Here's what they are and what you need to know about them:. Tariffs are a tax on imports. Tariffs are typically charged as a percentage of the price a buyer pays a foreign seller. In the United States, tariffs are collected by Customs and Border Protection agents at ports of entry across the country. Tariffs can be lower for countries with which the United States has trade agreements.
Mainstream economists are generally skeptical of tariffs, considering them a mostly inefficient way for governments to raise money and promote prosperity. President Donald Trump, a proponent of tariffs , insists that they are paid for by foreign countries. In fact, its is importers β American companies β that pay tariffs, and the money goes to the U. Those companies, in turn, typically pass their higher costs on to their customers in the form of higher prices.
Still, tariffs can hurt foreign countries by making their products pricier and harder to sell abroad. Foreign companies might have to cut prices β and sacrifice profits β to offset the tariffs and try to maintain their market share in the United States. What has Trump said about tariffs? Trump has said tariffs will create more factory jobs, shrink the federal deficit, lower food prices and allow the government to subsidize childcare.
As president, Trump imposed tariffs with a flourish β targeting imported solar panels, steel, aluminum and pretty much everything from China. Trump has promised even more and higher tariffs in his second term. The United States in recent years has gradually retreated from its post-World War II role of promoting global free trade and lower tariffs.
That shift has been a response to the loss of U. Tariffs are intended mainly to protect domestic industries. By raising the price of imports, tariffs can protect home-grown manufacturers. They may also serve to punish foreign countries for committing unfair trade practices, like subsidizing their exporters or dumping products at unfairly low prices. Before the federal income tax was established in , tariffs were a major revenue driver for the government.
