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Who Pays for Tariffs? Here’s What You Need to Know.

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President Trump is moving forward with extensive tariffs on America’s closest trading partners. Beginning Tuesday, companies bringing products into the United States from Canada and Mexico will pay a 25 percent tariff; importers bringing products in from China will pay an additional 10 percent on top of existing levies.

A tariff is an extra surcharge put onto a good when it comes into the United States. It is the importer of record that physically pays tariffs to the federal government.

Many importers of record are enrolled in the government’s electronic payment program, and have tariff fees automatically deducted from their bank accounts as they bring products into the country.

The next question is who ultimately will bear the tariffs’ costs. The importer can choose to absorb the cost, but that would eat into its profits. Some importers say paying a 25 percent tariff would erase their profit margins entirely and put them out of business.

If importers do not want to absorb the cost of the tariff themselves, they have two other options. They can try to force the supplier who sold them the goods to lower their prices to make up for the tariff. Or they can pass the cost on to their customers, in the form of higher prices.

The tariffs that Mr. Trump slapped on foreign products in his first term provide some illustrative examples. For the ones that he put on hundreds of billions of dollars of goods from China, several economic studies found that most, if not all, of that cost was passed on to American consumers.

The idea of raising prices is “baked in to why you are imposing a tariff,” she said.

Economists say companies are likely to pass at least some of the cost of new tariffs on to American consumers, in order to try to preserve their profit margins.

Estimates from the Tax Foundation, a think tank that favors lower taxes, put the extra cost to American consumers from tariffs on Canada and Mexico at more than $830 per household in 2025.

One thing people often misunderstand is that the tariff is not typically charged on the full sticker price of a good that you would see at the store. Instead, the 10 percent or 25 percent fee is charged on a lower “import price” that the company pays to bring the product into the country, before the price is marked up at the retailer.

If shoe companies don’t pass those additional costs on to consumers, their profit margins will fall. And Mr. Jeppesen said that brands need those profit margins to pay for their sales forces, distribution channels, product innovation and other expenses.

Even with the new tariffs, he said, “freight still needs to move, production lines still need to run and consumers still expect full shelves.”

Over the longer run, however, economists expect tariffs to drag on the economy, as consumers and companies alike are forced to reduce their purchases of foreign items with higher prices.

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