The United States imposes tariffs on imports for a variety of reasons, including protecting domestic industries, addressing trade imbalances, and responding to unfair trade practices. These tariffs can vary greatly depending on the product, country of origin, and specific trade agreements. Here's an overview of the key tariffs and trade policies that the U.S. government has in place:
1. General Tariffs
Most-Favored-Nation (MFN) Tariff Rate: Under the World Trade Organization (WTO) rules, the U.S. applies a most-favored-nation (MFN) tariff to most imports from countries that are WTO members. The MFN rate is essentially a baseline tariff that is applied to imports from these countries. The average MFN tariff rate for non-agricultural goods is relatively low, around 3-4%. For agricultural goods, the rates are higher, averaging around 10-15%, due to protections for U.S. farmers.
Tariff Schedules: U.S. tariffs are organized by product categories in a system called the Harmonized Tariff Schedule (HTS). This system provides the specific tariff rates for each product category, which are classified using numerical codes. Importers and exporters use the HTS to determine the exact duties they will face when trading.
2. Tariffs on Specific Countries
The U.S. imposes different tariffs based on trade relationships and agreements with specific countries:
China: In recent years, the U.S. has imposed substantial tariffs on imports from China, particularly as part of the U.S.-China trade war that began in 2018. The U.S. levied tariffs of 25% or more on hundreds of billions of dollars' worth of Chinese goods, including electronics, machinery, and textiles. These tariffs were aimed at addressing issues like intellectual property theft, forced technology transfers, and the trade deficit. Some of these tariffs remain in place, while others have been reduced or suspended as part of trade agreements.
European Union (EU): The U.S. has imposed tariffs on certain European goods, often related to trade disputes over subsidies to aircraft manufacturers (Boeing vs. Airbus) and steel and aluminum tariffs. In 2018, the Trump administration imposed a 25% tariff on steel and a 10% tariff on aluminum imports from the EU, citing national security concerns. While these tariffs were later modified or negotiated down, trade tensions with the EU remain.
Mexico and Canada (USMCA): Under the United States-Mexico-Canada Agreement (USMCA), the U.S. has largely eliminated tariffs on most goods traded with these two countries. However, certain products, such as dairy, poultry, and eggs, still face tariffs, though these are relatively low compared to the pre-USMCA North American Free Trade Agreement (NAFTA) rates. The USMCA also includes provisions to address issues like labor standards and digital trade.
3. Special Tariffs and Trade Measures
Section 301 Tariffs: Under the Trade Act of 1974 (Section 301), the U.S. government has the authority to impose tariffs on imports from countries that are deemed to engage in unfair trade practices. The most prominent example is the tariffs imposed on China, but Section 301 has also been used to target other countries. In particular, these tariffs have been used in response to intellectual property theft, forced technology transfers, and industrial policies that are viewed as unfair to U.S. companies.
Section 232 Tariffs (National Security): Under Section 232 of the Trade Expansion Act of 1962, the U.S. can impose tariffs on imports that threaten national security. The most notable example of this has been the tariffs on steel and aluminum imports, which were imposed in 2018 by the Trump administration, citing national security concerns related to the U.S. manufacturing base. These tariffs were applied to many countries, including traditional allies like Canada, Mexico, and the EU, though some countries have negotiated exemptions or lower tariff rates.
Section 201 Safeguard Tariffs: The U.S. can also impose tariffs under Section 201 of the Trade Act of 1974 if a sudden surge of imports threatens to injure a domestic industry. This has been used to protect industries like washing machines, solar panels, and steel. For instance, in 2018, the U.S. imposed safeguard tariffs on imported solar panels and washing machines to protect domestic manufacturers.
4. Anti-Dumping and Countervailing Duty Tariffs
Anti-Dumping Tariffs (AD): The U.S. imposes tariffs on goods that are "dumped" into the market at unfairly low prices, often below the cost of production, which can harm U.S. industries. These anti-dumping tariffs are applied after an investigation by the U.S. Department of Commerce and the International Trade Commission (ITC) confirms that dumping is occurring and causing injury to domestic producers.
Countervailing Duties (CVD): These tariffs are applied to offset the effects of foreign government subsidies that allow foreign producers to sell products at unfairly low prices in the U.S. market. Like anti-dumping tariffs, countervailing duties are applied after investigations determine that foreign subsidies have harmed U.S. industries.
5. Tariffs on Specific Product Categories
Agricultural Products: U.S. tariffs on agricultural imports are generally higher than on industrial products, especially for items such as sugar, dairy, peanuts, and tobacco. These tariffs aim to protect U.S. farmers from cheaper foreign competition. Additionally, safeguard tariffs are sometimes imposed on products that surge into the U.S. market, such as certain fruits, vegetables, or other farm goods.
Automobiles: The U.S. has historically applied tariffs on imported cars, though these have been adjusted based on trade negotiations (e.g., the USMCA). For most imports, the standard tariff is 2.5%, but tariffs on trucks (above 6,000 pounds) can be as high as 25%.
Steel and Aluminum: As mentioned earlier, under Section 232, the U.S. has imposed a 25% tariff on steel and a 10% tariff on aluminum imports from many countries, although some countries (like Canada and Mexico) have negotiated exemptions. These tariffs were intended to support U.S. steel and aluminum producers.
6. Customs and Border Protection (CBP) and Enforcement
Customs Duties: U.S. Customs and Border Protection (CBP) is responsible for enforcing tariffs and duties on imports. Importers are required to declare the value of their shipments and pay the appropriate tariffs at the time of entry. Failure to do so can result in fines, seizures, or penalties.
Trade Remedies and Enforcement: The U.S. also has mechanisms to enforce anti-dumping, countervailing duties, and safeguard measures. The Trade Enforcement and Innovation Act (2015) empowered U.S. authorities to crack down on trade violations and improve compliance
7. Exemptions and Special Programs
Generalized System of Preferences (GSP): The U.S. provides duty-free access for certain imports from developing countries through the Generalized System of Preferences (GSP), a program that allows goods from eligible countries to enter the U.S. without paying tariffs. This is aimed at promoting economic development in low-income countries.
Tariff Exclusions: In some cases, the U.S. government grants tariff exclusions for specific products, particularly if domestic production cannot meet demand or if the products are not available from domestic suppliers. For example, certain products from China were granted tariff exclusions under the Section 301 tariffs in response to requests from U.S. businesses.
Conclusion
The United States uses tariffs as a tool for managing trade relations, protecting domestic industries, and addressing concerns about unfair trade practices. While many imports are subject to the standard MFN tariff rates, the U.S. imposes additional tariffs on specific goods or countries based on national security concerns, trade disputes, anti-dumping measures, and international trade agreements. The overall structure of U.S. tariffs is complex and subject to frequent changes based on economic and political factors.
