🔍 What happens when tariffs are imposed on an imported product?

We often hear about “protecting local industry” or “balancing trade.” But… what actually happens when tariffs are applied?

👉 Let me break it down step by step, and you’ll see how that tariff ends up directly affecting your wallet as a consumer.

🔁 The price chain effect

• A tariff is imposed on an imported productLet’s say the tariff is 20%. That means if a company wants to import a product that costs €100, they’ll now have to pay €120 (product + tariff).

• The importer passes the cost alongThe distributor or importer can't absorb the full cost increase, so they raise their prices. The product might now sell for €150 to also cover logistics, admin, and profit margin.

• Local companies raise their prices tooWith less foreign competition, local manufacturers don’t feel the pressure to keep prices low. Result: they increase their prices as well.

• Domino effect in the supply chainIf the product is used as a component in other goods (machinery parts, electronics, etc.), those products become more expensive too. So not only does the tariffed product get pricier—everything that depends on it does too.

• Who pays in the end?You guessed it: the final consumer. We all end up paying more for less variety, less competition, and sometimes lower quality.

📌 Conclusion:Tariffs aren’t neutral. They affect the entire value chain, and it’s the consumer who takes the biggest hit. The key is striking a balance between protecting industries and encouraging healthy competition.

Have you noticed this effect in any product recently? Let’s talk 👇

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