Question

This is a discussion on the global effect of international trade

1. What do you see as the effect of increased trade tariffs on imports for retail trade in the US?
2. Do you see an increase or decrease in goods being imported to US retail trade?
3. Will profits be increasing or decreasing in the near future?

You cannot see other posts until you have made one.

Answer 1

Effect of increased trade tariffs on imports for retail trade in the US :

US implemented 15% tax on $112 Billion worth of goods. Around two-thirds of those are consumer goods. Hence, there will be an adverse impact on US consumers. According to many economists, the purchasing power of consumers will decrease to some extent. This means that the goods that they are able to buy from say, $100 now will be a little less than what they were able to buy from it before. Because of that, there will be a reduction of demand from consumers and hence retail trade will take a hit. Consumers Confidence Index was reduced, evidently and hence, now they will buy lesser products which will adversely effect the GDP. In short, Consumers will buy less product, there will be reduction in business activities, purchasing power will decrease and might even turn into inflation.

An increase or decrease in goods being imported to US retail trade :

I think that's pretty obvious that there will be a substantial decrease in the number of consumer goods being imported. Since consumers will buy lesser goods from US retail market, this will lead to gradual increase in supply of products and hence eventually the imports of those goods would automatically reduce.

Profits be increasing or decreasing in near future :

I am assuming that profits here means profits of US government. So, what happened during the trade war was that US had to shift to higher cost countries such as India, South Korea and some European countries. The US Government stated that trade diversion effects of US-China trade war for the first 6 months of 2019 to around $20 Billion and the net loss of $14 billion. India gained around $755 million by exporting extra material due to US China trade war. Hence, it doesn't seem like the US government would be minting profits in near future. Since they are importing from higher cost countries, it would take a long while for them to settle the prices and bring long term relation with those countries in order to earn profits if the US-China trade war continues.

please upvote for my answer.

Thank you so much.