Investing.com -- The introduction of potentially sweeping tariffs could significantly reshape the economic landscape for both consumers and businesses, as flagged by analysts at Yardeni Research. These measures, often presented as a way to protect domestic industries, carry a complex set of implications that could ripple across markets and households. For consumers, one of the immediate concerns is inflation. Tariffs generally lead to higher costs for imported goods, which can result in increased prices on store shelves. This could squeeze purchasing power, particularly for lower- and middle-income households, which are more vulnerable to price hikes on essentials like food and everyday goods. Yardeni Research notes that while real wage growth has recently turned positive after years of stagnation, any policy-induced rise in consumer prices could erode these gains, dampening household confidence and spending. From a business perspective, tariffs can raise input costs, potentially squeezing profit margins. However, Yardeni Research suggests that companies might find some relief through other economic dynamics. For instance, a stronger U.S. dollar—often a byproduct of tariffs—can mitigate some of the price increases by making imports relatively cheaper in dollar terms. Moreover, the analysts highlight that productivity gains could continue to offset rising costs, keeping production expenses in check. During the first term of the Trump administration, a combination of deregulation and favorable trade deals helped sustain corporate profit margins, even amid similar tariff regimes. Nevertheless, the broader impact on global supply chains could pose risks. Tariffs disrupt established trade flows, forcing businesses to reevaluate sourcing and manufacturing strategies. 3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. For some firms, this could mean relocating production domestically, which might involve higher labor costs, or finding alternative suppliers, which could affect quality and consistency. Yardeni Research points out that sectors relying heavily on imported components, such as technology and automotive, could be hit particularly hard. Geopolitically, the imposition of tariffs often leads to retaliatory measures from trade partners. This tit-for-tat dynamic can escalate tensions, reduce global trade volumes, and impact emerging markets disproportionately. Countries like Mexico, which are tightly integrated into the U.S. supply chain, could face economic headwinds if tariffs disrupt cross-border commerce. The full scope of the tariffs’ impact will depend on how they are implemented and whether complementary policies, such as tax cuts or deregulation, are introduced to cushion the blow. Yardeni Research remains cautiously optimistic, suggesting that while tariffs are unlikely to trigger a major inflationary wave—thanks to factors like the strong dollar and productivity improvements—they could still alter consumer behavior and business strategies in ways that reverberate across the economy. Which stock should you buy in your very next trade? AI computing powers are changing the stock market. Investing.com's ProPicks AI includes 6 winning stock portfolios chosen by our advanced AI. In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. Which stock will be the next to soar? Unlock ProPicks AI Latest comments Write your thoughts about How consumers and business might be impacted by potentially sweeping tariffs Post Comment Guidelines Next Article South Korea's acting president moves to reassure allies, calm markets after Yoon impeachment Published 12/14/2024, 06:54 PM Updated 12/15/2024, 03:46 AM View all comments (0) © Reuters. Acting South Korean President and Prime Minister Han Duck-soo delivers an address to the nation at the government complex in Seoul, South Korea, December 14, 2024. Yonhap via REUTERS By Heekyong Yang and Josh Smith SEOUL (Reuters) -South Korea's acting president, Han Duck-soo, moved on Sunday to reassure the country's allies and calm financial markets a day after President Yoon Suk Yeol was impeached and suspended from his duties over a martial law attempt. Han spoke with U.S. President Joe Biden by phone, the White House and Han's office said. "South Korea will carry out its foreign and security policies without disruption and strive to ensure the South Korea-U.S. alliance is maintained and developed steadfastly," Han said, according to a statement from his office. In a further attempt to stabilise the Asian nation's leadership, the main opposition party announced it would not seek to impeach Han for his involvement in Yoon's Dec. 3 martial law decision. "Given that the prime minister has already been confirmed as acting president and considering that excessive impeachments could lead to confusion in national governance, we have decided not to proceed with impeachment procedures," Democratic Party leader Lee Jae-myung told reporters. Han, a longtime technocrat picked by the conservative Yoon as prime minister, was elevated to acting president in accordance with the constitution while Yoon's case moves to the Constitutional Court. Demonstrators seeking Yoon's ouster braved the cold to throng the streets outside the National Assembly building where he was impeached. The crowd was about 200,000, according to police, Yonhap news agency said. Since Han's role is only acting president, "I hope he will exercise the minimum power to operate the country stably, rather than actively be involved in state affairs," said Jo Sung-woo, a 39-year-old Seoul resident. 