A tariff is a tax on an import (or export) between different countries (or other borders). They can make things...awkward.
Tariffs can be used to try to artificially affect the global market by making importing or exporting certain things more expensive than they would be otherwise. This can help artificially (in the economic sense) prop up industries.
But tariffs aren’t that simple. For instance, the Trump administration put a 25% tariff on steel and a 10% tariff on aluminum imports, with some exceptions. This was great for American steel and aluminum producers. They used to have to compete with cheaper, imported steel and aluminum, but now that the imported stuff was more expensive, it became easier for them to sell their steel and aluminum to other U.S. businesses.
Which gets to who it wasn’t great for: those other U.S. businesses. Business that rely on a steady stream of cheaper, imported steel and aluminum all of a sudden experienced a price hike, dramatically affecting their businesses.
Who else is paying? American consumers. The businesses that have to pay more money for steel and aluminum will pass that extra cost onto consumers, making a ton of goods more expensive than they used to be.
You have to look beyond the immediate effects to the secondary and tertiary effects of a tariff to get the full picture.
Related or Semi-related Video
Finance: What is sales tax?67 Views
finance a la shmoop. what is sales tax? and what are progressive and regressive
taxes? thumb tacks horse tax sales tax. all right well sales tax is yet another
way the government collects money to spend on things they need to you know [money in a vault]
govern us. so if you buy an acme chihuahua launcher in california while
you pay eight percent sales tax on it. meaning you thought you were only
spending a hundred bucks and it turns out that the launcher well really cost
you 108 dollars, and then you could tack on whatever damage the chihuahua does.
all right well each state has different sales tax charges. some states are high,
some states are low. but sales tax is considered regressive. which sounds like
a bad word and it while kind of is intended to be bad sounding. why? well
because everyone pays the same tax rate whether they're a hard-working plumbing
supply parts vendor making 200 grand a year, or a lazy bridge Tollbooth taker [pipe maker's logo]
who loves keeping their Facebook pages up-to-date. they pay the same rate when
either one of them buys a two-in-one laminating toaster, oven they pay the
same sales tax rate on that oven, and that is called regressive. the thought
process that being well 8% taxes on 200 grand in earnings a year is a whole lot
easier to pay than 8% taxed for someone earning only 20 grand a year. and yes
politicians want to punish the hard-working, saddle them with more
burden so that the less financially beefy, can you know keep their facebook
pages very up to date. well the opposite of regressive is the positive sounding
progressive tax system, where the hard-working plumbing supply parts dude
pays meaningfully more in tax and tax rate than the Tollbooth cash taker with [man frowns behind a desk]
the really up-to-date Facebook pages. of course that cash taker didn't study in
school didn't work hard early or later in life and now lives in a cockroach
infested apartment while the plumbing supply vendor is about to purchase his
second home, so maybe there is something after all to that education thing. like
kids study in school or you like that guy all right. well is
progressive tax good and regressive tax bad? maybe maybe not who knows not for
shmoop to say, all we know is that progressive and regressive taxation both
live in American society and they're the one-two punch that the friendly IRS man
uses to well you know knock you out. [man in suit throws a punch]
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