No one knows what is going to happen. This might happen.
But economics is not a science there are no laws. Its why economists have physics envy
Discussion
It’s clear how tariffs work and who pays them.
No its not
Its a soft relationship, like money supply and purchasing power.
The x% of new money printed is not x% loss in purchasing power
Likewise Y% change in tarifd (up or down) is not Y% in price change to the consumer
The system is much less casual than that
Causal*
Yes, it is complicated, but, directionally, local companies that import and their American consumers, will see their prices go up. That’s the entire point of tariffs: To make imports more expensive to consumers than domestic alternatives.
Would you agree with Donald Trump saying that other nations will pay to export to America, even setting up an External Revenue Service, as if tariffs are a tax that other countries pay?
Tariffs do what you propose if there is no premium left for selling into a market
But if the seller has been monetizing the premium (for itself or somewhere in its supplu chain), the seller will accept a new price until they cant
If you believe the current market is efficient then tariffs will make things more expensive.
If you believe the markets are inefficient, where sellers or their downstream supply chain, are enjoying some extra juice, things wont become more expensive.
The US has a lot of buying power and sellers, if they can afford it, will eat the tariff. If they cant things will get more expensive.
Consensus is the former, but Bessent and Lutnick believe the latter.
Time will tell.
Tariffs can be deflationary, maybe just for a moment though