Who Actually Pays for Tariffs?
It is kind of surprising but a lot of people don't understand tariffs There is a persistent myth about tariffs that sounds very appealing. The story goes like this: The United States imposes a tariff on a foreign country, that country writes a check to the U.S. Treasury, and Americans reap the benefits of the revenue. It sounds like a penalty fee charged to a competitor. That story is false. If you walk away with only one fact, let it be this: A tariff is a tax collected at the American border, paid entirely by American companies. The "Importer of Record" To understand why you are paying the bill, you have to look at the paperwork. When a cargo ship docks in Los Angeles or Savannah, the U.S. Customs and Border Protection agency does not send an invoice to the government of China, Mexico, or Germany. They do not bill the foreign factory that made the goods. By law, the tariff is charged to the Importer of Record. This is the American company trying to bring the goods into ...