The introduction of trade restrictions always brings certain consequences that are felt on a global scale. It can be predicted that when one country imposes tariffs or other restrictions, other nations will respond with their own limitations. The effect of such actions is a decline in exports—this applies to both American exports and international trade. Such a decrease can lead to slower production growth—and in the worst-case scenario, a general collapse of trade, which could result in a global recession, lower production levels, and increased unemployment.
For Americans, the effects of high tariffs will primarily be felt through rising prices. For example, about two-thirds of the cars sold in the United States are imported vehicles. If a 25% tariff is imposed on these cars, their prices will rise—forcing consumers to reconsider their spending. In cases where these tariffs affect the prices of imported vehicles, American manufacturers may also be compelled to raise their own prices to maintain their market position.
“As a result, residents of the United States will face rising living costs and reduced availability of certain products,” said Prof. Witold Orłowski, an economist from Vistula University and Warsaw University of Technology, in an interview with eNewsroom.pl. “Ultimately, this may lead to job cuts as well as a decline in household incomes. These effects will not only impact the U.S. but also the global economy—since economic conditions in the United States, Europe, and China are crucial for the global market. Disruptions in international trade can trigger waves of crises that will affect many countries. That is why it is so important to strive for trade cooperation and avoid drastic actions that could harm the global economy. The potential losses resulting from the introduction of trade barriers could, in the long term, negatively impact economic growth and stability worldwide,” Prof. Witold Orłowski points out.
Source: ManagerPlus