3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. About 8.5 km (five miles) away, a much smaller number of Yoon supporters demonstrated in the central Seoul area. "As a citizen, I'm really sad that the impeachment motion was passed," said Yim Joung-sook, 55. "I really can't stand to see these illegal lawmakers who were elected by fraudulent elections making evil laws and now this huge opposition party is running wild on their own." NORTH KOREAN THREAT Yoon's surprise martial law declaration and the ensuing political crisis spooked markets and South Korea's diplomatic partners, worried over the country's ability to deter nuclear-armed North Korea. Biden told Han the ironclad U.S.-South Korea alliance remained unchanged and Washington would work with Seoul to further develop and strengthen the alliance as well as trilateral cooperation including neighbour Japan, Han's office said. The White House said in a statement that the U.S. president "expressed his appreciation for the resiliency of democracy and the rule of law in the ROK and reaffirmed the ironclad commitment of the United States to the people of the ROK," using the abbreviation for the country's formal name, the Republic of Korea. "President Biden expressed his confidence that the Alliance will remain the linchpin for peace and prosperity in the Indo-Pacific region during Acting President Han’s tenure." Han convened his cabinet and National Security Council shortly after Saturday's impeachment vote and vowed to maintain military readiness to prevent any breach of national security. Han spoke by phone with the commander of U.S. Forces Korea, expressing concern about the possibility North Korea could attempt military provocations, such as launching ballistic missiles or cyber attacks, Yonhap said, citing Han's office. He emphasised that solid bilateral defence relations were more critical than ever, it said. 3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. South Korea’s partners wanted to see a credible and constitutional temporary leadership put in place as soon as possible, said Philip Turner, a former New Zealand ambassador to South Korea. "They will be pleased to see Prime Minister Han take over as acting president," he said. "He is capable, experienced and well respected in foreign capitals." But even with an acting president in place, international partners face months of uncertainty before a new president can be elected and a new government established, Turner added. ECONOMIC FALLOUT The Constitutional Court has up to six months to decide whether to remove or reinstate Yoon. If he is removed or resigns, a new elections will be held within 60 days. "During that time Korea’s highly competent professional bureaucracy can be relied on to keep the country’s foreign policy running, but they will find it hard to provide clear direction," Turner said. South Korean shares rose for a fourth straight session on Friday on hopes that the political uncertainty would ease after the impeachment vote in parliament, which followed a failed vote a week earlier. Democratic Party leader Lee said the most pressing issue is a slump in consumption caused by insufficient domestic demand and the government's reduction of its fiscal role. He called for a National Stability Council for Governance comprising the government and parliament to discuss finance, economy and public livelihoods. "To address this, I believe it is necessary to promptly discuss a supplementary budget," Lee said, adding that a supplementary budget could include funding to support small businesses and investments related to artificial intelligence and infrastructure to try to head off energy shortages. 3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads. Parliament, controlled by Lee's party, passed a 673.3 trillion won ($470.6 billion) 2025 budget bill on Tuesday that cut the government's 677.4 trillion won proposal, without reaching agreement with Yoon's People Power Party and the government. By law parliament cannot increase government budgets, and at the time the Democratic Party said a supplementary budget could be needed to address spending for people's livelihoods. The party said its cuts were mostly in reserve funds for the government, interest costs and funds allocated to the presidential office, prosecutors and auditors for classified operations. The government accused parliament of delaying projects for small businesses with the cuts. Deadlock over budget issues was one of the justifications Yoon cited for imposing martial law. South Korea's financial authorities vowed on Sunday to act as needed to stabilise markets while the finance minister said he would announce an economic policy plan by year's end. Which stock should you buy in your very next trade? AI computing powers are changing the stock market. Investing.com's ProPicks AI includes 6 winning stock portfolios chosen by our advanced AI. In 2024 alone, ProPicks AI identified 2 stocks that surged over 150%, 4 additional stocks that leaped over 30%, and 3 more that climbed over 25%. Which stock will be the next to soar? 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