International Trade and Welfare Costs of Tariffs

When it comes to how tariffs affect consumers and producers, who wins and who loses? This video will show you how to analyze international trade using supply and demand and will then use this same framework to demonstrate the welfare costs of tariffs. At its core, a tariff is a tax on imports. This leads domestic consumption to fall, and domestic production to increase. Ultimately, tariffs lead to a waste of resources by diverting production from low-cost (world) producers to high-cost (domestic) producers.