Tariffs Explained: Winners, Losers, and the Comedy of Errors

By Suzanne Sparrow Watson

If you’re like me, you haven’t given much thought to the subject of tariffs before this month. But, boy, they have my attention now. On the surface, they seem simple enough: a tax imposed on goods imported or exported between countries. But peel back the layers, and you find yourself in a tangled web of global trade, political strategy, and occasionally, outright shenanigans.

Historically tariffs have been a major source of government revenue. Between 1798 and 1913, they accounted for anywhere from 50% to 90% of federal income. But times have changed. Over the past 70 years, tariffs have rarely contributed more than 2% of federal revenue. Last year, for example, U.S. Customs and Border Protection collected just 1.57% of total government income. As many of us are so painfully aware as we write checks tomorrow, the burden has shifted to taxpayers. So why do we want tariffs? Think of tariffs as toll booths for international trade. Countries slap them on imported goods, hoping to achieve one of three things:

Raise Revenue: Collecting money for government projects, because hey, those bridges aren’t going to build themselves!

Protect Domestic Industries: Shielding local businesses from the terrifying competition of cheaper foreign products.

Flex Political Muscle: Using tariffs to make a statement—sometimes subtle, sometimes not-so-subtle.

For example, a tariff on imported cheese might make your locally produced cheddar look like a bargain compared to fancy French brie. Voilà! Welcome to cheese-based nationalism.

The dramatic dance of dueling tariffs lately is reminiscent of a middle-school dance-off – two countries in a virtual breakdance, one-upping each other by imposing tariffs on steel, soybeans, and other trade goods. The music? It’s less funky beats and more the frantic scratching of economists trying to figure out the long-term effects.

Take the U.S.-China trade war as an example. One country slaps a tariff on electronics, and the other retaliates with tariffs on agriculture. Before you know it, tariffs are flying faster than hotcakes at a pancake breakfast. The real winners of this dance? Lobbyists, politicians, and the occasional spreadsheet. Who wins and who loses when tariffs enter the picture? Well, it’s a mixed bag:

Winners: Domestic industries that suddenly find themselves free from the competition of cheaper imports. And, of course, the government collects sweet tariff revenue.

Losers: Consumers, who face higher prices for imported goods. So that fancy Italian espresso machine you’ve been eyeing might cost as much as a used car thanks to tariffs.

Confused Shoppers: People trying to figure out why avocados are suddenly so expensive.

Some consumers get creative, resorting to questionable DIY alternatives. “Who needs imported coffee beans? I’ll just roast my own acorns!” is a sentence no one should ever utter—but tariffs might drive someone to desperate measures.

Tariffs occasionally venture into absurd territory. Case in point: In the 2018 U.S.-China trade spat, Washington imposed tariffs on items like Chinese-made toasters, refrigerators, and… urinals. Yes, you read that right—urinals. Because nothing says economic strategy like taxing porcelain plumbing fixtures.

On the flip side, tariffs can lead to bizarre trade loopholes. For example, Canada once skirted around the “Chicken Tax” (an American tariff on imported trucks) by disguising small trucks as passenger vehicles. Picture a truck wearing Groucho Marx glasses and pretending to be a minivan.

Ultimately, tariffs are like that friend who always insists on picking up the check—but only if you pay them back double later. They have their perks, like protecting local industries, but they come with downsides, too—higher prices for consumers and potential international conflicts.

Next time you’re grumbling about the cost of imported chocolate or wondering why your favorite gadgets are suddenly pricier, blame tariffs. They’re a little piece of global trade magic—or madness—that keeps the world spinning. Of course, our heads have also been spinning this month. I wish we could import good humor, because I think we’re going to need a lot of it in the foreseeable future when we log into our investment accounts.