What’s a Tariff? Why does Trump use it to threaten countries?

Here’s an explainer on tariffs. Learn more about the tool the Trump administration uses to control other countries and companies.

This article was originally published in Black Iowa News in June 2025.

Under the current administration, we have been hearing the term “tariffs” used when there is discourse about the price of food, toiletries, electronics, among other every day products. However, what exactly are tariffs, and why are they important?

What are tariffs?

Tariffs are taxes placed on imported goods, with three main types being the most employed: ad valorem, specific, and compound tariffs, each having its own way of calculating the tax percentage.

Ad valorem is a latin phrase meaning “according to the value”. This type of tariff is calculated as a percentage of the value of the imported product. For example, a 10% ad valorem tariff on a $100 product would add $10 to the total cost. As for the current administration, they have announced a 10% baseline ad valorem tariff on all imported goods. 

In contrast, specific tariffs are a fixed fee on imported goods calculated based on the quantity of the product instead of its value. For instance, a tariff of $0.50 per kilogram of coffee beans could be placed, regardless of the value of the coffee beans. 

Finally, compound tariffs combine both ad valorem and specific tariffs. This means that it calculates the cost of a product by combining both types of tariffs. Let’s say that imported textiles had a value of 10% of ad valorem tariffs plus a $2 per unit charge. This would mean that for every unit, the importer would have to pay 10% of the total value plus a $2 unit charge.

Why are tariffs placed? Why are they important?

Tariffs are placed to maintain the value of local products and industries by making imported goods more expensive. This drives consumers to purchase domestic products more frequently. According to the U.S. Council of Foreign Relations, sugar producers have been protected by tariffs since 1789. The same applies to the auto industry, which has benefitted from 25% tariffs on foreign pickup trucks since 1964. Ultimately, they shield domestic industries from facing economic difficulties. 

What are the consequences?

Although tariffs are meant to protect domestic goods, it ultimately harms businesses focused on foreign products and cuisine. For example, the U.S. has recently placed 125% tariff on Chinese goods; this includes ovens, dishwashers, glassware, furniture, among other products. This also applies to foods, such as rice, Chinese vegetables, snacks, and seasonings. 
In Des Moines, Asian grocery stores and restaurants have felt this change, with restaurant food prices to increase soon and grocery stores having to raise the price of their products. These tariffs could also affect Iowa’s agricultural industry, with businesses announcing layoffs.