Donald Trump and Republicans must tell consumers about how tariffs will increase costs paid by American companies

Tariffs are costly for consumers:

An opinion letter echo published in The Columbian, in Vancouver, Washington state. 

There’s a misconception about tariffs. Despite how it’s portrayed by the Trump adminitration, the foreign countries do not pay U.S. tariffs. The importer of record — the U.S.-based business that imports the product — is the one responsible for paying the tariff.

An example: If a company imports $100,000 worth of steel that’s subject to a 50 percent tariff, that company must pay $50,000 in tariffs to the U.S. Treasury. 

This is not paid by the foreign government — it’s paid by the U.S. importer. An illustration: A company imports steel to manufacture mufflers. The muffler manufacturer either keeps using the tariffed imported steel, or switches to a high-cost domestic steel supplier, making mufflers more costly. That cost is passed on to the car manufacturer. The car manufacturer passes that added cost to the consumer.

This is how tariffs cause inflation — whether it’s steel for cars, construction materials, Nike, Columbia Sportswear, or even vegetables at Safeway.

Tariffs are often marketed as a means to protect domestic industries. But the real-world impact is that they act as a tax on U.S. businesses and consumers. This doesn’t mean all tariffs are bad policy. But it does mean we need to be clear and honest about who is paying.

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From Paul Gardner in Vancouver