Effects of Increasing Tariffs

• What is one effect of tariffs on the prices of imported goods for consumers?

  Tariffs increase the price of imported goods, leading to higher costs for consumers.
• How do tariffs benefit domestic producers?

  Domestic firms could benefit from reduced competition, allowing them to increase prices.
• What is a potential consequence of foreign countries imposing retaliatory tariffs?

  It could hurt firms that rely on exports.
• What challenge might firms face if they rely on imported inputs due to tariffs?

  They could face higher costs, potentially disrupting their supply chains.
• How do tariffs affect consumer choice?

  With less foreign competition, consumers may face reduced choice.
• What are the five microeconomic effects of increasing tariffs?

  1. Higher Prices for Consumers
  2. Increased Revenue for Domestic Producers
  3. Retaliatory Tariffs
  4. Supply Chain Disruption
  5. Reduced Choice for Consumers
• What is one macroeconomic effect of higher tariffs on inflation?

  Higher tariffs can lead to increased prices, contributing to inflation.
• How do tariffs impact trade volume?

  Tariffs can reduce the volume of trade, potentially leading to a fall in total economic activity.
• What effect do increased tariffs have on the current account balance?

  Increased tariffs can improve the current account balance by reducing imports.
• How can tariffs affect government revenue?

  The government could see an increase in revenue from the collected tariffs.
• What could happen if other countries retaliate with their own tariffs?

  It could escalate into a trade war, potentially damaging the overall economy.
• What are the five macroeconomic effects of increasing tariffs?

  1. Impact on Inflation
  2. Reduced Trade
  3. Current Account Balance
  4. Government Revenue
  5. Retaliation and Trade Wars