What are tariffs and how do they work?

How do tariffs work?

This brief animated video from Time walks through a simple example of a tariff on a single good, illustrating how this would affect the market for the good—both domestically and abroad—and who would eventually bear the cost of the tariff.

Tariffs are typically paid by the importing company or organization to the US treasury

Tariffs levied on foreign countries are typically paid by the importer upon arrival of goods—for example, if Walmart imported a $100 pair of shoes, they would pay the US treasury an additional $15 under a 15% tariff rate. The degree to which these costs are passed onto consumers depends on real-world business agreements.

Revenue from tariffs goes to the US Treasury’s general fund

That's also where federal income taxes go. Revenue from tariffs can be spent on almost anything the government needs, such as funding programs like Medicare or the military.

A nuanced break down of how tariffs are impacting prices

As tariffs have increased to their highest levels since the 1930s, economists have kept a close eye on retail prices. This chart and accompanying explainer shows correlations between key tariff announcements and news and the costs of roughly 350,000 goods from five major retailers.

An economic evaluation of US tariffs

Most economists agree that the implementation of large-scale tariffs on foreign goods would hurt both the American and global economies. This video from The Wall Street Journal explains the rationale for tariffs as a tool for domestic job creation, but explains why they may hurt the overall economy.

Explore the complex trade-offs policymakers face when considering tariffs

While tariffs can generate government revenue and encourage the consumption of locally produced goods, they can often lead to higher consumer prices and may negatively impact economic growth.

Read an overview of US tariff policy before the second Trump Administration

This comprehensive report from the Congressional Research Service explores the evolving role of tariffs—from a major source of government revenue to a tool for trade and foreign policy—providing insights into current practices, legal foundations, and global trade dynamics.

Pros and cons of tariffs

While some mainstream economists are skeptical about tariffs, President Donald Trump is bullish on them. The pros and cons of tariffs include their ability to help governments raise money and the potential for retaliatory tariffs.

Tariffs once fueled the US economy

US tariffs peaked in 1930 with the Smoot-Hawley Tariff Act, which slashed global trade by 65%. Once a key revenue source, tariffs gave way to income taxes in 1913, leading to decades of lower trade barriers. Today, US tariffs remain among the lowest worldwide.

The Tariff Act of 1789 was one of America's first acts

One of the first acts ever passed by the United States Congress instituted tariffs on foreign goods. The bill was sponsored by then-Congressman James Madison and signed into law by President George Washington. The goods the first Congress felt necessary to tax included Jamaican rum, playing cards, and—of course—British tea.

Trade and tariffs in the Roman world

Trade between nations and empires date back thousands of years, including the use of tariffs to raise government revenue.

Auto and consumer goods companies absorbed billions in costs due to President Trump's 2025 tariffs

Detroit's three automakers combined paid $6 billion in tariffs in 2025. Procter & Gamble raised prices on 25% of its products, and supply chain experts estimate that 80-85% of all tariff costs were absorbed domestically—either by companies or consumers.

A trade war is an economic conflict where nations impose tariffs or other trade barriers on each other in retaliation for similar actions

The US-China trade war is one example. While they aim to protect domestic industries, they can lead to higher prices for consumers and strained international relations.

See comparisons of different countries' taxation strategies

Taxes are a major revenue source for most countries, and how each government taxes citizens often reflects the country's economy. Developed countries tax at much higher rates than developing ones, and as a country grows its GDP, it also typically grows the proportional percentage of taxes it gains from its citizens.

Despite the Supreme Court ruling that President Donald Trump's 2025 tariffs were unconstitutional, billions of dollars in refunds remain unresolved

Over 2,000 lawsuits seeking refunds have been filed by major companies, including FedEx and Costco, but CBP says its systems can't handle the volume. Interest on unpaid refunds is accruing at an estimated $650M per month.

What are Treasury yields?

Treasury yields are the interest rates that the US government pays to borrow money for different lengths of time. Specifically, Treasury yields are interest rates on US government debt. They reflect economic outlooks and inflation expectations. Learn more about Treasury yields here.

US immigrants pay billions of dollars in taxes each year

While immigrants who are authorized workers pay taxes just like anyone else, even unauthorized workers file tax returns. These unauthorized workers use individual taxpayer identification numbers.

The price of gas is a composite made up of several different factors, with the federal gas tax making up less than 20% of what drivers pay at the pump.

Roughly 39% of Visa's revenue comes from data processing fees.

Visa gets roughly 0.13% to 0.14% of each transaction. About 32% of its revenue stems from the money banks pay Visa to use its services, and roughly 26% of its revenue comes from international transaction fees.

