Understanding US trade tariffs and how it affects businesses globally

Trade is a major part of how the world works. Countries buy and sell goods and services across borders to meet needs, support industries, and build relationships. But trade is not always free. Sometimes, governments place taxes on goods that come from other countries. These taxes are called tariffs. In the United States, tariffs have been used for centuries, but in recent years they have become more common and controversial. Understanding US trade tariffs can help people see how decisions made at high levels of government affect prices, jobs, and daily life.

A tariff is simply a tax placed on imported goods. When a product is brought into the US from another country, the US government may charge a percentage of its value as a tax. This makes the product more expensive in the US market. For example, if a television from another country costs $500 and there is a 20 percent tariff, the US importer will have to pay an extra $100 in tax. Often, that cost is passed on to the American buyer, who ends up paying more for the product.

There are several reasons why the United States imposes tariffs. One reason is to protect American industries from foreign competition. If goods from other countries are cheaper, local businesses may struggle to sell their products. Tariffs make foreign goods more expensive, giving US companies a better chance to compete. Another reason is to respond to unfair trade practices.

Sometimes, other countries sell products at very low prices, or support their industries with government funds. Tariffs are used to counteract these practices. Tariffs can also be used to encourage other countries to change their behavior. If a country refuses to follow certain rules or policies, the US might raise tariffs as a way to pressure them into negotiating. Finally, tariffs can help reduce the trade deficit, which is the gap between how much the US imports and how much it exports.

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While tariffs are meant to protect the country’s economy, they also have costs. Although foreign sellers are the ones exporting the goods, they are not the ones who pay the tariffs. Instead, US companies that import these goods are responsible for paying the tax. These companies often increase their prices to make up for the cost. As a result, American consumers end up paying more. Higher prices can affect everything from groceries to electronics to cars. This means that even though tariffs are meant to help, they can create extra costs for ordinary people.

In 2025, the US government introduced a new system of tariffs. A general 10 percent tariff was added to many goods from around the world. In addition, some countries were hit with higher rates—some as high as 50 percent—depending on their trade history with the US. These new tariffs affected countries like Brazil, China, India, and even close allies like Canada and the European Union. Steel and aluminum from other countries faced some of the highest rates, with up to 50 percent added to their prices. The government said these measures would protect American factories and workers, but many businesses warned that the increased costs would hurt their ability to compete.

There are both supporters and critics of tariffs. Supporters believe that tariffs protect American jobs, support local businesses, and give the government tools to fight unfair trade practices. They argue that if foreign countries are taking advantage of the US, tariffs are a way to push back. However, critics point out that tariffs can lead to trade wars, where countries keep raising taxes on each other’s products. This can hurt exports, cause uncertainty, and slow down the economy. Critics also say that higher prices from tariffs hit poor and working-class families the hardest, since they spend more of their income on basic goods.

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Tariffs also affect the world beyond the US. In today’s global economy, many products are made using parts from different countries. A car assembled in the US might have engines from Japan, electronics from Germany and tyres from Mexico. When tariffs are added to these parts, the final cost goes up and the entire supply chain is affected. Companies may move factories or change suppliers, creating even more changes for workers and consumers.

Trade policy is complex, and there are no easy answers. Tariffs can help in some situations, but they also create risks. The challenge for any government is to find a balance between protecting its own industries and keeping prices low for its people. In the US, the debate over tariffs continues. Some see them as necessary tools for economic independence, while others view them as barriers that make life more expensive. What is clear is that tariffs, though they may seem like a distant issue, touch everyday life in real ways.

Whether it is the price of a phone, the cost of a washing machine or the wages in a factory, trade tariffs have an impact. Understanding how they work, why they are used, and what their effects are can help people make sense of the bigger economic picture. As the US continues to redefine its role in global trade, tariffs will remain an important – and sometimes controversial – part of that story.

Ashford Kimani

Ashford teaches English and Literature in Gatundu North Sub County and serves as Dean of Studies.

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