Representative Alexandria Okasio Cortez, alias AOC recently upset against the president when he threatened Colombia of prices if he refused to accept his citizens after being deported. In his specific hyper -ventilated fashion, he urged us to “remember” that “we play tariffs, not Columbia.”
The change is not, the AOC is not Completely Wrong but only Most The wrong looks like she remembers the at least one important thing of Ekon 101, and she is that the business does not pay anything to anyone, because the business is just a legal structure. Shares, other stakeholders, consumers, or suppliers pay and/or receive the price of sales, taxes, wages, and so on. Unfortunately, I don’t think it was his talk and he lost the important thing that is because ‘who plays tariffs’ depends almost the entry fully on the flexibility of the product. There are two charts. In each case, the tariff supply curve moves from the left side to the left on the left side, the same amount in both pictures. In each picture, the quantity of the. c to Di And the price goes through A to B As the market goes beyond one balance.
The first chart shows one Unstable Demand curve, which features the fact that major changes in price do not change the amount of demand. In this case, the main effect is that consumers buy almost almost more and more. Consumers mostly pay tariffs.
The second chart displays one Flexible Demand curve, which also small changes in the price Big Changes to the amount of demand. In this case, the main impact is that consumers buy very little of the more expensive good, and the price only increases a bit so that the seller can bear the highest price.
Such a blanket statement that “we pay prices” is wrong. This product is sensitive to market features. Someone needs to be very careful about how we explain the product market because it makes a difference. I will argue that the flexibility of coffee is low enough, which is why Starbucks (Nes Deck 🙂 Even exists. If the coffee demand was very flexible, charging a cup of $ 5 for bad coffee would not produce a line around the block at the time of the rush. But this is not what we’re talking about here. Question Here That is, what is the demand flexibility? Colombian coffee? The answer to this question is very different. There are some close alternatives to the morning waking up in the morning. But Columbia is many, very close alternatives to coffee. Right now my favorite Ethiopia is enough. I also like a good Panama Bochet. Increase the price of the Bocoet by 20 %, and I think I will drink mostly. Increase the two by 20 %, and I will go to Brazilian Santos, or Colombian, or corner.
I think the reaction of the president of Colombia tells you everything that you need to know about what they understand about Columbia coffee demands, and that is why the impact of a tariff will be to the United States on the export of Columbia coffee. Trump was soon found with his Trump Technical Target Tariff (TTTT.). So to review: +1 for TTT, for -1 AOC.
Some other points about taxes and tariff strategies.
First, this event describes a very important distinction between use Were targeted The taxes and use Blanket Tackle blanket prices, for example everything we import from a major commercial partner or Each Trading partner, definitely raise prices for consumers. How much, and what prices, depending on how easily the alternative of imported supply from a domestic supply can be. But the answer is certainly that prices go up. But I point to you two articles about which I wrote earlier:
On August 28, 2019, revenue does not hurt domestic growth. This is a really good piece. Summary that, the revenues are bad World Nim but they are not negatively negative you learned about you at school. How good/evil they are about development depends on whether you are a pure importer or a pure exporter, and how big the former IM sector is in your country. Really free trade operates only in the non -ideological world when “(a) all participants are almost equal to the capacity or (b) the dominant partner is willing to accept his dominant position to improve his dominant position to secure his dominant place for his choice.” Really, you should read it.
On February 22, 2022, the re -inclusion of basic goods and the long -term effects. This is not about direct revenue, but the extensive delays of taxes (if it happens) should be thought of reinforcing the trend before. To re-join the United States, re-join, has been going on for many years-as Quaid exposed long supply lines, it certainly helped this trend but the trend of long-term globalization was already changing, and in this article, I argue that it is likely to grow as low as the basic goods. In the context of the current debate, President Trump has certainly made the production an important goal of his administration again. So whether it is caused by TTT, or due to blanket prices, or due to tax intervals for domestic production, the direction of inflation arrows is clear.
I’m not worried about hypertension with revenue and I think if you are the biggest and strong economic actor they are probably better than bad Domestic Economic results.
The truth is more important than we learn in school. Everything that expands the economy is not good, nor does everything that is good extends the economy. Everything that is not bad causes inflation, and everything that does not cause inflation.
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