Explain Like I'm Five

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If Trumps tariffs go thru would that not cause the countries the tariffs are imposed on just raise their prices? And a result of that hurt the american consumer? Why do it to begin with? (lemmy.world)

submitted 3 days ago by [email protected] to c/[email protected]

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[–] [email protected] 6 points 3 days ago* (last edited 3 days ago)

Consider for a moment that the largest industrial import is crude oil, accounting for 164 billion dollars in 2023 [1].

Slapping a tariff on imports sounds good in theory, but domestic production is not currently capable of supplying an equivalent amount of oil. Ramping up production to that scale takes a long time, and imports are going to be necessary in the meantime.

So, what happens when an X% import tax is introduced? Gasoline refineries pay X% more and pass the cost down to the consumer by raising prices at least X%.

In the short term, this is going to fuck the average American. And unless America fights hard against non-renewable energy and EVs, it's also going to fuck America in the long run by investing in the production of something with (ideally) dwindling demand.

And that's just oil/gas. There's a lot more raw materials that are difficult and/or expensive to extract domestically but cheap to obtain through global trade.

[1] https://www.census.gov/foreign-trade/Press-Release/ft900/final_2023.pdf