I have a question

[Ohiogal]

for any of you DUers who are knowledgeable about tariffs and how they work.

For example .... the tariff China is going to impose on American soybeans. That means that American farmers will be selling a lot fewer soybeans to China, correct? As for the Chinese businesses that still continue to purchase American soybeans .... they will have to pay a higher price for them. Who ends up pocketing the difference in price? Is it like a tax that goes to the Chinese government? I have a hard time believing that the extra $ goes to the American farmers. Thanks for any input, I apologize for sounding ignorant.

[JustABozoOnThisBus]

1. I think the Chinese government gets the money.

As for the impact, 1) the Chinese may pay more for soybeans, or 2) the Americans may lower the price on soybeans to "eat" the increase, or 3) the Chinese might buy soybeans elsewhere, like Brazil (and American farmers might sell to Brazil to meet their new, unexpected, unexplained demand )

I'd guess the last option will prevail. American farmers will sell to anyone but China, adding to the worldwide supply of soybeans, and China will buy from anyone but the U.S., purchasing from the worldwide supply of soybeans. Sort of like oil.

[dalton99a]

2. Yep. Tariffs are taxes on consumers

Chinese consumers will pay higher prices:

https://www.csmonitor.com/Business/2018/0405/In-US-China-trade-spat-soybeans-symbolize-two-economies-intertwined

Even with the tariffs, China will be forced to buy US soybeans, causing its own consumers to pay higher prices for food. (Soybeans are crushed, yielding soybean oil, which is used in a slew of products from margarine to frozen foods, and also yielding soybean meal, which is fed to livestock.) It’s the livestock feed that will be difficult to replace in the short term, so Chinese consumers could see significant rises in meat prices, says Wendong Zhang, an economics professor at Iowa State University in Ames. By taking actions that will hurt its own consumers, China is signaling its willingness to fight US trade tariffs, he adds. For Beijing, “soybeans are a nuclear option.”

[Ohiogal]

3. Thank you both!

[Blue_true]

4. I understand tariffs to be an entry tax.

Should mean the government gets the money, or Duty.

The problem that American farmers have is that China has been developing countries in South America as suppliers. Those countries will offer a lower price alternative and Chinese import companies will likely use them. Soybeans from Brazil, for example, have the same nutrient and protein content as US soybeans, Brazil also had a large production capacity and can absorb demand more demand coming from Chinese soybean importers. My feeling is that once the Chinese soybean market leaves the US, it is gone for good.