A tariff is a tax on imported goods, imposed by one country on another. When the US imposes tariffs, it means that the value of those imports will increase for American consumers. This can lead to higher prices for products like electronics, clothing, and machinery.
In the case of Trump’s tariffs on Mexico, Canada, and China, many experts say that Americans may end up paying the costs. Economists and members of Congress have been warning about this possibility, but President Trump has acknowledged it recently.
To understand how tariffs work, consider this example: Imagine you’re buying a laptop from China. If the US imposes a 20% tariff on laptops imported from China, the price you pay will increase by $20 for every $100 spent. This means that American consumers are essentially subsidizing the cost of importing Chinese goods.
Tariffs can have different effects on various industries and sectors. Some argue that tariffs help protect domestic industries by making imports more expensive, while others believe they lead to higher prices for consumers and reduced economic growth.
It’s essential to note that not all tariffs are created equal. The Trump administration has introduced a range of tariffs, including those on steel and aluminum, which have sparked significant controversy among lawmakers and industry experts.
Source: https://edition.cnn.com/2025/02/02/business/video/tariffs-explainer-costs-trump-economic-policy-mattingly-digvid