LogFAQs > #984575530

So just wanted to do some napkin math on how our tariffs are meant to work.... Let's assume countries that trade with each other only sell 1 product per country and only buy 1 product per country...

Country A sells $60,000 of Corn to Country B

Country B sells $90,000 worth of Soybeans to Country A

Country A considers this to be a "losing" Trade Deficit so they impose a 33% Tariff on further Soybeans purchased from County B. The 33% is calculated by dividing the deficit of $30,000 by the B->A exports of $90,000.

In theory if the two countries buy the exact same amount of Corn and Soybeans the following year then Country A will still pay $90,000 and County B will still pay $60,000 resulting in the exact same 30k deficit.

But now Country A will also generate 30k in Tariff revenue that will be paid by their own importers/consumers.

So businesses in country A are still only generating 60k in sales, but now as a country they are spending 120k, of which 30k is kept by the government in collected Tariffs.

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Does that about sum it up?