2/16/25

By Aditi Jha

Tariffs are taxes on products that we import from other countries. The intention is to make foreign goods more expensive so people buy things made in the U.S. The foreign companies that sell the product are the ones who get taxed and oftentimes pass that cost down to the consumer. For example, if there is a 20% tariff on a $100 item, that means that the tax is $20. The company might pay this $20 but often just make the product more expensive. Many companies in the U.S. rely on foreign sources to buy parts or materials. When said materials get more expensive, the domestic U.S. companies also raise prices. This has been empirically proven-- data from the Bureau of Labor Statistics (a government agency) shows the 2018 - 2023 U.S. tariffs on washing machines raised laundry equipment prices by 34%, a price rise that plummeted once the tariffs expired in 2023. When a company raises their prices, not only does this lead to people being unable to afford the product, but also less demand, hurting both the consumer and the business. Sometimes tariffs can lead to retaliation in which the affected country puts tariffs on American companies in response, in what is called a trade war. Trade wars can lead to much higher prices for a country’s consumers while also hurting said nation’s businesses as they are required to pay the taxes or raise their prices, hurting demand.  We have been in a trade deficit since the 1970s. This means that we haven’t exported more than we’ve imported in fifty years. The U.S. historically has had very low tariffs while our companies have been taxed by other countries much more heavily. For example, India taxes foreign motorcycles at 100% whereas our tax is only 2.4%, and Brazil taxes imports of ethanol at 18% while we tax it at 2.5%. President Donald Trump says that tariffs will help solve our trade deficit, and will boost U.S. manufacturing as more people will buy domestic products, protecting people’s jobs as an extension of that. However, Trump implemented tariffs in his first term which Biden continued and the deficit still climbed to the second-highest it has ever been last year at $918 billion. Trump has imposed a 10% tariff on all products from China, set a 25% tariff on all imported steel and aluminum starting March 12 (affecting the biggest sources of imports and our key allies Canada, Brazil, Mexico and South Korea), declared a 25% tariff on Mexico and non-energy-related imported products from Canada to start in a month, and is now establishing retaliatory tariffs on the countries that currently tax the U.S. He told reporters: “If they charge us, we charge them. If they’re at 25, we’re at 25. If they’re at 10, we’re at 10. And if they’re much higher than 25, that’s what we are too.” China implemented retaliatory tariffs on about $21.2 billion worth of U.S. exports which started on February 10th, a continuation of our ongoing trade war. “Imports of Canadian steel and aluminum create thousands, if not millions of jobs, to support families across the United States,” Canadian prime minister Justin Trudeau said regarding the delayed tariff on Canadian products. “We should be doing more together, not fighting with each other.” Looking ahead, automobile tariffs are scheduled for April 2. 

That's the news for today. Stay safe!