Stocks Market Falls on News of New Tariffs

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Impact of Tariffs

When President Trump was elected, he promised to bring jobs back to America. Many political leaders believe that tariffs are one of the best ways to accomplish that goal. Tariffs are a tax on foreign products before they enter the United States.

With higher costs on foreign products, Americans will purchase more products manufactured in the United States. However, many companies are now paying much higher costs for various products. President Trump recently announced new tariffs on nations like Canada and Mexico. These new tariffs caught many business leaders by surprise.

Higher Costs

Almost every company is dealing with higher costs. Commodity prices are at a multi-year high. With economic growth increasing around the world, commodities may continue rising in the months ahead.

The price of oil is also at a multi-year high. Higher oil prices cause everything to cost more. Not only must companies pay more to transport products, but many products require oil in the manufacturing process.

The additional tariffs imposed by the United States are just another cost that companies must manage. Some business leaders have cut profit guidance over the past few months. Manufacturing companies have fallen dramatically since the start of 2017.

Consumer Impact

Higher costs also impact consumers. Few people have additional money in their budget to pay higher prices for food and gas. Some people may start working an extra job to increase their income. Others may use credit cards to help pay the bills.

Although many political leaders praised the new tariffs, many consumers are wondering how much more they will pay for products. Canada has already announced new taxes on products manufactured in the United States. Any company that exports products to Canada will see a financial impact from the new tariffs imposed by Canada.

Read More: https://www.cnbc.com/2018/05/31/us-stock-futures-dow-data-earnings-politics-and-italy-on-the-agenda.html

 

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