A tariff is a tax on imported goods usually aimed at protecting local jobs and industries from foreign competition. The idea is that if foreign materials and products are more expensive, you’ll buy more domestic goods.
Suppose, for example, that the U.S. government levied a new 10% tariff on cars imported from Japan. The tariff would push the price of a $50,000 Japanese vehicle to $55,000. So because the Japanese car is now more expensive, a similar American-made vehicle becomes more appealing to buyers.
Former President Donald Trump introduced tariffs on about $380 billion worth of goods in 2018 and 2019, breaking with decades of free trade policy. And he has pledged to double down in his second term, proposing new tariffs of 10% to 20% on all imports, and an extra 60% tariff on Chinese goods.
Not sure how tariffs work or where you stand on the issue? We’ll walk you through how tariffs work, why governments impose them, and how they affect you.
Robin Hartill | Yahoo Finance