Much of the focus regarding the recent election has been on the issue of tariffs and how they might be able to help bring jobs back to the United States. For those who don’t know, tariffs are taxes imposed on goods made overseas when they enter the country. The idea is that the cost of international goods would be driven up so that consumers would be driven to purchase goods made in the United States. While this would be a major benefit for the companies that manufacture goods in the country, it could also have some unintended consequences.
What Happens to the Consumer Costs of Manufactured Goods?
First and foremost, the cost of consumer goods would go up because consumers would be forced to purchase goods from here due to the tariffs on international goods. Because the costs of consumer goods would go up, fewer people could afford to buy these goods. This means a decrease in business for manufacturers along with an increased cost of living.
What Happens to the Cost of Production?
Many people forget that the materials used in the manufacturing industry often come from overseas as well. Because these goods come from overseas, they would also be subject to the potential tariffs that have been proposed. If the cost of these materials goes up, this represents an increase in the overhead costs for manufacturers in this country. This would only further add to the increase in the price of goods.
Would This Cost Jobs?
If the cost of goods goes up and the price of manufacturing goes up, businesses would have to find a way to cut costs. One of the ways to do this would be to cut some of the jobs to save money. After all, if the demand for their goods goes down then the businesses don’t need to have as many employees. Many people could find themselves out of work.