**Causal Chain of Effects from a 50% Tariff on Imported Microchips Over Two Years**

1. **Immediate Impact on Domestic Companies (0–6 Months):**  
   - **Cost Surge:** Companies reliant on imported microchips (e.g., automakers, electronics manufacturers) face abrupt 50% cost increases. Profit margins shrink, especially for smaller firms with limited pricing power.  
   - **Supply Chain Disruptions:** Production delays or pauses occur as firms scramble to secure alternative suppliers or renegotiate contracts. Automakers, already dependent on just-in-time inventory, may halt assembly lines.  
   - **Stockpiling and Shortages:** Some firms rush to buy chips pre-tariff, exacerbating short-term shortages and price volatility.  

2. **Consumer Price Effects (6–12 Months):**  
   - **Price Inflation:** Manufacturers pass higher costs to consumers, raising prices for electronics, vehicles, and IoT devices (10–20% increases).  
   - **Demand Erosion:** Elastic goods (e.g., consumer electronics) see reduced sales, while inelastic goods (e.g., essential vehicles) drive broader inflation. Secondary markets for used electronics/vehicles grow.  
   - **Sector Contraction:** Lower demand forces layoffs in automotive and electronics manufacturing, particularly in cost-sensitive segments.  

3. **International Responses (12–18 Months):**  
   - **Retaliatory Measures:** Exporting countries (e.g., Taiwan, South Korea) impose tariffs on the tariffing nation’s exports (e.g., agriculture, machinery) or file WTO disputes.  
   - **Trade Diversification:** Exporters redirect chips to unfettered markets, marginalizing the tariffing country’s access. Global supply chains reconfigure to bypass the nation.  
   - **Alliance Building:** Affected countries accelerate regional trade pacts (e.g., ASEAN, EU chips alliances) to reduce dependency on the tariffing nation.  

4. **Medium-Term Domestic Employment (18–24 Months):**  
   - **Tech Sector Growth:** Domestic chip production expands due to protected margins, creating jobs in fabrication, R&D, and engineering. Government subsidies may amplify this.  
   - **Downstream Job Losses:** Auto/electronics manufacturers downsize or automate to offset costs. Ancillary sectors (e.g., logistics, retail) face spillover layoffs.  
   - **Skill Mismatch:** Tech sector hiring struggles to absorb displaced workers lacking specialized expertise, widening income inequality.  

5. **Structural Shifts (24 Months):**  
   - **Partial Import Substitution:** Domestic chips supply 20–30% of demand but lag in advanced nodes (e.g., 5nm), keeping reliance on foreign tech for high-end products.  
   - **Innovation vs. Complacency:** Domestic firms invest in legacy chip production (e.g., 28nm) but may lack incentives to innovate without global competition.  
   - **Geopolitical Fallout:** The tariffing nation faces diplomatic isolation, reduced FDI, and exclusion from multilateral tech initiatives (e.g., semiconductor alliances).  

**Conclusion:**  
The tariff sparks short-term inflation and job losses in downstream industries, while fostering modest tech sector growth. However, trade retaliation, incomplete supply chain reshoring, and skill gaps limit net employment gains. Consumer prices remain elevated, and the economy becomes more insular, with long-term competitiveness hinging on whether domestic innovation can offset protectionist inefficiencies.