When the U.S. imposes a 10 percent tariff on a product originally priced at $100, such as sneakers from Mexico, Mexican producers may reduce the pre-tariff price to $95 to maintain competitiveness, which is achieved by lowering real wages, reducing production costs, or tightening profit margins.

Authors

• Person: Not available Organization: Federal Reserve Bank of Dallas
  U.S. tariff outcomes dependent on trading partner responses

Sources

• U.S. tariff outcomes dependent on trading partner responses www.dallasfed.org Federal Reserve Bank of Dallas via serper

Referenced by nodes (4)

• U.S. location
• tariff concept
• Mexico location
• production costs concept