Foreign Trade 101

    The Republican candidate for president wants to raise taxes on imports as a way to protect American business and manufacturing.
   But.
   Basic principle of business is that when costs go up, retail prices go up to cover the increase. That applies equally to foreign trade, the only difference being that the hike is called a tariff, not a sales tax. And like any other boost, the increase is passed on to customers in the form of a higher price.
   So Donald Trump's insistence that boosting tariffs will protect American business shows ignorance of the basic economic principle that when costs rise, so do prices as the boost is passed on to retail customers.
   The reality is that raising import taxes will not protect domestic manufacturers, but only boost prices for consumers.
   Besides, what of products that are not made in the U.S., such as cocoa beans, the main ingredient of chocolate?
   Or any number of other products made in other countries where costs are lower and the difference is passed on to consumers in the form of lower retail prices.
   Clearly, any boost in tariffs (import taxes) is carried forward to a hike in the retail price to consumers, just as a higher minimum wage is incorporated into a boost in the final sales price.
   Be careful what you wish for. You may get it. That's especially true for politicians who call for higher tariffs as a way to reduce imports.
   It doesn't happen. What does happen is that the increase is passed on to consumers.
   Economics 101.