In Reply to: It's sad that Orange Douche doesn't know that posted by Bruinfan4ever on August 02, 2025 at 07:04:49
Here's how tariffs can weaken an economy:
Higher Consumer Prices and Reduced Purchasing Power: Tariffs increase the cost of imported goods, and companies often pass these costs onto consumers through higher prices. This can reduce consumer purchasing power and lead to a decline in demand for goods and services.
Increased Production Costs for Businesses: Many companies rely on imported components and raw materials for their production processes. Tariffs on these inputs can raise production costs for domestic businesses, which may in turn lead to higher prices for consumers or reduced profitability for businesses, according to The University of Virginia.
Disruptions to Supply Chains: Tariffs can disrupt global supply chains by increasing costs and making traditional sourcing less profitable. This can lead to delays in production, increased inventory costs, and the need for companies to find alternative suppliers, potentially compromising quality or increasing costs.
Reduced Economic Growth and Job Losses: Studies have shown that tariffs can lead to a decrease in overall economic growth (GDP) and wages, according to the Penn Wharton Budget Model. While some industries may see limited job growth due to protection from foreign competition, other sectors that rely on imported inputs may experience job losses or slower hiring due to increased costs and reduced competitiveness. The Tax Foundation estimates that recent tariffs will reduce market income and lead to an average tax increase per US household.
Retaliatory Tariffs and Trade Wars: When a country imposes tariffs, it often prompts retaliatory tariffs from its trading partners. This can escalate into trade wars, harming global trade, economic growth, and potentially leading to job losses across multiple countries. For example, the Smoot-Hawley Tariff Act of 1930, which significantly increased tariffs, led to retaliatory measures from other countries and contributed to the severity of the Great Depression.
In summary, while tariffs may offer some protection to specific domestic industries, their overall impact on an economy can be negative by raising costs, disrupting trade, and ultimately reducing economic growth and prosperity.