How and When Tariffs Will Cause Prices to Rise
Imagine there is an extra tax put on things imported from other countries. This sort of taxation is referred to as a tariff.
Reflect on how a company might offer toys made in other countries. When your toys are imported the company will have to pay the tariff to the government. As a result producing these toys will be more expensive for the company.
Naturally the company pays their employees and tries to make a profit so they include the tariff charge in the selling price of their toys. Then it sells the toys to shops at a higher cost than was the case before.
Then the toys are purchased by your area’s toy shop. Since they cost more to obtain the store increases the price for their customers. The store needs to have money to cover the cost of rent, employees and its expenses.
As such you must pay a higher price for the toy. Even if you didn’t pay the tariff it was still added on to the cost of every product.
That’s how the process of tariffs occurs. A tariff is originally charged at the border yet it can lead to prices increasing for products sold at retail shops. It’s just an additional amount that shifts from the seller to the store then finally to the customer.
