Tariffs — often described as taxes on imports — have become a focal point in global economic debates. But what exactly are they, and why do they matter to consumers, businesses and governments?
Here’s a breakdown of their purpose, history and current implications.
What is a tariff?
A tariff is a tax imposed by a government on goods and services imported from other countries. These fees, typically calculated as a percentage of the product’s value (ad valorem tariffs) or a fixed cost per unit (specific tariffs), aim to make foreign goods more expensive than domestically produced alternatives.
While tariffs generate government revenue, their broader goals often include protecting local industries, addressing unfair trade practices or leveraging political influence.
A brief history of tariffs
Tariffs date back thousands of years, with ancient civilizations like Greece and Rome taxing goods crossing their borders. In the U.S., tariffs were central to early economic policy.
The Tariff of 1789, signed by President George Washington, funded the fledgling federal government and protected manufacturers from European competition.
Tariffs became a political flashpoint in the 19th and early 20th centuries. High protective tariffs, such as the Smoot-Hawley Tariff Act of 1930, exacerbated the Great Depression by stifling international trade and provoking retaliatory measures.
By the mid-20th century, global momentum shifted toward trade liberalization, culminating in the 1995 establishment of the World Trade Organization (WTO), which oversees tariff reductions and dispute resolutions among member nations.
Why tariffs are dominating headlines now
Tariffs have resurged in political discourse due to rising protectionism and geopolitical tensions. President Donald Trump’s first administration marked a turning point, enacting sweeping tariffs starting in 2018 on steel, aluminum and $360 billion worth of Chinese goods under Section 232 (national security) and Section 301 (intellectual property violations) of U.S. trade law. President Joe Biden largely maintained these policies, reflecting bipartisan skepticism of free trade agreements and China’s economic practices.
Globalization’s uneven benefits have also fueled tariff debates. While free trade boosted efficiency and lowered consumer prices, it led to job losses in manufacturing sectors, particularly in developed nations. Tariffs are increasingly framed as tools to “level the playing field” for workers and industries.
Who pays tariffs? Spoiler: it’s you
Though importers technically pay tariffs at borders, economists agree that higher prices ultimately pass the costs to consumers. For instance, a 2019 study by the Federal Reserve found that the U.S. tariffs on Chinese goods cost the average household $831 annually.
Similarly, according to the University of Chicago, prices for washing machines rose nearly 12% following 2018 tariffs.
Businesses, particularly small ones, face squeezed profit margins. While large corporations might absorb costs or shift production abroad, smaller firms often lack such flexibility, forcing them to cut jobs, raise prices or shutter. Retaliatory tariffs further hurt exporters; U.S. farmers lost $27 billion in exports to China between 2018 and 2019, prompting federal bailouts.
Trump’s tariff legacy and the “Trade War” effect
Trump’s tariffs targeted revitalizing industries like steel and punishing China for intellectual property theft. While steel production jobs increased modestly, sectors reliant on steel and aluminum — including automakers and construction — faced higher material costs.
The U.S.-China trade war also reshaped supply chains. Companies like Harley-Davidson moved production overseas to avoid EU retaliatory tariffs, while others diversified sourcing from Vietnam or Mexico. Though the 2020 Phase One deal paused escalation, most tariffs remain, contributing to persistent inflation in sectors like electronics and machinery.
The bottom line
Tariffs are a double-edged sword: They can protect strategic industries but risk economic blowback. While proponents argue they safeguard jobs and national security, critics warn of hidden costs to consumers and long-term inefficiencies. As global tensions persist, tariffs will likely remain a contentious tool in balancing domestic priorities with international competition.
For now, one thing is clear: whether through higher prices or political rhetoric, tariffs impact everyday lives more than most realize. Understanding their history and mechanics is critical to steering the evolving conversation around trade, fairness and economic policy.
Contact Multi-Media & Senior Sports Reporter Noral Parham at 317-762-7846. Follow him on TikTok @3Noral. For more news, click here.
Noral Parham is the multi-media & senior sports reporter for the Indianapolis Recorder, one of the oldest Black publications in the country. Parham has worked with various leagues to provide a diverse perspective in sports, including the Big Ten, Big East, IHSAA, IndyCar, MLB, NHRA, NFL, NBA, WNBA, WWE and the Olympics. Prior to joining the Recorder, Parham served as the community advocate of the MLK Center in Indianapolis and senior copywriter for an e-commerce and marketing firm in Denver.
