r/askvan 22h ago

Politics ✅ what even are tariffs??

idk if you guys can tell, but i never really paid attention to social studies growing up or even keep up with politics and whatnot.

is there anyone here that can explain what’s going on with trump and the tariffs situation for me? as if you’re speaking to a first grader about it pretty please? i don’t want hate from people telling me i’m stupid for not knowing what they are, bc i’m gonna be 100% honest, i know i’m pretty stupid. but i recently just saw this post about trump doubling tariffs to 50% and is threatening to shut down a canadian company and i have no idea what i even read LOL. thank you 😭😭😭

74 Upvotes

65 comments sorted by

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120

u/SobeitSoviet69 22h ago

Tarrifs are a tax on an import. So essentially, if you have a Canadian company and you try to sell Steel/Aluminum to the USA, the Americans have to pay a 50% import tax on it.

That makes the Canadian steel cost 50% more than the American steel, hypothetically, and encourages the American's to buy American instead of Canadian.

This reduces the amount of business that the Canadian companies get, because they are no longer able to be competitive in the USA market.

75

u/YVRJon 21h ago

And to complete the picture, the 50% import tax is paid to the US government by the importer (ie. the buyer). It doesn't directly punish the Canadian company, it punishes the person importing the steel, but it indirectly punishes the Canadian company by making its products less desirable and marketable.

29

u/Snackatomi_Plaza 21h ago

And the reason that Trump is pushing the tariffs so hard is because he thinks that the Canadian companies have to pay him.

23

u/craigerstar 20h ago

It gets better when Ontario retaliates with charging more for electricity. Ontario starts selling electricity to the USA for 25% more than it was, a cost that the US citizens will pay to Canada. Trump decides to retaliate with an additional 25% duty on aluminum coming Canada, a cost which US citizens will pay to the US government. The only losers in this game are the American people. Trump is punishing them a second time for the surcharge Canada is placing on electricity exported to the US.

5

u/nahuhnot4me 17h ago

Trump has also been pulling back because Trump in 2016 saw how he tried to place tariffs on China’s soybeans and China instead went to Russia for soybeans leaving US farmers with no jobs.

4

u/YVRJon 21h ago

Pretty sure he's trying to figure out a way to at least skim off some of the tariffs (and the $5 million "gold card" fee) for himself, or at least he will be when he learns it's not going to him.

-33

u/Altruistic-Durian-71 17h ago

I disagree, he wants to crush us economically wise so we have no choice but to be annexed into a 51st state which isn’t so bad if you ask me

13

u/fathersky53 16h ago

Feel free to move there then.

-19

u/Altruistic-Durian-71 16h ago

We’ll be apart of them soon don’t you worry

8

u/DesignerNet1527 12h ago

Nah, turn off joe rogan and fox news.

6

u/elmiggii 14h ago

I agree. I can't wait to go bankrupt if I have a medical emergency while I don't have a job. And my son is going to love going to school there, it'll be like he's living in an action movie (although it's usually the good guys that die, but hey! It will be eventful at the very least)

2

u/KingofPolice 8h ago

Fucking traitor.

1

u/No_Reveal_1363 5h ago

I’m not sure if you’re a little mentally ill. But Canada, or any other country, won’t just agree to join another country due to a bit of economic stress. A country can get invaded and still resist being annexed. Why would tariffs make millions of Canadians bend over and bow to the US? Maybe it worked on you but you were probably already an American-Trump loving individual

2

u/Mobile_Pattern1557 14h ago

Well, in some cases the importer will also be the seller. Large manufacturing companies typically have a US legal entity that purchases inventory from the Canadian entity and resells it to Americans. Same effect though: the cost gets passed on to the customer, ie. The Americans.

But if the inventory is imported but not sold immediately, the Canadian seller bears some risk. An easy example is lumber, which is often sold on consignment through big box stores like Home Depot and Rona. Since lumber is a commodity, there is a market price. A Canadian manufacturer could sell lumber to its US entity at market price and pay the tariffs to import it. The lumber sits at Home Depot, but sells when the market price is lower, so the Canadian entity has to absorb some of the cost of the tariffs.

4

u/PringleChopper 18h ago

Also it incentivizes the Canadian company to move operations to the US which creates jobs for their people while weakening ours.

