Who winds up paying the cost of a tariff depends on how the tariff is applied, according to a new study by economists at the Federal Reserve and the University of Chicago that analyzed the impact of recent tariffs on washing machines. When tariffs were applied narrowly, only affecting a few countries in 2012 and 2016, the cost of washing machines for consumers fell as multinational corporations decided to absorb the expense of relocating their production to low-cost countries that weren’t subject to the tariff.
But when the tariffs were applied more broadly in 2018, producers chose to relocate some production in the United States, creating roughly 1,800 new jobs. Yet the price of those tariffs was borne mostly by consumers, who paid an additional $1.5 billion due to increased prices on washers and dryers.
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