Business

Recent Tariffs on Commodity Prices | Its Impact in a Global Perspective

A tariff is imposed by a certain government as an import tax on foreign goods. The goal of tariffs is to protect domestic industries and create a balance of trade. This way, the government can generate revenue from this access. However, this restricts the import of foreign products by raising tariffs.

Tariffs have pros and cons. It has a huge effect on commodity prices. The impact of tariffs (關 稅影響) must be understood by everyone who is affected by these changes. Below are areas that are greatly affected by tariffs on commodity prices.

Food Price Hike

This is the first repercussion of tariffs on farm goods. Food will be more expensive. If a country puts tariffs on agricultural products, there may be less on the market. This could lead to food price hike. The first ones that will be affected are the consumers. It will be more expensive for regular individuals to purchase imported products. This makes it more difficult for countries that depend on agricultural exports. There will be less demand for their products when there are tariffs imposed on them.

Influence on Energy Prices

Changes in tariffs have a major effect on energy goods. When there is an import tax on these goods, they will be more expensive. This means consumers will have to deal with higher prices for energy users. Also, tariffs on equipment used to manufacture energy will become more expensive. This also affects the price hike.

Effect on Manufacturing Industries

The manufacturing industries will also be affected by these tariffs. Importing metals will be more expensive for local manufacturers. This results in finished products being more expensive, too. The metals used to manufacture machinery, electronics, and consumer items could make the end product costs go up.

It Will Change the Currency Exchange Rates

Tariffs can also change the value of a currency. When a country puts taxes on goods, its trade balance may be affected. That can cause its currency value to change. For example, when the export products of a country are hit by tariffs, there will be an expected drop in the value of its currency. That is why because their products being sold to other countries will be more expensive. Their products will be less desirable to consumers because of the price hike.

A Huge Impact on Global Supply Chains

Tariffs can affect the global supply chains. Moving products across borders can be more expensive. This makes it more financially challenging for small-scale businesses that are trying to enter the global supply chain. A tariff on imported products could make manufacturers wait longer or have to pay more. This can cause supply/demand rates to go down. When it continues, the end-product prices could go up. Imported or exported products will be less available.

It Will Tarnish International Trade Relationships

Countries trade goods globally. But when tariffs are imposed, this can tarnish their trade relationships. This will disrupt the existing seamless trade agreements. A country’s products that are hit with tariffs will be less in demand. Governments will look for other suppliers of these products that do not have tariffs. There are times when some countries will respond to this change by imposing their tariffs. This will make product prices and trade flows unstable.

Conclusion

Tariffs on commodity goods may have both positive and negative impacts on the supply chain. The global commodity market will continue to be affected by these changes. And as countries respond to this, it will become more challenging for businesses, investors, and consumers. Understanding the impact of tariffs on basic commodities will help you understand why prices keep fluctuating.