Investors must grasp dynamics of tariff-driven markets

What are tariffs? Tariffs are taxes or duties governments impose on imported goods and services. They are typically calculated as a percentage of the item's total cost, including freight and insurance.

- Maboko Seabi

Tariffs are used to:

Generate revenue: Governments can use tariffs as a source of income.

Protect domestic industries: By making imported goods more expensive, tariffs encourage consumers to buy locally produced alternatives.

Retaliate in trade disputes: Tariffs can serve as a tool against perceived unfair trade practices by other countries.

How tariffs affect markets

Tariffs can have extensive implications for the economy and financial markets:

Higher prices for consumers: Import duties often lead to higher prices for goods as businesses pass the cost on to customers.

Disruption of supply chains: Businesses reliant on imported components to function may face higher costs, leading to supply chain disruptions.

Impact on trade volumes: Tariffs can reduce trade by making imports more expensive and less competitive.

Economic retaliation: Countries affected by tariffs may respond with their own tariffs, escalating trade tensions and creating uncertainty in the market.