<p>Well, due to Lerner's Simmetry Theorem, an import tax has the same effect of an export tax. When China makes its imports from the US more expensive, its exports get more expensive too.</p>

CC BY-SA 4.0
2018-07-12T00:38:52.250Z
So isn't that like saying an American export tax on American pork has the same effect on the price of pork in the US as an American tariff on Chinese pork? But can't the effect of a Chinese tariff on American pork have a completely different affect on the price of pork in the US?

I may be misunderstanding.
partyphysics
CC BY-SA 4.0
2018-07-12T00:56:20.597Z
This is how I thought it worked: A Chinese tariff on American pork encourages American pork producers to export less pork and sell more in the US. This means an increase in pork supply in the US without an increase in demand and thus pork prices in the US should drop. Is that thought process valid?
partyphysics
CC BY-SA 4.0
2018-07-12T17:36:41.013Z
The idea is that regardless of the tax policy, relative prices should remain the same. Meaning that a country can only export more by _importing_ more. And that import taxes not only make a country import less, it'll export less too.

[Lerner (1936)](https://www.jstor.org/stable/pdf/2549223.pdf?casa_token=s5eyZ4_9ztYAAAAA:3XtAcN67sQZGkhW1YkuXR9_8R3E60JVDgZowpp4zyOmik_unEc9W6XkrRrEANwOcrGHkAnZ7_1Zyd9n3g1D9h_EvacFpgZcNu02ec6i_yKazRUhiUR_W) is a great paper, you should at least skim it.
Pedro Cavalcante
CC BY-SA 4.0
2018-07-12T17:45:14.437Z
Despite Lerner, there's sides of this story you should know too. The first is general equilibrium reasoning.

In your example, why don't american producers produce pork in the first place, regardless of tariffs? Well, because american capital and labor can be better employed in other, more lucrative activities. This is known as _Revealed Profit Maximization_. We can infer that whatever firms do is a result of their attempts to maximize expected profits. Forcing capital and labor to be employed in activies that were revealed not to be as profitable makes your country _poorer_.
Pedro Cavalcante
CC BY-SA 4.0
2018-07-12T17:49:14.377Z
The second is floating exchange rates. An import tax increases supply of your country's currency (because people in your country now pay _more_ for the _same_ amount of stuff they import), making exchange rates appreciate. This makes it more expensive for other countries to import your country's exports. Thus, import taxes reduce exports.
Pedro Cavalcante
CC BY-SA 4.0
2018-07-10T19:10:58.400Z
2018-07-10T19:10:58.400Z
Pedro Cavalcante
<p>This <a href="http://money.cnn.com/2018/07/06/news/economy/china-us-tariffs-list/index.html" rel="nofollow noreferrer">CNN article</a> seems to imply that Chinese tariffs on American goods will make them more expensive to American consumers. Is this true? I did think that tariffs by your own country on imported foreign goods made those imported goods more expensive, but I also thought tariffs by a foreign country on goods your country exports actually made those goods cheaper for you.</p>

<p>Example statement in the article:</p>

<blockquote>
  <p>The cost of the new tariffs can be found in the roughly 1,300 individual products that have suddenly become more expensive.</p>
</blockquote>

<p>This statement is followed by a list of "US goods hit by Chinese tariffs
". Clearly the implication is these goods are among the products that have become more expensive.</p>

CC BY-SA 4.0
2018-07-06T17:37:57.057Z
"Washington put tariffs on $34 billion worth of Chinese goods on Friday, and Beijing immediately responded with penalties of an equal scale.
The cost of the new tariffs can be found in the roughly 1,300 individual products that have suddenly become more expensive."
Giskard
CC BY-SA 4.0
2018-07-06T23:07:12.283Z
@denesp Thanks for your comment. I did actually read the quotation you included, and it left me with the question I asked above. 

