Don_Dickle@lemmy.world to Explain Like I'm Five@lemmy.worldEnglish · 26 days agoELI5 How does a tariff against a major trading partner effect the common pleebs?message-squaremessage-square12fedilinkarrow-up11arrow-down11
arrow-up10arrow-down1message-squareELI5 How does a tariff against a major trading partner effect the common pleebs?Don_Dickle@lemmy.world to Explain Like I'm Five@lemmy.worldEnglish · 26 days agomessage-square12fedilink
minus-squareYoFrodo@lemmy.worldlinkfedilinkEnglisharrow-up2·edit-226 days agoLet’s say you want to sell lemonade for $1 per cup. Due to tariffs you must now pay 50 cents to sell a cup of lemonade. So what do you do about that? Do you: A. Take the profit loss and accept that while you still charge $1 you now only make 50 cents per cup B. Increase costs by 50 cents so your income per cup remains at $1.
minus-squaresunzu2@thebrainbin.orglinkfedilinkarrow-up1·26 days agoThe answer is in between depending on profit margin and market conditions… If nobody buys your shit for 1.50… You will be forced to eat the profit margin
minus-squareSolidShake@lemmy.worldlinkfedilinkEnglisharrow-up1·26 days agoI think you’d be surprised at how many businesses don’t like any sort of income loss. So the consumer pays the full tariff every time. The lemonade is now $1.50
minus-squaresunzu2@thebrainbin.orglinkfedilinkarrow-up0·26 days agoIf demand is inelastic… Sure… Food rent gas But people can easily either not buy or find a substitute for lemonade lol… That’s bow free markets generally work Electronics can be used until they break!
minus-squareSolidShake@lemmy.worldlinkfedilinkEnglisharrow-up1·26 days agoNon tariff lemonade is $2 because it’s local and “organic”. And it’s not gross Commie lemonade.
Let’s say you want to sell lemonade for $1 per cup. Due to tariffs you must now pay 50 cents to sell a cup of lemonade. So what do you do about that?
Do you:
A. Take the profit loss and accept that while you still charge $1 you now only make 50 cents per cup
B. Increase costs by 50 cents so your income per cup remains at $1.
The answer is in between depending on profit margin and market conditions…
If nobody buys your shit for 1.50… You will be forced to eat the profit margin
I think you’d be surprised at how many businesses don’t like any sort of income loss. So the consumer pays the full tariff every time. The lemonade is now $1.50
If demand is inelastic… Sure… Food rent gas
But people can easily either not buy or find a substitute for lemonade lol… That’s bow free markets generally work
Electronics can be used until they break!
Non tariff lemonade is $2 because it’s local and “organic”. And it’s not gross Commie lemonade.