Trump Tariffs 101

A very basic primer

Google searches for “What is a tariff?” increased roughly 500% from before the election to November 8^th. After the election is arguably a little too late to be checking on such things, but no matter—we’re here to help.

What is a tariff?

A tariff is a tax on things bought from other countries. Tariffs are due when the purchased things cross the border, to U.S. Customs and Border Protection (the CBP), and the payment is typically made as part of the customs clearance process.

As an oversimplified example: if you buy $100 of iron ore from Brazil, and there’s a 10% tariff on Brazilian imports, you have to pay $10 to the CBP when the iron ore enters through customs.

Customs brokers

Determining how much you owe in tariffs is confusing. Really, we look this kind of stuff up for a living and still have a hard time making sense of the harmonized tariff schedule. There are over 17,000 unique classification codes for different goods, the tariff rates for which are found across 99 chapters under 22 sections.

To make it easier, a lot of importers use a customs broker—agents licensed by the CBP to help figure out what you owe. In fact, the CBP even has this helpful 54 page document What Every Member of the Trade Community Should Know About: Customs Brokers.

On the one hand, this is helpful for importers overwhelmed by the complexity of calculating how much they owe in tariffs, especially for people buying a single large purchase. For example, here’s a Reddit thread about hiring a customs broker to help with importing a single Kei van from Japan.

On the other hand, customs brokers aren’t working for free, so that’s another expense on top of tariffs.

And on the third hand, because you’ll need a third hand to manage all this (see for instance, Shiva, the pan-Hindu deity), the buyer still needs to make sure the broker does everything correctly. From the CBP: “Remember, even when using a broker, you, the importer of record, are ultimately responsible for the correctness of the entry documentation presented to CBP and all applicable duties, taxes and fees.”

Trump tariffs