How tariffs work and why they are a key part of Trump's agenda

President Donald Trump announced sweeping new duties last week on all U.S. trade partners, including a new baseline 10% duty.

President Donald Trump announced sweeping new duties last week on all U.S. trade partners, including a new baseline 10% duty.

Trump dubbed the move “Liberation Day” and claimed his expansive use of tariffs will cause factories to move production back to the United States, ushering in a golden era for the U.S. economy.

Instead, the announcement has rocked markets, causing one of the worst stock sell-offs on record as investors realized that Trump sought not merely to raise the cost of importing goods into the U.S., but rather reduce or even reverse longstanding U.S. trade deficits — something most economists say is impossible at the scale Trump has proposed without wreaking global economic havoc.

Here’s what you need to know about Trump’s plan, how tariffs work, who pays for them in the short and the long run, and why they are even used in the first place.

Tariffs are fees companies pay the federal government to import certain products into the United States. Since the money is collected by the government, it is considered a tax.