Throughout the past few months, almost every politician and news outlet has used the word ‘tariff,’ making various claims about what the word might mean to them and their political agendas. This information can be contradictory, so, what exactly is a tariff?
A tariff is a tax on imported goods used for multiple different reasons, typically surrounding protecting domestic industries.
“One of the big [reasons] is to — and they don’t always turn out the way we expect — protect domestic industries. By making foreign products more expensive, it will shift production to domestic industries,” Miami Palmetto Senior High AP Macroeconomics teacher Joel Soldinger said.
Tariffs were highly successful in the United States in the years preceding the Civil War and in World War I, but largely fell out of favor after World War II when the U.S. shifted from a protectionist policy to promoting free trade.
Still, President Donald Trump has pledged to institute some of the largest tariffs in history, imposing 25% tariffs on Canada and Mexico and a tariff upwards of 60% on all Chinese imports. These countries make up 41% of the U.S.’s international trade. Additionally, Trump plans to impose a tariff of up to 20% on every other import from a foreign country.
“Well, without trying to put myself in Trump’s head, a lot of his rhetoric is America first and make America great. He wants American businesses to succeed,” Soldinger said.
Trump plans to impose these tariffs until Canada and Mexico become stricter on fentanyl and migrants crossing over the border, potentially violating free trade agreements. Despite these intentions, tariffs often have unintended consequences such as inflation.
“We have such an interconnected global economy. [Let’s say] you are an American car company making cars in America, but you rely on parts from Mexico. Even this American company is going to end up having to charge more because they rely on things from Mexico,” Soldinger said.
Despite Trump’s previous claims that China, Mexico, and Canada will pay for these tariffs, there is no scenario in which this happens. The tariffs are a tax that will be paid for by U.S. businesses.
Presidents are typically given a lot of freedom when imposing tariffs, so Trump will have fewer obstacles from Congress.
“Generally, presidents have a lot of leeway when it comes to tariffs. That’s not something that needs congressional approval, so this is probably something he could do more or less on his own,” Soldinger said.
