A tariff is a tax the federal government places on goods imported into the United States

When a product crosses the U.S. border from another country, the government can charge a tax on it. That tax is called a tariff. The importer — usually a company bringing goods in to sell — pays the tariff to U.S. Customs and Border Protection. The cost often gets passed along to the retailer and then to you, the person buying the item.

Tariffs exist for two main reasons: to raise money for the federal government, and to make foreign goods more expensive so American-made products look cheaper by comparison. A tariff on steel from another country, for example, makes American steel more competitive. But it also means the price of anything made with that steel — cars, appliances, construction materials — may go up.

Tariffs are different from income tax, sales tax, or other taxes you file on your tax return. You do not report tariffs yourself. Customs collects them at the border before goods reach store shelves. But tariffs affect your wallet because they change the prices you see when you shop.

Key Takeaways

  • Tariffs are federal taxes on imported goods, collected by U.S. Customs and Border Protection before products enter the country.
  • The cost of a tariff is usually passed to consumers through higher retail prices, even though you do not pay the tariff directly.
  • Tariffs are set by Congress and can change based on trade policy, international agreements, or political decisions.
  • You will not see a tariff line item on your receipt — the cost is built into the price the store charges.

How tariffs get built into the price you pay

When a company imports goods, Customs calculates the tariff based on the product type and its country of origin. The tariff rate varies — it might be 5 percent on one item and 25 percent on another. The importer pays this amount upfront to bring the goods into the country.

That cost does not disappear. The importer adds it to the wholesale price they charge retailers. Retailers add their own markup on top of that. By the time the product reaches the shelf, the tariff has been factored into the final price. You pay it without seeing it labeled as a tariff.

This matters most for goods that are heavily imported or made from imported materials. Clothing, electronics, furniture, and car parts often carry tariffs because they come from countries like China, Vietnam, Mexico, and India. Goods made entirely in the United States have no tariff, which is why tariffs can shift what people choose to buy.

Who sets tariff rates and when they change

Congress has the constitutional power to set tariff rates, but the President can also impose tariffs under certain trade laws. The most common is Section 301 of the Trade Act of 1974, which lets the President place tariffs on countries that unfairly trade or steal intellectual property. Another is Section 232, which allows tariffs on goods the President deems important to national security.

Tariff rates are not fixed. They change when Congress passes new trade laws, when the President issues an executive order, or when the United States negotiates a trade agreement with another country. For example, the United States-Mexico-Canada Agreement (USMCA) replaced the North American Free Trade Agreement (NAFTA) and changed tariff rates on many goods traded between those three countries.

You can find current tariff rates on the U.S. International Trade Commission website or through U.S. Customs and Border Protection. These rates are organized by product code, so you need to know what you are looking for. Most people do not check tariff rates themselves — they straightforward notice when prices at the store go up or down.

Tariffs versus other taxes on your return

Tariffs do not appear on your personal tax return. You do not report them to the IRS, deduct them, or claim them as a credit. They are a business-level tax, not a consumer-level tax. The importer or retailer handles the tariff transaction with Customs.

Sales tax, by contrast, is a tax you see at checkout and that varies by state. Income tax is what you report on Form 1040. Property tax is what you pay on real estate. Tariffs sit outside all of these — they are a trade tax that affects prices before you ever see a product.

That said, tariffs can indirectly affect your taxes. If tariffs raise the cost of goods across the economy, inflation may rise, which can change how much you owe in income tax or how much your refund is worth. But the tariff itself is not a line item on any tax form you file.

Common goods that carry tariffs

Many everyday items are subject to tariffs because they are imported or made from imported parts. Electronics like phones, laptops, and televisions often carry tariffs. Clothing and shoes from overseas manufacturers face tariffs. Furniture, toys, and sporting goods frequently do as well.

Some goods have zero or very low tariffs. Fresh fruit and vegetables, for example, often come in duty-free or at low rates. Goods made in countries with which the U.S. has free trade agreements — like Canada, Mexico, Australia, and South Korea — may have reduced or eliminated tariffs.

The tariff rate depends on exactly what the product is. A cotton shirt might have a different rate than a polyester shirt. A car engine might have a different rate than a finished car. U.S. Customs classifies products into thousands of categories, each with its own tariff code and rate.

Why tariffs matter to your budget

Tariffs affect your purchasing power because they raise prices on imported goods. If tariffs on electronics increase, the laptop you were planning to buy costs more. If tariffs on clothing rise, your grocery bill might not change, but your clothing budget will.

Tariffs can also affect which products are available or affordable. If tariffs make foreign goods too expensive, you might have fewer choices or be forced to buy American-made alternatives at a different price point. Some people benefit from tariffs — workers in protected industries may see more job opportunities. Others pay more for goods they need.

Understanding tariffs helps you understand why prices change even when the company making the product has not changed its prices. A sudden jump in the cost of imported goods often signals a tariff increase, not a decision by the retailer or manufacturer.

Frequently Asked Questions

Do I pay tariffs when I order something from another country online?

If you order a small package from overseas, you may not pay a tariff because the U.S. has a de minimis rule that exempts very small shipments. But larger orders or high-value items can trigger tariffs. The seller or shipping company may collect the tariff at delivery, or it may already be built into the price they quoted you.

Can tariffs be refunded or removed?

Tariffs are set by Congress or the President and can only be changed through new legislation or executive action. Individual consumers cannot request a refund on tariffs paid. However, businesses can sometimes request tariff exemptions or exclusions if they can show the product is not made in the United States and is critical to their operations.

Why does the government use tariffs instead of just raising income tax?

Tariffs are meant to protect domestic industries and jobs by making foreign goods more expensive. Income tax raises money from individuals and businesses based on earnings. Tariffs raise money from imports and are designed to shift consumer behavior toward American-made goods. They serve different purposes in government revenue and trade policy.

How do I know if a product has a tariff on it?

You will not see a tariff listed on your receipt. The cost is built into the price. If you want to know the tariff rate on a specific product, you can look it up on the U.S. International Trade Commission's website using the product's tariff code, but most people straightforward notice tariffs through price changes at the store.