Impact of Tariffs on Consumers

Tariffs, viewed as a tax, directly increase prices for consumers and producers alike. The discussion reveals that the proposed tariffs on Mexico and Canada could decrease real household income by approximately $1,200 to $1,500 annually. This increase stems from the deep integration of the North American supply chain, where significant portions of goods produced in one country rely on inputs from others. As a result, consumers may ultimately bear the burden of these tariffs rather than the importing countries, which can lead to notable economic strain.