Introduction to Tariffs for Kids and Teens
This video explains the concept of tariffs in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about tariffs, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.
Suitable for students from grade levels:
- Kindergarten
- Elementary School
- Middle School
- High School
The topics covered are:
- What are tariffs
- What are the advantages of tariffs
- What are the disadvantages
- How do tariffs affect you
- Are tariffs a good idea
Quiz: Tax Smarts
Some tax topics sound complicated but pay off once you understand them. This quiz covers capital gains, tariffs, and the difference between avoiding and evading taxes.
What are tariffs?
A tariff is a tax charged by the government on imported goods, usually on a specific type of product or sector.
This can be a percentage of the product’s cost, or a fixed dollar amount per product.
The goal of tariffs is to make foreign goods less attractive and encourage consumers to buy domestically produced alternatives.
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What are the advantages of tariffs?
Tariffs are mainly used to protect domestic industries and jobs.
Let’s say an imported car costs $30,000 but a comparable domestically made car costs $35,000. If the country imposes a 30% tariff on imported cars, and the importer passes it on entirely to the customer, that $30,000 car will now cost $39,000.
This makes the domestically made car $4,000 cheaper, making it more attractive for consumers.
Tariffs can also give domestic industries time to grow against global competition, generate extra revenue for the government, and be used for strategic trade negotiations with other countries.
What are the disadvantages?
While tariffs do encourage buying domestic products, they do this by making imported products more expensive.
Since tariffs are usually passed on to consumers, you end up paying more for the same imported product after a tariff is implemented.
Similarly, tariffs can also hurt businesses that rely on imported materials.
Lastly, countries targeted by tariffs could retaliate with their own tariffs, starting a trade war that could hurt both countries’ economies.
How do tariffs affect me?
The biggest impact of tariffs is an increase in the price of imported products.
For example, if there’s a 25% tariff on imported steel, products like cars and kitchen appliances that use steel would become more expensive.
On the other hand, companies and jobs reliant on manufacturing steel domestically would benefit since their products would become more competitive and more people would buy from them.
Are tariffs a good idea?
The effectiveness of tariffs depends on the specific way they are used.
They can allow domestic industries to grow and create new jobs. But they also lead to higher prices for consumers.
Alternatives like subsidies – which support local industries without punishing imports – could achieve similar results without many of the downsides.
