Bob in the US buys avocados from Alicia in MX. Bob paid Alicia $100 pre tarrif. If Alicia wants the same net, she would have to sell for $133 with the 25% tarrif.
Price P−0.25P=net n
0.75P=n
P=n/0.75
P=1.33n
This is ok for Alicia, she lives on pesos
Bob lives on fruits and nuts, 44% of which come from MX
To support this Bob needs to pay 15% more buying fruits and nuts.
1.33*.44+.56 ~= 1.15
Fruits and nuts are 10% of his expenses
1.15*.1+.9=1.015
If Bob previously netted $100 selling avocados @ $200 he now needs to net $102 rounding pennies. So
133+102= $237 a $37 increase or 19%
A 25% tarrif does not mean a 25% increase in price.
Is there some truth to what I presented or method to my madness?
#asknostr
