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Trump wants tariffs. You might be the one paying them.

Umito November 8, 2024

During his presidential campaign, Donald Trump declared that he would impose a 60% tariff on products from ChinaAmerica first foreign supplierand other tariffs of up to 20% on all U.S. imports, measures that retailers say will hurt U.S. consumers.

President-elect Trump said tariffs – taxes on imported products that make them more expensive to import and, later, to sell – would help end what he calls unfair trade practices by China. They will also increase manufacturing employment in the United States, Trump said.

Trump said foreign countries would pay the tariffs. However, retailers and economists say it’s American shoppers who will end up paying more.

A report from the National Retail Federation estimates $7,600 in additional fees per American household each year if Trump’s tariffs are imposed.

A middle-income family could pay estimated at $1,700 more per year, according to the Peterson Institute for International Economics.

How does a tariff work?

A the rate is a tax or levy imposed by the United States on foreign-made products imported into the country.

The additional fees are paid by the company importing the item into the country, usually a company based in the United States.

The money generated by a tariff is called a duty or duty. In the United States, fees are collected by U.S. Customs and Border Protection and remitted to the U.S. Treasury.

Tariffs target trade deficits

A tariff is used to reduce a trade deficitthe monetary gap that opens when a country imports more than it exports.

Tariffs create revenue for governments. However, the objective of a tariff is to modify the product flow across international borders and make products from foreign manufacturers more expensive for American buyers and businesses, USA TODAY reported.

The goal is to help American companies, whose prices are often lower than those of their foreign competitors, produce competing products.

Trump says the tariffs will benefit the United States in the following ways:

Encourage other countries to negotiate better trade deals.
Prevent other countries from “dumping” their products into the United States at below-market prices.
Motivate countries to reduce their tariffs on shipments to their countries from the United States

Who pays the rates? Usually consumers, not foreign countries

Additional costs induced by tariffs”are widely passed on to consumers“, according to economists in a report from the Council on Foreign Relations.

Among those who pay the price, Low-income Americans are the hardest hit, according to a 2014 analysis by the Peterson Institute for International Economics.

Who ultimately pays the rates depends on a number of factors, the Cato Institute explains. However, “recent empirical evidence indicates that new tariffs imposed by the United States in 2018 and 2019 were almost entirely sent to American consumersleading to higher prices and reduced export growth,” the think tank reported in April.

What is the global ranking of US tariffs?

Trump said many other countries were levying taxes much higher prices on imports than the United States, USA TODAY reported.

The United States has a trade-weighted average import duty rate of 2.0% on industrial goodsaccording to the Office of the United States Trade Representative. About 94% of U.S. merchandise imports by value are industrial or non-agricultural goods, according to the bureau.

Trump also criticized trade agreements such as NAFTA and tariffs from other countries that led to more foreign imports into the United States than exports from the United States to other countries. His administration replaced NAFTA with the United States-Mexico-Canada Agreement in 2020.

CONTRIBUTOR Jim Sergent and Paul Davidson

SOURCE USA TODAY Network Reporting and Research; Reuters; US International Trade Administration; Council on Foreign Relations; National Retail Federation; Cato Institute; Georgia State University