President Trump has insisted that his new tariffs on America’s largest trading partners will not increase prices for Americans. But a review of how they work suggests that is not the case.According to The New York Times, President Trump is moving forward with imposing extensive tariffs on America’s closest trading partners. Starting on Tuesday, companies importing products from Canada and Mexico will be subject to a 25 percent tariff, while importers bringing products in from China will face an additional 10 percent on top of existing levies.
Despite the president’s insistence that these tariffs will not lead to increased prices for American consumers, a closer look at how tariffs work suggests otherwise. Here’s what you need to know about who ultimately pays for tariffs.
Firstly, it is the importer of record – the company responsible for bringing the product into the United States – that physically pays the tariff to the federal government. This fee, which can be either 10 or 25 percent, is often charged on the import price that companies pay to purchase the product from abroad, rather than the full sticker price seen in stores.
Many importers are enrolled in the government’s electronic payment program, which automatically deducts tariff fees from their bank accounts as they bring products into the country. The revenue from these tariffs is collected by U.S. Customs and Border Protection, although President Trump has suggested creating a new agency to handle the money earned from his tariffs.
It is important to note that while the importer pays the tariff upfront, they may pass on the cost to the consumer by increasing the price of the product. This means that ultimately, it is the American consumer who may end up paying for the tariffs, rather than foreign countries as the president has claimed.
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