This is AI generated.

Have you ever bought something that was made in another country? Maybe a toy from China or a banana from Mexico? Sometimes, the government makes these things cost a little more money. This extra money is called a tariff. It’s like a tax you pay when you buy something from another country.

Tariffs have been around in the United States for a very long time. Let’s take a look at how they started and why we have them.

Way Back When: Tariffs Help a New Country

When the United States was just starting, it needed money to run the government. One way to get money was to put taxes on things that came from other countries. This was like a fee for bringing things into the country.  

One of the first important people in charge of money, Alexander Hamilton, thought tariffs were a good idea. He said it would help new American businesses grow because things from other countries would cost more. So, in 1789, the government made a rule that said people had to pay about 5% extra on most things they brought into the US. To make sure people paid these taxes, they even started a special group of people who would check the ships coming into the country. For a long time, tariffs were the main way the US government got money.  

Helping American Businesses Grow

Later on, people thought tariffs could do more than just bring in money. After a war in 1812, the US wanted to make more of its own things instead of buying them from other countries. So, they made tariffs higher to help American businesses that were just starting. By 1820, the tax on many imported things was about 40%.  

But this made some people unhappy. In 1828, they made a very high tariff, called the “Tariff of Abominations”. This tariff made things from other countries really expensive, sometimes as much as 50% more. Businesses in the North part of the US that made things like clothes and tools liked this because it meant people would buy more of their products.  

But people in the South were very angry. They grew things like cotton and sold them to other countries. They also bought many things from other countries. The high tariffs meant they had to pay more for the things they bought. They also worried that other countries would put taxes on the cotton they sold. Some people in the South even said they might leave the United States because of this tariff. They eventually made a deal to lower the tariffs a little bit, but it shows how tariffs can cause big problems.  

High Tariffs for a While

From the time of the Civil War until the early 1900s, the US mostly had high tariffs on things made in other countries. People in the North thought this helped American businesses grow and made sure people had jobs. But some people thought these high tariffs only helped certain businesses and might not have been the best thing for the whole country.  

A Very Bad Tariff

Later, in 1930, something called the Smoot-Hawley Tariff Act was made. This tariff made the taxes on imported goods the highest they had ever been in US history. It was supposed to help American farmers who were having trouble selling their crops. But many experts think this tariff made the Great Depression, a time when many people lost their jobs and didn’t have much money, even worse. Other countries got angry and put their own taxes on things they bought from the US. This meant that the US sold less to other countries, and other countries sold less to the US. It was bad for everyone.  

Lowering Tariffs and Trading More

After the Great Depression and World War II, the US decided that it was better for countries to trade with each other without high tariffs. They started working with other countries to lower tariffs and make it easier to buy and sell things across borders. This helped the world economy grow.  

Tariffs Today

Even though tariffs are generally lower now than they used to be, they are still used sometimes. In recent years, the US has put tariffs on some things like steel and products from China. Some people think this helps American businesses and workers. But other people worry that it will make things more expensive for everyone and could lead to problems with other countries.  

Who Pays the Tariff?

When there’s a tariff on something, who actually pays for it? It might seem like the company in another country that made the thing pays the tax. But usually, it’s the American company that buys the goods from another country that has to pay the tariff to the US government.  

Imagine a store in the US wants to buy toys from a factory in China. When the toys arrive in the US, the store has to pay the tariff on them. Then, to make up for the extra money they paid, the store might charge you a little more when you buy the toy. So, even though the company that brings the goods in pays the tariff first, the cost often ends up being paid by the people who buy the things.  

Sometimes, the company in the other country might lower their price a little bit so that the American store doesn’t have to raise the price too much. But most of the time, tariffs make things cost more for people in the US.  

How Are Tariffs Paid?

When a company brings goods into the US, they have to tell the people at the border what they are bringing. These border people work for US Customs and Border Protection (CBP). The company then has to pay the tariff, which is usually a percentage of how much the goods cost. They can pay with a check, in person, or online. There’s a big list called the Harmonized Tariff Schedule that tells you how much the tariff is for different kinds of goods from different countries.  The person importing and selling the items has to pay, not the country sending the items.

Good Things About Tariffs?

Some people think tariffs can be helpful. They say tariffs can:  

  • Help new businesses in the US grow by making things from other countries more expensive.  
  • Protect jobs in the US by making sure people buy things made here.  
  • Make other countries play fair if they are selling things too cheaply in the US.  
  • Help the government get money to pay for things like schools and roads.  
  • Make the US safer by making sure we can make important things like weapons ourselves.  

Bad Things About Tariffs?

But other people think tariffs can be bad. They say tariffs can:  

  • Make things cost more money for people because stores have to pay more for imported goods.  
  • Cause other countries to put tariffs on things the US sells to them, which can hurt American businesses that sell to other countries. This is called a trade war.  
  • Make it harder for businesses that use parts from other countries to make their products because those parts become more expensive.  
  • Might not actually create more jobs in the long run.  

Tariffs in the Real World

We can see how tariffs work by looking at some examples:

  • The Smoot-Hawley Tariff in the 1930s made the Great Depression worse.  
  • When the US put tariffs on steel and aluminum in 2018 and 2025, it made things that use these materials more expensive. Other countries also put tariffs on things they bought from the US.  
  • Tariffs on cars could make them cost more money for people who want to buy them.  
  • The trade problems between the US and China have shown how tariffs can make things complicated and cause problems for businesses.  
  • Even tariffs on things like washing machines made them cost more money for people, and it didn’t seem to create many new jobs.  

Tariffs have a long history in the US. They can help some businesses, but they often make things cost more for everyone and can cause problems with other countries. It’s a tricky issue with many things to think about!

For a different version with citations, go to this link:

Tariffs: A Resurgent Force in the American Economy