What is a tariff and how does it work?

What is a tariff and how does it work?

New York - since President Donald Trump took office, tariffs have dominated the headlines a little more than two weeks ago. On Tuesday, he threatened with high customs fees on goods that the United States imported from their three largest trading partners - Mexico, China and Canada.

effects of tariffs on consumers and companies

These tariffs could buy a wide range of goods that buy Americans, more expensive . There is also a risk that domestic companies will suffer if the three countries react to American products with retaliatory tariffs.

What are tariffs and how do they work?

In the middle of all the discussions about tariffs, many are wondering: What exactly is an inch and how does it work? Customs can be easily defined - it is a tax on goods that come from another country. These are typically structured as a percentage of the value of imports and can vary depending on the country of origin and type of products.

Who pays the tariffs?

domestic companies that import products into the country bear the costs for the tariffs in advance, contrary to Trump's claims that the exporting nations pay the invoice. The actual payment process takes place to the customs and border protection authority (CBP) specified in the USA, including airports, train stations, streets and ports.

At these customs offices, CBP agents collect customs fees from domestic companies that import the products. The amount of the fees depends on the classification of the goods and their origin, explains Ted Murphy, a lawyer at Sidley Austin, who specializes in advising companies in relation to customs regulations.

electronic payment systems for tariffs

Many importers use the Electronic payment system of the government Departs bank account. There is also the possibility to pay all fees once a month instead of making automated deductions for every import.

The economic consequences of tariffs

But Trump is not entirely wrong if he says that other countries ultimately pay the tariffs that are imposed against them. Because if companies know that they have to spend more to import goods from a certain country, they may decide to look for a new supplier or, in Trump's ideal world, to move production to the USA.

In both cases, the country's economy, the goods of which are taxed, can suffer from the losses, which may lead to job losses. However, exporting nations often do not accept tariffs without complaint. Sometimes these countries react with retaliatory tariffs, which often leads to a complete trade war with a mutual exchange of tariffs.