Corporate America is increasingly confronted with the consequences of tariff increases and is concerned that more is to come. This is a reminder that protectionism influences the economy not only directly via prices or changes in supply and demand but also indirectly because of increased uncertainty. The longer the uncertainty lasts, the more it would weigh on corporate investment. Psychology also plays an important role in the international tit-for-tat tactics and in trade negotiations. To the extent that companies which suffer from tariffs become increasingly vocal about it, this may end up influencing the tactical agenda of the US administration in the run-up to the mid-term elections.

EcoTV Week 07/20/2018

Recommended reading: Two Words That Could Shape the Politics of the Trade War: Loss Aversion

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