To the editor:
People go into business to make money. Businesses compete on quality and the price of their goods. They want to maximize profit. So let’s compare two identical businesses except one is an American firm and the other a foreigner firm. Before tariffs, each business sold a product of the same quality for $100. If the U.S. government places a 100% tariff on the foreign owned business, the business will have to charge about $200 for their product. If the foreign owned business were to pay the tariff, they would always lose money. However, the American owned business can now raise their price and still have a competitive advantage, so long as they keep the price below $200. Because the American owned business will raise their price to maximize profit and because they can charge less than the foreign owned company and still offer a better price, the American consumer will pay more.
In 2016 we were told that Mexico would pay to build a wall at our southern border. While it was appealing to think that somebody else would pay the bill and we would get the benefit, this did not happen. We are now being told that somebody else will pay the cost of the proposed tariffs and we will get the benefit. While this again sounds great, it makes no sense. Perhaps this is why economists have rejected the idea of tariffs as bad for the American economy and for the American consumer.
Milton Eder Maple City
