Understanding the Tariff Impact on Inflation: A Supply-Demand Analysis of U.S. Markets
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Do Tariffs Raise Domestic Prices? Let’s Cut Through the Noise
Figure 1: Domestic and Foreign Suppliers Competing for a Domestic Market
Case 1—Foreign Imports At Capacity; Small Domestic Industry Still Exists Without Tariffs
Case 2—Foreign Imports At Capacity; No Domestic Industry Exists without Tariff
Figure 4: Case 3: Foreign Imports Below Capacity; Zero Domestic Industry Exists without Tariff
Figure 5: $30 Tariff Imposed on the Base Case
Analysis for Case 1—Insufficient Domestic Supply to Meet Entire Domestic Demand
Figure 6: What Changes Does the $30 Impose on the Base Case
Figure 7: Case 1—Not Enough Domestic Supply (pre Tariff) to Fully Serve Domestic Demand
Analysis for Case 2—Domestic Capacity (pre Tariff) to Meet the Entire Domestic Demand, i.e., to Replace All Imports
Figure 8: Case 2—Exactly Enough Domestic Capacity to Serve the Entire Domestic Demand
Analysis for Case 3—More Than Enough Domestic Capacity (pre Tariff) to Serve the Entire Domestic Demand, i.e., to Replace All Imports
Figure 9: Case 3—More Than Enough Domestic Capacity to Meet the Entire Domestic Demand
Common Findings
Path Forward to Know the Impacts of Tariffs
Figure 10: AOM Regionalization of Refining, Demand, and Transportation
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