What effect do tariffs typically have on domestic prices?

Tariffs are taxes imposed on imported goods, and their primary purpose is to make those imports more expensive. When a tariff is enacted, the cost of importing goods rises, which usually leads to higher prices for consumers in the domestic market. This is primarily because domestic producers may take the opportunity to raise their prices since imported goods are now more costly, limiting competition from foreign products. As a result, the overall effect of tariffs tends to push up domestic prices for both imported and sometimes even locally produced items, as domestic producers may increase their prices in response to potentially reduced competition from imports.

This aligns with basic economic principles regarding supply and demand: as prices for imported goods rise due to tariffs, consumers may find themselves paying more for both import substitutes and local alternatives. Therefore, the imposition of tariffs generally results in increased prices within the domestic market.