So we build a wall between here and Mexico. Who pays for it? Initially, we do. It becomes a budget item, and we pay to build it. Then what? President Donald Trump imposes his 20 percent tariff on goods imported from Mexico, and that’s supposed to reimburse the U.S. Fat chance, that.
The exporter has a price that has been established against competition, a price that covers expenses such as materials, facilities and labor and the small profit typical of competitive industry. So, the exporter can’t swallow the tariff. It gets added to the import price. The importer has expenses that are added on, and the small profit that sustains the business, and the distributor faces the same business model — recoup expenses and take a percentage profit.
That brings us to the retailer, and, you guessed it, recover expenses and make a small profit.
So who pays the tariff? The end user — that’s us, and we keep paying it as long as that tariff is in place. Given that the price of a product goes up, it probably costs some jobs on both sides of the border as well. If less of a product is sold, the usual result of price increases, less labor is needed, profits are smaller, and staff cuts are inevitable.
— Fred Lierman, Rockford
