What are tariffs? How Trump's tariff plan works, who pays them, and how they could affect prices and jobs

• President Donald Trump has announced a slew of "Liberation Day" tariffs on 60 trade partners.
• Tariffs are meant to raise government revenue, but may also affect prices and employment.
• Here's a guide to tariffs, including who pays them, how they work, and how they affect the economy.

In a much-anticipated speech on Wednesday, President Donald Trump announced "Liberation Day" tariffs, imposing duties ranging from 10% to 49% on imports from 60 trade partners, including India, China, and the European Union.

The Trump administration argues these tariffs will counteract "highly unbalanced" trade deficits, which they said have weakened US manufacturing, supply chains, and national security.

"They do it to us, and we do it to them," Trump said. "Very simple. Can't get any simpler than that."

What are tariffs?

A tariff is effectively a government tax specifically levied on foreign goods imported into a country.

They increase the cost of foreign products, making them less competitive compared to domestic goods.

Governments use tariffs to raise revenue and protect local industries from foreign competition.

Under Trump's new tariff plan, China will face a 34% tariff, the European Union 20%, Taiwan 32%, and India 26%.

The policy primarily targets countries with whom the US has the highest trade deficits.

Who pays them?

Importers are responsible for paying tariffs when goods enter the US, but these costs are often passed on to consumers through higher prices.

While exporting countries don't directly pay tariffs, the increased prices may make their goods less competitive.

Trump has insisted that his trade policies would bring in revenue and restore jobs, but he acknowledged in a February Truth Social post that Americans would feel "some pain" as a result.

When do Trump's tariffs go into effect?

The baseline 10% tariff is set to go into effect on April 5 at 12:01 a.m. E.T.

Higher rates for specific countries will come into force on April 9 at 12:01 a.m. E.T.

Why is Trump putting tariffs on other countries?

In his executive order, Trump said the tariffs are necessary to correct trade imbalances and protect national security.

He argued that large trade deficits have eroded the US manufacturing industry and left supply chains vulnerable to foreign influence, which he views as detrimental to the country's economic and strategic interests.

"This situation is evidenced by disparate tariff rates and non-tariff barriers that make it harder for US manufacturers to sell their products in foreign markets," Trump said.

Will prices go up?

Trump has said that tariffs will eventually lower prices for Americans, but in the short term, their implementation is expected to lead to higher prices for consumers.

In November, several companies told Business Insider they would raise prices if tariffs increased.

As importers often pass on additional costs to buyers, goods subject to tariffs will likely become more expensive, contributing to overall inflation.

The Federal Reserve Bank of Boston estimated that a 60% tariff in China and 10% tariffs on the rest of the world would increase inflation by between 1.4 and 2.2 percentage points.

The International Monetary Fund warned in October that if the US, the eurozone, and China imposed 10% tariffs, the US GDP could shrink by 1%.

What will happen with jobs?

The impact on employment remains uncertain.

Tariffs may create jobs in protected industries like steel and manufacturing but could also result in job losses in sectors that rely on imported materials or face foreign retaliation.

According to a March survey by Duke University and the Federal Reserve Banks of Richmond and Atlanta, one in four US businesses believed that trade policy changes would negatively impact their hiring plans this year.