An increase in tariffs on imported goods will shift the aggregate supply curve to the left and cause the level of output to decrease.
By increasing the costs to U.S.businesses that rely on imported inputs,tariffs cause production costs to rise,shifting the AS curve to the left.

Question

Quizplus · Accepted Answer

Tariffs increase the costs of imported goods, which in turn increases the production costs for businesses that rely on those goods. This results in a decrease in output and a shift of the aggregate supply curve to the left.

An Increase in Tariffs on Imported Goods Will Shift the Aggregate