How much would medical equipment cost after the tariff is in place?
How much medical equipment do we import?
If we restored the tariffs from 1% to 10% then you’d see about a 9% increase in the cost of imported equipment. Equipment that we don’t currently import shouldn’t be impacted.
Assuming of course that the manufacturer didn’t absorb some of the tariff to remain competitive against U.S. manufacturers.
Of course if U.S. manufacturers start producing for the price of ImportCost + 9%, then the big cost picture changes dramatically.
If we assume 50% of the product cost is labor, then government reaps (ImportCost + 9%) * 50% * 15% in income tax. Even better government avoids the outlay for supporting the unemployed which we’ll guess at 25% of the cost of the labor.
So now between income taxes generated and unemployed cost avoidance, government reaps a benefit of 50% * (15%+25%) or 20% of the product.
So the cost to the consumer on imported medical goods is 9% but government reaps a 20% windfall from income taxes and safety net avoidance costs.
This the real cost of raising the tariff and putting Americans back to work is -11%.