Tariffs have suddenly become a massively disruptive feature of the U.S. economic landscape, upending supply chains and threatening consumers with a new wave of inflation.
Yet even as tariffs dominate headlines, most people would struggle to explain how they actually work. How do U.S. businesses keep track of them? How do firms know how much they owe? The answer: It’s not easy.
To understand how tariff collection works in practice, Fortune spoke with customs brokers and legal experts about what happens after the White House announces a new tariff.
Fortune Finance Editor Jeff John Roberts explains.
Yet even as tariffs dominate headlines, most people would struggle to explain how they actually work. How do U.S. businesses keep track of them? How do firms know how much they owe? The answer: It’s not easy.
To understand how tariff collection works in practice, Fortune spoke with customs brokers and legal experts about what happens after the White House announces a new tariff.
Fortune Finance Editor Jeff John Roberts explains.
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TechTranscript
00:00Tariffs. Tariffs. Tariffs. Tariffs. Tariffs.
00:04We hear the word tariffs a lot, but what are they exactly?
00:07The simplest way to put it is just a tax on imports.
00:10If a good comes from another country and there's a tariff, it'll have a tax on it.
00:13It might be as low as 2%, it might be as high as 100%, but basically just think it's a tax.
00:24If a shoe producer, say if Nike has to pay more for their shoes from overseas,
00:29they're going to have to pass it on to someone and that's probably going to be you as a consumer
00:33because the business has got the same costs as before, but now they have this new expense
00:37in the form of a tariff and quite likely cause the price of goods to rise and cause inflation more broadly.
00:47While some are saying this is a short-term pain and need a long-term gain, the only way to really
00:53fix this under the current Trump policy prescription is to build more factories in America. The problem
00:58with that is it takes time. You can't simply stand up a legion of ball bearing and plastic making
01:04factories overnight. It's not that easy, it's not that cheap, which also I think underscores for a
01:09lot of people why free trade is a good thing. Countries that are specialized in producing a given
01:14good do that and export it and we will export what we are good at producing to them. If you're a consumer,
01:19free trade will make your goods cheaper and that's appealing for a lot of people.