Tariff Cascade Simulator
Canada and the United States do not mainly trade finished goods, they build them together, so a single component can cross the border several times before final assembly. Each crossing is a separate customs event assessed on a cost base that already contains earlier duty. This model walks a notional component through that sequence and reports the effective burden, the retail price effect, and how much of the cost lands on producer margin rather than on the buyer. Deterministic scenario model with stated assumptions, not live data and not advice.
A continental component rarely crosses the border once. Set the terms and the model walks a notional $1,000 input through each crossing, applying duty to a cost base that already contains the duty paid at the previous stage.
32.3%
against a headline rate of 15 per cent, a cascade premium of 17.3%
$508
$305 to the buyer, $203 to the producer
+8.7%
on a finished good priced from the same component
5.6%
from a 9 per cent starting margin, 3.4% compression
Untaxed cost base at the same number of stages: $1,574. Duty collected across all crossings: $393. Administrative drag: $43.
11.8%
9 mo
Survivable but structural. Producers can hold the relationship only by giving up most of their margin, which defers rather than avoids the price increase.
Fixed assumptions, stated so they can be argued with: value added is 12 per cent at each processing stage, the finished good prices at 2.4 times component cost, administrative cost is 0.8 per cent of value at each crossing, and the starting operating margin on the finished good is 9 per cent. Duty is applied to the cost base carried forward, which is how cascade arises. Drawback, duty deferral and preferential origin claims reduce the cascade in practice and are excluded here so the mechanism is visible. This is a scenario model with illustrative inputs, not a forecast, not a quotation and not advice.