Hello everyone and welcome to the new copiers. In April update we talk about the biggest driver of the market - tariffs. What are tariffs and who ends up paying them, what effects they have for economy and the world in general.
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Tariffs are essentially a tax imposed by a state for example US on imports from other countries, they may vary by product and by country of origin. Essentially their main benefit and why countries implemented them in modern history is protection of their own industries from being overrun by products from abroad and thus becoming a dependant on those products and losing control over pricing and quality of those products.
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Who ends up paying for tariffs is in most cases the imposing country's end consumers. In some cases the middle man might bear some of the tariff cost if it is unable to pass the cost to final consumers, meaning the businesses that imported the goods for resale in the imposing country might take a hit on their profits. The effect of the tariffs is that due to higher cost of imported goods, home goods may no longer seem as expensive and consumers might chose home products over foreign. When it comes to businesses, same applies and in addition, they might want to bring back production from overseas as it might now be more cost efficient to produce the goods in home country.
Low income people will end up being most affected by tariffs as any price increase on lower priced items is not felt by the rich as they are likely not buying cheap products in the first place and they do not feel price increase even if they do.
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To me just about the only good thing that the use of a tariff might bring is protection of the consumer. For example to protect high-quality food products in your own country from questionable cheap products without quality control from other countries. This, of course, is not the reason US implemented them. I believe in free trade, less burocracy and it's very sad to see what is going on in the world.
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As I'm sure most of you already know, US president imposed huge tariffs basically on the whole world, with some of the biggest targets in Asia (China, Cambodia, Vietnam, Sri Lanka, Taiwan which faced initial 60-100% tariffs) and would you belive it Africa and then slowly followed even by US allies like EU, Japan. Since the publication, the trade escalation continued specifically with China, which went back and forth with US with hiking tariffs.
The white house tariff numbers that supposedly other countries had before were essentially a joke and had no proper economic background calculations behind them. Since then Trump already heavily walked back on tariffs on electronics and automotive section because he faced huge pressure from US companies namely Apple, Tesla as prime examples. Also there has been a 90 days pause on tariffs for all countries but China and others who imposed reciprocal tariffs on US.
Such hostile tariffs basically bring nothing good to the world and seem to be doing most damage in middle and lower class of America as well as countries of 3rd world that have some heavily dependent industries on trade with US. Cheap labor in Africa, which makes clothes for US got high tariffs and may lose a lot of sales because of it and that means people who rely on that work will be starving and losing the little income they get. US has basically isolated itself from trade with other countries. Meanwhile those countries continue to benefit from free trade between themselves. And China somehow looks like a more reliable trading partner than the US. China also doesn't heavily rely on sales to US like it once did as their sales to US only represent about 10% of its exports. What serious business wold want to make long-term business decisions relying on US trade situation which is changing almost every day. US basically shot their middle and especially lower income class in the foot while strengthening all other countries ties with a free trade China in my opinion exactly the opposite what the US is trying to achieve.
Bringing home industries important for country's strength such as chip manufacturing takes a very long time like 10 + years. Yes US can bring back cheap industries such as 3rd world country cheap clothing manufacturing. But this would cause a massive price increase on clothing and I think these are jobs that hey would have trouble to find workers for in US as very few people would like that kind of work and very probable low wage that comes with it.
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Just today we received data that US economy contracted in the latest quarter with 0.3% annualized pace, while for example Germany for which a lot of people are worried about their automotive industry lately grew at 0.2%. That effect, it has to be said, could be temporary due to stocking... Show More
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Sun Dec 14 2025 03:41:08 GMT+0000 (Coordinated Universal Time)
