TARIFFS, MARKET DYNAMICS, AND PROTECTING U.S. CONSUMERS: A CASE FOR STRATEGIC IMPORT POLICY

Abstract

 This article analyzes the effect of tariffs on U.S. consumers by examining the possibility that tariffs could be “absorbed” along the supply chain and not passed through to the consumer in the form of higher prices. Country manufacturing and us seafood importing Data from Chinese manufacturers and US importers make clear that both foreign manufacturers and domestic importers have significant price flexibility that can help blunt the effect of tariffs. The study shows that Chinese firms frequently practice discriminatory pricing among destinations, that is, prices are adjusted in response to local competition and tariffs, which implies they have room to absorb the costs deriving from tariffs. Moreover, U.S. importers are discovered to hold large profit margins, indicating they have plenty of margins to accommodate tariffs without passing them on to American consumers. But the study also shows that without proper regulation, importers will opt to keep or increase their mark-up, rather than lower prices. This paper will suggest that tariffs should not automatically mean higher consumer prices and will describe a strategic approach to imports. The framework tabled by the Opposition involves price benchmarking, mandatory reporting of profit margins as well as mechanism for the importers to be compensated for absorbing the costs of the tariffs. Through use of these measures, the U.S will be able to protect national interests, promote domestic production and reduce the inflationary repercussions of tariffs on consumers. The results in this paper provide insights into the general implications of tariff dynamics, and provide policy recommendations that can be utilized by policy-makers to soften the impact of tariffs on U.S. households