Let's get one thing right: definition of tariffs.


A while back I produced a live video on Instagram about the confusion that is created among the general population about whether or not the increase in tariffs will impact them. As mentioned in the video, the short answer is yes. Here is why. Think of tariffs as taxes. They are fees imposed on foreign goods coming into US. These fees are paid by the importer, and this is very important to understand. I repeat: The importer is the one that pays the fees. That means, that the foreign producer does not pay any fees. So, when goods get into US the importer will pay the tariff, the custom duty, the tax, on those goods. The confusion seems to be that people believe that the foreign producer will pay the fees. That is not the case. The impact on the foreign producer is that importers will seek to buy less or will look elsewhere for similar goods in order to avoid the tariff hike. Where this is not possible the importer ultimately will pass the cost incurred eventually to the consumer. Remember change is always felt at the margins. Ultimately the consumer will be the one feeling the impact of tariffs because they will pay more for goods it buys in the local market that are shipped by that particular country. When it comes to the US families, research has shown that the average American family will pay upward $2000 dollars as a result of the tariffs imposed on goods coming from China. To conclude, tariffs are not paid by the foreign producer they are paid by the importer, and it is the American consumer or American businesses including agriculture that will be financially impacted by their rise.

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