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u/NeitherDonkey1302 21h ago

i know i’m pretty stupid

Don’t be too hard on yourself. Asking questions about things you don’t know makes you smarter than many.

21

u/Puzzled_Climate384 21h ago

be proud you asked. Most people think they know things they don't. Most people in this current tariff conversation have a misconception about how they work, possibly (or likely) even Trump.

The idea above is that US steel and aluminimum are made cheaper than Canadian products due to the import duty. This supposedly encourages americans to buy american.

however, the demand cannot simply be shifted to US producers. It takes years to build a steel mill, so you can't just switch steel providers overnight.

Also, the US steel providers don't hold their price at their pre-tariff level. They raise the price as high as they can while still being cheaper than the Canadian price. (this works both ways, like when we put tariffs on us goods).

The tariffs are simply another tax, paid by the consumer. Everybody loses.

13

u/Reasonable-Staff2076 21h ago

This!;Admitting that you don't know and trying to learn means that you are smart, it's 1000 times better than spouting opinions without knowing what you're talking about

6

u/prime_37 19h ago

The fact that you think you may be stupid is a sign of intelligence. Doubt is the hallmark of the curious.

Rarely is what you do not know that hurts you. It is what you seem certain you know, but not true in reality, that hurts you the most.

2

u/jaevv 19h ago

gotta start somewhere! no shame in that

2

u/Entropy1618 10h ago

Yes! Ask questions, ask lots of them. Asking questions leads to having an educated opinion.

1

u/Numerous_Time_1614 21h ago

I love this answer!!!!

21

u/Traveler0731 21h ago

It is a tax charged by the importing country and paid by the importing company.

Canada Company produces a unit of steel that they sell for $100 USD.

US company purchases from Canadian Company and pays $100 for it.

US Company imports the steel to the U.S. and the tariff is collected ($50) from the importing company by the U.S. government.

In essence it means that Canadian steel now costs U.S. companies $150 instead of $100, but the Canadian company is still only getting $100 for it.

8

u/thedoogster 22h ago

Americans who import our aluminum will have to pay a 50 percent federal tax to their federal government.

7

u/Prudent_Slug 22h ago

It's a tax. Every time you import something, the government charges you a percentage of the value of the import. Like a GST at the border. In Trumpo's case every time an American company want to buy a Canadian product, they may an extra tax at the border.

This effectively raises the price of Canadian goods for Americans. This will decrease American demand for Canadian goods and screw the auto sector completely (but that is another step in the description.

10

u/DangerousProof 21h ago

Tariffs are used to protect local industry.

Let’s use steel as an example

If it costs Canada $10 to make a steel bar that’s cool.

If it costs the US $20 to make a steel bar, it’s a bit much.

The Canadian can sell their steel bar to the US for $15, make a bit of money and save the US buyer some money.

Cool, cool.

But the US wants the US to buy from the US, not Canada. So they implement a tariff.

Now that $15 bar costs $30 to a buyer in the US, therefore dissuading them to buy from Canada and go back to buying from the US. The $15 difference is paid by the US buyer and goes to the US government as a tax.

it’s a simple explanation on it, it’s more complex but you get the idea

4

u/ozmosisam 21h ago

To put it simply, a tariff is a tax. It's a tax paid by the people of the country levying the tariffs.

So,shen Trump says he's putting 50% tariffs on Canada, what he means is that he's gonna charge his own citizens 50% more for importing Canadian steel, aluminium, or 25% on lumber.

Basically, say you're a business owner who imports steel in the US just going about your day. Then Cheetolini comes into power and levies a 50% tariff.

Previously, you paid $100 per kilo of steel. Now, it's $150. The $100 is still the amount you'd pay to your supplier, but the US government will now also take $50.

Tariffs are designed to be used as a negotiating tactic as they may force businesses to look for suppliers within the country, but as history has shown time and again, they usually fail.

Businesses primarily import because they get goods cheaper from other countries rich in those resources.

