My question is, how exactly are tarrifs supposed effect the county on which they are being sanctioned?
For example, how is a 5% tarriff on Mexico supposed to effect Mexico?
In: Economics
A tariff is supposed to raise the cost of goods from Mexico, making them less competitive with American goods and reducing sales. In actuality, the exchange rate between the peso and dollar will move in the opposite direction (peso weaker, dollar stronger), reducing the impact of the tariff in the US and making American goods more expensive in Mexico.
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