Question

The most recent tarriff trade war between the U.S. and China affects which components(s) of the GDP function?

Answer 1

The recent trade war will affect the consumption because due to tariffs the price of the goods have increased, at a higher price the consumption will be lower in the economy.

it will affect the investment, due to increased price of the imports the local business can increase the supply and that will decrease there inventory, leading to higher investment by the local producer and it will decrease the investment by the international investors.

it will decrease the imports and exports so it will also affect the net exports of the economy.