A tariff is a tax on an import (or export) between different countries (or other borders). They can make things...awkward.
Tariffs can be used to try to artificially affect the global market by making importing or exporting certain things more expensive than they would be otherwise. This can help artificially (in the economic sense) prop up industries.
But tariffs aren’t that simple. For instance, the Trump administration put a 25% tariff on steel and a 10% tariff on aluminum imports, with some exceptions. This was great for American steel and aluminum producers. They used to have to compete with cheaper, imported steel and aluminum, but now that the imported stuff was more expensive, it became easier for them to sell their steel and aluminum to other U.S. businesses.
Which gets to who it wasn’t great for: those other U.S. businesses. Business that rely on a steady stream of cheaper, imported steel and aluminum all of a sudden experienced a price hike, dramatically affecting their businesses.
Who else is paying? American consumers. The businesses that have to pay more money for steel and aluminum will pass that extra cost onto consumers, making a ton of goods more expensive than they used to be.
You have to look beyond the immediate effects to the secondary and tertiary effects of a tariff to get the full picture.
Related or Semi-related Video
Finance: What is VAT?5 Views
finance a la shmoop what is the eighty or VAT well it's this what okay then I
never mind Breaking Bad was awesome though anyway in finance land VAT or V.A.T[Car drives by financeland sign]
stands for value-added tax and it is simply a consumption tax like the tax
rate on anything you buy in Massachusetts is say ten percent so you
think that car cost thirty grand no it was thirty three grand and you'll pay [Car on a driveway]
other v.a.t.s like a tax for your license plate registration and other
stuff note that the V and the A in their value-added yeah and it's a fair
question to ask value-added for whom and the answer is the government the taxman [Uncle Sam poster appears on wall]
v80 tax is that three dollar gallon of gas at the same rate for Bill Gates as
it does for Joe Sixpack it is a regressive tax that is rich in poor
people all pay the same rate and yes Bill Gates jet probably uses more gas [Bill Gates stood by a jet]
than does Joe six-packs but the rate per gallon is the same and this causes
controversy among various political factions who feel that it's wrong to tax [Political figures speaking on stage]
the poor at the same rate as the rich well when it comes to income tax the
rich are taxed vastly more not just in volumes of dollars taxed because they
earn more money but in the rate of tax applied like let's punish those
hard-working plumbing parts suppliers and reward the guy who's asleep at the [People using laptop on benches]
tollgate taking the five bucks like someone in a blue state making thirty
grand a year pays fifteen percent tax on their last dollar someone making 500
grand pays like fifty cents or half so over time a number of politicians have
suggested that v80 should somehow have an income level overlay that is the
buyer of a given gallon of gas should state what income tax bracket they're in [Man unscrewing gas knob]
when they go to the gas pump and that for Bill Gates that gallon should cost [Gas pump filling up car]
like thirty eight dollars whereas for the Union Tollbooth worker yeah wake up
there buddy five bucks each time well they only have to pay two dollars for
their gallon of gas fair not fair well ask the toll booth guy
you know when he wakes up [Toll both man sleeping]
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