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© Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.What are tariffs and how do they work?
By PAUL WISEMAN WASHINGTON©2025 GPlusMedia Inc.
32 Comments
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TaiwanIsNotChina
An idiot slaps them on without thinking, the other side responds and we are all poorer as a result.
sakurasuki
At the end, consumer will pay the price hike, that simple.
P_C
USA importers absolutely pay the tariff when purchasing goods from foreign markets. And, in reality pass on some/all of the cost to USA consumers of those goods. Plain and simple.
tDUMP looks only at the secondary effects of likely decreased total sales/revenues by foreign markets due to increased tariffs likely lowering the demand for foreign goods. His mind is always zero sum. Winners & Losers. His way of thinking is overly simplistic and easy for the populous to digest, unfortunately.
Tokyo Guy
This almost made me think of a New York pitchbot line.
"We wanted to clarify the function of tariffs for the people whose jobs and livelihoods depend on them. So we asked three republican voters at a diner in Fulshear, TX"
browny1
The US had it's big day in the sun when it expanded globally with major companies in every country - almost - and it's commercial/trade influence impacted the world.
Now that others are growing up they don't like it.
It's so nasty! It's so unfair!
Love to see US try to go full isolationist and attempt to do it alone.
And bring back all of those companies from GM to Coke.
Make America Great Again - tee, hee!
Alan Harrison
The best example of a tariff is rice imported into Japan. 775%.
Desert Tortoise
There is more to it. As prices rise on foreign goods consumers buy less of those and buy stuff made in the US not subject to tariffs when a domestic substitute is available ( if one is available ). That increased domestic demand and drives up prices on domestic goods. Double whammy for inflation. Domestic suppliers love the higher prices but the consumer gets stiff armed.
GBR48
Tariffs always hurt the citizens of governments who impose them, because they function as an additional tax, paid by the consumer to the state.
EvilBuddha
USA importers absolutely pay the tariff when purchasing goods from foreign markets. And, in reality pass on some/all of the cost to USA consumers of those goods.
If American importers decide to deduct the tariffs from the prices they pay to the exporters, it's going to harm the exporters more.
And that depends on who has more market power. If there are alternate sources of imports, it's the American importers who have more power and they will be able to pass on the price increase to the exporters instead of American consumers.
That is why nations are worried.
MiuraAnjin
It doesn't work like that.
Have you ever been shopping?
Wasabi
send a copy to trump
Speed
It was Clinton's 1994 NAFTA Agreement that allowed for this not "Trump’s US-Mexico-Canada trade agreement."
wallace
Trump's new taxes.
EvilBuddha
It doesn't work like that.
Have you ever been shopping?
It works exactly like that.
For example, go through the below.
https://www.nytimes.com/2025/01/17/world/canada/trump-tariffs-windsor-autos.html
George Papp is the chief executive of Papp Plastics, whose headquarters sits near the imposing new suspension bridge. He said his U.S. customers, mainly automakers, would simply invoke the terms of contracts he has with them and deduct the cost of tariffs from the amount they pay him.
Desert Tortoise
That is not how tariffs work. Tariffs are a percentage of the price of the product or service. Importers in the US can't deduct it from the price. It is applied by the US government after the product is purchased and the buyer has to pay it.
If the US buyer doesn't like the price the seller can sell their goods somewhere else. The US isn't the only place buying stuff. What it will hurt are US companies that manufacture products abroad for the US market. That is very common. They are not going to escape paying the full cost of the tariff. Think about a company like Ford making cars and trucks in Mexico. They can't pass the cost of the tariff off to any other company.
Desert Tortoise
And NAFTA was negotiated in part to help industrialize Mexico, increase incomes and in that way try to give Mexicans a positive reason to not immigrate to the US. Help make Mexico prosperous enough that their people have a reason to stay.
Desert Tortoise
Jupiter is taking across the board tariffs on every nation. The substitutes will be subject to tariffs. There are products we buy that are not made anywhere in the US. Window air conditioners for example. Bagless stick vacuums. High end rice cookers. Drip coffee makers. Nobody in the US makes these. Most come from China but you find the odd example from Japan, Taiwan, Malaysia, and occasionally a European country though even companies like Bosch have moved production to Asia. It is not as if buyers have US made options for these products and the likely never will because US labor costs, even with tariffs make US production grossly unprofitable.
EvilBuddha
Importers in the US can't deduct it from the price. It is applied by the US government after the product is purchased and the buyer has to pay it.
The importers can negotiate the terms with the exporters to deduct the tariffs they pay to the US government from the price and pay the balance amount only to the exporters. In this case they will not pass on the tariffs to the American consumers as most are suggesting, but to the exporters.
