Tariffs are taxes. Just because it is not levied on income or profits does not change the fact that it is a tax. The tax is levied on entry and is paid by the importer, not the exporter. It may have an impact on exporter profits, but someone will pay for the tax - the immediate is the importers, the less immediate the exporter and consumer. A tariff is discriminatory. It impacts specific goods and leaves other goods alone. The impact is that there is a change in relative prices, which changes consumption patterns. The importers need more financing because they have to pay for the tax before goods are sold. Businesses have to change investment plans based not on demand but on the tariff policies of the government.
Tariffs are an inefficient tax system regardless of policy goals. The best tax systems are broad-based and relatively flat and will have the minimum disruptive effect on private consumer and investment decisions. The most effective tax systems have a minimum of uncertainty, which negatively impacts long-term investment decisions.
The current environment is not positive for aggregate investment decisions, nor is it good for businesses or consumers who have to adjust to a changing world based on international goods taxes.
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