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Trump has long promised he would implement tariffs and during his presidential campaign, he said repeatedly that “tariff” is the “most beautiful word in the dictionary”.
What are tariffs?
Most economists agree that it’s the residents of the country imposing the tariffs who pay the biggest cost, as importers will typically pass the extra cost onto the consumer by raising prices.
How do they work in practice?
To manage the increased cost, the company selling that product could do one of three things:
- Absorb the price and accept lower profits
- Absorb part of the tariff cost and hand the rest onto the consumer by increasing the price
- Raise the cost of the product to cover the tariff cost.
Source: SBS News
Who uses tariffs?
Australia has been subject to tariffs from China due to a political dispute, with tariffs placed on Australian wine and barley in 2020. These were removed in March as the relationship between the two countries improved.
I usually describe tariffs like this as akin to a circular firing squad because essentially you are targeting someone else but hitting yourself in the process.
Markus Wagner, University of Wollongong
How will the US be impacted by tariffs?
Speaking to SBS News, economic law professor at the University of Wollongong, Markus Wagner said he describes tariffs as “akin to a circular firing squad because essentially you are targeting someone else but hitting yourself in the process.”
How could Australia be impacted by tariffs?
With the Australian Associated Press.
