I found this comic nailed it perfectly. There is one not-so-subtle aspect of tariffs that I have not heard the MSM address, including so-called “expert” reports and analysts covering the economy and markets. That aspect is this: Tariffs cause all prices on like products and substitutes to increase. I have discussed this before, but it is never fully explained in the MSM. I assume because the average American is too stupid to comprehend the finer facets of tariffs.
You know, this is not a matter of simply avoiding tariffed products by switching to items made in America instead. That’s not how economics works, as the comic above evinces. Of course, a firm would raise its price to just below what a like product would be under tariffs. That’s a no-brainer. If you have to buy a widget, domestic or foreign, and the imported widget price is $15.00, then why won’t a domestic producer charge a price higher than pre-tariff but less than post-tariff? Firms are rent-seekers, and this is risk-free profit in the short term. If American-made firms can get away with raising prices by any amount, knowing that demand for their widget will shift from foreign to domestic producers, then why not? Yes, yes. You may ask what about producers selling less of a product at a higher price, which might induce them to keep prices low. That is a fair point, and that’s where the intricacies of economics become very complicated; indeed, what is the sweet spot between higher profits and production? Bottom line is this: Tariffs equal restricted supply, which leads to higher prices. Nonetheless, Dictator Don thinks all this will lead to deflation (or disinflation), and that’s what idiots of America also seem to believe. That’s why they voted for him — allegedly. If The Don! says it, then it must be true! Welcome to stupid America!