How would tariffs on foreign goods strengthen a country’s economy? Conversely, how does another country imposing tariffs cost the target country money?

Question

I read an example recently where the Obama administration imposed tariffs on tires from China and in response China imposed tariffs on chicken from the U.S. Both were said to have ‘cost’ the U.S. (in tire prices passed to consumers and … it wasn’t clear). How does this work?

In: Economics

Answer 1

China can produce tires more cheaply than America can, even after imports are taken into account. So when tariffs are raised, tires get more expensive in America, costing the American consumer 

 On the flip side, China buys meat from the US. When China introduces tariffs, that reduces the demand for US chicken, as it becomes more expensive for the Chinese consumer. Less demand means less money is coming into US companies, which also hurts the US consumer. 

To clarify, this hurts both the US and China, that’s the nature of these kind of tariffs, each country is just better the other will blink first.