Tesla's Price Hikes in China Shows How Tariffs and Currency Wars Really Work

Electric carmaker Tesla (TSLA) - Get Tesla Inc Report just gave the world a beautiful lesson on what really happens during a trade war or a currency war.

The manufacturer says it will raises prices on its vehicles starting at the end of the week and may do so again before the end of the year.

Why?

It is the result of the trade war and a possible currency war between China and the U.S.

Each country is imposing tariffs on the other country's products. That should be clear to anyone watching the news.

It also looks like China is trying to deflate its currency, the Renminbi, versus the dollar. Certainly, its value has declined over the past few months. That is often what happens in a currency war -- a race to devalue a currency in an effort to gain a trade advantage.

The problem in both cases is that it hurts the people in the country most of all.

Watch the video to find out more.

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Constable owns none of the securities listed in this story.