Tariff Increases directly cause inflation

As of the 2024 election, the word “tariff” has been a hot topic for politicians and citizens alike. President Donald Trump, on his campaign trail, would bombastically promote that he would push to increase tariffs on incoming goods from other countries. Trump insisted that the purpose of this was to promote American businesses. This nationalist ambition is unrealistic at best and economically devastating at worst. One of the fundamental reasons this campaign strategy worked is because of a critical misunderstanding of what “tariffs” are.
Tariffs are a form of tax applied on imports from foreign countries. Tariffs, despite what politicians will insist, are paid by the importer, not the exporter. This means that the tax is applied to the business owners within the U.S. In order to pay for these new tariffs, business owners will increase the price of these goods to make up for the deficit from the tariff(s). Goods from other countries are needed for several reasons; particularly that other countries, such as Canada, Mexico, and China, have more efficient ways to make the goods they trade with the United States.
Although there is a certain stigma around inheriting the economy from the previous presidential administration in the opening years of a new President, businesses bracing for Trump’s proposed tariffs can be traced back to early December in 2024, when he was confirmed to be the President Elect.
Laurel Orley, cofounder and CEO of Nashville-based sprouted nut snack company Daily Crunch, said at first, she didn’t think the tariffs would affect her business, because she doesn’t import very much. But she realized the tariffs will have a ripple effect. For example, she had planned on sourcing bags from China to save 5 cents a bag. But with the tariffs, she might need to scuttle that plan.
“That was one of our big initiatives for 2025, moving all our bags to China for 15 cents a bag,” she said. “And now I don’t know if we can save any money on the bags when the tariffs go into effect.”
Warehouse prices are going up because of the expected tariffs, too, Orley said. Her warehouse provider said demand has been increasing since the tariffs were announced.
“As many other companies are buying bulk inventory overseas to get ahead of tariffs, warehouse availability is becoming limited, which will increase costs for everyone,” she said.
This situation will inevitably lead to the argument that products should be manufactured in the U.S. to circumvent these tariffs altogether. However, there are several key products that are necessary to get from other countries, such as oil. In 2023, the United States imported about 8.51 million barrels per day (b/d) of petroleum from 86 countries. Compare this to in 2023, the United States produced 12.9 million barrels of crude oil per day (b/d) on average. Gas prices are already at an all-time high, and cutting off 40% of America’s petroleum supply is guaranteed to increase gas prices even more.
The key issue to understand with the misconception of tariffs is that, no matter what a politician will say, tariffs are taxes paid to the U.S. government by the American companies that import these goods. These tariffs will not be paid by other countries, and the cost of these tariffs will be taken directly out of the consumer’s pockets. Tariffs will directly lead to increases in the prices of gas, groceries, and technology so that the American people can continue to have these goods at all.