Transcript
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Introduces Trump's claim that tariffs on foreign countries will enrich American citizens. It then raises the central question of whether foreigners actually pay those tariffs.
Speaker A
Tariff for foreigners enrich the citizens.That was Donald Trump's promise on January 20, 2025, when he declared, instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.Sounds great in theory, but is Trump's claim that tariffs are paid by foreigners, not Americans, actually true?
Explains that tariffs are collected from domestic importers at the border, not foreign governments. It also shows how tariffs raise consumer prices and create economic losses.
Speaker A
Well, here's the reality.A tariff is a tax on imported goods, and it's collected at the border from the importing domestic firm, not the foreign government.In today's interconnected economic environment, foreign exporters rarely absorb the full cost.Therefore, importers must pass it on to consumers through higher prices.The figure on screen shows how a tariff shifts the supply curve upward, reducing imports, raising domestic prices and creating a deadweight loss in consumer surplus.
Evaluates Trump's claim more carefully and concludes it is only partly true in theory. The transcript cites evidence that most tariff costs are passed on to American consumers.
Speaker A
So is Trump right?Well, partially.
Tariffs do generate government revenue, however.Amiti, Redding and Weinstein found close to 100% pass through to American consumers from Trump's 2018 tariffs, meaning foreigners barely paid a cent.The claim is only valid if foreign supply is perfectly inelastic, which it just isn't.So next time someone says tariffs make foreigners pay, remember the receipt usually lands in your shopping cart.