Question

How might increasing tariffs on Chinese imports impact the average American consumer? Explain.

Answer 1

An average American consumer consumes many goods and services including imports from different countries such as China. when there is an increase in the tariff on the products that are imported from China, their price will increase in the domestic market. For consumers this situation is not welcomingbecause it will increase the price the face and reduce the variety they are offered. They will also be able to buy fewer imported goods. Hence there is a reduction in the total consumer surplus. In this manner increasing the tariffs on Chinese products will reduce the welfare of average American consumer.