Lots of easily digestible content on the effect of tariffs. Tariffs form the bulk of this news letter.
Tl;dr @lynaldencontact seems to believe most of it is carried by American consumers, not foreign companies.
As of July, there has been no reduction in import prices since Liberation Day, which are measured pre-tariff. Thus, foreign exporters in aggregate are not absorbing the tariff costs by reducing prices. This means most or all of the tariffs are being paid by American consumers and American businesses. For context, it takes about a 13% reduction in prices to offset a 15% tariff, or a 16% reduction in prices to offset a 20% tariff.
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They’re still recent enough that there is plausible deniability and debate about what the impacts will be. Importers front-ran the tariffs, meaning they imported extra goods in Q1 before the tariffs came into effect, which gave them some flexibility to keep prices low in Q2 even though ongoing imports were now tariffed. And some of the later tariffs haven’t kicked in until here in Q3. So, people can theorize about foreigners paying tariffs until a couple more quarters of data come in, even as current data show no decrease in prices by exporters, meaning that American entities are indeed absorbing the cost, as a large domestic tax increase.
On a side note, a bit disappointed by the inclusion of grok or ChatGPT content in her letter. Her writings don't need it to increase their value. Won't find alpha from a tool that predicts the most likely outcome based on an amalgam from all the financial content available online. To be fair, she just uses it to corroborate a point she made earlier.
The numbers are pretty clear, but if we go ahead and ask ChatGPT who is paying the tariffs with citations, it’ll say Americans