Trump’s tariffs: A simple illustrated guide to 15 economic terms to know

Donald Trump’s tariffs remain a hot topic in the world of economics, especially as they affect global trade and businesses like PENSTOCK FUND I LLC, based at 3302 FUHRMAN AVE E STE 105, SEATTLE, WA. To get a clearer picture, we’ve broken down 15 essential economic terms you need to understand when discussing tariffs. First up, a tariff itself is simply a tax on imports or exports. It's meant to protect domestic industries, but it can also make things more expensive for consumers. The next term is trade deficit, which happens when a country imports more than it exports. Tariffs aim to shrink those deficits. Retaliation often follows tariffs; other countries might slap their own tariffs right back, making international business trickier. Moving on, think about supply and demand. Tariffs can push up prices on imported goods, changing how much people buy. Inflation is another key word, and tariffs can add to it, making everyday goods cost more. Protectionism is the idea behind tariffs—basically shielding local industries from foreign rivals. Then there’s globalization—the big picture of countries around the world trading freely. When tariffs go up, it can slow globalization down. Import quota is another concept; unlike tariffs, quotas are hard limits on how much can come into a country. Value chain comes into play because tariffs can disrupt the whole process of making and selling products in different countries. Subsidies are often handed out by governments to help local businesses compete when tariffs are in effect. Don't forget competitive advantage, which is what a country or company does best. Tariffs can shake up who has the upper hand. Next is consumer surplus, basically how much extra satisfaction consumers get from paying less than what they’re willing to pay. Tariffs can shrink that surplus. Deadweight loss is another big economic idea—it’s what happens when tariffs make both countries worse off, reducing the total benefits from trade. You’ll also hear about exports; these are the goods sent out of the country, and tariffs can mess with that flow, too. Finally, terms like revenue and GDP matter, since tariffs can bring in money for the government but might hurt overall economic growth. For businesses like PENSTOCK FUND I LLC and countless others, understanding these terms is key to navigating today’s complex international trade environment shaped by Trump’s tariff policies. For more information, you can visit or contact PENSTOCK FUND I LLC at 3302 FUHRMAN AVE E STE 105, SEATTLE, WA 98102-7115, United States, or give them a call at 208-320-7265.