With the upcoming presidential election, one hotly debated issue is the role of tariffs. Both candidates have strong opinions about them. Trump is pushing to increase tariffs if reelected, while Harris opposes them, despite being part of an administration that has largely kept Trump-era tariffs in place. This leaves many consumers and investors confused about tariffs—are they good or bad? How do they affect the economy, your investments, and your daily spending?
Let’s break it down.
A tariff is essentially a tax on goods imported into the U.S. For example, when a foreign company exports cars, electronics, or steel to the U.S., a tariff might be added to the price of those goods. While this tax is supposed to help protect U.S. industries and jobs, the real question is: Who ends up paying for it?
More often than not, it’s you, the consumer. Tariffs drive up the prices of imported goods, and even domestically produced products can become more expensive as companies raise their prices to stay competitive. So while tariffs can be framed as a way to “protect American jobs,” they also lead to higher costs for consumers and may hurt the economy in the long run.
When Donald Trump took office, he implemented tariffs on several countries—both allies and adversaries alike. These tariffs targeted industries ranging from steel and aluminum to bourbon and cars. Some of the more notable tariffs were levied on the European Union, Canada, and China, impacting a wide range of products. This was part of Trump’s broader goal to protect U.S. industries, but it sparked a trade war, especially with China. Retaliatory tariffs from other nations soon followed, creating a tit-for-tat situation that affected businesses and consumers globally.
Despite the back-and-forth trade battles, many of these tariffs remain in place today. Under the Biden administration, little has changed—though Harris has spoken against tariffs, the Biden administration has kept most of them, particularly the tariffs on China.
That depends on whom you ask. Proponents of tariffs argue that they help protect domestic industries from being undercut by cheaper foreign goods. By taxing imports, tariffs can encourage consumers to “buy American,” which, in theory, supports local jobs.
However, critics argue that tariffs are more harmful than helpful. For one, they increase the cost of imported goods, which means higher prices for you as a consumer. Whether it’s your washing machine, your car, or even groceries, tariffs can push prices higher across the board. This added cost doesn’t stop at the store—your investments may also be affected, as tariffs can reduce the profitability of companies reliant on global trade.
A recent estimate from economists suggests that tariffs add around $2,600 per year in costs to the average American household. While this is an approximation, it’s a reminder that tariffs have real-world financial implications.
As we head toward the next election, the tariff debate will remain front and center. Trump has made it clear that if reelected, he will continue pushing tariffs, particularly on China. Meanwhile, Harris and the current administration seem to be caught in a balancing act—publicly criticizing tariffs while keeping most of them in place.
If Trump gets his way and significantly increases tariffs, expect prices on many goods to go up. Conversely, if the current administration gradually reduces tariffs, some price relief could be in sight. Either way, tariffs are likely to remain a tool for politicians to wield in trade disputes and economic negotiations.
At the end of the day, tariffs are a form of taxation, and as with all taxes, the cost is ultimately passed down to the consumer. So when you head to the polls this election season, consider the impact tariffs have on your wallet, the economy, and your investments. While protecting U.S. jobs is crucial, it’s also important to weigh the cost of doing so.
For now, tariffs remain a hot topic in political debates and will likely shape the economic landscape for years to come. Whether they are a necessary evil or a hindrance to economic growth will continue to be a matter of perspective.