Using Trump2.0 economic logic (my
previous post has sources) here is how tariffs may
not increase prices for US consumers. A mixture of these methods is expected.
Tariff offset by foreign currency exchange rate.
In the first Trump administration tarrifs increased 17.9% against China, and were offset by China's currency exchanging for 13.7% less USD.
America is able to pull this off because USD is the global reserve currency.
Importer eats cost.
Real world data shows middleman import companies pay the brunt of the cost increase.
Example:
America-made item $2 each.
$1 Chinese item sold at $1.90 each.
25% tariff makes Chinese item $1.25, but importer keeps selling at $1.90. Importer eats 25¢ increase.
American made products more affordable.
Reduce the cost of regulation compliance.
Reduce corporate income tax rate.
Reduce labor costs (no tax on overtime or tips)
Reduce energy prices ("drill baby drill")
There are more methods and details than this, but I tried to explain the most obvious and straightforward methods.
Nobody knows for certain if Trump's economic solutions will work. Tariffs haven't been used this heavily by America in 100 years.