During his presidential campaign, Donald Trump made it clear that a pillar of his economic policy would be tariffs, going so far as to say that “tariff” is the “most beautiful word in the dictionary.” With tariffs such a key part of his presidential priorities, it’s worth exploring what they are, how they work and what kind of impact Trump’s tariff proposal could have on the economy.
“Tariff is just a fancy word for tax: It’s just a tax on anything that comes into this country from overseas,” explains Peter Simon, a teaching professor of economics at Northeastern University. Similar to a sales tax for consumers, tariffs place additional taxes on imported goods, usually specific goods or goods from specific countries, only the tax is paid by any company that imports those goods. The money collected from tariffs ultimately ends up going to the federal government, like any kind of tax. Trump’s recent tariff proposal would involve a 60% tariff on all goods from China and a 10% to 20% tariff on all imported goods.
