers of the same item for this to really make any sense. Otherwise maybe I buy Japanese capacitors instead of Chinese ones.

 

[sKiZo]

Also worth mentioning - shippers can also charge tariffs, and that can be a big surprise when they show up with a package and an invoice - payment on receipt. Was a time when express mail was recommended for shipments from Canada as UPS and the like were charging ridiculous fees to cover the tariff passed on by the seller AND the shipper's fees for collecting the fee ... probably a fee for delivering the fee as well, and extra if they threw in a fi, fo, and fum. Express Mail didn't play those games - seller had to pay everything up front. Not sure if that's still done, but there it is.