US: The import tariff boomerang
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Import tariffs have a negative impact on the targeted country. Retaliation will in turn have negative consequences for the country which started the tariff hikes
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Even in the absence of retaliation, there will be negative consequences
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Household spending will suffer from a loss of spending power due to an increase in inflation following higher import prices and/or a switch to domestically produced goods
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For the same reason, aggregate corporate profits may suffer. Companies may also cut back their investment because of increased uncertainty
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Empirical research confirms these outcomes
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