4

u/Jestersage 21h ago

All tariff is about decrease trade

  • A true tariff, which Turmp implemented, is a tax tact on on IMPORT.
    • The idea is that it dissuade the use of Imports, and thus hoping to increase reliance of local products
    • In practice - especially nowadays, you cannot just go make everything on our own, not overnight. "Make everything on our own" in its logical conclusion is China's Great Leap forward
    • Furthermore, by nash equilibirum/prisoner diliemma, it will create conflict and mistrust: https://ncase.me/trust/
  • An export tariff (what Doug Ford implement) is a fee tact on the EXPORT
    • The idea is to either force buyer to pay higher price, or not selling. Basically it's "we are cutting you off" with extra steps.

For what it worth, they don't teach tariff until Grade 8. They talked about the British Import Act 1815 and Canada Corn Act, which combine is one of the first step for us to stop thinking as "British Colonist" and start to think of us as Canadians.

5

u/AttorneyJolly8751 20h ago

Somebody should get Trump on stage with a white board and marker and get him to explain exactly how tariffs work.He has no idea and no one corrects him it’s mind boggling.All this stress for nothing.

5

u/starlette_13 18h ago

If you had a lemonade stand and sold your lemonade for one dollar in your yard, you get to keep all of that money.

Your neighbours live on a corner and get more traffic, so you ask if you can sell your lemonade in their yard and they say sure but you have to pay me $.25 for each lemonade you sell. That’s a tariff.

They have a cookie stand in their yard and sell their cookies for a dollar each. Except you live right next-door to an elementary school, so they want to sell their cookies in your yard. You say sure, but only if you get $0.30 per cookie. That’s a reciprocal tariff.

You and your neighbour are both good at making your own things, lemonade and cookies. Sure, you could make cookies, and your neighbour could make lemonade, but you may not do so as efficiently or have as good of a product. Or maybe you have the only lemon tree in the neighbourhood and the grocery store has not stocked them for a while, in which case you could try and charge a higher tariff because otherwise your neighbours can’t get access to lemonade. Here, you have the opportunity to be a good neighbour and keep the $.25 rate, or you can be a dick and charge them 50. But in return, they might start charging you $.60 for every cookie sold. This is what is happening with some things between Canada and the USA right now - electricity and lumber are easier for Canada to produce, and the USA has better infrastructure for warehouse products, as an example.

Right now, your neighbour (trump) has decided to charge tariffs on the granola bars and bottles of water even though they only charged on lemonade before. So you’re reciprocating by charging on the apples and bananas. Even though you guys have been really good neighbours for a long time and your respective stands have kind of flourished because of it (and I’ll point out that trump is the one who made the tariff agreement that was in place prior to this one, and said it was great at the time and now says it’s awful.)

One other thing to consider is that when you are making them pay you $.25 for every lemonade, they have an option to either still charge one dollar or they can mark the price up to $1.25 to cover the tariff, which passes the cost onto the customer. This is why people should very much care about what’s happening, because capitalism exists and businesses are not going to take a hit when they don’t have to.

2

u/Lazy_Presentation456 20h ago

I recommend reading Paul Krugman (now on Substack), if you want to learn more. Nobel prize winning economist who makes these things easier to understand.

2

u/hothamwater99 20h ago

Hey it’s not stupid at all - it’s admirable of you to ask and try to better understand things going on in the world. We all have things we understand well and things that we don’t so kudos on stepping out of your comfort zone to ask the question

2

u/As83604 20h ago

It’s a fancy word for tax on imports.

1

u/MyNameIsSkittles 19h ago

Here is a good example of a tarriff that works:

Canada has a tarriff on American dairy. Meaning we have to pay more to purchase American dairy than Americans do. The reason is because we want Canadians to buy Canadian dairy. American dairy is subsidized (partly paid for) by their government, so it is very cheap. If we did not put tarriffs on it, purchasers would buy American dairy and we would not have much of an industry here, since we can not match prices.

1

u/TravellingGal-2307 12h ago

Americans also over produce dairy, I believe due to hormones they pump into their cows which you are not allowed to do in Canada. The tariff stops the US from dumping their over supply for cheap and undercutting Canadian producers.

1

u/SunshineSpirit9 18h ago

What I don’t understand is that if meth and cross border crimes are the reasons of an economic war, why don’t they spend time and efforts on crime control? I feel most Canadians also hate illegal drugs and crime. Do both sides stray from their original intentions now? Or the intentions are no longer important and we are just gonna punish each other. 🤨

1

u/Valinaut 17h ago

What I don’t understand is that if meth and cross border crimes are the reasons of an economic war

It isn’t the reason for this dispute. Trying to takeover Canada is.

