Countries have all kinds of ways to battle each other besides bombs and bullets. Words and policies may seem harmless, but they can be pretty powerful—and sometimes, they lead to real explosions. Even when they don’t, these moves can still affect everyone’s daily lives.
Lately, a big deal has been made about tariffs. So, what are they, and why do they matter?
Here are Five Fast Facts on tariffs:
- 🤔 What Are They? - Tariffs are taxes on goods coming into a country from somewhere else. They raise the price of imported stuff to make local goods look cheaper. It’s like a country saying, “Buy local!”
- 🧑🤝🧑 Current State - The U.S. already has tariffs on things like cars (2.5%) and shoes (6%). But countries that are pals, like Canada and Mexico under the USMCA, don’t use tariffs on each other.
- 📝 Basic Outline - Trump has proposed a number of new tariffs for when he takes office, including a 10-20% tariff on all imports to the US all the way up to 60% on everything coming from China, and up to 100% on things coming from Mexico. Given that USMCA was signed into law by Trump himself a few years ago, and given Trump’s tendency to, ah, bluster, we’re pretty sure that last is just a negotiation tactic to get control of the border…
- 😱 Under Pressure - Speaking of negotiations, that’s usually why tariffs are used - to achieve a political end. The US is by far the largest economy in the world, so when it gets more expensive to sell stuff here, it forces crunch time for other countries looking to hawk their stuff.
- ✔️ Been There, Done That - In Trump’s first term, the tariffs he put on China caused three times more economic damage to China than to the US. He also used the threat of tariffs to get Mexico to prevent excess illegal immigration. It’s kinda like a rich dude walking into a bar and throwing C-notes around and saying, “Jump”...so people take the money and jump!
🔥Bottom line: It’s not a strategy without risk. Over time, tariffs can raise prices on domestic goods and services in response, so that’s why a lot of economists don’t like them. But Trump has done this before, so hopefully he can do it again. No matter what, “buying American” is always a good thing, so we recommend it whenever possible!
What do you think about tariffs?
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