Co-blogger John Murphy, “Why do Americans have to pay tariffs?” May 29, 2025 points out that US tariffs are primarily paid by Americans. He quotes Related literature.
He then further notes that trade occurs between businesses, not countries. This is true and important, but it has nothing to do with the problem of those who are responsible for customs.
Customs duties are taxes. 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 Americans will bear the majority of our tax burden. However, if demand is highly elastic and exporter’s supply is less elastic, exporters will bear most of their tax burden.
This is what I wrote about the issue with ” .Tariffs hurt Canadians and Americans alike,’ Definition of ideasDecember 19, 2024:
Many people, like me, who are critical of tariffs, claim that US consumers are owing the full cost of tariffs. For example, Rachel Rain from CBS News in August 2019 It is listed“In fact, when Chinese goods reach the American coast, the companies here pay tariffs on US customs and border security.” It is true that Americans are writing 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 burdens on producers (exporters) and consumers (importers).
Consider Canadian oils. On the one hand, many Americans in the Midwest states rely on oil from Canada. However, depending on the tariff, they will probably ship oil 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 to non-Americans. 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 many Canadians are sweating the tariffs Trump is threatening suggests they think they will bear a significant portion of the burden.
Generalised, it is probably true that US consumers are owed most of the tariffs imposed by the US government. But there is no need for that. That’s an empirical question.
John rests on many debates about methodological individualism. However, noting the association between supply and demand resilience is not inconsistent with methodological individualism.
