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What A Tariff On Goods Could Mean For American Businesses

Many businesses are now flourishing due to a stabilizing economy in the country. In consequence, imports and exports of goods have enhanced trade relations between countries (like America which has a good business trade with Mexico).

Despite these seeming advantages, tariffs on imported and exported goods have been imposed on these companies to improve tax collection and consumer protection. There may be disadvantages of tariffs, but we have to keep in mind that these mechanisms are not enacted if they can’t give benefits to the general population. With this, determining what a tariff on goods could mean for American businesses is important for entrepreneurs to anticipate what their next moves should be.

the increasing prices of imported and exported goods due to tariffs

Who Pays for Tariffs? Functional Breach In US Tariffs

By definition, tariffs are scheduled fees which are imposed on imported or exported products for the maintenance of such services by the government. A country can impose these taxes either on imports, exports, or both, as tariff regulations are different from one country to another.

In the United States, however, new impositions made by the Donald Trump administration have raised import tariffs on Mexican goods to twenty percent. In this case, who pays for tariffs? This imposition will affect more Americans now that it is in effect. Prices will go higher since the consumers will be the ones who will pay for the tariff of imported goods, which is predicted to result in economic setbacks to the country, probably defeating the protective nature of the imposition of such taxes regarding financial security.

Effects Of The New Tariff System With International Relations

There are other examples of tariffs in the US, and the most common ones we see are industrial tariffs. The Mexican tariff amendment is only one of the cases that are currently being enacted by the US. In fact, America has even included China and Canada on its list of countries which will be imposed with tariffs.

In a recent encounter, the Canadian Prime Minister Justin Trudeau and American President Donald Trump have exchanged salty statements, as America threatens to impose new tariffs on Canadian softwood and dairy. This means that international trade between America and other countries may be compromised as stakeholders face the appointment of new tariffs on consumer goods. This is just one scenario showing what a tariff on goods could mean for American businesses.

tariffs result in high imported commodity prices

Disadvantages of Tariffs For American Businesses

In consequence, the increase in tariffs may mean that a good’s price may increase (or even double) since the cost of the tariff has gone up to the extent where trade relations between America and other countries will take longer to reconcile. For American businesses, this may mean a slow and small income until the economy stabilizes.

The currency may become radical, increasing and decreasing unpredictably, and the nation may even voice their dissatisfaction; however, the removal of such taxes will not be able to correct the economy rapidly. This is only an overview of disadvantages of tariffs for American businesses. A consequence on employment is then expected to follow.

Many employees may face losing their jobs since businesses will have to lay off some workers as they wait for the economy to stabilize. This is only one of the disadvantages of tariffs for American businesses under the new administration. Despite this, hopes are going up, especially now that the government is already reconsidering to make some changes to make the situation favorable for everyone.

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