The announcement by U.S. President Donald Trump to impose tariffs on dozens of countries worldwide has left the global economy shaken.
The immediate effect will be a price increase on many products, ranging from beer, t-shirts, cars, or… sneakers… Oh! And your next iPhone.
Yes, the increase in tariffs could, in theory, boost piracy, as it could raise the prices of legitimate products, leading to higher demand for counterfeit or smuggled goods.
The production of various products is sometimes not concentrated in a single country but spans across two or three countries. This will make the cost of these supplies rise easily by more than 40 percent.
Take Nike sneakers as an example, which are manufactured in Asian countries like Vietnam and Cambodia, both hit by tariffs of up to 40 percent. Logic tells us that if a pair of Nike sneakers cost an average of $150 before, with this tariff, they would easily cost over $200 now. Will people still buy them, or will customers turn to the so-called non-original sneakers sold on the streets of any city in the world? These could easily be bought for $50, and the differences wouldn’t be that significant.
For example, in Mexico, there are numerous towns in the central part of the country with hundreds of factories selling fake Levi’s jeans to small merchants at laughable prices. The design and model are very similar, almost a copy. The big difference is the price.
“How do you want your jeans?” says the manufacturer.
And the merchant shows them a picture. The products are so well-made that in a few days, the order is ready, tailored to the customers’ preferences.
This can keep happening with the entire line of clothing and sneakers.
If tariffs make legitimate products more expensive, some consumers might opt for ‘piratas’ or smuggled goods, which are cheaper.
Piracy can become more attractive for smugglers because they can earn significant profits selling counterfeit products at lower prices.
The rise in tariffs could hinder legal trade and boost the informal economy.
In Los Angeles, in the popular ‘alleys’ of downtown, you can find almost anything—caps, clothes, shoes, electronics, and more—all imitations, with people happily buying them for a third of the original price.
So, when you see your favorite products starting to rise in price, set aside your ego and remember that there will always be alternatives.
