Amid the turmoil caused by a recent spate of tariffs, there has been a great deal of news, analysis, and speculation surrounding financial markets and large industries. It might have left small businesses wondering what are these tariffs and what do they mean for my business?
What is a tariff?
A tariff is a tax on a particular class of imports or exports, such as lumber or soybeans. There are a couple types of these taxes.
A unit tariff is a fixed dollar amount on a specific item, such as steel, for example.
An ad valorem tariff is proportional to the value of imported goods. Historically, the purpose is to raise revenue for the country and protect a country’s companies from foreign competition. The effects of tariffs vary, but they tend to raise the cost of an imported good while boosting the market for domestic companies.
What are the new tariffs?
The first set of new tariffs were announced by the U.S. on May 31, targeting the steel and aluminum exports of Canada, Mexico and European Union nations. Almost immediately, these nations made clear their intent to issue retaliatory tariffs of their own. In addition to the aluminum and steel tariffs, the U.S. levied lumber tariffs against Canada and is exploring adding automobile tariffs to the list of those levied against the EU. The U.S. also threatened tariffs targeting China, drawing the ire of and retaliatory threats from the Peoples’ Republic as well.
Naturally, these are seismic events that will have massive consequences, but they will also impact small businesses in ways you might not have anticipated. In the U.S., small businesses make up 99.7 percent of employer companies and 48 percent of the private workforce, so their well-being collectively has a huge effect on the economy in terms of employment, wages, and growth. In other words, their economic value is highly significant.
Read more: https://www.businessnewsdaily.com/10931-small-business-tariff-impact.html