{"id":35049,"date":"2025-12-08T15:59:04","date_gmt":"2025-12-08T11:59:04","guid":{"rendered":"https:\/\/cue.edu.ge\/?post_type=articles&p=35049"},"modified":"2025-12-08T15:59:04","modified_gmt":"2025-12-08T11:59:04","slug":"the-u-s-tariff-paradox","status":"publish","type":"articles","link":"https:\/\/cue.edu.ge\/en\/articles\/the-u-s-tariff-paradox\/","title":{"rendered":"The U.S. Tariff Paradox"},"content":{"rendered":"

Mirza Khidasheli<\/strong><\/p>\n

Doctor of Business Administration, Professor, Central University of Europe<\/p>\n

Mirza.khidasheli@cue.edu.ge<\/a><\/p>\n

\u00a0<\/strong><\/p>\n

Abstract<\/strong><\/p>\n

The imposition of significant tariffs by the United States since 2018 presented a unique economic puzzle, challenging the conventional view that such trade barriers would inevitably lead to broad and sustained domestic inflation. This report, analyzing the recent U.S. experience, identifies and explains this phenomenon, which has been termed the “U.S. Tariff Paradox.” While standard trade theory posits a direct inflationary channel\u2014where tariffs raise the cost of imported goods, which is then passed through to consumers\u2014the empirical evidence subsequent periods indicates a much more complex reality.<\/p>\n

The central finding of this analysis is that the potential inflationary impact of these tariffs was overwhelmingly neutralized by a confluence of powerful economic mechanisms and overshadowed by more dominant macroeconomic forces. The report details four primary mitigating factors: a strengthening U.S. dollar, which offset higher import costs; strategic responses by firms and consumers, including cost absorption and substitution toward non-tariffed goods; the inherently limited scope of the tariff actions relative to the total U.S. consumption basket; and, most critically, the overwhelming influence of external shocks, such as pandemic-era supply chain disruptions and energy price volatility, which dwarfed any tariff-induced price pressures.<\/p>\n

Ultimately, this report concludes that tariffs do not automatically translate into broad-based inflation. The U.S. case study demonstrates that a holistic assessment of trade policy is essential, one that extends beyond short-term price effects to consider the structural and behavioral dynamics of the economy, as well as the long-term consequences for productivity, supply chain resilience, and international relations.<\/p>\n

 <\/p>\n

Keywords: <\/strong>Tariffs, Inflation, Trade policy.<\/p>\n

JEL: <\/strong>F13, E31, D22<\/p>\n

DOI: <\/strong>10.52244\/c2025.5<\/p>\n

Article<\/strong><\/a><\/p>\n

References <\/strong><\/p>\n

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