Trump has argued that “unfair trade policies” have harmed the American workers. This has led to a “trade war” where the U.S. and China have placed tariffs on each other’s products, leading to foreign products becoming more and more expensive over a short period of time.
Trump claims that he is acting on the behalf of the American workers, but does he know what tariffs will do for America’s growth in the long run?
Even though the tariffs’ purpose is to help domestic companies, could it also lead to less consumption, because the price for imported goods will rise.
“Tariffs are a tax on imports. As taxes go up, so do the prices of foreign goods. Consider the metal tariffs. Foreign imports of steel and aluminum became more expensive overnight to the tune of 25 and 10 percent, respectively.
Higher prices drive down consumption of foreign goods while bolstering demand for domestic equivalents.