This article dissects Representative Alexandria Ocasio-Cortez's assertion that 'we pay the tariffs' when President Trump threatened Colombia with tariffs. It explains, through supply and demand curves, how the burden of tariffs depends on the elasticity of demand for the affected product. Using Colombian coffee as an example, the article argues that the elasticity of demand suggests the Colombian President understands the potential impact of tariffs on his exports.
Representative Alexandria Ocasio-Cortez, aka AOC, recently railed against the President when he threatened Colombia with tariffs if they should refuse to accept their citizens being deported back to them. In her typical hyperventilated fashion, she implored us to “remember” that “WE pay the tariffs, not Colombia.”wrong. She seems to remember at least one important thing from Econ 101 and that is that businesses don’t pay anything to anyone, since a business is just a legal structure.
I think the reaction of the Columbian President tells you everything you need to know about what he perceives about the demand for Columbian coffee and therefore the impact a tariff would have on exports of Columbian coffee to the United States. Trump very quickly got what he wanted with his Trump Tactical Targeted Tariffs . So to review: +1 for TTTT, -1 for AOC.trading partner, definitely increase prices for consumers.
TARIFFS ECONOMICS DEMAND SUPPLY COLOMBIA
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