Effects of Tariff increases

Article by Joshua Hendrickson

The U.S. dollar is the world’s reserve currency, and the U.S. Treasury security is the global reserve asset. This means, respectively, that the dollar is the primary currency used in international trade, and that foreign central banks and other institutions store wealth in terms of dollars with Treasury securities.

...the dollar, because of its reserve status, tends to be overvalued. This makes foreign goods cheaper for U.S. consumers, but it also makes foreign labor and production cheaper ... a dynamic that has hollowed out America’s industrial base.

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While imposing duties on imports will raise prices for American consumers, it will also appreciate the value of the dollar, ...

Tariffs might generate some revenue in the short run, but their larger effect—bringing countries to the negotiating table—could help the Trump administration achieve its [other] long-term objectives.