Prague Post

In Opinion by Krystal Perkins

After the current administration took over the White House, there have been a lot of changes to the governing style. Courtesy of the widespread effects of these changes, millions of business owners and taxpayers around the nation have been impacted in some way. Just consider, for example, how the latest tariffs that the United States imposed on certain nations affect domestic producers. When the Trump Administration announced its steel-based tariffs on countries like Canada, Mexico, China and many others in Europe, the goal was to create a leveled playing field.

Unfortunately, once competing countries are engaged in trade deals, there tends to be a form of tit-for-tat action that occurs every time changes are made. So, when the United States introduces tariffs, it is effectively incentivizing the corresponding countries to fight back with their own tariffs or fines. After looking at the example mentioned above with steel, one can easily see that this scenario is exactly what took place.

A Vicious Cycle
After the countries who trade with the U.S. enacted their own tariffs, the only possible outcome was a large spike in prices for everyone involved. Thus, foreign producers who now have to pay more to export their steel will attempt to pass that surcharge on to the customers. The way that they do so is by increasing prices and making the demand cover their new costs. This helps maintain the same or very similar level of profitability.