Yes, you read that correctly. I have seen numerous headlines claiming the tariff will make Mexico pay for the wall. That is misleading at the very least.
No business, no company or corporation pays any tax, fee or penalty. It is passed to the consumer as part of the price of the product or service. It is part of the cost of delivering the product to the end user just as is the electric bill, shipping, etc.
Now, it is possible this is simply posturing to try and leverage a deal down the road. However, I want you to think about what each action of the government costs you in the end. Also, the president cannot do this alone, it will have to be legislation passed by Congress.
Twenty-five percent of our imports from Mexico are in the auto industry- cars, parts, and accessories totaling $75 billion. Refrigerators, tomatoes, and beer are significant imports, as well. An additional 20% added to the cost of these items will be paid by the consumer.
Money does not come from government, nor does it come from businesses. The economy runs on money earned by people who then pay taxes and buy products and services.
You and I pay for EVERYTHING.
Next time you see or hear of government sticking it to a company for perceived wrongs, or a country over trade - understand we are the ones who pay in the end.
Photo Credit: "Tomatoes", © 2012 Tony, Flickr | CC-BY-ND