What are Tariffs?
A tariff is a tax imposed on foreign-made goods, paid by the importing business to its home country’s government.
For example, if there’s a 10% tariff on all goods from China, a product worth $10 would have a $1 charge added. That charge is paid to the U.S. Government by the importer.
HOW DOES THIS IMPACT CONSUMERS?
Because these tariffs are being paid by the importer, economists predict that prices of common goods will rise. ING estimates a rough yearly increase of $835 per person or $3,340 for a family of four.
For example, if Jewel Osco imports $100 worth of vegetables from China, they will have to pay a $10 tariff. This makes the vegetables higher in value, so the grocery store might sell them for more than usual.
HOW DOES THIS IMPACT BUSINESSES?
If goods are selling at a higher price than normal, this may impact demand. Not only will businesses have to pay more on their imports, they will have to sell items at a higher cost to offset their spending.
For example, if a restaurant has to buy its vegetables from Jewel Osco & the price has increased per dish by $10, then the price of that dish might also increase by $10. This increase may be less appealing to customers.
WHAT TARIFFS ARE BEING IMPLEMENTED?
Trump’s Executive Order on Saturday morning (2/1/2025) imposes tariffs on Canada, Mexico, and China, who together accounted for more than 40% of imports into the U.S. last year.