Source: The Daily Economy
by Vincent Geloso
“[T]ariffs tend to increase input prices which would make them less competitive on foreign markets. It would also increase prices for domestic consumers and thus reduce sales. Tariffs also have effects on exchange rates that end up making exports harder. Finally, and more generally, when domestic production expands due to import taxes, producers must use resources that are less efficient or better suited to other uses. … These costs of tariffs, however, are only the tip of the iceberg. Focusing solely on them suggests that the American economy would contract temporarily before returning to its previous growth rate — a scenario known as a ‘level shock,’ not a ‘trend shock.’ But protectionism — the broader policy goal tariffs are meant to serve — does produce a trend shock by slowing long-run growth.” (04/10/25)
https://thedailyeconomy.org/article/the-other-cost-of-protectionism/