Why Increased Tariffs Are Likely to Harass the American People

It truly doesn’t matter what I think. Economist professionals of all political stripes agree that increased tariffs have no utility, and will cause a dramatic hike in inflation. But since many economists once supported the “trickle-down” theory in the 1980s, public opinion has shifted and an average Joe might not trust economists now.

My aim is to demystify the effects of tariffs and how they will affect every American in a way that the average person can understand.

First, let me break it down this way: How will you not be paying more for the same things? America has no means to tax another country. Therefore, you, as a consumer, will be bearing the tariffs by driving up prices. Would you call this inflation? Isn’t “paying more for the same stuff” a perfect definition of inflation?

Think about it: you just elected someone who promised to increase prices across the board. Almost nothing will escape this price hike, and I suspect most things will go up by about 20–30 percent.

How Will Import Taxes Help the Consumer?

But what about those who think that import taxes will benefit the consumer? Indeed, huge taxes are involved. The reality is more complex and less favorable than what they might have imagined.

Tariffs Are Not Passed by the People Solely

The simplistic model often cited suggests that businesses merely add tariffs to their costs and then pass them on with a fixed profit. However, businesses don’t operate in such a straightforward manner. They attempt to optimise prices, which often involve raising prices to maximize profits. In light of this narrative, it’s very probable that prices will go up due to the monopoly other countries have on some products.

Whereas some might argue that the costs are bourne by the exporting countries, it is almost certainly not the case. If the tariffs were simply bourne by the exporting countries, importers and manufacturers wouldn’t pass on these costs to consumers. However, since this is not often the case, consumers in the US will bear the brunt of the costs via higher prices, leading to inflation.

Domestic Production versus Imports

Another consideration is whether increased tariffs will result in a surge of domestic production. The effects in the US are likely to be minimal for high-profit or expensive items. Imposing tariffs may slightly increase the demand for domestic products, but it will be a marginal increase that would not significantly boost overall production or reduce import reliance.

Retaliatory Tariffs and Their Impact

Add to that the reality of retaliatory tariffs and other international market responses. These actions are likely to reduce exports, which will hit some businesses hard. This will not benefit the US overall, given the interconnected nature of the global economy.

In conclusion, while the theory of increased tariffs to benefit Americans sounds promising, the practical implications suggest the opposite. Instead of benefiting the American people, tariffs are more likely to contribute to inflation and increase the overall cost of living, thereby harming the American people.

Keywords: tariffs, inflation, economic impact