Import Tariff Deadweight Loss Simulator

Import Tariff

Tariff rate 25%

Prices

World price

–

Domestic price

–

Imports, free trade

–

Imports, w/ tariff

–

Who Gets the Money?

→ Domestic producers

–

→ Government revenue

–

→ Deadweight loss (destroyed, nobody gets it)

–

Total extra cost to consumers

–

Domestic price ≈ world price + tariff. The rise transfers surplus from consumers to producers (blue) and to government (purple) — but the red triangles are trades that no longer happen at all: value destroyed, captured by no one.

Demand Supply Producer transfer Govt revenue Deadweight loss

Deadweight loss vs. tariff rate — grows faster than the rate itself