US protectionism: How cascading tariffs impact consumers

Yet it turns out that this protectionist policy doesn’t necessarily make consumers (and America) wealthy. In fact, due to the increased cost attributed to a cascading tariff structure, consumers end up with more expensive products.

Erasmus School of Economics Assistant Professor Aksel Erbahar, along with Assistant Professor Yuan Zi from the University of Oslo, authored a paper which highlights this type of trade policy and its consequences.

Petitioning for protection

President Trump decided to introduce another set of tariffs to protect domestic producers of several downstream products who were hurt by the original tariffs. These tariffs increase input prices which then ‘cascade’ to be passed on down the supply chain.  As a result, “consumers bear the cost of this protection: as input price increases are passed on to final good prices, consumers are pushed to purchase more expensive domestic goods.”