In this edition of TPO Explains, we break down tariffs – explaining what they are, how they work, why governments impose them, and why critics argue they raise prices for consumers.
October 18, 2025
How do tariffs work?
Y’all ever used DoorDash? A $10 burger turns into a $23 burger by the time it crosses your doorstep, but the burger isn’t any bigger… and you think to yourself, “Self, next time we can save money by doing this the homemade way.”
Consider that your first lesson in tariffs.
Well, now I’m just hungry.
Hold your horses. 🐎 There’s more to learn!
Tariffs are taxes on imported goods. There’s…
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Ad Valorem Tariffs: percentage-based (e.g., a 20% tax on anything imported from Taiwan)
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Specific Tariffs: fixed fees imposed on physical units (often used on commodities where the price is constantly changing, like $10 per barrel of oil)
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Compound Tariffs: a combination of ad valorem and specific
All tariffs are taxes paid by importers to the local government.
For example, imagine the U.S. has a 50% tariff on goods from China (purely hypothetical). If an American company imports a $1,000 Labubu Doll from China, it will also have to pay $500 to the U.S. government ($1,500 total). The company can either absorb that $500 tax or pass the price hike along to its consumers… but someone’s gotta pay it.
Why do governments impose tariffs?
There are three main reasons:
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Revenue generation (tariffs generated ~50% of Uncle Sam’s revenue before 1913)
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Protection of domestic industries (increasing the cost of foreign goods incentivizes buying local)
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Leverage in foreign relations (pressuring other countries through their export biz)
When we hear about tariffs in the headlines these days, it’s mostly #3, with some #2 and #1 sprinkled in. (Check Uncle Sam’s current tariffs here.)
Why do critics dislike tariffs?
By design, tariffs make the market less efficient and raise prices for consumers.
Back in 1913, the U.S. moved away from its tariff-focused tax system in favor of the current income tax system because tariffs disproportionately affected lower-income consumers (they spend a larger share of their income on basic goods, many of which are imported).
Want to hear more about tariffs? Today’s episode of the TPO Explains podcast is for you!
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ETERNAL PERSPECTIVE
Our response to things beyond our control (such as economic negotiations between governments) should reflect our faith in Christ and encourage others. In the face of uncertainty and change, seek to reflect the peace of God, which surpasses understanding.
“What does the LORD your God ask of you except to fear the LORD your God by walking in all his ways, to love him, and to worship the LORD your God with all your heart and all your soul? Keep the LORD’s commands and statutes I am giving you today, for your own good.”
Deuteronomy 10:12–13 (CSB) (read full passage)
Prefer to respond on your knees? Check out our new Sunday newsletter, Praying the News.
