![](https://i.imgur.com/CLvY2jA.png")
05-02-2025, 09:50 PM
How do tariffs work? Who pays, who collects and more
https://www.straitstimes.com/business/ec...s-and-more
How Do Tariffs Work?
What are Tariffs?
Tariffs are taxes imposed on imported goods. They are essentially a fee that governments charge on goods brought into their country from other nations.
Purpose of Tariffs:
- Government Revenue: Like other taxes, tariffs generate revenue for the government.
- Protecting Domestic Industries: Tariffs make imported goods more expensive, making domestic products more competitive.
- Foreign Policy Leverage: Countries can use tariffs as a tool to influence other countries' policies, as seen in the recent case of the U.S. imposing tariffs on China.
Who Pays Tariffs?
Ultimately, consumers end up paying for tariffs. While importers initially pay the tariff to customs, they often pass on the cost to consumers by raising prices. Businesses may also absorb some of the cost, but they may also pass it on to consumers through higher prices.
How Tariffs Are Collected and Enforced:
- US Customs and Border Protection (CBP): In the United States, the CBP is responsible for enforcing tariffs at ports of entry, including seaports, airports, and land border crossings.
- Customs Clearance: Tariffs are collected at the time of customs clearance, when imported goods are inspected and verified.
- Penalties: Companies that fail to accurately report the value, category, or origin of goods can face penalties.
Examples:
- Re-imported Products: Products made in the US with US components, assembled in Mexico, and then re-imported back to the US, are often duty-free.
- Gold Jewelry: Gold exported from the US to India and used to create jewelry will be subject to tariffs when re-imported back to the US.
Impact of Tariffs:
- Reduced Imports: Tariffs often lead to a decline in imports from the country being targeted.
- Tariff Evasion: Importers may attempt to evade tariffs by mislabeling products or shipping goods through a third country.
- Price Increases: Tariffs drive up prices for consumers, making imported goods less affordable.
Trade Agreements and Tariffs:
- Free Trade Agreements: Trade agreements often aim to reduce or eliminate tariffs between countries.
- World Trade Organization (WTO): The WTO sets rules governing international trade, including limitations on tariffs.
Conclusion:
Tariffs are a complex economic tool used by governments to influence trade and protect their economies. However, they have a significant impact on consumers, businesses, and international relations, often leading to increased prices, reduced trade, and potential trade disputes.
https://www.straitstimes.com/business/ec...s-and-more
How Do Tariffs Work?
What are Tariffs?
Tariffs are taxes imposed on imported goods. They are essentially a fee that governments charge on goods brought into their country from other nations.
Purpose of Tariffs:
- Government Revenue: Like other taxes, tariffs generate revenue for the government.
- Protecting Domestic Industries: Tariffs make imported goods more expensive, making domestic products more competitive.
- Foreign Policy Leverage: Countries can use tariffs as a tool to influence other countries' policies, as seen in the recent case of the U.S. imposing tariffs on China.
Who Pays Tariffs?
Ultimately, consumers end up paying for tariffs. While importers initially pay the tariff to customs, they often pass on the cost to consumers by raising prices. Businesses may also absorb some of the cost, but they may also pass it on to consumers through higher prices.
How Tariffs Are Collected and Enforced:
- US Customs and Border Protection (CBP): In the United States, the CBP is responsible for enforcing tariffs at ports of entry, including seaports, airports, and land border crossings.
- Customs Clearance: Tariffs are collected at the time of customs clearance, when imported goods are inspected and verified.
- Penalties: Companies that fail to accurately report the value, category, or origin of goods can face penalties.
Examples:
- Re-imported Products: Products made in the US with US components, assembled in Mexico, and then re-imported back to the US, are often duty-free.
- Gold Jewelry: Gold exported from the US to India and used to create jewelry will be subject to tariffs when re-imported back to the US.
Impact of Tariffs:
- Reduced Imports: Tariffs often lead to a decline in imports from the country being targeted.
- Tariff Evasion: Importers may attempt to evade tariffs by mislabeling products or shipping goods through a third country.
- Price Increases: Tariffs drive up prices for consumers, making imported goods less affordable.
Trade Agreements and Tariffs:
- Free Trade Agreements: Trade agreements often aim to reduce or eliminate tariffs between countries.
- World Trade Organization (WTO): The WTO sets rules governing international trade, including limitations on tariffs.
Conclusion:
Tariffs are a complex economic tool used by governments to influence trade and protect their economies. However, they have a significant impact on consumers, businesses, and international relations, often leading to increased prices, reduced trade, and potential trade disputes.
