The trade war between the US and China has taken a dramatic turn with President Trump's imposition of a 10% tariff on all goods coming from China. This blanket tax, which has also been threatened for Canada and Mexico, has sparked widespread confusion and concern among consumers, businesses, and economists alike. But what exactly does this tariff mean, and how will it impact the average American?

To start, it's essential to understand that a tariff is simply a tax on goods and services imported from abroad. In this case, the 10% tariff on Chinese goods means that any product coming into the US from China will be subject to an additional 10% tax. This tax is paid by the importer, which can be a company like Target or Apple, or even individual shoppers. The money collected from these tariffs goes into the US Treasury, accounting for a relatively small portion of federal revenue – less than 2% for the last 70 years.

Despite the president's claims, tariffs are not paid by other countries, but rather by American businesses and consumers. This misconception has been debunked by economists, including Kathryn Anne Edwards, who notes that the cost of tariffs ultimately falls on consumers. Companies may try to absorb the costs, but they will likely pass them on to consumers in the form of higher prices.

The impact of tariffs can be seen in the example of washing machines. In 2018, Trump imposed steep tariffs on imported washing machines, which led to a price increase not only for washing machines but also for dryers, even though dryers were not subject to tariffs. This demonstrates how tariffs can have far-reaching and unpredictable consequences for consumers.

The timing of when consumers will feel the effects of tariffs depends on various factors, including how companies choose to implement price increases and the competitiveness of the market. Some companies may wait until they use up existing inventory before raising prices, while others may raise prices immediately. Additionally, foreign companies may decide to absorb some of the tariffs, reducing the impact on consumers.

One of the most significant concerns surrounding Trump's tariffs is their potential to create jobs in the US. While the president has touted tariffs as a way to bring back manufacturing jobs, research has shown that this is not a reliable solution. In fact, a study on the washing machine tariffs found that it cost consumers around $815,000 per job created.

The immediate impact of the tariff hike will be felt by consumers who order products from China, particularly those who use ultracheap discount stores like Temu or fast-fashion giant Shein. These companies will need to decide how to handle the added costs, which could be passed on to consumers in the form of higher prices or additional fees. Furthermore, the end of the de minimis exemption, which allowed packages valued under $800 to enter the US duty-free, will lead to increased paperwork and inspections, potentially causing delays and confusion.

The future of Trump's tariffs is uncertain, with the president using them as a bargaining chip to negotiate with other countries. As the trade war continues to evolve, it's essential for consumers to stay informed about the implications of these tariffs and how they will affect their wallets.