There has been much discussion regarding Don Trump’s blustering about placing tariffs on imported goods from certain countries, as a means to punish those countries not willing to kowtow to his global vision, but how do tariffs work and what is the likely outcome of implementing this strategy.  Thomas Kemp, department chair and professor of economics at UW-Eau Claire, joins Tony Castañeda and the 8 O’Clock Buzz to talk about the possible result of using this economic strategy to impact trade relations.

Tariffs can be used to shift trade away from countries in a trading zone with assessed tariffs, but it’s a given that there will be retaliatory tariffs placed on American produced goods and services that may impact any specific local economy in the US.  For American importers, if a suitable alternative can’t be found for specific goods, the increased cost will be passed on to the American consumer, which can be thought of as a new tax.  With tariffs, the new administration may get their cake, and eat it too, but they’ll have to give up some of their entrée as a result.

Photo by Athanasios Papazacharias on Unsplash

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