this post was submitted on 06 Apr 2025
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Explain Like I'm Five
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When you import something from another country, it needs to go through things like customs, etc. You have to fill out all the paperwork about what it is and where it's going (if you're using/selling it in the US or just middlemanning it somewhere else).
Part of that paperwork includes tariffs, a tax on the good you are importing. So, the importer has to pay the government that money in order for the product to legally come in to the country. The importer pays that cost, so the local purchaser pays that cost, so the consumer pays that cost. And each one of those (and likely many other) steps probably will add on a little extra for the trouble.
The hope is that encourages local production; even if it costs more to produce locally, when you factor in the cost of the tariffs to import, it might make sense to invest the cost to avoid the tariffs.
The troubles are:
Thank you so much for this simple breakdown! It makes sense now and im bookmarking the comment. Why do you think the government is putting these tarrifs in? The real reason, not what they're telling people.
The cynical perspective is that it's an attempt to consolidate wealth for the wealthy.
Basically, you drive the price up on everything and force the least able to bear the loss in revenue to give up and sell.
Elon Musk can afford to lose $11 billion, because he still has $200 billion left over and that is obviously more than anyone needs to keep afloat for a few bad years. The same goes for every billionaire and every multibillion dollar company.