Many economists will tell you that import tariffs work kind of like a consumption tax on your own citizens. It may keep some foreign goods out of the market or in the market at a higher cost, driving up prices that are paid by the consumer.
But on a more micro level, they're used to protect specific industries and businesses. For example, in 1983, the U.S. put into place temporary tariffs that targeted Japanese motorcycles in order to give Harley Davidson time to get into a better financial place.
The current trade wars between the U.S. and various parts of the world is showing us the reverse of protecting domestic businesses: Targeting specific sectors or businesses in the other country.
AL.com's William Thornton reports that the European Union's latest retaliatory tariffs against the U.S. are targeting red states, including Alabama, with the obvious intent to put some squeeze on businesses in states that are friendly to President Trump.
The Associated Press has reported that Alabama wood products are in the EU's crosshairs, and Fortune reported that Alabama produce is on the hit list.
That, of course, probably adversely affects wood and produce consumers in the EU but also takes a market away from Alabama businesses.
So everybody loses a little.
President Trump has vowed to retaliate.
U.S. Sen. Tommy Tuberville was on Fox Business Wednesday to actually credit tariffs for the economy's performance during Trump's first term: “There’s going to be some pain with tariffs. But tariffs got us back as the strongest economy in the world when President Trump was in the first time. He knows what he’s doing.”
