Export Erosion

When tariffs are imposed on imported goods, a big loser is. . . exporters! As we reduce imports from, say, Canada, Canada’s economy and currency weaken, and its’ imports from us decline.  And, if, as desired, the tariff boosts domestic demand for a protected product (think cars), that boosts domestic prices and wages, pushing up inflation leading to higher interest rates and a stronger currency, hurting, you guessed it, exports!  Counterintuitive, but true!

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