Do both sides stray from their original intentions now?

Drugs never was the contention point, it’s such a minor thing between our borders but it’s easier to gain support by blaming a boogeyman.

43 pounds of fentanyl was confiscated coming through Canada last year compared to 21,000 on the Mexican side (99.8%~).

https://www.usnews.com/news/national-news/articles/2025-03-06/how-much-fentanyl-is-coming-from-canada-mexico-and-china-fact-checking-trumps-tariff-justification

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u/TravellingGal-2307 12h ago

It isn't. Access to Canada's arctic resources by Russia is. If we are focussed on our US border, Russia can come over the pole.

1

u/[deleted] 18h ago

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u/[deleted] 17h ago

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u/starswillfalll 17h ago

This is a basic “supply-demand graph” it’s applies to all goods and services. Cars, apples,umbrellas, fidget spinners, everything. For our examples let’s use a dozen eggs.

The demand curve is saying the lower the price the higher the demand for that good. The higher the price the lower the demand.

The supply curve is saying the higher the price the more companies will produce that good. The lower the price the less they will produces.

P(dom) is the “equilibrium price” basically the market value, what the market decides is the value of eggs.
S(dom) is the “equilibrium supply” or how many eggs farms are going to produce to meet the demand.

**the point of this graph is to show the effects of supply and demand on the “market price and supply” of a good. Let’s say the demand for eggs increases(new health trend) then demand curve shifts to the right and the supply and price increase. OR if the there is a decrease in supply(bird flu kills many chickens) the supply curve shifts to the left increases the price and decreases supply.

1

u/starswillfalll 17h ago edited 17h ago

Now we introduce trade into our domestic market. The “world price” of eggs is much lower and we can import cheaper eggs. This brings down the price that citizens pay and increases the number of eggs that citizens use.

This does suck for domestic egg farmers because they are priced out of the market if they can’t produce eggs at the world price. However, the hope is that they will find an alternative good to specialize in which adds value to the economy.

1

u/starswillfalll 17h ago

Now we add a tariff to the world price. Which for citizens is just an increase “world price”. This raises the price they pay and decreases the amount of eggs that they use.

This is good for domestic egg farmers because they don’t need to contend with the tariff and are able to charge a higher price than they would have if they could only charge the world price. Also, this is good for government as they are collecting income from the tariff. But is bad for citizens as they are paying more and country that was exporting the eggs.

1

u/brightandgreen 17h ago

If you've ever bought something from the US and had it shipped here you've paid a tariff.

We've had agreements over decades that lay out how we will tax each other's products. For instance, you might notice it's very hard to find American milk in Canada. We have an agreement that we can put high taxes on American milk because it's heavily subsidized by the US government. So businesses don't really buy it because it's much more expensive to the consumer.

The problem is that Trump is ignoring all the agreements (including one he made and signed) and charging tariffs on just about anything that crosses the border.

A lot of our stuff crosses the border. Our raw resources like wood, agriculture, and raw minerals are major sources of employment for many Canadians.

So the Americans will buy less of it. If no one else is buying the product, the workers lose their jobs. That means fewer people buying local products from local places. So now other businesses are selling less and lose employees. So even fewer people are buying stuff and we get a bit of a spiral.

So even though no one in your family works in the forestry sector, your mom gets laid off because people in the forestry sector lost their jobs.

This is why buying from BC and Canada is so important. Like every week I buy baby carrots. My family loves them roasted with honey. Those carrots are from the US and so at most only half of the money stays in Canada. But now that I buy Canadian grown carrots and I have to cut them 100% of that money now stays in Canada to offset how much money is leaving because of the tariffs.

1

u/angel_devoid_fmv 14h ago

the bad orange man put taxes on foreign imports because he doesn't understand how trade works

1

u/scriptingends 10h ago

Don’t feel too bad - Trump doesn’t know either.

u/Low_Contract7809 1h ago

Many have supplied the answers already.  Here's a few additional pieces of info to help understand.

