The Pamphlet Collection of Sir Robert Stout: Volume 51
6. Import duties on foreign goods fall on the foreigner, and are paid by him
6. Import duties on foreign goods fall on the foreigner, and are paid by him.
This is absolutely the reverse of the fact, but the assertion has been frequently made, with a jaunty indifference as to its truth, in order to coax the consumer into acquiescence with levying duties on foreign goods. He is told, "Let us lay on, say, 10 per cent, import duty on such or such a foreign article. You will not have to pay it; oh! dear, no! It is the foreigner who will bear it. He will let you have his goods 10 per cent, cheaper than you pay now, so that the duty will make no difference to you, and the revenue will be benefited at the expense of the foreigner." Very tempting, but alas! quite untrue. The foreign producer will not, and cannot, make the reduction. Before the duty is laid on, competition has already reduced the price of the article as low as it could go without trenching on a fair living profit. Such a profit leaves no margin for such a reduction. The imposition of the duty by no means diminishes the amount of labour and capital expended on the production of the article. The foreign producer may, if the imposition of duty takes him by surprise and he has a large stock, submit to some deduction for the moment. But permanently he must get the old price, or the importing country must do without the article. If the importing country will, however, have the article, it must itself bear the 10 per cent, duty which it imposes. Suppose that England laid an import duty of a penny a pound on raw cotton, does anyone for a moment imagine that the price of cotton would thereupon fall a penny a pound in America, so that cotton would stand in to English spinners no more than it did before the duty? Who, in this case, would have to bear and pay the duty—the American grower or the English consumer? Can there be a doubt as to the reply? Again, if putting a duty on foreign imports makes no difference to the consumers of the importing country, then, of course, neither would taking the duty off make any difference to them. So that, according to this doctrine, if page 21 England were to abolish her import duty on tea, the Chinese would get all the benefit, and the English consumers would still pay the same price as before! But as the subject is again referred to under the next head, we will not enlarge upon it here. The proposition implies that the prices which we now pay for foreign goods are so exorbitant, that they could easily be reduced by the amount of import duties which we might levy on them—which is simply absurd. Of course, some slight and temporary variations in the relative demand and supply might occasion some slight and temporary variations in prices, but they would be both trifling and transient. To sum up, the truth is that Import Duties on Foreign Goods Fall on the Consumers of the Importing Country, and are Paid by them.