<p>Assuming a competitive global market, </p>

<p>If an importer would by steel in the global market in global prices, he will have to absorb the tax cost at importing, then roll it to its customers at home
The exporter will not absorb the tax, since it can sell to other countries without it.</p>

<p>If the importer's country is big enough market-wise, then:
some tax absorption on the exporter's side might take place since the exporter will lose large sales if no absorption is made, 
And the importer will not roll all the tax to its customers since competing importers, might receive the same tax-absorption sharing with exporters (theory dictates it, all are equal in a competition),
In this case, a lower price from competitors will lead to a loss of market share</p>

CC BY-SA 4.0
2018-10-31T20:45:03.020Z
תודה שענית על השאלה שלי גיא.
user27343
CC BY-SA 4.0
2018-10-31T21:31:28.057Z
@user27343 בשמחה
Guy Louzon
CC BY-SA 4.0
2018-10-31T20:02:51.083Z
2018-10-31T20:02:51.083Z
Guy Louzon
<p>When a foreign company wants to export their goods to the U.S. they may encounter a tariff (e.g. steel). The tariff is imposed by the U.S. government at the port of entry and is a form of tax revenue. However, does the exporter's revenue take a hit or do they simply charge the importer more to take the cost of the tariff into account? Does it just depend on whatever agreement the exporter/importer come to? </p>

<tariffs>
How do tariffs work?
user27343
# How do tariffs work?

(Asked by: username_0 on 2018-10-31)

When a foreign company wants to export their goods to the U.S. they may encounter a tariff (e.g. steel). The tariff is imposed by the U.S. government at the port of entry and is a form of tax revenue. However, does the exporter's revenue take a hit or do they simply charge the importer more to take the cost of the tariff into account? Does it just depend on whatever agreement the exporter/importer come to?

**Tags:** tariffs


---

## 1 answers

### Answer by username_1 on 2018-10-31. Score: 2 | Accepted answer

Assuming a competitive global market,

If an importer would by steel in the global market in global prices, he will have to absorb the tax cost at importing, then roll it to its customers at home
The exporter will not absorb the tax, since it can sell to other countries without it.

If the importer's country is big enough market-wise, then:
some tax absorption on the exporter's side might take place since the exporter will lose large sales if no absorption is made,
And the importer will not roll all the tax to its customers since competing importers, might receive the same tax-absorption sharing with exporters (theory dictates it, all are equal in a competition),
In this case, a lower price from competitors will lead to a loss of market share

> **Comments:**
> **username_0**: תודה שענית על השאלה שלי גיא.  
> **username_1**: @username_0 בשמחה  

---

