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Coffee Or Tea? The Unintended Consequences Of Tariffs


Today, America is a country that prefers hot coffee to tea. That was surely not always the case. Some, on good authority, claim it is a result of tariffs imposed by England on her colonies and the events surrounding the Boston Tea Party.

Yes, had it not been for tariffs and a search for substitutes, far more English-speaking Americans, like their British cousins, might still be enjoying a celebratory afternoon tea.

When the price of a commodity or service rises, whether due to tariffs, regulation or some market action, the quantity demanded falls. A search for substitutes ensues. At least this is how the economist’s “law of demand” is often described.

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