Tariffs are taxes on imports. They can protect domestic industries and raise negotiating leverage, but they also increase costs for businesses and consumers.
When trading partners retaliate, exporters face headwinds, and supply chains adjust in ways that are hard to predict.
The first-order effect is price pressure. Companies may absorb some costs, but over time, higher input prices typically flow through to retail shelves—especially in categories with limited substitutes (semiconductors, specialized machinery). The second-order effect is uncertainty, which discourages capital investment and complicates hiring plans.
Consumers can hedge by comparison-shopping, delaying non-essential big-ticket purchases, and watching for inventory-driven discounts as firms rebalance stock. Businesses, especially SMEs, should map critical suppliers, consider dual-sourcing where feasible, and revisit contracts for price-adjustment clauses.
Tariffs are a blunt tool; targeted industrial policy, worker upskilling, and supply-chain resilience programs often deliver more durable competitiveness. Policymakers face a trade-off between short-term leverage and long-term efficiency—one that ultimately shows up in household budgets.