Comment by Dalewyn
2 months ago
The incentive to raise prices is pressured down by customers' desire to not spend more money than they have to. If businesses can get away with raising prices that means the price was too low to begin with, tariffs or no tariffs.
That's dependent on the market actually being efficient.
If a consumer walks into a store and sees coffeemakers by ten different brands, but seven are all actually owned by one giant manufacturer and the other three by some American almost-as-giant manufacturer, then a tariff on the former will drive up the price of seven of them and the American manufacturer will almost certainly raise the prices on the remaining three. Otherwise, it's just bad business.
Oops, in "actually owned by one giant manufacturer", I meant to say "actually owned by one giant Chinese manufacturer".