Some importers already have such terms written in their contracts, for example the article shared above.
https://www.nytimes.com/2025/01/17/world/canada/trump-tariffs-windsor-autos.html
If the US buyer doesn't like the price the seller can sell their goods somewhere else.
Only if they find the market. The US is the largest consumer market and therefore the market power favors the American importers against those who export to the US.
GuruMick
Is the US the "largest consumer market "?
How do population giants like India and China fare.?
Just asking.
I'veSeenFootage
A trade agreement he now criticizes as being terrible, because he clearly has dementia.
deanzaZZR
Just curious are other countries around the world raising tariffs dramatically? The USA certainly is an exceptional country. Once the icon of "free trade" now the icon of "trade wars are easy to win".
GuruMick
Deanza...Australia among many others changed/lost industries because of US moves to a non tariff world.
Thanks "partner "
Sanjinosebleed
Just another way for the corrupt politicians to justify recent crazy price hikes and increase the rich poor divide…
GuruMick
USA...worlds richest nation by far...now worlds most unhappy nation, by far.
Wake up and smell the roses my friends.
gokai_wo_maneku
I'm pretty sure that Trump supporters do not realize or understand that they are paying for the tariffs. They add to their cost of living.
kurisupisu
So, Americans will start producing in the US where there will be less tax to pay and products
will be similar in price.
kurisupisu
How about the tariffs and obscure regulations governing imports to Japan on food,fuel,construction materials,drugs etc?
Zaphod
Tariffs are Trumps favourite negotiation tool, and they work. But it is funny to see that the legacy media feels they have to explain to their readers what tariffs are.
Chikatilo
What an obfuscated article. Anything to get at Trump, right?
He added tariffs his first time around, and nobody said anything like this.
Tariffs have been around forever, so it's no news and shouldn't be anything new to know how they work or how they impact the final consumer.
This is not exactly how it works, has anyone heard of INCOTERMS?? Depending on the INCOTERMS, the code used for each specific contractual international commercial transaction, either the seller of the foreign goods (the exporter) or the buyer of them (the importer) pays the tariff upfront to the US government (or the government of the country where the goods enter). However, the final burden of the tariff is logically always borne in the end by the importer (we ship our products from Japan to the US, our contracted Incoterms, DDP, mean we take care of every cost, including tariffs, from the time our product leaves our facility to the time it reaches our customer, so at first we pay it to the US customs, but of course we have included that cost in the price we sell the product to our customer, and they know it!!), which will then most likely pass it to the final consumer to cut its losses (our customer then bases his selling price on the cost he paid us, which includes the tariffs!!).
The end result is the customer will see and increment on the price of the product, meaning if a Chinese product was ay cheaper than a US product, therefore increasing its chance of selling, now it will be priced similarly or even more expensively, meaning it won't sell or may be less likely to sell. Therefore, the original importer has to decide if it worth the risk to continue importing those products only to have them not sell as before.
The fact that the consumer will bear the grunt of the tariffs, presupposes that the original importer will take the risk of selling the same product but more expensive. And yes, the objective is to eliminate the price gap existing that makes Chinese products cheap. So in the end, it serves its purpose. There's nothing outrageous about it. Japan hits US automobiles with the same high tariffs, so does China, so why shouldn't the US do the same?? China can circumvent that by producing their products out of China.
Chikatilo
gokai_wo_manekuToday 05:58 am JST
This presumes: 1) the consumer will accept the cost increase and pay it, without looking at the other now similarly or cheaperly priced options (which is the point) and more importantly 2) that the importer will continue importing such product taking the risk of it not selling that well as before due to the increased cost. Several importers will simply stop selling the imported goods as they are no longer as sellable as before. In the end, it will become as with many other products in the world, the local product is cheaper than the foreign one (for some items). International negotiations sometimes allow that country A sell it's cheaper produce A in country B, which country B lacks, or doesn't have a lot, while country B can do the same for its produce B selling it in country A. Where it becomes unfair, is when country B has good internal production of produce C, but country D is allowed to sell its cheaper produce C in country B, therefore damaging the local industry of produce D production. That is what these tariffs are trying to revert or prevent.
nishikat
WRONG
Japan has no tariffs on import cars. It's that Japanese people don't want to buy Buicks. There are few practical American cars for the American market. Another point, what Japanese person wants to buy a Buick?
nishikat
for the American market -- for the Japanese market.
I will also say that foreigners who like to bash Japan for this misconception are non car buyers anyways and always use public transportation (and like to complain generally)