Question

What is one of the main economic effects of a tariff increase?

Reduced productivity
Higher prices for consumers
Increased wages for workers
Decreased profits for domestic industries

Answer 1

Higher prices for consumers and increased wages for workers and reduced productivity

Answer 2

Higher prices for consumers

Step-by-step explanation:

Trade tariffs have an effect on the final price of products and are detrimental to trade as a whole, but especially to end consumers. Governments adopt tariffs on the grounds that it is necessary to protect the domestic industry from foreign competition. For example, President Trump recently imposed tariffs on imported Chinese products. Thus, Chinese products become more expensive within the national territory, reducing the competitiveness of Chinese products. This may be good for the national economy, but consumers are worse off because if there were no tariffs, they could buy the goods at lower prices.