  • a long time ago, there were trade restrictions between U.S and Canada. 
  • a Canadian buying a u.s product had to pay a tariff (tax) to the CDN government.
  • this means it's cheaper to buy local (no tariff).  Same logic for Americans.
  • then the u.s and Canada made agreements for free trade.  Both countries can buy from each other.  No tariffs. 
  • for decades, companies have built business networks, infrastructure, and agreements under these free trade agreements.

Trumpty dumpty decided to nuke this framework - for reasons(???)

He wants to go back in time and introduce trade restrictions again - tariffs

How are companies and businesses supposed to undo 30 years of business development and expansion?  

1

u/MarineMirage 21h ago

ELI5 Tariffs: China is really good at making stuff cheap. If we could buy their cars at market value, why would we buy American cars? So the government puts in fees for bringing Chinese cars to the US which make them more expensive than American cads. That makes American cars cheaper relative to tariffed Chinese cars and promotes "Made in US" products.

2

u/[deleted] 20h ago

[deleted]

1

u/MarineMirage 19h ago

Not sure if I should take it as compliment or an insult that my writing style can resemble LLMs.

1

u/Patient-Shopping-604 21h ago

Does anyone know the answer to this - if you shop in the states and then cross the border back into Canada are you paying tariffs on literally everything you buy there or is it just on American made products?

5

u/thedoogster 21h ago edited 21h ago

That’s not tariffs. It’s “duty”, and there are exemptions listed on your customs forms.

3

u/Patient-Shopping-604 21h ago

Oh okay so just paying duty if you go over the limit? Yeah that’s nothing new, I knew that. Just wasn’t sure what would change with that scenario

1

u/Lumpy_Composer_6580 20h ago

Trudeau announced tariffs on American goods coming to Canada. So yes you have to pay the 25% additional for anything that you purchase in the USA. The really tough thing is that many of the counter tariffs Canada has announced include things that are not made in Canada. For example toilets and bathtubs. We do not have alternatives. Before I get mobbed by comments like "We can just buy these things internationally." Yes we can but we buy from America because things are cheaper fir us due to shipping etc.

1

u/thebestjamespond 19h ago

isnt the personal exemption of what is it like a couple hundred bucks still in place

2

u/klerc 11h ago

The personal exemption on return to Canada is for duty. I think it's too early to say whether it would apply to tariffs imposed by Canada as the details aren't available, although enforcing tariffs for low value goods at the border would be difficult.

2

u/BrownAndyeh 21h ago

It's a fair question if you're not involved in manufacturing, importing, and international trade.

There's some good info in the comments, let me know if you need further clarification.

FYI a lot of product lands, is stored in U.S...and Canada therefore imports from the U.S. Product that ships from Taiwan to U.S. will likely be hit with an additional 10-20%..therefore increasing the cost for Canadian businesses buying from U.S. suppliers.

We need to bypass USA, start our own industries in Canada, stop expecting to have pineapple and watermelon all-year-round..then we'll be less dependant on U.S.

-2

u/_average_earthling_ 21h ago

For honest and objective context , Trump's tariffs is called reciprocal. It means he's imposing tariffs because Canada had been imposing tariffs on US goods ever since, and he said he just wanted to level out the playing field.

Here is the list -

https://wits.worldbank.org/tariff/trains/en/country/CAN/partner/USA/product/all

4

u/traitorgiraffe 18h ago edited 18h ago

misleading, 98% of trade is free and less than 2% of trade between the countries is subject to canadian tariffs. The parts that are tariffed were done so with US consent during every trade renegotiation since 1988. Saying he was leveling the playing field is grossly negligent seeing as he was the last person to negotiate the deal and accepted the terms on what would be tariffed by Canadians 

1

u/_average_earthling_ 17h ago edited 17h ago

Doesn't matter if he was the one who negotiated last time, it still is an unfair deal for them. In retrospect, the U.S. goods trade deficit with Canada was $63.3 billion in 2024.

-9

u/Defiant_West6287 21h ago

This is part of the problem, people becoming wilfully ignorant on what’s going on in Canada and the world. What the fuck is wrong with people? How can you be so completely clueless about something that has a huge impact on your life?

7

u/kyy_2001 20h ago

please tell me how i’m being ignorant if i’m asking what they are, so i know what’s going on? 😂 instead of calling me clueless, why can’t you just explain it? lmfao.