Overview

Consequence of Chinese business against tariffs influenceHigher prices could hit consumers' wallets . US Trading Statistic indicated that the most recent set of tariffs against Chinese imports, which went into effect at the end of September, targeted around $200 billion of goods with a 10% tax scheduled to increase to 25% on January 1, 2019. Unlike earlier rounds of tariffs that mostly targeted materials and intermediate goods, about a quarter of the new tariffs target consumer goods directly, according to an analysis by the Peterson Institute for International Economics. Those tariffs could have an even more direct impact on Americans' wallets than the earlier round of tariffs, which were mostly against industrial products and intermediate goods. Some of the goods that are likely to be hardest hit by the newer tariffs include computers and computer parts, furniture, and tires. Economists, including Ian Sheperdson of Pantheon Macroeconomics, suggest that consumers could see price increases as a result of tariffs on those goods. We don't know for sure how quickly importers will raise wholesale prices of the affected items, or how quickly manufacturers of substitutes for Chinese products will lift their prices, Sheperdson wrote in a note to clients. Sheperdson estimated that the newer round of tariffs could add as much as 0.5% to the headline CPI inflation rate. An analysis by the National Taxpayers Union Foundation suggested that the full impact of the 25% tariffs beginning in 2019 would hit Americans harder than the total taxes levied under the Affordable Care Act, better known as Obamacare. Retailers have also warned that the tariffs could increase prices for consumers and threaten the retail industry.The US Dollar was slammed across the board alongside US equity markets fears of trade wars emerging. It's important for traders to understand the economic significance of tariffs and how they impact economies. To no surprise, US steel and aluminum industry insiders are a fan of the 25% and 10% tariffs that US, respectively. As is often the case with protectionist tariffs, prices for goods using steel and aluminum will rise for the entire economy while these insiders will capture the surplus. In this piece, we'll go in some historical examples of tariffs and their ensuing impacts. There are three main takeaways why protectionism via tariffs/limiting free trade is bad: 1) Protectionism always ends up with a bias because it serves to protect domestic producers in competition with foreign producers. This means protectionist policies like a tariff favor industries in competition with foreign manufacturers over those that are not.

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