Question

President Trump announced today, May 31, 2018, that his administration would impose tariff on Steel & Aluminum products entering the US from Mexico, Canada, China and the European Union (EU). What are tariffs? Why are they imposed? If the referenced countries retaliate, how would it affect US consumers, companies and the US economy in general? In answering these questions and, to receive full credit, please view the Youtube Videos on tariffs and reference a couple of them

Answer 1

What are tariffs?

Tariffs are kind of tax or duty levied on imported goods and services .

Why are they imposed?

They are levied to restrict imports . The tariff causes the price of imports to increase hence demand for imported goods falls in domestic market . This is done to protect domestic industry or increase revenue earnings .

If the referenced countries retaliate, how would it affect US consumers, companies and the US economy in general?

If those countries respond in similar fashion by imposing tariffs on goods exported from US then US exports will fall . This will cause balance of payments crisis , fall in revenue . So US companies will suffer loss and might increase price in domestic market . So in general the economy will get affected adversely .