President Donald Trump just made thousands of items coming in from China more expensive — including baseball caps, bikes and handbags.
Here’s how the tariff works.
A tariff is a tax
The tariff acts like a tax on the business importing a given good. Importers must pay the 25% duty once their products reach the United States. The money is paid on delivery and goes to the US Treasury.
The Trump administration imposed the 10% tariff on $200 billion of goods in September, following an earlier round of tariffs on $50 billion of Chinese goods that went into effect over the summer. The tariff rate on the earlier round was always set at 25%.
So, as of Friday, the United States has a 25% tariff in place on $250 billion of Chinese goods.
The new, higher tariff rate will be applied to goods shipped Friday or after, excluding those that may have already been on the water this week but hadn’t arrived in the United States yet. That gives some reprieve to US importers, who were given just five day’s notice about the tariff hike.
Who pays?
In some cases, Chinese manufacturers may decide to absorb some of the cost of the tariff in order to stay competitive in the US market.
