There is one real-world effect of tariffs that is unavoidable: Tariffs keep foreign companies from bringing foreign products into the U.S. market, but they also keep U.S. manufacturers from bringing in parts they need to build or finish their own products. It also, obstructs U.S. companies from bringing in finished products that are made mostly with U.S. parts.
· That means tariffs of the kind that Trump advocates have several implications but the most immediate effect would be felt by inflationary pressure. Tariffs not just affect Chinese and Mexican manufacturers, but American ones too. Prices go up across the board, even if one has been trying to "buy American.
· The money a consumer pays in higher prices gets redistributed very inefficiently. Tariffs work a lot like a tax, in the form of higher prices. The revenue from tariffs is divided up between the government as the tax collector, the worker, and a few U.S. companies that get shielded from foreign competition. The effect on the overall economy of Trump-style tariffs would make every person buying equipment in a given or industry pay more money to factory workers and the owners of such plant. The likelihood is that, on balance, consumers will pay hundreds of thousands of dollars extra for each job preserved in troubled industries, but there are many more efficient and cheaper ways of getting those people back to work.
Trump lacking understanding of the most basic economic principles of international trade proposes to lay taxes on American shoppers who buy Chinese-made goods. This is going in opposite direction to the rest of the world with unforeseen consequences for the U.S. economy.
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