Tariffs are bad for you.
Headlines from today state that the new Trump administration will put a 25% tariff on imports from Mexico, and Canada. Additionally, a 10% tariff on goods imported from China. A tariff is a fee charged by the Federal government on goods coming into the country. That fee is paid by the importer, not the exporter. For example, Target wants to sell PlayStation in their stores, so they purchase them from Sony, who builds these in China. Target receives the shipment of PlayStations, where they will be charged the tariff. Target pays the tariff to the Government to receive these goods. Target then must decide how to recoup the additional fees. They can either choose to eat the cost and reduce their revenue, or they can increase the selling cost. The outcome is a combination of the two. As a result, consumer prices, specifically for food and cars are going to go up. And businesses lose money by having to pay tariffs and selling few items. For th...
Comments
Post a Comment