By Shira Kramer, Managing Editor
News outlets often throw around the word “tariff” like it is an important concept. President-elect Donald Trump likes to talk about how he will impose more tariffs once he takes office. But what does this term mean? And, more importantly, how will it affect consumers?
Simply put, tariffs are taxes put on imports from other countries, paid by consumers to their own government. They are similar to any other tax, yet consumers often do not know they are paying them. For example, when buying a car from Subaru, an additional surcharge is added to the total purchase price that accounts for the tariffs Subaru has to pay to the U.S. government. While the importer, in this case Subaru, is supposed to pay for the additional tax, the burden usually falls on the consumer.
Governments implement tariffs because they protect domestic industries and interests. However, they are also used as a political game to discourage purchases from a specific country. On September 27, President Biden placed a large set of tariffs on imports from China that aimed to protect U.S. companies from unfairly advantaged Chinese prices abroad.
However, at second glance, tariffs could be trying to prevent purchases from fast-fashion companies like Shein and Temu. In addition to the increased tariffs on imported goods from China, Biden’s new set of tariffs tightened a rule called the “de minimis tax-free trade exception,” which exempted purchases under $800 from import tax. This is how companies like Temu and Shein stay so cheap. According to CNBC, due to new tariffs, prices from these companies could increase by up to 20% for the average consumer.
Tariffs are advantageous because they direct money back into the domestic economy, allowing government-funded programming to continue. The money is collected by Customs and Border Protection on behalf of the U.S. Commerce Department.
In the next four years, Americans will probably see an increase in tariffs as well, as Trump has consistently favored additional tariffs. During a speech in Flint, Michigan, Trump said that “tariffs are the greatest thing ever invented.’’ The future president has also labeled himself as the “Tariff Man,” according to PBS News.
Trump has proposed a 60% tariff on imports from China and a tariff of up to 20% on all other imports to the U.S. He then said that if the American agricultural manufacturing company John Deere moved to Mexico, he would punish them by adding a 200% tariff for imports from Mexico.
Trump also said that he believes tariffs are necessary to keep U.S. borders safe.
“Tariff[s] will remain in effect until such time as Drugs, in particular Fentanyl, and all Illegal Aliens stop this Invasion of our Country!” Trump said in a Truth Social post. However, it is almost impossible for his dream of tariffs to prevent illegal immigration from happening.
While we don’t know exactly what the future holds for tariffs during the next administration, it is still important to research import taxes on companies before making purchases from abroad. Consumers may not know they are paying tariffs, but the additional fees on imports add up and deter Americans from supporting international companies.
Photo Caption: Goods being loaded onto a cargo ship
Photo Credit: Unsplash