Hailey Whitlock, Writer 

As a cause of great debate, tariffs have been featured heavily in the rhetoric surrounding the 2024 presidential election. However, this brings to mind the questions: what exactly is a tariff and how do they operate? A tariff is a tax imposed by the government on imported goods. While tariffs are legally levied against foreign importers, the rise in the cost to sell products across borders often leads to an increased price for consumers.

According to Forbes, Douglas Irwin, a leading historian of American trade, postulated that “trade policy affects prices in the domestic market, shaping the allocation of a nation’s resources.” Oftentimes, companies that import goods are faced with the difficult decision of whether to inflate consumer prices to cover the higher cost of importing goods, or accept a reduction in profits to keep price points competitive.

Faced with these two undesirable options, consumers and retailers shift away from products besieged by tariffs in favor of less expensive domestic goods. Thus, this introduces the two primary functions of tariffs: to act as a revenue source for the government and to serve as a means of protecting domestic industries.

Tariffs have been a central part of American history prior to the start of the nation; as recorded by Smithsonian Magazine, tension regarding “taxation without representation” extended to the tariffs imposed by the Townshend Acts. As such, when the Articles of Confederation were established, the federal government lacked the power to tax the citizens of the new nation.

It was quickly discovered that this model would not be maintainable, prompting the drafting of the Constitution. In fact, according to Forbes, the second law ever passed by Congress was a tariff law – a method by which the federal government could raise revenue without directly taxing citizens.

Tariffs have remained a point of politics ever since, and prior to the Civil War, a heated dispute erupted between the North and South regarding the appropriate role of tariffs. Those in the North typically favored higher tariffs as a form of protection against foreign competition. Conversely, the South, a primarily agrarian economy that relied heavily on imported goods, strongly objected to the imposition of further tariffs as these duties increased the cost of everyday necessities.

These arguments came to a head when South Carolina refused to honor newly passed tariffs. When President Jackson threatened to use military force to enforce these tariffs, South Carolina stated thoughts on withdrawing from the Union. A compromise was reached, but when the South did withdraw from the Union, Northern lawmakers were able to impose hefty tariffs.

These high tariffs remained until the time of President Franklin Roosevelt who encouraged relaxing trade restrictions to open wider foreign trade. Since then, the trend has been low tariffs, instead relying on taxes for government revenue. However, President-elect Donald Trump’s re-election calls into question the impact tariffs could have on the national economy. 

A central point to the 2024 Trump presidential campaign was an increase in tariffs. According to USA Today, his campaign boasted plans to impose 60% tariffs on Chinese goods as well as a universal tariff up to 20% on imports from other nations. This aggressive approach to tariffs is considered with the goal of bettering domestic production and manufacturing.

By passing tariffs, the price of common goods will increase, positioning foreign-made products at a more expensive price point. In doing so, American goods may appear more appealing to consumers, bolstering domestic goods. At a speech in Georgia in September, President-elect Trump stated, “When they have to pay tariffs to come in, but they have incentive to build here, they’re going to come roaring back.”

However, tariffs come with an extremely high price. USA Today references a study by the Peterson Institute for International Economics, a nonpartisan think tank, that claims that the passage of these tariffs will cost the average American household more than $2,600 a year. Tariffs incite higher inflation and interest rates, a combination which has many economists skeptical about the steep tariff rates.

Schlossberg from the Wells Fargo Investment Institute stated, “Most of us feel the tariff proposals are detrimental to the economy as a whole, even though they may benefit certain types of manufacturing at least for a time.”

Overall, the high tariffs suggested by president-elect Trump usher in a new era of aggressive tariff policy, prompting concern of a shift away from foreign products at the cost of American consumer prices.