The Trump administration has imposed a 25% tariff on all imported steel and aluminum, but what is a tariff, who pays, and why does it matter?
Put simply a tariff is a tax on imported goods, and it is paid by the importer.
That means it is U.S. companies that will pay for the tariffs imposed on foreign steel and aluminum.
Studies show that ultimately, it’s American people who foot the bill.
Companies can’t always swallow the whole cost of the tariff, so they pass all or some of that extra burden on to customers in the form of higher prices.
In the case of the steel and aluminum tariffs, it means potential price hikes for everyday products, such as beverage cans, washing machines, and cars.
On the flip side, tariffs on imports can encourage American companies to buy American products and therefore build the resilience of domestic supply chains.
According to the Economic Policy Institute (EPI), targeted tariffs can help to protect certain U.S. manufacturing industries.
Tariffs on steel (25%) and aluminum (10%) imports have been in place since March 2018 under national security provisions of U.S. trade law, though exemptions were put in place.
Trump's latest proclamation raises the tariff on aluminum and resets those national exemptions and exclusions.
According to the EPI, evidence suggests the 2018 tariffs have been effective in preserving and expanding the domestic steel industry.
