What are tariffs

Good morning/evening
 
The current word on everyone's lips at the moment is tariffs, some people seem to think that tariffs are a new thing but they are not, the first was way back in 1789 when the USA urgently needed revenue for a trade imbalance with England that was fast destroying the young American industries and draining the nation of its currency, the Hamilton tariff authorized the collection of duties on imported goods.
 
In the modern era 1947 the General Agreement on Tariffs and Trade (GATT) was signed by 23 nations at the Palais des Nations in Geneva, it was used to reduce tariffs and set trade rules.
 
This was followed by The World Trade Organization in 1995 where agreements also cover trade in services and intellectual property as well as goods. This was also formed to represent new independent states and help countries trade fairly and help if a country imports more than it exports, to try and balance the scales a bit. including developing nations to trade globally and for consumers to get access to more products at stable prices. The WTO has 166 members with more in the process of joining and these agreements now make up about 30,000 pages of trade rules!
 
 
But what exactly is a tariff and how do they affect everyday life?
 
Basically it is a tax on imported goods and usually applied as a percentage. The supposed reason for tariffs is to generate revenue for the government as well as protecting local goods (By making imported goods more expensive, tariffs can help domestic companies compete. If foreign products cost more, consumers might be more likely to buy local.) In my opinion this will not always work because take a trainer for instance that could be made in Vietnam, the labour costs are a fraction of what they would be in the USA and that same trainer made in the USA would cost so much more that a normal person could not afford them! As you may know I live in Eastern Europe so it will take some time to see if this does affect us or not but one thing I am sure of is that it will be the regular person that will end up paying.
 
Then tariffs can also be used as leverage in negotiations, which I understand is happening now with some countries but others may not. 
 
 What’s the Deal with a U.S./China Tariff War?
 
When two huge economies are throwing tariffs at each other all I can see is rising prices for us the consumer, I am no expert and hopefully I am wrong but surely American companies that rely on Chinese parts or materials (like tech and manufacturing companies) suddenly have to pay more to get what they need and that can cut into profits or force them to raise prices. Some might even have to lay off workers or scale back.
 

2025????????

🇺🇸 What the USA Imports from China

 
I did try to go through the WTO documentation for this but it is broken down into about 50 items just for a phone so AI produced this list for me.
(Mainly consumer goods and components)

• Electronics (phones, computers, TVs, etc.)
• Machinery and parts
• Furniture
• Toys and games
• Clothing and footwear
• Plastics and plastic products
• Tools and hardware
• Household appliances
• LED lights and electrical equipment
• Automotive parts

🇨🇳 What China Imports from the USA

(Mainly raw materials, tech, and food)

• Soybeans and other agricultural products
• Semiconductors and tech components
• Aircraft and airplane parts (like from Boeing)
• Automobiles
• Medical and pharmaceutical products
• Chemicals and industrial materials
• Natural gas and crude oil
• Machinery and equipment
• Cotton
• Meat (especially pork and beef)

Tariffs are basically taxes on imported goods. So when the U.S. puts a tariff on Chinese products, the companies that import those items usually just pass the cost onto consumers. That means everyday stuff like electronics, clothes, and even groceries can get more expensive. Same thing happens in China when they tax American goods. Both countries could then go elsewhere to buy these goods from a country with lower tariffs so is there really a winner here?
 
How is this affecting the markets?
 
In a word, badly. Do I think it will last? Probably not, at the moment it is the unpredictability that investors hate and it shows in these charts. I would like to think that things will pick up but it may take a few months or more, so at the moment I am not making any rash decisions or panic selling, I will just wait it out.
Then just as quickly as the markets go down a pause on tariffs can cause the markets to go back up again, the US stock market gained trillions in a short space of time. The Crypto market also saw some green, but will it last?
 
Screenshot from Trading View.
 
Now I am no expert on tariffs or trade wars but I do think this will take time to resolve but hopefully the markets will get used to it and become less volatile every time someone mentions the T word.
 
As always, thank you for reading and please feel free to comment as I would love to hear your thoughts, perhaps I have it wrong, share your opinions.