Are you saying the article does not imply that the Chinese tariffs on American goods will make those goods more expensive?
partyphysics
CC BY-SA 4.0
2018-07-06T23:42:13.457Z
Not to the American consumer, no. The quoted part mentions both American and Chinese tariffs. There is no implication that American tariffs make American products more expensive to the American consumers.
Giskard
<international-trade><price><usa><china><tariffs>
Do Chinese tariffs on American goods make them more expensive to American consumers?
partyphysics
# Do Chinese tariffs on American goods make them more expensive to American consumers?

(Asked by: username_0 on 2018-07-06)

This [CNN article](http://money.cnn.com/2018/07/06/news/economy/china-us-tariffs-list/index.html) seems to imply that Chinese tariffs on American goods will make them more expensive to American consumers. Is this true? I did think that tariffs by your own country on imported foreign goods made those imported goods more expensive, but I also thought tariffs by a foreign country on goods your country exports actually made those goods cheaper for you.

Example statement in the article:

> The cost of the new tariffs can be found in the roughly 1,300 individual products that have suddenly become more expensive.

This statement is followed by a list of "US goods hit by Chinese tariffs
". Clearly the implication is these goods are among the products that have become more expensive.

**Tags:** international-trade, price, usa, china, tariffs
> **Comments:**
> **username_1**: "Washington put tariffs on $34 billion worth of Chinese goods on Friday, and Beijing immediately responded with penalties of an equal scale. The cost of the new tariffs can be found in the roughly 1,300 individual products that have suddenly become more expensive."  
> **username_0**: @denesp Thanks for your comment. I did actually read the quotation you included, and it left me with the question I asked above.   Are you saying the article does not imply that the Chinese tariffs on American goods will make those goods more expensive?  
> **username_1**: Not to the American consumer, no. The quoted part mentions both American and Chinese tariffs. There is no implication that American tariffs make American products more expensive to the American consumers.  

---

## 1 answers

### Answer by username_2 on 2018-07-10. Score: 1

Well, due to Lerner's Simmetry Theorem, an import tax has the same effect of an export tax. When China makes its imports from the US more expensive, its exports get more expensive too.

> **Comments:**
> **username_0**: So isn't that like saying an American export tax on American pork has the same effect on the price of pork in the US as an American tariff on Chinese pork? But can't the effect of a Chinese tariff on American pork have a completely different affect on the price of pork in the US?  I may be misunderstanding.  
> **username_0**: This is how I thought it worked: A Chinese tariff on American pork encourages American pork producers to export less pork and sell more in the US. This means an increase in pork supply in the US without an increase in demand and thus pork prices in the US should drop. Is that thought process valid?  
> **username_2**: The idea is that regardless of the tax policy, relative prices should remain the same. Meaning that a country can only export more by _importing_ more. And that import taxes not only make a country import less, it'll export less too.  [Lerner (1936)](https://www.jstor.org/stable/pdf/2549223.pdf?casa_token=s5eyZ4_9ztYAAAAA:3XtAcN67sQZGkhW1YkuXR9_8R3E60JVDgZowpp4zyOmik_unEc9W6XkrRrEANwOcrGHkAnZ7_1Zyd9n3g1D9h_EvacFpgZcNu02ec6i_yKazRUhiUR_W) is a great paper, you should at least skim it.  
> **username_2**: Despite Lerner, there's sides of this story you should know too. The first is general equilibrium reasoning.  In your example, why don't american producers produce pork in the first place, regardless of tariffs? Well, because american capital and labor can be better employed in other, more lucrative activities. This is known as _Revealed Profit Maximization_. We can infer that whatever firms do is a result of their attempts to maximize expected profits. Forcing capital and labor to be employed in activies that were revealed not to be as profitable makes your country _poorer_.  
> **username_2**: The second is floating exchange rates. An import tax increases supply of your country's currency (because people in your country now pay _more_ for the _same_ amount of stuff they import), making exchange rates appreciate. This makes it more expensive for other countries to import your country's exports. Thus, import taxes reduce exports.  

---

