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Will US consumers notice they are being taxed?

| Posted by: Paul Donovan | Tags: Paul Donovan Weekly

  • Trade protection is a tax on shoppers. US tariffs force buyers of imports to pay a tax. Alternatively, shoppers buy more expensive local goods, which they would not have bought normally.
  • Why do shoppers not rise up in revolt over the tax increase? Shoppers may not notice that they are paying a tax.
  • President Trump's tax on washing machines and solar panels is not visible to American shoppers. Shoppers notice price changes for things they buy often. Americans do not buy washing machines or solar panels very often. Thus, the tax on imported washing machines and solar panels may go unnoticed.
  • Shoppers may notice a tax on steel and aluminum. Americans buy imported metal if they buy American-made products using imported metal. However, the tax is hard to see. The price of imported aluminum in a beer can is a small part of the price an American beer drinker pays. For shoppers to notice, metal importers would need to be very clear about the trade tax's role in their product's price change.
  • President Trump's current trade taxes are unlikely to be visible to US shoppers. This limits their negative effect. If things shoppers buy often are taxed, then Americans will notice.