The term 'wedding tax' is often used to refer to the extra money that many wedding industry suppliers charge

According to wedding vendors, the "wedding tax"—the additional money charged for goods and services specifically intended for a wedding rather than another type of event—stems from the increased amount of time and attention that someone like a florist or makeup artist spends on a wedding versus any other type of event. Unlike other events, weddings are often planned a year or more in advance and require more detailed planning and hours of communication.

Canada is the largest foreign buyer of California wine

Tariffs have impacted the wine industry in Canada significantly, given that California winemakers are responsible of 80% of the country's wine supply.

Watch a breakdown of tax breaks most Americans don't know about

Programs like healthcare savings accounts or flexible spending accounts are tax-free accounts that are designed to help lower healthcare costs. However, many Americans don't use them and don't understand how they work.

Calculate how much of your tax dollars go to each federal program based on your income, filing status, and number of children

How much do you pay in gas taxes?

The average national price jumped from $3.02 to $4.12 per gallon between March and April in 2026, but state prices range widely, from $3.66 in Texas to $5.79 in California, driven by differences in taxes, proximity to supply, and local competition.

Trademarks protect the branding of a service or product, while patents protect the product or service itself

Trademark protections cover the branding of a service or product, like its logo, its smell, or even its shape. However, patent protections give inventors exclusive control over a new product—as long as those inventors disclose how the product works and how they made it.

How mutual funds work

Investing in mutual funds can give you access to a wide range of securities, such as stocks and bonds, with just a single investment. Mutual funds are one of today's most common investment options. There are different types of mutual funds, such as stock, bond, money market, and target-date funds.

Infographics explaining global terrorism trends

Our World in Data’s terrorism page details global trends in terrorism. Through interactive infographics, the site shows how the number of terrorist acts varies around the world and how it has changed over time. Sections investigate common definitions of terrorism, trends in global terrorism deaths, and the global distribution of terrorism. Additional segments highlight airline hijackings, public opinion, and media coverage of terrorism. Explore this website for an array of infographics on terrorism.

Hedge funds, the private investment firms that trade a wide swath of financial assets, make money by imposing steep fees on investors and from the fund's investment performance.

While the first exchange-traded fund (a 'basket' of different assets that can be bought and sold on a stock exchange) in the US only launched in 1993, the global ETF market has grown to more than $10T in the short time since.

US consumers collectively owe more than $1T to credit card companies—almost as much as they owe in auto loans.

The United States is one of only around two dozen countries with a fully federal system of government, in which power is divided between national and state governments.

Art theft is the third-largest source of criminal revenues worldwide, thanks in part to the subjective nature of valuing a work of art.

Tattoos remain visible on your skin thanks to immune cells called macrophages

Mark Twain spent decades feuding with the US Postal Service, convinced its costs and regulations were bureaucratic overreach.

Some coin denominations have ridges etched on their sides, partly to prevent counterfeiting, in a practice called 'reeding.'

Trace how the Bill of Rights, inspired by centuries of political theory, took shape between 1774 and 1789.

Planeterrellas create artificial auroras that mimic the atmospheric displays of light by setting up an electric field between two metal balls in a jar filled with a small amount of air.

Stanford built a Google Maps for the Roman Empire, revealing how much it cost to travel in the ancient world

How Amazon operates a 'flywheel' business model, a self-reinforcing cycle that drives continuous growth

The history of many kitchen appliances involves unexpected discoveries and applications, including wartime radar turned hamster defroster and replacing an 'ice king' with heat-stealing boxes.

See this overview of the firework rules across all 50 states, ranging from a complete ban on non-professional fireworks in Massachusetts to states with more lax rules like Indiana.

Pure water does not conduct electricity because this flow of energy requires the movement of charged particles, and water is a neutral molecule.

In 2025, four executives from large tech companies were given positions in the US Army Reserves—including Palantir Chief Technology Officer Shyam Sankar, which reinforced Palantir's ties with the US military and its role as a leading defense partner.

Gerrymandering works through two techniques: cracking opposing voters across districts to dilute their power, and packing them into a few to waste their votes in lopsided majorities.

Browse a detailed visual analysis of over 200,000 similes—comparisons that often use 'like' or 'as'—from popular fiction to see how frequently writers the same idiomatic expressions.

The American cockroach is actually from Africa, an apparent hitchhiker aboard ships carrying enslaved people, with evidence suggesting the bug may have arrived in the New World as early as the 1600s.

Doctors differentiate between a phobia and fear by asking patients whether their fear interferes with their day-to-day activities.

Ebola is a filovirus, meaning it resembles a thread under a microscope, though it sometimes twists and can resemble a bowl of spaghetti.

An investigation suggests a Scottish island became awash in forever chemicals via seafoam and seaspray—raising questions about what that means for the safety of other coastal areas.

The word 'jazz' evolved from 'jasm,' 19th-century American slang for 'energy'