How do tariffs affect the demand for domestic products?

Tariffs are taxes imposed on imported goods, making those goods more expensive when they enter a domestic market. When tariffs increase the price of imports, domestic products often become more attractive to consumers who are looking for a relatively cheaper alternative. As a result, this can lead to an increase in demand for domestic products since consumers may prefer to buy locally produced goods over more expensive imported options.

This economic principle is rooted in supply and demand dynamics; when the cost of a product rises due to tariffs, consumers typically shift their purchasing behavior towards alternatives that remain competitively priced. Thus, tariffs create a market environment that can bolster the demand for domestic products, as they directly influence consumers' choices by altering relative prices.