What are Tariffs?

Chip Genung ‘25

Tariff is a word used a lot recently when talking about foreign policy and economics. This is primarily because they serve as a part of President Trump’s new foreign policy strategy. Tariffs historically have pros and cons, both for the United States and for the countries the U.S uses them against. They can hurt or help the economies of the countries that implement them. Very simply, tariffs are a way in which the government taxes imports from foreign countries.

Recently, Trump has announced a 25% tariff on imports of steel and aluminium, which means 25% of the price of all imported steel and aluminium will have to be paid by the importer to the US government. Douglas Irwin is an economics professor at Dartmouth, and has laid out the historical precedent for tariffs in the US saying they are used to promote the “three R’s”. These stand for revenue (more income for the government), restriction (a method to protect American producers from international competitors), and reciprocity (leverage to use when negotiating with other countries). The revenue aspect was popular before the introduction of an income tax in the 19th century, but today the cost of the US government cannot be solely covered by tariffs. The restriction and reciprocity aspects of tariffs have been implemented multiple times throughout history. President Trump appears to be a fan of the “three R’s”, using tariffs as leverage and favoring it as a way for the government to make money. For example he used the threat of tariffs as a bargaining chip in talks with both Canada and Mexico. 

However, he has seen a considerable amount of pushback, as tariffs have been known to raise prices for American consumers on imported products, which can have varying effects on the economy depending on the severity of the tariffs. Others worry about the effect tariffs will have on inflation. Furthermore, without resources from other countries being imported in, we might have a lack of specific goods, therefore driving the price up. 
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There's no doubt that tariffs have been playing a big role on the world stage, and it appears they will continue to do so, as leaders of the world attempt to use them to accomplish their ambitious goals.