Breaking down the craziness of inflation and tariffs in simpler words.
Have you gone to the grocery store and realized that everything has gotten more pricey? Heard people talk about the “tariff war” or crazy inflation that’s going on? Here is what is happening:
What is a trade war?
By definition, according to Google, a trade war is a situation in which countries try to damage each other’s trade, typically by the imposition of tariffs or quota restrictions. Essentially, that is what is happening between the U.S. and China. President Trump believes that the trade practices between the U.S. and China are unfair, which has led him to impose tariffs. In response, China has replied with its own tariffs on the U.S., escalating to what is now called the trade war.
Many big companies produce products that the average person uses from out of the country. Products such as electronics, machinery and clothing are typically made in China, while other products, such as food, are typically made in neighboring countries such as Mexico.
The recent imposition of tariffs on these key trading partners has resulted in a noticeable increase in the price of many goods. If the U.S. companies cannot access many of those out-of-country resources, it will force them to use American-made resources or simply raise the prices along with the tariffs.
President Donald Trump states that imposing tariffs will encourage Americans to choose the American-made product over the now more pricey, out-of-country-made products. Stating that it will eventually lead to high investment in American companies. But unfortunately, with this decision, it becomes increasingly harder for the average person to buy typical necessities.
Here are a couple of companies that will raise their prices due to tariffs, according to the Economic Times:
- Cars (Ford)
- Electronics (Best Buy)
- Affordable clothing (Shein)
- Everyday items (Amazon)
(source)
The trade war has had a great impact on both citizens and economies around the world. It is uncertain if the ongoing trade war will end, and many have different predictions as to what will happen in the future.
