Politicians Debate Tariffs & Taxes

WILL TARIFF-SLAPPED CHINA STOP BUYING GOLD?

- MICHAEL GAROFALO

The 47th president of the United States, Donald J. Trump, took the oath of office on January 20, 2025, and he did not waste any time in starting to shake things up. One of the subjects that President Trump discussed on the campaign trail was imposing tariffs on some of the major trading partners with the United States to change the trade imbalances that currently exist.

So, what is a tariff? Every country is limited in producing what its population needs and wants by the natural resources it has and the ability to produce those specific goods and services. A tariff is a tax imposed by one country on the goods and services imported from another country to influence it, raise revenues or protect competitive advantages. Sometimes the tariff is paid for by the importing country. Often, the tax is passed on to the consumer. And that is the issue with tariffs. They cost someone additional monies, whether it is the importer or the consumer.

Shortly after taking office, President Trump imposed a 25% tariff on goods imported from Canada, a 25% tariff on goods imported from Mexico, as well as a 10% tariff on goods imported from China. He is also discussing a possible European Union tariff.

At press time, February 2025, the Canada and Mexico tariffs were placed on pause, but the tariff on China remains.

There are two important things to remember about tariffs:

Governments impose tariffs to raise revenue, to protect their own domestic industries or exert financial power over another country.

The major problem with tariffs is that they often result in an unintended consequence, such as higher consumer prices for the country imposing them. Importers often pass on these tariffs onto consumers.