The economy

Tariff

A tax a country charges on goods brought in from other countries.

Why does it matter?

Tariffs raise costs for companies that import parts or products, and they can lead to retaliation that hurts exporters.

How do I read it?

Companies can absorb the cost, pass it on to customers through higher prices, or change suppliers. The effect on each company depends on where it makes and sells its products.

Example

With a 25% tariff, a part that a company imports for $100 costs $125. The company can earn less on each product, raise its prices, or look for a supplier elsewhere.